Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Underground Shadow Commerce is the Real Economy

Politics / Social Issues Apr 02, 2014 - 12:28 PM GMT

By: BATR

Politics

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.


This shadow 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.

People are 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
    • Local permits and licenses
    Trivia 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.

"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."

As Friedrich 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 future.

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.

James Hall – April 2, 2014

Source: http://www.batr.org/negotium/040214.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2014 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in