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Saturday, July 26, 2008

Wesley Snipes and Tax Resistance

Wesley Snipes and Ed/Elaine Brown are held as high-profile examples of tax resisters that got busted. When the mainstream media touts these cases, the implication is "These people got busted for tax evasion. Therefore, everyone who resists taxes gets caught."

There's another fact these cases confuse. There's a difference between civil penalties and criminal penalties. If the IRS wants to collect unpaid taxes, it can file a civil lawsuit. Sending someone to jail is much more severe than merely collecting unpaid taxes. It's one thing to say "someone should pay taxes/tribute". It's another thing to send an otherwise productive citizen to jail.

The criminal penalties for tax evasion are excessively high *ON PURPOSE*. The goal is to make people afraid of tax resistance. If you're convicted, there's an excessively large penalty; this gives most people an incentive to plea bargain.

According to the sources I've read, the vast majority of tax resisters don't go to jail. Usually, the IRS pursues civil penalties. For example, the IRS took money out of The Picket Line author's checking account. He didn't go to jail for tax evasion; the IRS merely seized his property without a trial.

Wesley Snipes' tax resistance strategy was particularly stupid. He was resisting taxes on his movie income. This income is automatically reported to the IRS.

Ed Brown also did something stupid. He was a dentist, and his customers paid him in cash. He got postal money orders to avoid bank reporting requirements. However, his excessive use of money orders triggered State reporting requirements. Ed Brown should have deposited some of his cash in his bank account and declared it as income. Then, he could have used the remainder for living expenses without reporting it as income. Instead of having 100% of his customers pay in cash, he could have arranged for 50% of his customers to pay in cash and 50% pay by check. Then, he would report only some of his income. When you take into account tax rules *AND* the fact that he could have charged *ALL* his dentist expenses to this amount, he would have avoided most of his tax via this method.

I have no idea what the true risk of being busted for tax evasion is, if you're clever about it. If you're a proper agorist, you perform transactions with cash or sound money, without reporting them to the government. If you have trustworthy trading partners, your risk as an agorist should be low. DON'T DEPOSIT YOUR PROFITS IN A BANK OR ANY OTHER ASPECT OF THE FINANCIAL SYSTEM! If you need long-term investments, buy gold or silver, if you know someone who'll buy/sell anonymously with cash. If necessary, report some of your income and pay tax on it.

Also, if you are busted for tax resistance, YOU HAVE TO DEFEND YOURSELF SUI JURIS. If you want to make a "jury nullification" defense, you cannot use a lawyer, because a lawyer is sworn to "uphold the law", even illegitimate laws. A lawyer who presents a jury nullification defense would forfeit his law license. State licensing requirements of lawyers help prevent honest trials from occurring. After investing several years and a lot of money on a law license, a lawyer isn't going to risk his career to defend someone honestly.

High profile tax resistance cases are designed to instill fear in everyone else. You cannot estimate the true risk of tax resistance from just two datapoints, especially when the people who got caught were being stupid.

1 comment:

Anonymous said...

Er, yeah. Why would you want a lawyer?

Forget about the fact that Jack Kevorkian won several cases when he had a lawyer, due to jury nullification. Then he decided to defend himself and ended up in prison.

A good criminal defense lawyer knows how to argue for jury nullification, and get away with it. Most pro-se defendants can't even get basic evidence admitted.

But go ahead, defend yourself pro se. Then blame someone else when you end up in prison.

Or hire a lawyer, and at least have a fighting chance.

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