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Wednesday, April 29, 2009

Corporations as Tax Collectors

Any large corporation is effectively a branch of the State. Corporations have an important role not frequently mentioned. Corporations are tax collectors for the State.

Corporations have an obligation to report all transactions to the State. Whenever a corporation pays out money to a worker, a W-2 or 1099 form is generated. Whenever a corporation pays out money to another corporation, a 1099 form is typically filed. *ALL* economic transactions involving a corporation are reported to the State.

Corporations also have an obligation to withhold taxes from employee salaries. Even if you're someone who wants to practice tax resistance, you're SOL if you're employed by a corporation. The corporation has an obligation to report your labor and income to the IRS. The corporation has an obligation to withhold taxes. If you refuse to sign the W-4 form allowing tax withholding, then the corporation will refuse to hire you.

Corporations have an obligation to collect taxes and report transactions to the State. However, they are not reimbursed for this burden. A corporation with $10B in revenue may pay $10M on accountants. This is 0.1% of total revenue. Suppose you are a small business owner with $50k-$100k in revenue. You still have to hire an account or do it yourself. This costs $5k or more per year. This is a much greater percentage of your revenue than the large corporation.

In this manner, tax regulation (in addition to other regulations) is a higher burden for small business owners. The small business owner has an obligation to follow the regulation, but is not reimbursed for the expense. Anybody operating an on-the-books business has an obligation to work as an unpaid tax collector for the State.

Executives at large corporations don't mind the tax requirement. They receive more in State perks than the taxes they pay. The taxes a small business owner pays are partially used to subsidize profits of large corporations. If you run a small on-the-books business, you're subsidizing your larger corporate competitors.

Currently, in the USA, small businesses are being squeezed out of the market in favor of large corporations. Large corporations are dependent on leeching the productivity of small business owners via taxation and inflation. The decline of small businesses accelerates complete economic collapse.

A pro-State troll might say "Some small business owners are successful. That proves that the economic system is fair." That is false reasoning. Some small business owners are so talented or hardworking that they succeed *IN SPITE* of the huge handicap placed on them by the State. If there were not such severe State restriction of the market, you would see a lot more small businesses.

Most small businesses are under continuous pressure to grow, so that they can benefit from corrupt State regulations. During a recession/depression, many small business owners risk being ruined. If they borrow to expand their business, then they are ruined during the recession/depression. Their customers might be unable to pay their bills; the small business owner may be ruined if he doesn't cut back his business in time. If a small business owner doesn't borrow to expand during a boom, then he risks falling behind competitors who use leverage. Large corporations can profitably borrow and use the proceeds to buy out smaller competitors; State restriction of the market then prevents new competitors from emerging.

The practice of income tax withholding was introduced as a "temporary emergency measure" during World War II. It is now standard practice. Most/all businesses comply with the regulation. Any small business owner that refuses to play along with the scam risks being the victim of a violent State raid.

Some conspiracy theorists say that when you incorporate a business, you're voluntarily entering it into the State taxation and regulation system. For this reason, I advise agorists to *NOT* incorporate their businesses. When you incorporate, you're claiming a limited liability perk along with other perks. There perks are worth very little for a small business owner. These perks are worth nothing for an agorist. The first advice a pro-State troll gives when starting a business is "Incorporate your business!" If you plan to practice tax resistance/evasion, such advice is bad.

IRS tax forms allow you to operate unincorporated businesses. For example, I may deduct hosting expense from AdBrite revenue. My transactions with Google AdBrite are taxable, because Google is a corporation. When I start an agorist business also, then I will report my AdBrite revenue to the State and pay tax on it, while also operating my agorist business.

Large corporations are effectively a branch of the State. One of their most evil functions is their role as tax collector and economic spy for the State.

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