Things got a little wilder than usual at the Tax Day demonstration in Rochester, New York:

On the evening of , three activists were handing out literature and holding signs protesting war spending in front of the IRS building on East Ave. in Downtown Rochester. One of the demonstrators climbed a tree and held a sign that read “Cut War Spending.”

Photo by T. Forsyth

…the first two officers to arrive at the scene threatened to taser Emily from the tree and place her under mental health arrest if she didn’t comply with their orders to get down. Shortly thereafter, they called in six other police cars and two firetrucks to the scene. Three police officers used a firetruck ladder to get to Emily in the tree. One officer pepper sprayed her in the eyes at point blank range and forcefully removed her from the tree.

Before the Emily was removed and arrested, Mary, who was holding an anti-war tax sign under the tree that Emily was sitting in, was arrested for trespassing. Ben and Jake were arrested after chanting, behind police lines, “No Justice, No Peace! Fuck the Police!” Ted was arrested after asking the officers what the charges were against Ben and Jake.

Later that night, Ben and Ted were released on bail. Emily and Mary refused to be bailed out. Jake wasn’t released because police claimed that his photo ID had expired. The next morning, after the arraignment, it was discovered that his ID was in fact valid and that it was to expire in three months.

The following day, all five were arraigned in Judge John E. Elliott’s court. Emily was charged with resisting arrest and trespassing. Mary was charged with trespassing. Ben, Jake, and Ted were charged with disorderly conduct: obscene language/GES.

According to the lawyer who represented three of the five in court today, the section of the disorderly conduct statute that deals with obscenity was already found unconstitutional by the appeals court. The five are scheduled to go back to court at .

There’s some video footage of the protest arrests on-line. Looks like things went pretty much as described above. They really did arrest those kids for yelling “fuck the police.” They even have footage of a police spokesperson explaining afterwards to the upset protesters and independent journalists that of course you can be arrested for yelling profanities in public.

He claimed that the validity of such arrests are settled law, upheld by the courts, which I believe is untrue: the U.S. Supreme Court has struck down convictions of people for cursing police officers or for wearing clothing with slogans like “fuck the draft” in public places on First Amendment grounds.

Bottom line, though: “My officers do not have to tolerate being treated like that,” he says.

I see this sort of split perception of police officers a lot in the angry radical set: On the one hand, rhetorically they see the police as a bunch of lawless fascist thugs brutally enforcing the whims of the ruling classes and trampling on the rights of good folk. On the other hand, they act alarmed and surprised when the same police officers don’t leave them alone to smash the state at their leisure or when they disrespect the Bill of Rights in so doing.


Tax law professor James Maule takes a first look at the possible tax consequences of alternative currency plans. These alternative currencies seem to be experiencing a renaissance these days, but there is a lot of ambiguity in how alternative currencies are treated in the tax law:

The consequences of the use of [an alternative currency called] Equal Dollars should be easy to determine, but there is no explicit authority answering the question.

Years ago, in Rev. Rul. 79-24, 1979-1 C.B. 60, the IRS concluded that gross income includes the value of property or services received in exchange for other property or services. About a year later, in Rev. Rul. 80-52, 1980-1 C.B. 100, the IRS concluded that the same result was reached even if the bartering was not direct but implemented by an organization crediting its members with trading units. Several years later, in Rev. Rul. 83-163, 1983-2 C.B. 26, the IRS concluded that members of a barter club must report gross income when they receive services through a barter exchange. The organizations operating these barter exchanges are required to comply with the barter exchange reporting requirements.

The IRS has also concluded that organizations that provide a venue for individuals to exchange services on an informal, noncommercial basis and that do not give the participants any rights or impose any obligations with respect to the exchange are not barter exchanges subject to the reporting requirements. Thus, in private letter rulings, the IRS has concluded that nonprofit organizations issuing “Time Dollars” or similar credits for services provided by individuals to other individuals are not barter exchanges subject to the barter reporting requirements, chiefly because in the instances it reviewed, there was no guarantee that the recipient could get anything for the “Time Dollars” issued to the person.

The IRS has specifically declined to answer the question of whether the participants in the program have gross income. Turning to the statute, unless an exclusion can apply, the recipients of the Equal Dollars have gross income because when they receive those dollars they receive something that has value, that can be used to acquire property or services of comparable value, and that are theirs to use unfettered by any restrictions or limitations.

When one works through a list of possible exclusions, it’s unreasonable to conclude that the Equal Dollars are received as a gift. A person who bargains to receive half of her salary in Equal Dollars isn’t the recipient of a gift. Filling employee accounts with amounts that the employees can use to acquire goods or services isn’t the making of a gift because transfers by employers to or on behalf of employees by statutory definition cannot be gifts.

It’s very difficult to conclude that the receipt of Equal Dollars represent imputed income, which the IRS as a matter of administrative practice declines to tax and which some theorists claim isn’t income in the first place, because imputed income situations involve people doing work for themselves, such as mowing their own lawn or cooking their own meals.

Consider, for example, the $700 of Equal Dollars received by the organization’s CEO. How is that any different from receiving a gift certificate for $700 worth of services of products at a retail establishment? It isn’t. Professor Deborah Geier has reached the same conclusion, in “When Helping Hands Have to Pay Taxes,” an article [a letter to the editor, really — ♇] published on page A24 of the edition of the New York Times.

As for the compliance questions, there aren’t enough facts [in Annette John-Hall’s article about a Philadelphia alternative currency plan] to determine what the organization and the participants are doing. Perhaps the recipients are reporting income, and perhaps they are not. Whether the details of the Equal Dollar program fall closer to the barter exchange or closer to the “Time Dollars” arrangement on the spectrum of “U.S. currency-free transactions” is unclear, and thus whether the organization described in John-Hall’s column should be reporting cannot be answered at this point. The facts of the “Time Dollars” private letter rulings are sufficiently different from those of the “Equal Dollars” arrangements to make it risky for someone to reach a conclusion based on the general facts that fit into a newspaper column. Lurking in the compliance cluster is the situation that will arise when someone reports Equal Dollars as earned income in order to qualify for, or increase, the amount of his or her earned income tax credit.

That’s a good point. If something may be considered income for tax purposes or may not be, and nobody knows for sure, it might not be the government that decides to press the point. For some people, it can be economically advantageous to declare questionable income as “taxable” earned income in order to qualify for (or enhance) refundable credits.

In some ways, the use of Equal Dollars is tantamount to the creation of a separate currency system within the economy. So long as Equal Dollars can circulate only within the limited world that accepts their use, the tax issues aren’t unlike those arising when a barter exchange or trading club sets up ways to measure members’ economic positions through devices other than a national currency. If, however, the use of Equal Dollars or their equivalent become so widespread that they displace the use of national currency on a grand scale, the tax issues, especially the policy questions, will be cast in a totally different light.

Maule thinks that if Congress adopts a laissez-faire attitude to alternative currencies, people and businesses will come up with all sorts of ways to recast their income and profits in this way in order to avoid taxes, which Congress will never tolerate. Alternatively, if Congress crafts precise rules to limit which sorts of alternative currency transactions are taxable and which are not, this would just become an invitation for those businesses that can afford the craftiest lawyers and accountants to monopolize the alternative currency field (which would destroy anything that is currently appealing about it).

His prediction: “Ultimately, the Congess needs to deal with these issues. Unfortunately, it, like most legislatures, usually waits until people sort things out for themselves, making it more difficult to prescribe sensible rules because a coalition of those wanting special exceptions, those wanting transition rules, and those unwilling to change their reporting practices prevent the legislatures from writing on clean slates.”

Of course what looks like a bug to us is probably considered a feature to folks on the inside. Why bother going through the process of legislating if there isn’t a group of entrenched interests with a large financial stake in the outcome who are willing to spend some money in exchange for influence?

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