Privacy

Really Private Banking?

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A man operated a "warehouse bank" out of his suburban home, taking at least $28 million from people around the country who wanted a discrete bank account, according to court documents.

An IRS investigator said Robert Arant had hundreds of customers, many of whom apparently used his bank, Olympic Business Systems LLC, to conceal assets for the purpose of evading taxes.

On his now-defunct Web site, Arant advertised his services to those "who would rather not deal directly with the banking system," court records said.

This guy would have been a libertarian hero in the 1970s and '80s. A little history for you:

Warehouse bank schemes were popular as illegal tax shelters in the 1980s, but several have been busted in more recent years — including one broken up in Boring, Ore., in 2000, involving $186 million in deposits from 900 people over 14 years. The six organizers of that scheme were sentenced to up to four years in prison.

The king of semi/illegal tax shelters: Former LP presidential candidate Harry Browne, who originally make his name (and fortune?) with books like Harry Browne's Complete Guide to Swiss Banks (1976) and You Can Profit from a Monetary Crisis (1974).

Via Fark, which describes the news thusly: "IRS agents discover man running a "secret bank" out of his suburban home. In other news, there are people willing to give nearly $28 million to a guy running a bank out of his house."

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  1. Boring, Oregon? Isn’t that redundant?

  2. Glad they busted this one. I don’t mind paying my fair share of taxes but I don’t care to pay those of people who think they’re above contributing.

  3. Then THIS, must be really, really private banking…

    CARACAS, Venezuela – Venezuelan President Hugo Chavez on Thursday threatened to nationalize the country’s banks and largest steel producer, accusing them of unscrupulous practices.
    “Private banks have to give priority to financing the industrial sectors of Venezuela at low cost,” Chavez said. “If banks don’t agree with this, it’s better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits.”
    Chavez also warned the government could take over steel producer Sidor, which is majority controlled by Luxembourg-based Ternium SA.

  4. “Then THIS, must be really, really private banking…

    “If banks don’t agree with this, it’s better that they go, that they turn over the banks to me””

    No, this is unbridled megalomania.

  5. In other news, there are people willing to give nearly $28 million to a guy running a bank out of his house.

    Perhaps they were told that if they did their banking with him they could facilitate large transfers of money from Nigeria.

  6. thoreau,

    Does this mean I’m not getting a share of the UK National Lottery prize?

    Damn it!

  7. Dan T, you’re not really a libertarian, are you?

  8. Dammit, I was thinking of doing something akin myself. Now I have to go do something else!

  9. “Dan T, you’re not really a libertarian, are you?”

    Perhaps he’s the kind of Libertarian who believes in working to change the system rather than just ignoring democratically-enacted laws when it suits him.

  10. In other words, how many doors have YOU knocked on for Ron Paul 2008?

  11. In other news, Bob Saget now blogging at http://www.winecommonsewer.com

  12. That was really more a “highnumber” kind of comment.

    Lupito41,
    You don’t know Dan T., do you?

  13. “Lupito41,
    You don’t know Dan T., do you?”

    As soon as I posted, I remembered some of his other comments… Point conceded.

    Still, there is a process for changing laws.

  14. How does one go about filtering out the trolls? I know there’s a way. Please enlighten me.

  15. “Perhaps he’s the kind of Libertarian who believes in working to change the system rather than just ignoring democratically-enacted laws when it suits him.”

    Hoo, boy is that rich! Democratically elected laws! /snicker.

  16. Perhaps he’s the kind of Libertarian who believes in working to change the system rather than just ignoring democratically-enacted laws when it suits him.

    Yeah, that kind. I’ve met lots of those.

    I mean, what makes a law legitimate? Oh yeah, when the majority says it is. Those majoritarian libertarians…they’re everywhere, man.

  17. Am I really the Pollyana? I love the ideas I’ve found on this site, but I was under the impression some of you fancied this a movement… Am I wrong?

  18. How does one go about filtering out the trolls? I know there’s a way. Please enlighten me.

    YOU WILL NOT FILTER ME.

  19. Am I really the Pollyana?

    SHORT ANSWER OR LONG ANSWER?

  20. From Urkobold? Definitely give me the long answer?

  21. Onshore banking.

  22. Urko, thanks for the plug.

  23. URKOBOLD? HAS NO NICKNAMES!

  24. *Urkobold scratches head, doesn’t remember posting last comment.

  25. …..working to change the system rather than just ignoring democratically-enacted laws when it suits him.

    Taking that for what it’s worth, I never cheer when somebody gets taken down by the IRS. That’s my point.

    As I tell my clients, you must pay taxes because tax protests or tax cheating is futile and either may end up as a one way ticket to a lot of grief. Or a nice new suit with stripes.

    That advice is practical advice because the government has all the tanks and stuff.

    Although it’s probably an overused example, it’s a good thing that people ignored the democratically enacted run away slave laws while they worked from within to change the system. That sure made life better for a lot of people.

    Or maybe the US should have jailed Levi Coffin and Harriet Tubman for ignoring democratically-enacted laws when it suited them. Common criminals, both.

  26. Sorry, highnumber, I usurped your authority. Blame my towering indignancy.

  27. You’re gonna open a bank, just for an example. You’ve got to give it the right name. It’s gotta be something big and strong like “Security First Trust and Federal
    Reserve.” And you have to name a bank that way because nobody’s gonna put their money in “Fred’s Bank.”

    “Hi, I’m Fred, I have a bank. You got $1500? Ahhh…I’ll put it … right here.”

    (inserts hand into pocket of white suit)

  28. Someone call him Urky. I dare ya.

  29. Oh, and Tom? Your fair share of taxes paid got flushed down the shitter faster than you could blink your eyes twice. Feel like you got your money’s worth?

    “I owe the government $3400 in taxes. So I sent them two hammers and a toilet seat.”-Sue Murphy

  30. here, now, Violent – something like that would be so… so… Barberton

  31. ‘Sokay, ProGLib. I just got confused.

  32. Might not put it in Fred’s Bank but apparently they’ll put the money in Bob’s Bank.

  33. “Or maybe the US should have jailed Levi Coffin and Harriet Tubman for ignoring democratically-enacted laws when it suited them. Common criminals, both.”

    I don’t know if the example is overused either, but it certainly is not adequate. As you said yourself, these heroes broke the immoral, unjust laws “while they worked from within to change the system”. If this banker was running a fiscal underground railroad, I will gladly stand corrected. Though, like you, I will also never cheer for an IRS victory.

    My point is that it sure is easier to be ideological than it is to be active, and it’s a stigma that many Libertarians suffer from especially.

  34. ProGLib,

    I like the idea that Urkobold could be everywhere at once.

    As long as he didn’t degenerate into Dan T.

  35. Nothing could diminish the Urkobold so far.

  36. A planet where apes evolved from trolls? Maybe this one nickname could be permitted, though I cannot speak for the Urkobold.

  37. these heroes broke the immoral, unjust laws

    People in the south didn’t consider the laws unjust nor did they consider Tubman and Coffin heroes.

    Why is it okay to break unjust laws when you personally approve? Didn’t you remark that Tom might not be the kind of libertarian who isjust ignoring democratically-enacted laws when it suits him?

    And btw, I think the banker was running an underground railroad that liberated money from the confiscatory system. The system where you work for a third of your life for the government?

    OTOH, he may have been guilty of nothing more than daring to offer banking privacy to willing depositors.

    Yes, action is good. You need outreach, ideology, and action. None of which seem to be working all that well for us libertarians.

  38. excuse the unplanned question mark.

  39. Your fair share of taxes paid got flushed down the shitter faster than you could blink your eyes twice. Feel like you got your money’s worth?

    Those leaky sewage pipes in the Baghdad police training academy spewing shit all over the new recruits aren’t going to pay for themselves…

  40. Somehow people like me fail to see the moral equivalence between tax evation and sheltering fugitive slaves. I bet Hariette Tubman wasn’t getting rich for her efforts either.

  41. Since the Chavez thing came up earlier in the thread-

    Why aren’t “nationalized” (stolen) industries pulling a Howard Roark? “Sure you can have our production facilites, hold on a moment…..(distant banging and booming)…ok, it’s all yours. Just as useful as the day I found it. See ya.”

  42. arbitrary designation,

    YOU FAIL TO CATCH TWC’S POINT.

    YOUR PUNISHMENT:

    YOU ARE NOW KNOWN AS “Simon Burke.”

  43. “My point is that it sure is easier to be ideological than it is to be active, and it’s a stigma that many Libertarians suffer from especially.”

    Having just read Lysander Spooner’s “No Treason” and some great articles on the Voluntaryist.com website, I’m more inclined to say it’s more “active” and courageous to starve the beast than to cast piddling votes which more than anything else just seem to further legitimate a corrupt government.

    I normally post under my own name but figured I’d go anonymous for this one in case I ever decide to act on these beliefs. Big Brother might be watching.

  44. The closest thing that anybody can do to this within the current system is to use a credit union. I just switched recently, and it’s completely different from a bank. They’re still regulated, but they’re owned by the members.

  45. Also, check out this very good website, called “The Picket Line”: http://www.Sniggle.net/Experiment. The guy lists Hit & Run as a blog he likes, so if the author is lurking about: kudos for a great service to the internet community.

  46. Wine Commonsewer:

    “Why is it okay to break unjust laws when you personally approve?”

    Lots of good points, but you completely ignored the qualification we just established, which was an active role in changing the laws from within. And I still didn’t say it was okay. They are considered heroes today because of what they helped accomplish, and I have seen nothing to indicate that this banker is a freedom fighter. I have seen nothing to indicate he ISN’T a freedom fighter either, but my point — still unadressed — is that all the tools are at our disposal to change the laws, but instead we salute those who further marginalize us by ignoring them.

    Anonynmous register: Your prose strikes me as FAMILIar…

  47. Anon Resister, rather…

  48. URKO!

    It was this General Urko who once said, “The only good human is a dead human!”

  49. Oh, crap, my mistake — that was General Ursus in Beneath the Planet of the Apes.

    Urko was a character in the Planet of the Apes TV series that came later. I can’t remember anything quotable he said.

  50. Further clarification: The photo linked to above is in fact Urko, but I erroneously attributed a General Ursus quote to him.

    Insofar as it is within my power, every Planet of the Apes comment I make on this blog shall be 100% accurate!

  51. Stevo,

    It’s okay. The ruling is that Ursus is merely the Latinized version of Urko. Even the ape generals are into Roman history. Though, thanks to Dr. Zaius, they thought early Rome was inhabited by apes.

  52. And there is a huge difference between conscientously battling against a law and simply ignoring one, in both morality and pragmatism.

  53. liberated money from the confiscatory system

    Whose agents are the confiscadors.

  54. And there is a huge difference between conscientously battling against a law and simply ignoring one, in both morality and pragmatism.

    Sure, if by that you mean to say ignoring an immoral law is usually better, both morally and pragmatically, than battling against it.

  55. I normally post under my own name but figured I’d go anonymous for this one in case I ever decide to act on these beliefs. Big Brother might be watching.

    We’re already on to you.

  56. And there is a huge difference between conscientously battling against a law and simply ignoring one, in both morality and pragmatism.

    If you are gay, do you ignore laws prohibiting sex between consenting same sex adults?

    If you are on Hwy 89 in Utah and the only car on the road do you ignore the 55 mph speed limit, (er probably 65 now)?

    If you have cancer or Aids do you ignore the law prohibiting your use of pot?

    If you want to install a new water heater do you ignore the law that says you have to get a permit?

    If you know that your little girl is coming down with strep throat do you ignore the law and give her the rest of the antibiotics you have in the cupboard?

    From the mundane to the illicit the commonalities among these issues is the moral.

  57. You need a permit for a hot water installation?

    The things I learn here. I feel like I should add a tidbit.

    Fully 3/4 of TX women ignore that law about personal massagers.

  58. is that all the tools are at our disposal to change the laws, but instead we salute those who further marginalize us by ignoring them.

    Sez you. 🙂

    I vote against everything and everybody.

    This magazine, it’s writers and the analysts at the foundation that backs it, spend every waking moment working toward a better America.

    I’m not sure what else you might be after, but there are a lot of us out there who are one by one making a little bit of a difference every day.

    The simplest thing I do, every day, is to remind people that the money you earn doesn’t belong to the government. It helps people see the whole system in a new way when they realize that nobody asked their opinion of how much tax was enough.

    And if you mean to imply by the use of an obscure metaphor that my contributions are not up to scratch then I’m afraid I’m going to have to ask you to step outside. 🙂

    I don’t plan on any elaboration on that count except to say that I’ve been around the movement for a long time.

    tip of the glass to Monty Python.

  59. meant to say heater

  60. Hey, Miche! 🙂

    You have to remember, I live in Californicate where a permit is required for everything except granola.

    Fully 3/4 of TX women ignore that law about personal massagers.

    Hmmm, guess I should change careers and move to Tx.

  61. “Fully 3/4 of TX women ignore that law about personal massagers.”

    And we’re not to sure about the other 25% of their anatomies.

  62. But then Mrs. TWC won’t need your services anymore. hehe

  63. Somehow people like me fail to see the moral equivalence between tax evation and sheltering fugitive slaves. I bet Hariette Tubman wasn’t getting rich for her efforts either.

    From reading the article I’m not sure that our boy was charged with tax evasion although not filing a tax return for six years is pretty dang dumb.

    It seems to me that the whole thing revolves around a non-approved banking system that allowed other people (allegedly) to evade taxes in some measure.

    To me, when it fleshes out, it looks like this sort of attempt at finding financial privacy is illegal and you seem okay with that.

    That’s fine until you’re the guy (like my client) who sold his business only to find out that, OOOOPS, the wire transfer doesn’t show up in his bank when escrow closes because Mellon Bank in the ‘Burgh says hey, you’re a fargin’ terrorist. No money today Charlie, sorry. And they simply refuse to fork over the 3 million.

    Sure, it all got cleaned up……..eventually.

    Or another guy who was moving lots of money from lots of different accounts in a hurry so he could buy that dream house in Hawaii. The IRS showed up, with guns, because Schwab alerted them. Well, it DID look kind of suspicious.

  64. But then Mrs. TWC won’t need your services anymore. hehe

    She married me for the back rubs…..certainly wasn’t for my looks or my money. As my aunt used to say hell to get cheated out of both. Looks and money, I mean.

  65. Miche, think it’s wine thirty yet? Oh, hey, it has to be in Texas cuz it’s already, uh, let’s see, Mickey’s big hand is on…..

  66. “Fully 3/4 of TX women ignore that law about personal massagers.”

    Well now DUH (light bulb comes on).

    I swear to God, I completely missed that one. I thought maybe the massage business was really popular in Texas or something. Jesus Chrysler. LOL at myself for being a dork.

    See if I had a glass or two of wine, I would have got that right away.

  67. Wine Commonsewer:

    I sincerely and gratefully concede. I am admittedly new to not just the site, but the ideology as well. It’s tough adjusting to an ethos as opposed to a set of beliefs (a la Reps and Dems), but reason prevails.

    Thanks for the patient conversation!

  68. I am having vodka & lemonade tonight but I am mixing them weakly. Mom in law is coming to town tomorrow and she already hates me. I’ve been with her son 10 years and this is the first time she will visit our home. Can’t be hugging her with a wine hangover.

  69. new to not just the site, but the ideology as well

    I too am new to both, and hope to find not an ideology, but rather a phenomenology.

  70. phenomenology

    Dude, had to look that up. 🙂

  71. Hope something like this turned up:

    Phenomenology: The phenomenological is a specific view of things which aims at revealing aspects hidden from usual viewpoints by habit. It requires leisure (“?poche”) in order to exclude preconceptions about the thing under consideration. If we look at the things around us using this method, we can classify them in three groups (though this classification will always remain precarious). Firstly, things behind which human designs are concealed: the “produced” things, which in their entirety could be called “culture.” Secondly, things behind which such designs cannot be discovered: the “given” things, which in their entirety could be called “nature.” And thirdly, things in which the viewer recognizes himself because they offer him no resistance (and are thus not genuine “things”) but rather seek to recognize the viewer themselves: the “others,” which in their entirety could be called “society.”

    “Precarious”. Isn’t that what my dentist warns me my teeth are?

  72. @ TMC
    OMG, so did I!!

  73. But I didn’t get M’s definition.

  74. M doesn’t get it yet either. It’s a process, he’s assured.

  75. Lupito41 and M, welcome, hope you’ll stick around.

    Thanks for the patient conversation!

    One can only hope that manners sometimes prevail although they don’t always and I’m sometimes as guilty as anybody.

    You’ll find a lot of crazy stuff around here and maybe some stuff that will move you and touch you. Sometimes you’ll wonder if you stumbled into the wrong place in the dark, and sometimes your jaw will drop in horror. The flames can sometimes light up the night, but mostly everybody gets along. Not everything you see here in the comment sections will be libertarian and you’ll notice that libertarians sometimes don’t see eye to eye.

    If you’re interested in policy you’ll find that stuff over at Reason.org. It’s a whole ‘nother side of Reason that many folks don’t know exists.

    Lots of cool people here, got a nice long oak bar, second longest on line. Lots of good red wine and fully stocked with good booze including all the right fixin’s for a good Martooni. I think somebody’s running the dope concession back there behind those silk curtains. Might be High, but maybe not. Pun intended.

    That’s the quarter tour. I don’t know who’s tending bar tonight, but tip them well.

  76. Thank you for the welcome, Matt.

    the dope concession

    I have indeed noticed that many here concede readily enough that someone else is a dope. 🙂

  77. And while I have your lapel, are you taking questions?

  78. The only other thing that’s required is my self-serving invitation to stop on by The Wine Commonsewer now and again.

    Sheesh, you’d think I owned this site.

    Oh, and you can call me Mike or TWC.

    As Ever,

    TWC

  79. Questions? sure.

    But I gotta go back upstairs and sit with the kids for a few. I’ll be back.

  80. I think the definition is something like holding a large mirror up and looking at the garden (or room) backwards over your shoulder to see it from a new perspective. Same reality but it looks different. Then again, maybe not.

    Helps with where to put that old black leather chair though.

  81. Your site looks rich, TWC. Did you know that Agave may be lethal to Pentheus? He didn’t.

    So here’s my invitation for someone here to trounce my question before I can understand the reason for the trouncing.

    What oh what makes minarchism superior to anarchism? Where did von Mises, Rothbard, Rockwell, et al. go wrong?

    Depending on the duration of your hiatus I hope to learn tonight or tomorrow. Thx.

    Me, I think phenomenology sets out to put down the mirror, discontinue seeing through the glass darkly, and turn around instead. Heretical, I know, I know.

  82. The phenomenological is a specific view of things which aims at revealing aspects hidden from usual viewpoints by habit.

    That’s why you hold the mirror up and look behind you. 🙂 But, I dunno, you are the Phenomn man.

    BTW M, thanks for the kind words about TWC site.

    I have your answers, first of all, von Mises should have stuck to rockets and Rockwell should have never merged with Boeing. Should have just kept doing those cool Saturday Evening Post covers for doctor’s offices.

    My buddy Col Hogan could probably give you the skinny on why anarchism is superior to minarchism, but mostly I am a minarchist mice elf.

    Libertarians and objectivists have been kicking this stuff around for decades–into the wee hours of the early morning no less. With coffee, with dope, with wine, with……and all of that introspection has brought us no closer to the reality of it all than when we began.

    There are at least a hundred people who post here that are far more qualified than I to kick the esoteric around.

    I CAN tell you this. Wine is the only answer. Booze, if you are El Geronimo de Crow.

    Now, I gotta go put my kids to bed, Mrs TWC is traveling and they miss her.

    Enjoy what’s left of the eve.

  83. Oh, and thanks for the welcome-mat, Mike. 🙂

  84. all of that introspection has brought us no closer to the reality of it all than when we began

    Dunno why, but I have the strongest feeling that this is not a universal consensus.

  85. M,
    In case TWC takes awhile with the kiddos, I will give you my answer but it’s not popular and I don’t expect that it will get much support here.

    What oh what makes minarchism superior to anarchism? Where did von Mises, Rothbard, Rockwell, et al. go wrong?

    Minarchism is superior to anarchism only because it doesn’t grate so harshly on the average person’s sense of normality. It is hard to imagine that people can do for themselves when some form of state has existed and chipped away at confidence for most of recorded history.

    Where did the ‘gods’ of libertarianism go wrong? They watered down the message. It is sort of contradicting to say we can do without a state in bed, drugs, and contracts but we need it if shit really hits the fan.

    Again, it is just my two cents and you didn’t ask me.

  86. and obviously TWC hit submit before I did

  87. Thanks, miche. Racing to submit is the political pandemic, is it not?

    But I fear more to many objectors’ objections than strategy. Minarchism appears to be a principled stance at least as often as a rhetorical device to velvet truth’s claws. The Disestablishment Claws, that be.

  88. No race in this case. Was busy doing something else and when I saw he wasn’t back yet, I figured may as well spout off. Good night guys. Gotta get up early to make sure the house doesn’t give me away as a lazy wife. ;o)

  89. I was thinking of political submission.

    No race in this case

    Oh, that juries would feel that way too!

  90. As a principle and “guiding light” for thought and action, I don’t think minarchism is superior to anarchism. Here’s a good essay on the subject, titled “In Search of a Word: Limited Government versus ‘Anarchy'”,
    http://www.voluntaryist.com/articles/082a.php.
    An excerpt:
    “With that background, let’s now come to the question of limited government versus anarchy and which term, if either, a thinking person could adopt as his philosophical badge. (And so as not to let it cloud our minds, let’s try to leave out of account the fact that anarchy, as popularly understood, is a pejorative term, bringing to mind images of terrorism.) Baldy Harper, Leonard Read’s first associate at FEE and later founder of the Institute for Humane Studies, looked at it in a way that I find attractive. He had no more idea than the man in the moon whether we or our descendants will ever actually see a “total alternative,” as he put it, to political, tax-supported-government. But he pointed out the importance of holding the ideal clearly in mind as a heuristic device and a compass to help us keep moving always in the direction of freedom. The analogy he used was that of the north star and the mariner who steers by it. The mariner doesn’t expect to reach the star. But, steering by it, which is a process entailing innumerable small decisions and self-corrections, not one of which he could make without the star, he eventually reaches Liverpool. We need a transcendent ideal always in mind, Baldy would say, to help guide our everyday decisions that determine whether or not we keep on our heading toward freedom. . . . Baldy didn’t have an all-encompassing word, but he wasn’t beating any drums for government, limited or otherwise.”

    For me, the biggest sticking point in plotting a course towards total anarchy is the apparent need for some kind of military defense (which, especially given our geographical location in the world, should entail a miniscule fraction of the cost it entails today), to prevent other governments from invading us and to prevents warlords from rising up within our own borders and establishing new governments. All other forms of protection for persons and property could theoretically be established by purely voluntary associations, truly and not fictionally based on the consent of the governed, for which people actually sign up (and presumably in most associations would pay some kind of dues to keep their membership in good standing). If two parties who are members of the same association have a dispute, the dispute would ordinarily be resolved according to the methods of the association. But if my neighbor’s association wants to haul me into its court if it has one or throw me in its jail or take my property because of something I allegedly did to my neighbor, and I am a member of a different association (hopefully the charter of my association provides only limited protection from other associations if I do something against the laws of my own association) or am not a member of any association, that could be a serious problem. Logically, the government would most likely need to establish tribunals to adjudicate such potentially violent conflicts. Beyond these bare functions, I don’t see a compelling case for further government.

  91. Thanks, AR.

    I’ve only begun to plow through it, but For a New Liberty by Murray Rothbard, available here, apparently addresses, I know not how conclusively, both modifications to anarchy you suggest.

    Now I know there are some rabid archists out there!

  92. Nobody really addressed my originial point, that is that when people cheat the system by not paying their taxes, it means that the honest people among us end up paying more.

    Not paying legally owed taxes is a form of stealing. If you don’t think that living in the United States is worth the price, then move elsewhere.

  93. Taxes? Only the little people pay taxes.

  94. Nobody really addressed my originial point, that is that when people cheat the system by not paying their taxes, it means that the honest people among us end up paying more.

    Gosh, then maybe the guvmint might have to spend less to compensate.

    Not paying legally owed taxes is a form of stealing supreme irony. If you don’t think that living in the United States is worth the price, then move elsewhere get off my lawn you miserable kids!

    There, all fixed.

  95. that is that when people cheat the system by not paying their taxes, it means that the honest people among us end up paying more.

    I do not agree with you. The law says you, Dan T, are required to pay X dollars based upon your marital status, overall earnings, deductible expenses like mortgage interest and property taxes, number of kids and their ages, and your blended rate of tax. That does not change based on the fact that some largely unknowable number of people are not paying some largely unknowable amount of tax.

    Secondly, those who shave their taxes or avoid them altogether are only easing out of income taxes (& possibly social security taxes), they are not exempt from any other kind of tax such as sales, excise, property, fuel, or fill-in-the-blank.

    Thirdly, the underground economy is a vital part of the overall economy and generates far more in growth than it takes away in unpaid tax. It works like a tax-free investment or the growth in an IRA. The 25% you would have given to the government compounds along with the rest. Now don’t be thick here, of course the tax scammers aren’t investing their ill gotten tax savings 100%, but they are spending money in the local economy that wouldn’t otherwise be there, which is a boost for everybody. When Leona put in a pool with the tax she was supposed to give to Uncle Sugar all the little people who worked on that job benefited from it and would not have had that job if the money went to the treasury instead.

    Saying that tax cheats force you to pay more tax is like saying that GWB’s tax credits for people with kids force unmarried and childless people to pay more tax. Superficially plausible, but demonstratively false. Tax rates have not changed for people without kids in the six years or so since the child tax credit was enacted.

    Another way to view that is to assail those with 401(k) plans for forcing the rest of us who don’t have them to pay more tax. After all, there are billions of tax free dollars going into those plans every year.

    And finally, when the government needs more money they print it or borrow it. And in the end your taxes are going up regardless because no matter who is in power in DC the spending is going to go up. And up. And up. Which is why I always argue for tax cuts now. And, as you know, there is very little connection between tax receipts and spending.

    And finally (again), tax cheats are simply making use of higher risk tax shelters than the ones that wealthy people have access to because they have both money and knowledge.

    There is, however, one good reason not to cheat on your taxes. The penalties are very severe. I would say that in most cases, the risk isn’t worth the reward. Even if you aren’t jailed, the financial penalties can easily reach 50% or more of the original tax when you get caught. Yes, that’s right FIFTY PERCENT.

    Secondarily, it isn’t very easy to cheat on your taxes given that every aspect of your financial life is reported to the government. In essence, if you work for someone else you are audited every year by IRS computers.

    I’m done, sorry for the sermon. I let the kids sleep in my bed last night. Like sleeping with two bags filled with fighting raccoons and baseball bats.

  96. Slight Edit

    Another way to view that is to assail those with 401(k) plans for forcing the rest of us who don’t have them to pay more tax. After all, there are billions of tax free dollars going into those plans every year.

    Those of us without 401(k) plans do not pay more tax, the people with the plans pay less tax.

  97. Simple illustration:

    If the government required $1000 to operate in a country of 100 people, then (assuming a head tax) the tax burden would be $10 per person.

    If one person failed to pay, then the government would need to borrow $10 to compensate.

    So the next tax cycle, the government would have to charge everybody more taxes to pay the debt service on that borrowed money.

  98. Yes Dan, but the effect of non-payment of income tax is spread over 200 million taxpayers and the amount required to run the government is not fixed in any meaningful way.

    If the government required $1000 to operate in a country of 100 people, then (assuming a head tax) the tax burden would be $10 per person.

    If one person CONTRIBUTED TO A 401(k) PLAN AND THEREBY REDUCED HIS TAX OBLIGATION TO ZERO, the government would need to borrow $10 to compensate.

    Making him no better than a tax cheat.

  99. “This guy would have been a libertarian hero in the 1970s and ’80s.”

    He sounds at least as heroic in 2007.

  100. Praising as honest a victim of coercion is to misdefine the transaction.

    It may be may honest to tell a man holding a gun to your head (with badge or without) what he wants to hear. If it’s praiseworthy, it’s praiseworthy only for being prudent, not for being noble in the way that honoring voluntarily entered promises is noble.

    Nationalism, like loyalty to your local warlord, conflates reverence for cultural tradtion with submission to brutality, packaged as an (improperly so-called) noble fiction.

    The gummint runs a protection racket. They say, Pay us in exchange for the services we compel you to accept, or we’ll burn down your pizza parlor. L’etat, c’est The Biggest Bully On The Block.

    – – –

    My computer sizzled out this morning, so I’ll unfortunately be unable to keep up here, at least regularly, for a about a week. Now if the company were a state-run rather than private company, that week would surely be a few months.

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