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Friday, October 19, 2007

Agorist Toolkit - Tax Avoidance

The whole point of an agorist economy is to avoid taxation and regulation. What tricks could be used to avoid taxation and government confiscation of wealth?

1. Set up a trust or corporation. Trusts are used by wealthy people to dodge taxes. This would be a trust or corporation set up for the benefit of many people. Assets would be held in the trust, but the trust rules would respect the property rights of individuals. Transactions between trust members might not be taxable. I'm not a lawyer, so I don't know if this would work.

2. Set up a religion. There are all sorts of tax breaks for religion. Maybe it would be worthwhile to incoporate as a religion. The "First Church of Tax Avoidance" sounds as legitimate as all other religions, but government regulators might not see it that way.

I don't like options (1) and (2) that much. They still involve reporting activity to the government. The laws can be changed at any time and loopholes closed. Loopholes that benefit a single wealthy person will always be present. Loopholes that collectively benefit a lot of people would soon be closed.

3. Every transaction is a gift. Gifts up to $10,000/year are not considered taxable or reportable. As long as each transaction is a gift, it is not reportable. I don't know what the IRS' attitude would be towards this. On the other hand, who's going to be telling them about the transactions?

I like option (3). It's good because it doesn't involve reporting your activity to the red market at all.

The IRS gives an example on its webpage. A dentist trades with a plumber, free dental service for free plumbing. Both must report it as taxable income. However, what if the dentist gives the plumber a gift of free dental work? The plumber gives the dentist a gift of free plumbing. Is that reportable? Besides, what dentist and plumber are stupid enough to report their activity to the IRS?

Notice that transactions over $10,000 could be facilitated. Suppose A wants to give $20,000 to B. He can give $10,000 to C and $10,000 to D, who in turn each give $10,000 to B. This would not be reportable, if all transactions were gifts. If payment is made in physical silver or gold, instead of paper money, it would be much harder to trace the transaction.

Another option that might help is bribes paid to tax collectors, to help them look the other way. As long as the tax collector underestimated the amount of grey market activity, the bribe demanded might be reasonable. On the other hand, this is a risky approach to take; you might face greater criminal penalties if doublecrossed. Besides, any payments to government agents defeat the entire purpose of a grey market economy. Perhaps some agorist will set up a profitable "red market agent bribery" agency?

I think the "gift" approach is best. Each transaction will be, in the eyes of the participants, a "gift". Agorist contracts are not enforceable in red market courts anyway, so all transactions might as well legally be recorded as gifts. As long as transactions are under $10k/year between two parties, they are not reportable. Further, using 3rd party intermediaries could be used for larger transactions to stay under the $10k/year threshold. Besides, if I'm doing more than $10k/year of agorist business with you, I probably trust you and could pay you directly with a quantity of gold or silver, if necessary.

Another important point is DON'T KEEP RECORDS! Obviously, you have to keep a record of all current debts and credits. However, all completed transactions should have the records destroyed. This limits the effectiveness of red market agents who might demand to see your records. Corporate management uses this trick all the time. Corporate "document retention" policies are effectively "document destruction" policies; they intentionally keep the minimum records the law requires. Destroying evidence before you receive a subpoena is not a crime.

The best approach is maximum stealth to avoid detection. It might help if you were operating a white market and grey market business simultaneously. This way, your activities would be less suspicious. Anyone demanding to see your business records would see the white market records. On the other hand, the IRS frequently cracks down on small business owners, under the allegation of tax avoidance. It might be better to not be officially operating any business at all.

I realized something else. The average person does not think that barter transactions are subject to the income tax! This means that it probably would be feasible to pursue a jury nullification defense if an agorist community member was being held for trial for tax evasion. Unfortunately, trial by jury has been almost totally repealed, so a jury nullification defense is risky.

Another important point is to maximize the government's costs when it attempts to seize assets. If the red market seizes $50,000 of your property, and you force the government to spend $200,000 in collection, that's a net loss for the government. Right now, the bad guys control all of the world's wealth, so that's a losing proposition. However, as the agorist economy grows, it will begin to pay to maximize the collection costs for the bad guys. Agorist insurance associations will reimburse you for your loss, provided you maximize the red market's cost of collection. On the other hand, it might be practical to accept reasonable plea bargains to avoid wasting time. That's an economic decision that can be made when needed.

Summarizing, the agorist community should record each transaction, legally, as a gift. As long as both sides of the transaction are not completed simultaneously, it's more believable that it's a gift. For example, A volunteers to fix B's plumbing. Another day, B gives a gift of a free meal to C. Another time, C gives a gift of a free home-built air conditioner to A. If the payments balance in the long-run, it works out. If A had a net deficit, he could give a gift of physical silver or gold to correct his imbalance.

1 comment:

Zhwazi said...

It seems a good solution would be to combine as many strategies as possible.

Seen this one yet? From what I can tell it seems to work.

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