As the deadline for filing yearly income
taxes is rapidly approaching, businesses especially hard pressed to make a profit in a depressed economy struggle with their
tax compliance. Reporting legitimate deductions and costs is the easy part. When you are losing money, disclosing a diminished
income stream based upon lower margins, is not a difficult decision. Nevertheless, small enterprises burdened with government
regulation costs and tax obligations, often are unable to conduct business and retain a net return. Self-proprietorships frequently
are so scared that many look to the cash underground economy to hide income earnings.
commerce, practiced throughout the world, is the real economy. Actually, in the United States, tax compliance is quite high
by comparison. With the acceptance of instruments of credit, the banking system has become more of a tax reporting service
than a financier of a healthy economy. The taxman would have you believe that voluntary transactions in cash constitute a
black market in illegal dealing. Casting the dispersion of seedy activities upon the motivation to subsist is a common practice
of governmental revenue agents.
Building upon this attitude, a deceptive title to a USA report,
$2 trillion underground economy aids recovery, would have you think constructive criticism returned to the mainstream press. Sorry to disappoint, you can
always count on the Gannett media to be a government mouthpiece.
"Shadow economies are usually
associated with illegal activity, such as drug dealing. But anecdotal evidence indicates that off-the-books work in today's
job market includes personal and domestic workers, such as housekeepers and nannies.
running out of patience when it comes to finding a job and losing income," Gonzalez said. "So it's not that surprising
to have workers take jobs that are in the shadow economy. But it's a sign of how bad things are and how we have to get the
real economy moving again."
Yep, blame the poor starving worker for accepting
payment under the table by a greedy company owner who wants to beat down labor. What such ridiculous viewpoints lack is that
the REAL ECONOMY is based upon main street enterprises for actual job creation. When state requirements become so burdensome
that fundamental survival of a business becomes impossible by the tax demands, mere existence as a commercial entity becomes
untenable for the entire economic structure.
Little is left of the free enterprise system. When
a society imposes tax obligations and government regulations on garage sales upon property that the state has already collected their sales tax, the message is clear. You really own only
a partial share of your items in partnership with the government.
Several issues are involved
with the "business" of holding a garage sale:
- Income taxes on the profits
from the sale,
- Sales taxes on the cost of the items sold, and
permits and licenses.
you say, as rightly you should. However, the entire basis of acceptable claims upon the wealth of individuals must be re-examined.
Now we all know that the courts have ruled that a government can virtually tax any transaction. Yet, by this tortured logic,
the natural rights of an individual are violated by such an unrestricted decree.
Terry Miller and Anthony B. Kim write in Defining Economic Freedom.
is the condition in which individuals can act with maximum autonomy and minimum obstruction in the pursuit of their economic
livelihood and greater prosperity. Any discussion of economic freedom has at its heart reflection on the critical relationship
between individuals and the government."
Hayek once observed, "To be controlled in our economic pursuits means to be controlled in everything." (From - The
Road to Serfdom)
By any reasonable standard,
the real economy must be based upon voluntary transactions. Government extortion practitioners design the imposed partnership
split, which is reported as the Gross Domestic Product economy. Tax collection is the habitual occupation of government. When
tax penalties, onerously inflicted upon individuals for merely conducting business escalate, the natural result is that the
engine of commerce slows.
John Locke "defends private property not for the sake of the rich and against the poor, but "against possible
unconstrained encroachment by the state". Thus, Locke's views on property play a role in his argument for limited political
authority." Since the natural law underpins the relationship of the individual with government, it becomes imperative
that taxation reflects the inherent ownership rights of the property holder.
Therefore, when a purchase, made in the marketplace with a tax assessed upon the cost paid, it is not
proper that the state should compel any additional claim on the value of the same item, if it is sold to another party in
The underground economy distinctly accepts this
standard. However, government is not satisfied unless each future transfer reaps additional taxes. Just ask a buyer of a used
car. How many times does a sale tax need to be extracted after the initial payment?
Adopting the elimination of sale taxes for a consumption tax on a county and state level needs to become the correct approach. IRS bean counters would cry for a national
VAT tax, like that in place in the EU, but that punitive burden would only benefit the growth in the Federal Government.
As for taxing labor by designating toil as income,
is even more preposterous. The progressive cultists want a taxing code that penalizes industrial initiative, while entrapping
and rewarding a social welfare culture.
Corporatist businesses use every trick and loophole to evade paying taxes. Yet this segment of the economy, characterized
as legitimate business, processes withholding tax for their employees. For every company that manages the income tax theft
racket, there are scores of underground business activities that enhance productive growth in a stagnant economy.
Greece, Italy, Portugal, Spain, Germany and France know well that the shadow
economy is the real economy under socialism. As America descends deeper into the same abyss, more people will respond with
creative and bold methods of doing tangible business.
Hall – April 2, 2014