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Bitcoin
“Fr33 Aid” is a group of volunteers who organize free first aid and health services and who educate people about first aid skills (like CPR) and about the value of voluntary mutual aid at libertarian/anarchist-leaning events.
According to a press release on their site, dated , they have given up on their frustrating quest to gain government-certified non-profit status.
Instead they are going to try to withdraw from the state-monitored banking system and the use of state-controlled currency and instead do as much of their operations as possible with the newly-developed currency known as “bitcoin.”
“When we founded Fr33 Aid in , the banks all required a taxpayer ID number and government paperwork,” said Teresa Warmke, Fr33 Aid’s co-founder and treasurer.
“Bitcoin changed everything. We can focus on our mission now that Fr33 Aid’s assets are safe in our Bitcoin wallet.”
In a follow-up Q&A, Warmke explained:
“Now that there are ways for us to do banking without government involvement, we decided fulfilling [IRS requirements] would not be a responsible way for Fr33 Aid to spend its money nor for our volunteers to spend their time.”
The organization will continue to accept donations denominated in dollars from people who have not adopted bitcoins, but will convert such donations to bitcoins “in a timely manner.”
This way, Warmke says, “If at some point either the bank or a government tries to confiscate our account for taxes they believe we owe or failure to file paperwork, they would only be able to find a few dollars for their trouble.”
Bitcoins are very interesting.
They are a form of currency that is backed by the full faith & credit of its community of users and the sophisticated and clever algorithm they agree to use and that gives the currency value as a medium of exchange.
It is composed of numbers, minted by mathematics, often never takes material form, is recognized by no government, and backed by no material goods… and yet it seems strikingly more secure and useful and dependable than the currencies we have grown used to (for which, on close inspection, many of these same frightening conclusions hold true).
I’ve been hearing about them for months, but only recently have I investigated them in earnest.
I don’t feel economically or mathematically sophisticated enough to give them a full-throated endorsement, but I’ve learned enough to know that most of my initial skepticism about bitcoin was superficial and invalid.
This may very well be the real thing: a currency that is not controlled by a central authority, but by the community of people who use it; and one that is relatively easy for people to safeguard from government attempts at confiscation or restriction of trade across national boundaries.
Here are some items of note that have come to my attention in recent weeks:
I wondered if this might happen: One of the weirder aspects of Obamacare is that the individual health insurance mandate is to be enforced by adding a penalty to the income tax of any individual who fails to get health insurance — but for public relations reasons the IRS is forbidden to use its usual methods of liens, levies, seizures, and the like to chase down this penalty if the taxpayer refuses to pay it.
So now, Obamacare foes are starting to whisper about this cheap-and-easy civil disobedience opportunity.
Though “whisper” isn’t really the right word when you’re talking about Rush Limbaugh.
Are Cryptocurrencies [like Bitcoin] “Super” Tax Havens? asks Omri Y. Marian of the University of Florida.
Marian concludes: “Significantly, cryptocurrencies possess all the traditional characteristics that tax havens do; Earnings are not subject to taxation, and taxpayers’ anonymity is maintained.… Thus, cryptocurrencies have the potential of defeating the recent successes of governments in battling offshore tax evasion.… while governments have paid some attention to this issue, they have so far failed to identify the acuteness of the potential problem.”
Among the things the so-called government “shutdown” brought us was a halt in almost all IRS levies and liens for the duration.
The agency had plenty on its plate before the shutdown, and now it’s already behind in regearing for tax season.
France enacted a populist measure to throw a 75% marginal tax on incomes above €1 million.
Professional soccer teams, whose players may earn large annual incomes but usually over a short viable career, have decided to protest by going on temporary strike, effectively eliminating a round of matches this year — the first time teams have done anything of this sort .
Our tax reporting and collection system is built, among others, on the assumptions that (ⅰ) parties to a taxable transaction know each other (or can reasonably obtain information about one another and send information to each other), and (ⅱ) that there are some uniquely situated taxpayers (such as banks) that regularly collect financial information about other taxpayers in a centralized manner.
The operation of Bitcoin defeats both assumptions.
Parties to Bitcoin transactions do not necessarily know each other, and the operation of Bitcoin is decentralized.
Thus, important assumptions that stand in the basis of our traditional collection mechanisms collapse.
Bitcoin is going through some significant growing pains at the present.
A major hub in the economy that grew around the currency, Mt.
Gox, has shut down amid rumors that it had lost hundreds of thousands of bitcoins that had been stored with or exchanged through its service.
It seems that making the algorithms around the currency itself impregnable was only the first part of the challenge.
The next step will be developing tools of exchange and commerce that are up to the challenge of dealing with the new currency in a reliable and trustworthy manner while being accessible to the ordinary person.
Some bits and pieces from here and there:
In , you can attend an on-line “google hangout” on the subject of “War Resistance: Beyond the Rally,” sponsored by the National War Tax Resistance Coordinating Committee, the Center on Conscience and War, and the National Campaign for a Peace Tax Fund.
In the U.S., a person who pays alimony can take it as a tax deduction; a person who receives alimony must declare it as income; and to take the deduction, the payer must include the taxpayer identification number of the recipient on their tax return.
You’d think this would make it easy for the IRS to make sure that the numbers match up, and that people aren’t taking phony deductions for fictitious alimony, or failing to report alimony received as income.
But according to a new TIGTA report, fully 47% of the alimony deductions do not have corresponding alimony income shown on the recipients return — amounting to “more than $2.3 billion in deductions claimed without corresponding income reported”.
Peter J. Reilly dug a little deeper and found that the IRS only bothered to audit 4% of the pairs of returns showing discrepancies — that is to say, “you and your ex collectively have a 96% chance of getting away with something that is in your face blatantly wrong even though you are, in effect, ratting yourselves out.”
He calls this “a scandal of epic proportions” and suggests that it’s going to encourage divorcing couples and tax advisors to game the system.
Because these bitcoins can, in some circumstances, be used to purchase goods or services with a monetary value or where they can be converted to legal tender, the proper income tax treatment of bitcoin transactions presents both compliance and substantive questions for the IRS.
…This article explores the current state of the law as it relates to bitcoins as well as proposed methods for applying existing federal income tax laws to the virtual economy.
Some links that have flashed by my browser in recent days:
IRS
Follies
It takes so long to reach the IRS by phone that a company has gone into business selling places in the phone queue.
That’s right.
They have many lines on which they call the IRS and stay on hold, and then you call them and buy the line that has been on hold longest so you don’t have to wait so long.
Somewhere, a star on Obama’s economic team is tallying this up as “innovative job creation.”
Padamsee claimed that he always does everything legal and correct.
He said, “I checked with lawyers.
We are a group of like-minded people, and the tax paying population of this country, and they said, anyone who works together could form a union.
And by law, a union is allowed to strike.
We will strike by not paying tax.
We plan to assemble a million people with a fee of Re 1 each, but all this is at the planning stage.
We are talking with senior lawyers and will have them on board.
Our main aim will be to make the government accountable.
If there are any recommendations, people can contact me.”
However, it is not yet specified which tax the Tax Payers’ Union will not pay, as there are various taxes in India, and most of them are indirect tax, which one pays in form of service, or while buying products.
The other important taxes which concern an individual directly, include income tax and professional tax.
This idea seems to be catching on.
Justice Arun Chaudhari, from the Nagpur bench of Bombay High Court, in a ruling during a recent corruption case, said:
In my considered opinion, corruption can be beaten if all work together.
To eradicate the cancer of corruption — the “hydra-headed monster,” it is now a high time for the citizens to come together to tell their governments that they have had enough.
That is the miasma of of corruption.
If the same continues, taxpayers may resort to refuse to pay taxes by “non-cooperation movement.”
Tommaso Cerno, a journalist and gay rights activist in Friuli, Italy, has made waves by announcing, in a letter published in Repubblica, a tax strike for gay rights.
If the government does not allow us the freedom to direct our taxes toward more enriching and sustainable funds, we will begin the process of taking that freedom for ourselves.
We will discontinue paying taxes to the government, and instead redirect our money into a community fund that distributes our income in a way that serves all of us.
As long as we continue paying for the current system in the form of taxes, we are complicit in the violence and corruption committed by it.
By withdrawing our funding of it, we withdraw our consent of its actions.
Bernard J. Berg recalls how he came out of the U.S. military doubtful that what he was doing deserved to be called “service”:
I too served in the Navy, just before Vietnam, helping to keep the sea lanes safe for United Fruit Co. and the Dulles brothers.
I later joined the war tax resistance effort sponsored by Lehigh-Pocono Committee of Concern.
Money which should have gone to the IRS to pay for our war crimes went into the fund to be used for worthy causes.
But the IRS had the last laugh as it garnered my bank account and got more money for illegal wars with the fines it extracted from me.
Miscellany
I just learned about the following presentation which was made at the 2013 Bitcoin Conference, and features Angela Keaton from AntiWar.com, Carla Gericke of the Free State Project, and Teresa Warmke of Fr33Aid, discussing how nonprofits can benefit from using BitCoin:
The number of U.S. citizens who are renouncing their citizenship is climbing, continuing a dramatic trend since 2008.
Some bits and pieces from here and there:
The New England Gathering of War Tax Resisters is going to be held in Hardwick, Massachusetts.
Details will be posted to the NWTRCC website eventually.
From a tax-evasion point of view, they are particularly attractive.
Cryptocurrencies possess the two most important characteristics of a traditional tax haven.
First, because there is no jurisdiction in which they operate (they are “held” in cyberspace accounts known as online “wallets”), they are not subject to taxation at source.
Second, cryptocurrency accounts are anonymous.
Users can start as many online “wallets” as they want to buy or mine Bitcoins and trade them without ever providing any identifying information.
Significantly, Bitcoin (and other cryptocurrencies) offer one additional major advantage to tax-evaders that traditional tax havens do not: the operation of Bitcoin is not dependent on the existence of financial intermediaries such as banks.
Bitcoin is exchangeable peer-to-peer by definition.
Bitcoin thus seems immune to the developing international anti-evasion regime [in which] financial institutions [are] the emerging agents of tax collection…
Thus, cryptocurrencies have the potential to become super tax havens.
Bitcoin transactions are not anonymous by default.
Indeed, there is a permanent record of every bitcoin transaction that is fully available to law enforcement.
If you want to use bitcoin anonymously you have to take careful steps to do so.
There’s a bit of interesting background in this IRS research paper about the process the agency goes through when it detects that someone has failed to file a tax return.
Some bits and pieces from here and there:
war tax resistance
Jesse Maceo Vega-Frey recalls his time with Juanita & Wally Nelson, and his own ambivalent experiences with war tax resistance, in an article for the Boston Review.
I stumbled on this quote, shared recently by “tandy_jack” on Instagram, from the back of a Joan Baez album:
We paid the taxes that bought the war that hired the men and dropped the fire that burned the huts and killed the people who then were the bodies that Scott counted.
It’s a rotten thing to brainwash someone into doing the dirty part of the killing while we stay at home.
It’s a rotten thing to pretend the war is coming to an end when it’s only taken to the air.
And in if you don’t fight against a rotten thing you become part of it.
What I’m asking you to do is take some risks.
Stop paying war taxes, refuse the armed forces, organize against the air war, support the strikes and boycotts of farmers, workers, and poor people, analyze the flag salute, give up the nation state, share your money, refuse to hate, be willing to work… in short, sisters and brothers, arm up with love and come from the shadows.
virtual cash
exiled American dissident Edward Snowden made waves recently by promoting tax resistance to the incoming Trump regime
National governments are trying to discourage cash, so as to eliminate the sorts of anonymous, untraceable transactions that are difficult to tax.
For example, the government of India recently made a surprise announcement that 500 and 1,000 rupee notes would no longer be legal tender after a certain deadline.
If the IRS does decide to crack down on virtual currencies, it may have to do so with virtual employees, as its real enforcement staff numbers have been dropping year after year:
This article, concerning another TIGTA report, gives a good indication of how strapped the agency is.
Even when shown that there’s money on the table that just needs to be picked up (in this case, high-income people who haven’t filed income tax returns but whom the agency knows about), the IRS complains it doesn’t have enough people to do the picking.
Some bits and pieces from here and there:
Wendy McElroy looks into the IRS’s sudden keen interest in bitcoin.
Activists from the South Korean People’s Democracy Party were in the U.S. recently and met with representatives from NWTRCC to learn about how they might incorporate tax resistance into their struggle against the corrupt South Korean government.
The “won’t pay” movement in Greece continues to score propaganda victories by illegally reconnecting the power to the homes of families who have had their utilities shut off for their inability (or unwillingness) to pay the austerity-enhanced bills.
The government of Keene, New Hampshire has lost its state supreme court appeal, in a unanimous ruling that likely puts the final nail in the coffin of its attempts to get an injunction against the “Robin Hooders” who follow its parking enforcers around, filling expired meters and in other ways interfering with their attempts to boost the city coffers with parking enforcement revenue.
Some links of interest:
Tax Resistance Heats Up in the U.S.
Allen D. Madison of the University of South Dakota Law School has written up a good summary of The Legal Consequences of Noncompliance with Federal Tax Laws [in the U.S.].
There’s an important difference between what the IRS can do and what it will do, but if you want to know what it can do, this paper is an authoritative source.
If Stephen Miller and Steven Bannon and Trump continue to run the country and
we have international wars and we have a government that won’t comply with
court orders, we are going to need tax resistance. Tax resistance is the kind
of thing, like general strikes, that people toss around really easily and
say, “We should just not pay our taxes,” but, again, I think this moment is
pretty unique in American history. Tax resistance has been a part of the
history of the United States of America since the beginning… Like a general
strike, it [can] happen if everybody is going to do it. People need to get
together and create a means by which folks can actually feel comfortable not
paying their taxes, putting it into a separate account and getting receipts
for it and all doing it together as a collective political statement.…
Tax resistance is something [with which] we can break their backs, and when
and if it is time, we should do it together.
More links that have scrolled through my browser recently:
Scott Alexander has an insightful review of James Scott’s Seeing Like a State up at his always-mind-stretching blog Slate Star Codex.
In the New Republic, Kevin Baker promotes Bluexit: A Modest Proposal for Separating Blue States from Red.
He notes that the “blue states” tend to pay more into the federal treasury than they take out, and the “red states” on the other hand tend to be net recipients of federal money.
He suggests that the blue states stop subsidizing the red and that liberals reembrace federalism:
We won’t formally secede, in the Civil War sense of the word.
We’ll still be a part of the United States, at least on paper.
But we’ll turn our back on the federal government in every way we can, just like you’ve been urging everyone to do for years, and devote our hard-earned resources to building up our own cities and states.
We’ll turn Blue America into a world-class incubator for progressive programs and policies, a laboratory for a guaranteed income and a high-speed public rail system and free public universities.
We’ll focus on getting our own house in order, while yours falls into disrepair and ruin.
For starters, we now endorse cutting the federal income tax to the bone — maybe even doing the full Wesley Snipes and abolishing it altogether.
We will raise our state and local taxes accordingly to pay for anything we might need or want.
We ask nothing more from you and your federal government.
Nothing for infrastructure, or housing, or the care of the poor and sick — not that you gave us much, anyway.
All we want is our money, and you can keep yours, dollar for dollar.
Learn Liberty has a feature on feisty tax resister Vivien Kellems.
Seattle Weekly tells the story of the war tax resisting Archbishop Raymond Hunthausen.
The IRS considers bitcoin a kind of investment, and so if you buy or earn some, and later spend it, the difference between the value of the bitcoin at those times counts as a capital gain or capital loss, and you’re supposed to file a Form 8949 to report it.
But to bitcoin users, the stuff is a currency, and it would be folly to keep track of how much it’s worth every time you earn and spend it and keep an account book like that.
So it’s little surprise that only about 800 people report bitcoin transactions on Form 8949, according to the IRS.
Some links of interest:
Frida Berrigan writes: Why tax resistance under Trump needs its antiwar edge. A nice article that’s not all that well-described by its headline, describing current American anti-Trump tax resistance and how it fits in to the long-standing war tax resistance tradition.
Manoj Viswanathan Presents Tax Compliance In A Decentralizing Economy — Viswanathan says the current tax authorities depend on centralized intermediaries (banks, employers, brokers) to report financial transactions to the government. But blockchain-related technologies like Bitcoin may displace banks and brokers, and gig-economy innovations may reduce the use of employers.
A coalition of grassroots anarchist / anti-authoritarian groups in Greece sabotaged more than 200 public transit fare-enforcement machines. The Greek government has been frustrated in its attempts to raise money through straightforward taxation, and has increasingly been relying on increases in fares, highway tolls, and utility bills. 40% of Greeks are unable (or unwilling) to pay their utility bills. Some have taken to using devices that interfere with the electricity meters; others have been assisted by Den Plirono activists who reconnect the power to residences that have been cut off for failure to pay the electric bill.
Anabaptist World features a letter from Harold A. Penner urging Mennonites to redirect their war taxes to the Mennonite Church USA Peace Tax Fund.
And here is some more news about the ongoing troubles at the IRS.
This CNN Business story goes in some depth into how a loose coalition of activists forced the IRS into an embarrassing and costly retreat from its plan to use facial recognition technology to verify the identity of taxpayers using its online account portal.
This note from the National Taxpayer Advocate gives more details about the IRS plan to stop issuing certain enforcement action notices while it tries to deal with the enormous backlog of unprocessed returns and other correspondence.
For example: “If a taxpayer’s account has been assigned to one of the IRS’s automated levy programs (ALPs), the IRS is also suspending the levies made by those programs…”
The agency will also not be able to pursue many new levies because in order to do so, it must first send the taxpayer a letter informing them of their right to request a Collection Due Process hearing, and they’ve temporarily stopped the automatic sending of those letters.
Some 53,000 IRS employees are still on remote work — about two-thirds of the agency’s workforce, which an IRS spokesperson characterized as “a maximized telework posture.”
But privacy rules prevent remote processing of the millions of paper tax returns mailed to the IRS, as well as the examination of returns with discrepancies from IRS records, the issuance of refunds and dealing with other taxpayer mail.
The Transactional Records Access Clearinghouse at Syracuse University issued a report showing that the IRS audits the poorest American households at five times the rate as the rest.
This seems to be an effect of the agency’s plummeting rate of audits of the well-to-do combined with its increasing use of cheap-and-easy “correspondence audits” against low-income taxpayers who apply for the Earned Income Tax Credit.
As the National Taxpayer Advocate puts it:
The IRS correspondence audit process is structured to expend the least amount of resources to conduct the largest number of examinations — resulting in the lowest level of customer service to taxpayers having the greatest need for assistance.
Last Summer, the U.S. House of Representatives passed a spending bill that would have boosted the IRS budget.
That bill got bogged down in Congress before anything could come of it.
A recent appropriations bill resurrected the IRS budget boost, but pared it way back, so now the agency budget will only rise by 6%.
These days that’s hardly enough to keep up with inflation.
And the appropriations bill restricts how various parts of the increase can be spent, so some parts of the agency budget — tax enforcement for example — will see even smaller increases.
