It's Startiiiiiiiiiing!

Trim a little here, cut a little there....

2016 Standard Mileage Rates for Business, Medical and Moving Announced
IR-2015-137, Dec.17, 2015
WASHINGTON — The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 54 cents per mile for business miles driven, down from 57.5 cents for 2015

• 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015

• 14 cents per mile driven in service of charitable organizations

It's only a couple of cents...  times billions... and it is only one break out of millions...  aqueeze... squeeze... squeeze...

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China Cuts Taxes

China makes the right moves...  since taxes divert productive savings to wasted efforts, misallocation and malinvestment,  cutting taxes is doubly beneficial as the producers spend wisely and the government is starved of what they would waste anyway.

BEIJING - Tax breaks have seen 37.1 billion yuan ($6 billion) slashed from on China small companies' tax bills in the first three quarters of this year, government data showed on Thursday.
Business income tax worth 7.46 billion yuan was reduced or scrapped, as companies with annual taxable business income below 100,000 yuan were eligible for a 50 percent reduction in their bills..

RMB100,000 is about US$16,000, quite livable in China.

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Money Community Economies and Credit

An acquaintance of mine, at 92, still lives a throwback lifestyle.  Sharp as a tack.  A recent visit to a doctor had her prescription sent to "the corner pharmacy" which delivered it early that evening.  They added the charge to her bill, which she settles up at the end of the month.

(She found surimi in and among her shrimp in a salad and her notice of it has led to this particular store banning all surimi in all instances.  "Surimi is not shrimp."  "Yes, ma'am." The last dozen visits has been the occasion of a dozen reminders.  Truth in advertising is maintained by a 92 year old.)

Now think about that, and compare it to your doctor visit.  Do you argue with the doctors, and make them back up their diagnosis with science?  If a prescription is needed, is that information communicated to your corner pharmacy which in turns delivers it to you home, and then bills you?  And you pay up at the end of the month?

No, if you are typical, someone you don't know says things about you quickly and leaves you not sure about your condition, or at best hopeful.  Then you have to make time to stand in line somewhere to get  your prescription filled, or try to save money by going to Walmart or Costco or some place.  And here again, someone who does not know you is filling that prescription.

Her pharmacist knows her personally, and will advise her even more fully than the doctor.  Her pharmacist exists still, one of those gift-shop in the front, pills in the back shops, that were in every neighborhood in my youth, largely because they are a "compounding pharmacy."  Pharmacists are free to make any drug they want, and compounding pharmacists do so from scratch when needed.

Most doctors are getting a cut of the prescription action, one way or another, from big pharm, and most pharmacists are simply filling that prescription.  Ka-ching!  But if pressed, doctors can change the formula, and compounding pharmacists can make that up.  And do.  And 50 years ago, this was true of almost all pharmacists.

What changed is banks learned they could lend asset-less backed credit to any and all. With this credit with no rational limits, they needed to find a market for it.  Consumers!

My twenties I regularly received credit cards, loaded with credit, ready to use, unsolicited in the mail.  I believe by 1980 I had some fifty credit cards of various styles.  At the time airlines had their own internal systems, but eventually they found they could switch to United Air Lines Visa, dump their operations, and make more money brokering visa than running their own.

All of this allowed concentration of credit-extension farther and farther away form the transaction, the community, with more and more centralization of transaction, and the ability of the hegemon to peek in on who was spending what with more and more specificity.  Taxing became easier.  Match this massive data flow with computers, and the Center could more and more spot trends and predict outcomes ever further from the transaction.  FICO thrived.  Get big or get out was actualized.  Safeway for food, Gap for clothes, Ikea for furniture, CVS/romneycare for medicine, NFL for entertainment, Fox for info, Ferguson for law enforcement, 9-11 for defense, Comcast for utilities, ad nauseum. The more the centralization the further from accountability to the customer.

Two generations believe their fundamental relationship in the economy is with a bank, instead of the stores one patronizes, and your status is determined by a credit score.  You pay interest depending on your credit score.

Dave Ramsey is anti-debt, and has become a multi-millionaire out of bankruptcy preaching anti-usury, yet he has to give into his audience wanting to buy a home on credit.  So if people take his advice on the one hand and get rid of credit card debt, then they run into a problem on the other, no credit score to get a loan.  Such are called the unscorable.

One of the side effects—or side benefits—of becoming and living debt free is that you eventually fall off the FICO radar. You become one of the 64 million “unscorable” consumers who haven’t had an active credit account for at least six months and therefore can’t qualify for a mortgage with many lenders.

Distraught at losing some potential usury slaves, the bankers come up with a solution.

The unscorable group has grown large enough that it’s getting attention with Experian, Equifax and TransUnion, the three credit bureaus FICO uses to determine its scores. They have developed the VantageScore model that looks at 24 months of credit history instead of six months. It also includes rent and utility payments—even public records when they’re available.

What is happening... they are going local for the credit info...  decentralized.

In another place Ramsey notes (and even big banks will do this) a practice called a manual mortgage, in which they study your circumstances based on local experience.  he may not know this, but in banks it is called a "portfolio loan."  That is to say, the bank is keeping the risk on the books, instead of acting as a broker and passing the loan risk off to taxpayers via Fannie and Freddie (which just last week again lowered their standards to restart the housing bubble - as I said, there is no rational limit to lending asset-less backed credit) and keeping the profits, the banks can do what all banks in all instances did 40 years ago, and ran the risk and kept the profits.  Mortgage bankers knew every customer personally.  Not any more.

But to capture the growing group of independent, the usury-free, the banks must return to old practices. But personalization costs more, so will their cheap credit still be so cheap?  Will the cost of duplicating what is already known locally about a customer overwhelm the advantage of EZ cheap credit centrally provisioned?

EZ credit at inexpensive interest allows more people to consume than no-interest credit allows.  The pharmacist is not going to extend credit to someone he knows cannot pay.  There is a pitch-perfect justice in someone who is profligate has that very profligacy checked by the community in which he lives.  The community is strengthened by curbing profligacy.  Interest free credit builds communities.

With EZ credit at low interest, people tend toward eternal debt.  But also deadbeats spend prodigious amounts before they are destitute and cut off.  Their selection of goods and services are items that please deadbeats, and this market is so large, whole factories and industries grow up to serve this mal-investment.  And once cut off, why, does EZ credit stop?  Not at all, they are issued an EBT card in which credit is extended to them with no requirements whatsoever.  By failing to meet commitments at usury, they are returned to no usury loans, but there is no community to curb their profligacy.

A downward spiral.  Cheap EZ credit destroys communities.

Kentucky Fried Chicken, drug dealers and McDonalds rejoice.  The pendulum may be swinging back, since Mickey D saw a 30% cut in profits last quarter since their highly subsidized food is so nasty.  McDonalds will try to turn things around by... wait for it... tailoring their menu to local tastes.  But if they do, how do they take advantage of the EZ credit subsidized ingredients that makes their model profitable?  If they need not buy a billion pounds of reprocessed potato starch to supply the exact same french fries to all locations, and buy a 50 pound sack here, and a 50 pound sack there, how will they compete with a local burger joint whose tiny market for fresh fries is ten times the volume of any one given Micky D unit?  Micky D can't have it both ways, mass volume purchase and localized product. If the EZ cheap credit is not advantageous for what one can do with it, for size no longer delivers what enough customers want, then there is for the corporate welfare queen a downward spiral.  Just like the EBT set.  Cheap EZ credit ruins economies.

One quarter a trend does not make, but it is worth watching.

But with all these movements toward local I think the pendulum is swinging back.  People are sick of getting sick from what they eat.

So as you start a business, recall what once was: extractors fronting processors at no-interest credit, processors fronting manufacturers at no interest credit, manufacturers fronting distributors and retailers at no interest, and retailers fronting Larry Lunchbucket at no interest until the end of the month, when the bills were settled up.  Larry's $100 got passed back from the retailer, 60 to the distributor, 40 to manufacturer, 10 to processor and 5 to extractor.  No banks involved, no interest involved.  Now every step is run through the banks because their credit is EZ and the cost seems ot be cheaper than maintaining your own credit monitoring in house.

And indeed, those small businesses could not compete against EZ credit at low cost to consumer vs credit monitoring of the market at no cost to the consumer.  But, in a mere forth years, the goods and services called forth by the putative winners of this regime, corporate and private welfare, no longer match the needs.  With no real feedback loop except "cheaper" what range of goods and services narrowed over time and through malinvestment and misallocation no longer meet consumer demand to the degree that the economy is stagnant, and six years in has shown no improvement.  This is scary to those picked as winner in this regime.

And those who realize what is up look to gold as a hedge.  Very good.  In times of economic distress, gold is king, it is money that will extinguish debts, and call forth goods and services when no one will extend credit (and no one will accept currency as money, since it clearly is not money.)

But, gold and silver, as money, is a medium of exchange.  Holding on to it to get to the point where the economy is healed and businesses are again extending credit within their communities is a rational plan. But if things get to that point, you'll have bigger problems than if gold will buy things.

Instead of hedging future fears by hoarding medium of exchange, why not invest that money is a business now, in which you extend credit to your customers, the worthy ones, like the pharmacy down the street, and maybe front-run the pendulum which very well may be swinging back, and find you are not a part of the problem, but part of the solution.

Dump the banks and the EZ cheap credit, and square and etc... build a solid customer-based business, not one based on EZ cheap credit.  Be a part of the real economy, not the false economy.

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You Cannot Tax a Corporation

The talk of Buffett-financed Burger King tax evasion is desultory.  It is not possible to tax a corporation or business.

If a business is profitable, it has passed all paid taxes onto its customers.  If you buy a hershey bar, you have paid all of Herhsey's taxes.  The end-user refunds or prepays all taxes ever paid.  Nothing else is possible.

So why tax corporations at all?

1. Hide the tax from the ultimate payee.  Corporate taxes are stealth taxes that keep you from knowing you pay about 70% of what you earn in taxes.  (How do you think we "pay" for all these wars?)

2.  To disadvantage one business in favor of another, by hiding the fact you are harming one businesses customers.  Capitalism needs governments to pick winners and losers.  Tax codes reflect the decision of who proceeds and who is destroyed.  (The power to tax is the power to destroy - Chief Justice John Marshall, 1819)

For Obama to say

“I don’t care if it’s legal, it’s wrong.”

is ever so delusional, astonishing ignorance.  If it is wrong, why is it legal? (and this from the man who orders criminal invasions of other countries, and meets Tuesdays to pick who dies from a deck of cards.)   It's legal because it does not matter, but in any event, it is there on purpose.  Don't like it, change it.  That is what congress is for (although this "constitutional lawyer" seems ignorant.)

Pat Buchanan advises we lower the corporate taxes to be competitive.  Why not just eliminate the desultory taxes and show people what they really pay in taxes, since they are the ones who really pay the taxes?

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Are Corporations Legitimate?

Nick has left a new comment on your post "Answering the Two Hesitations to Business Start-up...": 

John, you said: "the corporation is not an ethical business structure"

This intrigues me, I'd like to learn why you think this... have you any posts that speak to this point?

Thanks!

Hey Nick,

The line you cite pushed its way forward while I was writing, your citation brings it to focus.  I'll start with Drucker, who wrestled with the corporation, its role and value, his entire career.  Somewhere, long ago I read where he wrote something to the effect that he questioned where the corporation got its legitimacy.  Drucker was good that way, there is an immediate obvious answer, but the more you think about it, the more you question.

The immediate answer is "the state that issued the corporation charter."  OK, where did it gets its authority to issue charters?  Well, it's constitution under the Federal system.  OK...  where did they get their power?  Ultimately it goes back to that first corporation, the US of A. And then where did it get what powers it claims?

Next, we have shifting definitions from them to now, definitions still shifting and in debate. Our idea of a corporation today would be absurd a century ago, and two centuries a corporation was merely a definition of a project.  People formed a corporation to collect money to build a bridge, it was naturally a toll bridge, the purpose of which was to attract traffic over an easier route, good for everyone.  These were hardly thought of as "persons" in the law.  But that is where we are today.  Today as a practical matter, with no particular limits as to purpose (see Bush family Zapata corp) corporations are the vehicle for privatizing profits and socializing costs.  If you want to trace this in the history of the usa, I recommend Morton Horwitz'  The Transformation of American Law, 1780-1860 (Studies in Legal History)



Finally, there is a business organization option that is legitimate, and every bit as useful as the corporation in achieving goals, the co-operative.  The have all of the capabilities of a corporation, but a co-op gets its legitimacy from its customers, not the state.  it is formed by people for a particular purpose, and cannot much stray.  Its losses are on its members (who are necessarily its customers) and its gains are automatically dispersed to the customer/owners. There are no classes of stock (there is no stock), so now referential treatment among members.  Now that sounds somewhat analogous to the corporation, but in a case of wrongdoing, a co-op is not served papers (it is not a corporation) the individual doing the wrongdoing is served, or all of the members.  (Co-ops do insure heavily).   With a co-op the malfeasant cannot escape responsibility, with a corporation it is pretty much assured miscreant will escape.

If the USA is a legitimate form of government, it is because it is "from the people, by the people for the people."  A co-op is exactly the same with a much smaller focus.  The USA makes claims as to its powers that are debatable, but a co-op has no need or interest in debatable claims.

And for what it is worth, co-ops tend to pay taxes, and corporations not.  Having to pay taxes, and be responsible to the community, or be tax free and not responsible, which would you choose?

The corporation as a business entity fails in practice and applicability.  It's the wrong tool for the job, and it provides for unfortunate ends.  If you need to get big, do so by customers acclaim, not because as a corporation you can issue enough debt to buy off a supreme court and transfer private property from its rightful owners to your private ends, or any one of countless other unfortunate uses of the corporation.

The solution is to deny the state its assumed power to charter corporations.

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Mish Gets Libertarian Advice Wrong

Of course I am no libertarian, but Mish entertained a question as to whether a "Trust Fund Baby", an adult whose family is supported by a trust fund and therefore no one works, prefers to spend time together (I wonder what that is like, spending all your time together), a libertarian, who finds under Romney/Obamacare he is legally entitled to $600 in welfare payments.

Two points jump out:

1. Two teens still at home.

2. "The trust fund makes the money, not him."

Mish turns to a mentor, Pater Tenebrarum (Father Darkness?) who in turn cites Ayn Rand.  Eeeew! And the advice is in essence, take the money and run.  You paid in, so take out what you can get.

It's not that simple.  People and corporations ought pay in as little as possible, do everything within the law, like Boeing and Apple and Google, to pay no taxes whatsoever, because there are no instances when taxes are used to do good.  In every instance taxes go malinvestment which in turn distorts the market and leads to the terrible uneven distribution we see daily.

On the other hand it is foolish to run afoul of the tax laws, however wrong, even Jesus paid his taxes, although he performed a miracle to do so.  The lesson is if you pay taxes, it is another example of a miracle.

So to navigate whether to take government money, we first need to understand only end-users, consumers, pay taxes.  Business cannot pay taxes.  When you buy a Hershey chocolate bar, you have paid all of Hershey's taxes (as well as all of their expenses).  All costs including taxes are paid by end users.  (If a company goes bankrupt, the taxes it paid borne by the end-users, the receivers of the bankrupt firm).  In this case paying as little as possible becomes a competitive advantage, you lose unless you play.    All of this talk of "business paying their fair share" is pointless drivel.

The point is to wherever you find yourself in the flow of funds, you leverage it to the good. Let's look at some examples.

Now, taxing government payrolls is too a pointless exercise (why not just pay them net?) until we come to the business tax laws.  Your average federal paycheck is about $80k, and taxes may be about $20K, so $60K net say.  In that case that funny money $20k could be pre-tax dollars to invest.... instead of giving it to Uncle Sam in taxes, use $20K to start a business, and reduce your income to the Same $60k take-home anyway.  Of course your taxes are now based on $60K, not $80K, so maybe now you have $13K in taxes, but you make have built untaxed equity in a business in excess of the $13K in taxes.  Consult a CPA about where that sweet spot is for you ($80k is average, half make above that, so $200K is nothing special for mid-level ministers of funny walks, etc.)

Of particular interest to me is the "marketing dollars" the Feds distribute to businesses looking to build export markets.  Now this is money taken in taxes and then given back to businesses that are building markets worldwide.  Here is the problem in this instance:

1. It is directed to a very specific activity - essentially advertising.

2. It is putatively for all USA business but as a practical matter designed only for large USA business.

So here is the deal, if you do not use the money, it will be used by big business.  You can only use the money on market-building.  Here is the problem, as a practical matter it can only be used by big business, but  I F ,   if, you know how the game is played, you can work the program to where legally you can take advantage of it.  In this instance, you are building your business and starving evil big business of the limited funds.  But it is like Odysseus sailing past the Sirens, you have to be strapped to the mast during a certain phase or the programs will drive you mad and your business will crash.  One reason I teach is to show people how to get this money, and most importantly, when, and how to leverage it properly.

There are programs that are just hoaxes, like Foreign Trade Zones which get you nothing except paperwork, and payroll work subsidies that get you headaches.  yes some programs you ought to just steer clear of.

But now to the Trust Fund Baby.  We are all trust fund babies, we fly in planes in an industry that has never turned a profit since the Wright Brothers got that bicycle to launch.  A classic example of socializing costs and privatizing "profits" the airline industry is an example of convention, not markets.  Not to pick on the airline industry, just one example of countless instances of which we are "heirs" to investments we do not paid for, we did not earn.  Indeed, USA borrows half of what it spends, so we are all welfare queens as well.

Mish takes Father Darkness's lead in pointing out all taxation is theft, so any and all restitution is acceptable.  Take the money and run.  Fair enough analysis. Except...  we are all also thieves.  So grab from the booty and run?  The USA economy, and imperial economy depends on our ability to terrorize others who cannot be bribed into paying us tribute.  That is imperialism.  We cannot get away from the reality is little girls are set on fire overseas so we can have free junk here.  We call it collateral damage, or "the price we pay" but it is not rare, Madeleine Albright said expressly a half million dead Iraqi children is worth it.  (Razia did not die after being set on fire by USA troops.)  We invaded their countries on a false pretense, but with the express goal of having them pay for their occupation and our hegemony.  This hegemony is the basis for Chinese loans to us, that we can credible repay from imperialism what we borrow form the Chinese so we can have pointless junk that crowds out a more authentic life.  We are all as guilty as hell of that, and there is probably not less than 100, not 50, not ten here who are not guilty.

So as I pointed out above, the salient points are trust fund, no work, two teens...  free "money."  Well, the trust fund is a state creation to achieve a stable cadre of regime-adherents.  The fund is strictly limited as to in what it can invest.  One gets trapped into a pas-de-deux with the regime.  Next, managing assets would be work in its own right, but here again, expressly forbidden by the regime rules.  So the funds in the trust are as solid as the state (in fact support the regime goals) and at the same time deny us the good of the beneficiary being obliged to come out and compete with the rest of us.  The kids of these adults will never know from example of what it is to struggle and produce. The Trust Fund is an evil government entity.

So the $600 a month in welfare payment to an independently wealthy family is indeed odd.  The money comes from imperial oppression, if not taken it will likely end up in the war profiteers accounts, so what to do?

We are all trust fund babies in some sense and we will all be "getting" social security at some point. Social Security is a welfare payment to a trust fund baby when you get it, so we are all faced with the fellow to which Mish refers.

So what to do?  For my part, I have decided I will take the money, but not "run" with it.  Since these payments all rely on USA imperialism, I've targeted the funds to a group that removes UXO around the world, particularly Vietnam.

I tried to find a charity that does this, but charities (NGOs) are government chartered entities that usually end up doing far more damage than good (see "Africa").  Eventually I found a private company that can sally forth with $10,000 to remove mines, ex-minelayers who repent of their evil.  This is serious work, not for starlets and princesses, fronting NGOs, who more often simply, as Father Darkness advises, take the money and run.  So my social security checks will go to the UXO removal company, which actually removes UXO, by people who are healed by removing UXO.  I rather dig ditches for rice and beans in Mexico than accept USA welfare.  (I am assuming the ditches are not far from the ocean, and there is beer with the rice and beans.)

What is left is working at building what is good, directing what targeted funds are around you to good rather than let it go to bad, and direct "untargeted funds" to the people upon whom we've imposed for the provision of the money in the first place (say, Laotian farmers.)  Then you are closer to the free market, and are closer to surviving come what may.

And also, along these lines, it pleases me to no end to see the poor using their EBT cards in the most upscale grocery stores, buying the finest free range meats and organic produce.  the last thing they should be buying is Cheetos and Coke, and in so buying upscale they support the small farms in their effort to recover farming in USA.  Smile encouragingly when you see the mom with the screaming kid stocking up on pate and paying with her EBT card.  Offer to carry out her bags (not to worry, the store has plenty of help for that.)

The bottom line is entrepreneurs never take risks. Whatever your circumstances, work with it.  There are no times in history when things were just right.  Previous generations left us work for us to do.  We've got to get out of imperialism, and each of us can work in a relatively free market, by our practices.

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Crimea: Tax Holiday for BIG Investors

Arrrggghhh... after liberating the Crimea from the Ukrainian welfare-queen policies and crony capitalism, the Russians are affirming the Hong Kong style "One country, two systems" independence of the Crimean SEZ.  Of course the first thing any state should do is reduce, if not eleiminate, taxes and so the Russians are doing so.

But only for "big investors."

Talking to the Government meeting on Monday Medvedev said Crimea couThe Crimean SEZ will be similar to the SEZ in the Kaliningrad region, says Izvestia referring to a government official. "As well as in the case of Kaliningrad, it is required to adopt a separate law which will allow giving tax privileges to all large investors, ready to put money into the region".

Arrrggghhh...  this is crony capitalism, not free markets.  In essence this is a Russian version of "get big or get out" because necessarily only SMEs will be paying taxes.  Too bad.  Vlad, step in here, you know what needs to be done, you did it for Russia.  Knock most all the taxes out... Go Full Hong Kong. We were all having so much fun.  Les bon temps, sont finis.

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Harry Reid Says Taxes are Voluntary

And are for, in effect, chumps:


Left and right wingers go crazy, because they want free $#!+ (at other's expense) and make  a religion of paying taxes so they can have more free $#!+.

Look at minute 2:05 minutes, Reid is clear we have rules with which you may comply and owe no taxes, so paying is voluntary.  He makes clear employees get nailed, but Reid is getting spoken over so you have to listen closely to hear what he is saying.

We are told when Jesus said -

Matthew 22 KJV
21 Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.

Left and right wingers agree this means you should pay taxes.

John 8 KJV
He that is without sin among you, let him first cast a stone at her.

OK, then does this mean stone the woman?

Yes, I work (or my CPA does, who can understand the code?) my self-employment to take all tax breaks, but I do pay taxes, and eschew cheating.  I don't think people who cheat on their taxes can complain about taxes.  If you cheat on the taxes, then they are not a problem, are they?

I pay taxes.  I object.  Like that.

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Free Ty Warner

I cite Ty Warner in my book, an exceptionally good man, with the skill of turning a fad into a mania, a man who was probably the first small business billionaire.

He had so much money coming in that he was buying such properties as the Four Seasons resort in New York City, with cash.  He placed $100 million or so, in one of very many placements with the UBS Swiss bank which decided to finger customers secretly to save their own skins.

Here is the problem.  Once you plead "guilty" as a tactical matter, and then the feds shift the game, if you go back and change your plea, given the new rules, it looks very bad, and the powers that be make an extraordinary example of you.  This is a complex but common example of the lawlessness we live under.

Warner tried to set the situation right, no doubt calculating that no matter how bad the fines, since he normally gives it away anyway, and he's paid over a billion in taxes anyway, what's a hundre millions in back taxes and fines more?

They want to imprison him.  And here is some more info...  He deserves a pass....

Richard Pryor got into tax problems too...  listen to the 3rd or so bit...  (NB: waterfront saltiness)

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The Problem With Tax Evasion

I have no sympathy for anyone who claims unpaid taxes are some sort of theft from the people, and I would argue for clemency to anyone caught evading taxes.  I don't believe for a second that paying taxes in any way helps anyone or anything.

I am familiar with St Paul's elucidation on this point:

Romans 13:5-7:
• Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor. (NIV)

My objection to the applicability to this is first, we have a republic that has degenerated into a democracy, which is not a legitimate form of government.  And in any case, there is no connection between the tax laws written and our democratic vote.  We vote for peace and get war, we vote for no bailouts and get them anyway, we say no to stadiums but we get them anyway.  The passage above relates to polities ordained by God.  And the only form of government ordained, after great argument, is a kingdom (1 Samuel 8), leaving off the better anarchy.  And the USA is not a kingdom (whereas the Roman Empire was, as was Judea under Herod.)  There is no basis to offer honor, revenue, taxes, respect, etc...   more on that in a second...

But I do try to pay, at outrageous expense, with my tax "obligations" in general, although I am not above putting off a big ticket purchase now if I am going to be in Oregon soon, to save say the $100 in Washington taxes on a purchase in this state.  I cannot remember the last time I've done that (was it the chair?) and the last time I plotted to do this, sometime in October, none of the stores had what I was looking for so I wasted my time.  So I am not nuts about compliance, but probably more compliant than most, for a particular reason.

Also, part of the expense necessary to pay taxes I also take every exemption I can.  Fair is fair.

If I do not pay my taxes, I can hardly complain about them.  It is disingenuous to not pay taxes and claim they are a problem.  If you do not have cholera, cholera is not a problem for you, you cannot claim how hard cholera makes your life.  So to retain my right to complain, I pay the taxes.

Next, by paying the taxes I can say with immediate experience they are outrageous, counterproductive, and unfair.  Further I can demonstrate how they (along with the estate tax) destroy small business.  There is an 800 pound gorilla in the room, and that is how many small businesses cheat on their taxes, and must, to remain competitive against the large businesses that are exempt from taxes, compliments of the progressives who hate small business and fall over each other to outdo billion-dollar tax cuts to one company, Boeing.

Greece, Spain and Italy, and now France, are in trouble because they are just farther along the path.  With a $15 minimum wage plus Romney/Obamacare we'll get there sooner.  Youth unemployment, dying industries, collectivization, we are all going Soviet.  And ultimately, war is the health of the state.

What I advise.  Pay your taxes and go out of business.  Show them.  Of course, there is no safety net for the self-employed, but don't be afraid of the unseen.  You'll have a new perspective, and one that may be brilliant.

I am moved to say this for a particular reason.  I've been talking about the passage in the Bible where even Jesus paid his taxes, when there was zero basis for Him to do so, exactly where we find ourselves in USA today.  He confounded his abusers by asking whose image was on the coin by which taxes are paid, without answering the question. But finally, when it came to another tax, Jesus paid it, after some discussion.  But he performed a miracle to pay it, and while he was at it, covered Peter's tax too.  Why not, if you are going to perform a miracle anyway?  So my meme has been paying your taxes is a miracle anyway, so pay them.

Now a strange thing happened in the last few months.  I had a rather burdensome tax bill, for my sins, on one of those chaotic points built into the tax code that cannot be anticipated.  Nothing new there. The tax code is like a sniper, no one knows who is going to get picked off.  I set up a payment plan to ease the cash flow issues, but chafed at the interest applied, since I am trying to operate usury-free as well.  (Now that is an adventure!)  And let me say, I realize that all of this may very well make people glad they are not self-employed (or better described: customer-employed.)

So what happened?  One day the money was not withdrawn from my account.  This was around the "govt shutdown" so I just figured more weirdness.  But then another month passed, so I inquired, and was told the debt had been paid.  How?  "Could not tell you if I knew." came the answer.  So I asked for and received confirmation that the tax bill is paid (not forgiven or purged or erroneously discharged) but paid.  And I cannot find out why, only that it is.

A miracle?  No doubt there is a profane explanation, but from my point of view, a miracle.  Pay your taxes, even to an illegitimate government.  You can then complain.  You can speak your mind.  And who knows?  There may be a miracle.

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Taxes Are Punishment for Being Greedy

If you are self employed, you have gross income of X, you have expenses of Y and the net is Z.  Z is what you are taxed upon...

Being self-employed, you want as little Z as you possibly can...being self employed, you want to earn, net, as little as possible...

How come? Because what you do helps other people, and the more you invest in helping other people, the less net you earn, and the less taxes you pay.

What you do not spend in business gets taxed...at what 30%?

What you spend, and is therefore taken from the net profit, and is not taxed, gets spread around to other businesses, which helps them also.

And given your product relates to your life, all you can legitimately spend money which is a business expense necessarily also promotes your own lifestyle.

If you net near zero, by spending all of the income on things to support your lifestyle, then the business is most efficient... you are doing the most good you possibly can.

The measure you have a net profit is the measure you are declining to help others, the measure you are greedy.

Taxes are your punishment for being too greedy to spread your net income around...  the crony capitalists pay no taxes anyway, so they will not object when the communists in the USCongress raise the taxes to 90% on business, to curb the greed.

So the right thing is to net near zero and keep building up your expertise.  If not, the communists in the USA government will see to it anyway, or at least spend on themselves what you will not spend building up yourself.

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Internet Tax - Market Fairness Act

A retired police officer and friend of mine talked about the good old days when the decision to handcuff anyone was up to the officer dealing with the situation.  Problem was, white folk were rarely handcuffed, black folk were usually handcuffed.  That was unfair.

So new rules, now everyone gets handcuffed.  There.  Better.

Today we have some states require sales taxes on internet sales, some do not.  So Amazon.com, only to avoid the constant lawsuits from States over taxes, is calling for something Congress is calling Marketplace Fairness Act which of course is a misleading title.  An act has winners and losers, the only question is who wins and who loses.

In this one, small businesses and some consumers lose because the cost of collecting the taxes and comparison shopping will combine to end an advantage, and run people out of business.

For my part I have no real dog in this fight, for small businesses who compete on design have no fear from taxes or amazon, but in principal, whenever we extend a bad idea that vexes some to everyone, the results just make things worse.

Instead of handcuffing everyone, who about we stop picking on blacks?  Instead of taxing everyone, we make all internet sales tax-exempt?  More taxes in the hands of the State just means more of the problems the states foist upon us.

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Where Pat Buchanan Goes Right

Pat Buchanan has a great article on economic reform, which makes great sense if you believe in the State.  (I don't, but this would be far better than we have.  I do believe in improvement.)  In essence get rid of corporate taxes.

First, every U.S. corporation that had moved abroad in search of lower taxes in recent years would start thinking about coming home and bringing its production and its jobs back to America.Second, that $2 trillion in income U.S. companies have stashed abroad would come roaring back into U.S. institutions.Third, foreign companies would begin to relocate and produce here in America, both to get around the tariff and pay no taxes.Fourth, U.S. producers would see sales soar inside the $17 trillion U.S. market, at the expense of foreigners who would pay a 10-percent admission fee to get into this market, a fraction of what they used to pay in the 19th century.

Read his whole article here...

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Apple And Taxes - Here We Go Again

Corporations cannot pay taxes.  Only end users can pay taxes.  When you buy an Apple product, you pay all of Apple's taxes.

A report released ahead of Apple CEO Tim Cook’s inaugural Capitol Hill appearance Tuesday alleges the tech giant took advantage of numerous U.S. tax loopholes and avoided U.S. taxes on $44 billion in offshore, taxable income between 2009 and 2012 — a characterization Apple flatly rejects.

Apple follows the law on what taxes it does pay.  If Apple was obliged to pay more taxes, you would simply fork over more money to Apple who would fork it over to Uncle sam.

The congress that wrote the rules to get companies like Apple to behave the way they do now wants to punish Apple for behaving along the lines indicated by the tax code.

It has begun.  If you have a paycheck, a pension or property (such as a company) you are screwed in USA for at least the next thirty years.

Better get self-employed.

Update: While congress investigates Obama for selectivity abuse by the IRS, the Senate is grilling the Apple CEO for Apple not paying enough taxes, while GE also pays no taxes, under the same laws and the GE CEO (and Obama adviser) gets a pass.


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Democrats Don't Pay Taxes

Mish has a delightful graph done on who at what income levels pay taxes.  I wanna know who earns over $100,000 and pays no taxes.  If is funny, if tendentious, for the creators of this graph to use blue (democrat) to denote those who do not pay taxes, and red (republican) to denote those who do.

Of course since the Republicans are all about war, it is only just that democrats don't have to pay.  On the other hand, the democrats do not object to war because they get farm subsidies and welfare payments for their constituents, so they lay low.

So, the next time you cash a welfare check (or now, use your EBT) thank a Republican.



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Taxes: Google No, Users Yes

While the rest of us are coming to grips with the horrors of the suspicious bombings in Boston, the politicians are business pushing through things they cannot otherwise: gun seizure, more spying more taxes.

Taxing the internet, the last free market in USA, has long been a goal, and we're getting there.

In the meantime, the "Google pays not taxes" flash is playing out, this time in the UK.

But in an interview with the BBC, Mr Schmidt defended his company’s practice, suggesting that its contribution to the UK economy was more important than the tax it paid to the Exchequer. “We are investing heavily in Britain,” he said. “We power literally billions of pounds of start-ups through advertising networks and so forth, and we’re a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country. So from our perspective, I think, you have to look at it in a totality.

Again, corporations cannot pay taxes.  Only end users, consumers, who buy something ar ethe ones who cover all previous axes.  Until the end user consumes the item, all taxes are inputs toward the final price the end user pays.

This is one reason used goods cost so much less.  The taxes have been paid, by the poor schmuck who paid retail.

Taxes can be used to kill a company, but it is impossible to tax business, unless the business, having paid the taxes, goes under.  In that case, the dead business acted like the end-user.

The question is, what do we get for our taxes?

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Starbucks, Taxes and Scruples.

A politician has accused a business of lacking moral scruples.  As a friend recommends, savor.

Foreign companies like Starbucks and Amazon which have avoided paying large corporation tax bills in Britain lack "moral scruples", David Cameron has said.

OK... first problem, a business cannot have moral scruples, only people can.  So, as is often the case, we have a problem of categories and definitions.  But let's proceed, the people at Starbucks legally pay all of their taxes.  Anything less in tax receipts than what a politician would like to have to spend is not the result of a lack of moral scruples.  It is that the politicians have not written enough rules to mulct more.  This they can do if they like, and they do.  For example, after pretending there was a danger over something termed the fiscal cliff, and pretending to play chicken over the reich paying more, the result is in USA those making $30,000 pay a greater per cent than those paying $500,000.

The politicians have ruined their economies, and now want more money to bail out their friends.

“That is that’s not right, and so we are looking at it. I’m chairing the G8 this year so I’m going to be getting the Americans and the French and the Germans and the Italians and the Japanese all to look at this together at how can we try and stop unfair tax farming practices?

Look at that list.  It is a list of the losers of the next war, if they agree.  Creativity and progress will move to where the taxes are lower and freedom is greater.  The dark clouds of socialism have blow off the Asian continent and are now over Western Europe and the United States, and the state buys another 200,000 war-prohibited rounds.  Russia and China will invite our best and brightest.  In the 1960s the term "brain drain" referring to talent escaping socialist Britain to the comparatively superior USA.  It will happen again.

It is all madness, but if you subscribe to the false dilemma presented in elections, then you are stuck.  Self-employment is the the best way to maintain a semblance of humanity.

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How 91% Tax Will Crush the Dope Trade

I always wondered how various friends, productive members of society who merely self-medicate since we have such a brutal medical regime in the USA, can be using dope for over 40 years and never they nor their dealers ever get busted.  Well, it is a well oiled system.  They use marijuana and cocaine, whereas what is sent into the ghetto is criminalized.

A deep undercover narc explained it to me. All that dope money has to be laundered to be used.  The welfare checks go out, the crack flows in, the two are exchanged, and the shadowing forces come up with fantastic sums.  Now, it has to be laundered to be used.  If you want to transfer a million bucks somewhere to use it, you have to show you earned it.

So you have a chain of pizza joints that take in $2500 a month, or whatever.  You declare $50,000 per month, the difference being the dope receipts. You depoist the dope money in your local bank account. You pay about 30% in taxes, or $15,000.  Now, you have $35,000 a month with which you can do whatever you like.  Plus, you've paid protection money to the government and you will NEVER be busted.

As an aside, people who argue if we legalize dope we can tax it are delusional on two fronts.

1. It is already taxed, if anything the tax revenue will go down, as dope is put in food (medibles) which is not taxed in our state, and of course prescriptions (medical marijuana) is not taxed.  So you see why the state people do not want marijuana liberalization?  It will kill a huge tax base.

2. Genocide is still in play in USA. When Lincoln's "back to Africa" plan did not work out, progressives have been angling to liquidate the population with some African heritage ever since.  Crack to the Ghetto is the American "slo-cooking" way.  The reason I don't like this policy is we are denied the good of the competition from these targeted groups. I disagree with Darwin on the desirability of their extermination.  If for no other reason, as a Celt, it was less than 100 years ago the progressives were saying the same things about us.  Celts are tolerated only because we'll fight the progressives' wars for them.

So as mentioned earlier, if the fed tax rate goes to 91%, small businesses, legitimate ones, will simple spend the money inside the business on the owner and his family, before taxes.

Drug dealers will have a heck of a time trying to spend $35,000 per month within the confines of what is a legitimate expense in a pizza parlor.  It takes time to spend, and more time to spend legitimately when your money is hot.

The very best plan is freedom, deregulate, unregulate anything, something, everything.  None of that will happen because all peoples clamor to be oppressed, as first noticed in 1 Samuel 8 (and emphasized in 1 Samuel 12.)

So what is the next best thing for economic recovery.  Give 'em what they want, good and hard.  91% on top incomes, and good and hard down the line.  Who gets nailed?  Money launderers and anyone who takes home a paycheck, like corporate raiders.  Of course, the taxes will go up on the small guys too, employees (and services decrease), but then such oppression is what they clamor for when they turn in a job application.

Yes, 91%, plus unregulate medicine.  China will never know what hit them in terms of economic competition.

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Business Start Up & Write Offs

Following up on an earlier post, here is an article that might help people understand that the tax laws are written to encourage business start up.

Doug Stives, a CPA from Red Bank, N.J., went skiing in Utah.

"I always dreamed of coming here for peak conditions," he said in mid-March between runs at Snowbasin Resort.

The trip is among the many perks that have accrued from his decision, in 2006, to become, in effect, The Most Tax-Efficient Man in America. The experiment has led to a new career, frequent travel and obsessive documentation of expenses, such as a $6 hot dog he recently bought in the Philadelphia airport.

Mr. Stives says he is careful to observe IRS rules. He has a contract for each speaking gig, and keeps one for his wife's arrangement, too. He uses one credit card for business expenses, making sure it provides a year-end summary by category.

You see, Google has massive business expense, your business small expenses.  Whereas Google expenses relate to electricity payments and payroll, your small business has expenses such as your travel, meals, books, research, museum visits, etc.  You personally spend the time and money doing what you love, therefore you need less money as a paycheck.

Here is Sen. Reid explaining that payment of Federal taxes is voluntary, and most for employees.  

Ignore the obtuse interrogator and just focus on what Sen. Reid says.


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Apple Overpays Taxes Again

it is not possible to tax a corporation.  Ultimately, only consumers are taxed, for it is the ultimate consumer who covers the cost of all taxes all along the supply chain.  If the taxes levied happen to destroy any business anywhere along that chain, then the creditors to that failed company become the ultimate consumers, and the creditors in essence "pay the taxes."

So when Apple pays 1.9% in taxes, it is 1.9% too much, even more, because the cost of setting up the money laundering/tax avoidance regime is a heavy cost too.  When you buy a Apple product, you've paid all of Apple's taxes.  When you buy a Hershey chocolate bar, you've paid all of Hershey's taxes.

We can stop this nonsense, and the massive job-shifting avoidance work, if we were to 1. cut the size of government and taxes close to nil, or 2. get rid of taxes completely.

The problem is not so much the taxes, as it is what taxes buy.  There is the real problem.  Eliminate all business taxes.

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