How you can resist funding the government → a survey of tactics of historical tax resistance campaigns → participate in barter and other off-the-books transactions → barter & gift economy

I attended some workshops on matters economic. One, on “the underground antieconomy” was an uneducational polemic that I left early. Another, on emerging post-revolution start-from-scratch economic systems, was canceled because the instructor was apparently on some sort of Orange Alert blacklist and was detained at the airport (expect to see more of this sort of thing).

Another seminar I attended was about community currencies. These are paper money systems that exist alongside the familiar greenbacks. There are versions of this going on all over the place, and there have been attempts to get this sort of thing going for decades.

I was paying special attention to find out whether this sort of thing was a possible way to participate in a flexible, currency-based economy, without engaging in taxable activity. I didn’t think it was likely, but thought I’d pay some attention just in case.

The instructor was one of the organizers of Berkeley’s “BREAD” alternative currency, which had a five-year run but ultimately failed.

The long and the short of it was that I walked away without much excitement for the local currency concept (it doesn’t seem to offer many advantages over government money, and is at a great disadvantage competing against the effective government monopoly). And as a tax dodge, it’s a non-starter.

The IRS doesn’t even want you to get away with untaxed barter “income” — they’re certainly not going to decide that barter that’s mediated through some sort of notes or coupons is exempt (their guide on taxable income also includes sections on “kickbacks,” “illegal income,” and “pulitzer, Nobel and similar prizes” — they think of everything).

The Baltimore Sun Journal brings us an article on the world of barter exchanges: Have it all — without cash.

I’ve written about barter before ( & ), because at first glance it looks like it might be the ticket to an untaxed marketplace. Not quite. The IRS is hip to the barter thing, and considers goods gained via barter to be just like cash gained via sale, and just as taxable. The Sun Journal article shows what was lost when barter exchanges came above-board:

Bartering, once relegated to an underground economy, gained legitimacy with a Internal Revenue Service ruling that requires exchanges to report the barter income of each member. For tax purposes, barter dollars are treated as cash.

Ways to reduce your dependence on money-based and therefore taxable transactions, and to reduce the need for a taxable income include things like bartering, bargain shopping, using less, reusing stuff, recycling, and borrowing. Boing Boing reports on Mediachest — a social networking web site (a la Friendster) with a twist. You use the site to catalog your books, CDs, DVDs, etc. that you’re willing to loan out, and then to search your friends’ collections for things you’d like to borrow. (Useful as that sounds, you can expect that such a site will also be used for marketing research and other forms of privacy-invasive intelligence-gathering, so let the web surfer beware).

Speaking of barter, if you go to One Red Paperclip, you’ll see the ongoing story of a man who is trying to barter up from one slightly-used red paperclip to a house. So far he’s traded the paperclip for a pen in the shape of a fish which he traded for a ceramic doorknob in the shape of a face which he traded for a camping stove which he traded for an electric generator.

The IRS insists that even barter counts as income and must be taxed, but there are exceptions to this rule, as a recent Wall Street Journal article points out:

Using a section of the tax code called 1031, a growing number of wealthy individuals and companies are participating in so-called like-kind, or 1031, exchanges. The strategy allows participants to defer, or sometimes even avoid, capital-gains taxes when they quickly replace business or investment assets with similar property of equal or greater value.

Ethan Miller’s essay Solidarity Economics has thought-provoking and encouraging things to say about the potential of the underground economy that exists almost invisibly all around us:

“economy” is not just about supply-and-demand markets. In its largest sense, economics is about how we as human beings collectively generate livelihoods in relation to each other and to the Earth. The human economy includes all of the varied social relationships that we create in the course of meeting our needs and pursuing our dreams.

Capitalism, with its “free market economy,” its “jobs” and its “wages,” is only one part of how we actually create and maintain livelihoods in our families and communities. When we peel away the misleading idea of one giant “Economic System,” we can begin to see the workings of many different kinds of economies that are alive and well, supporting us below the surface. These are not the economies of the stock-brokers and the “expert” economists. These are our economies, people’s economies, the economies that we build with our everyday lives and relationships.

These include: “Householding economies,” “barter economies,” “collective economies,” “scavenging economies,” “gift economies,” “worker-controlled economies,” “ ‘pirate’ economies,” and “subsistence-market economies.”

These categories name only some of the many diverse, non-capitalist economic relationships that are interwoven throughout our lives. The project of identifying these relationships is a project of hope, one that allows us to begin de-colonizing ourselves from the devaluing and degrading ways-of-seeing that have been imposed on us by the Economics of Empire. We can begin to see, instead, the powerful spaces of freedom that already exist in our midst.…

Solidarity Economics begins here, with the realization that alternative economies already exist; that we as creative and skilled people have already created different kinds of economic relationships in the very belly of the capitalist system. We have our own forms of wealth and value that are not defined by money. Instead of prioritizing competition and profit-making, these economies place human needs and relationships at the center. They are the already-planted seeds of a new economy, an economy of cooperation, equality, diversity, and self-determination: a “solidarity economy”.

Though the capitalist economy has devalued or hidden these seeds from us, we can use them as starting points for our alternative economic organizing. The project of solidarity economics is to water these seeds — to identify and expand the spaces of solidarity that already exist and, in the process, create new and larger ones.

CNNMoney.com reports on a new web site that helps to encourage and expand barter trading:

Swaptree is now creeping out of superstealth mode with a new take on e-commerce. Its high-tech bartering system lets consumers get the goods they want without paying a dime.

Swaptree isn’t the first to try online bartering — Peerflix, Bookins, and La La help people trade movies, books, and CDs, respectively, while SwapThing lets users combine goods, cash, and services.

But it is, significantly, the first site to pull off direct trades between more than two people… Swaptree can engineer three- and even four-way trades among users who want different things.…

For instance, one person sends a book to a second person, who sends a CD to a third, who sends a DVD to a fourth, who then sends the first person a videogame.

…Trades will be limited initially to books, CDs, DVDs, and videogames, though [Greg] Boesel says he’s open to adding other categories. Items will be valued equally, on the premise that they’re all worth about the same to people who have already read, viewed, or otherwise consumed them.

…To start a swap, users enter the UPC codes of the titles they want to trade and create a list of those they might want. Swaptree’s engine will constantly look for matches and present users with potential swaps. A nifty plug-in on Amazon.com, eBay, and nine other sites can notify users if the book or CD they’re seeking is available on Swaptree. When users find a swap they like, they can initiate trades: Within two days, all parties get e-mail instructions on where to send their stuff.

How does cashless Swaptree make money? Unlike eBay, Peerflix, and others, it won’t charge fees. Instead, it’s planning to survive solely by selling ads.

The more transactions are removed from the cash economy, the less they are taxed. If you trade a book with someone instead of buying one new, that much less profit is made by bookseller, publisher and author, and that much less profit is available to be taxed.

Also, being able to obtain things through barter or trade rather than through purchase makes it easier for people to live more frugal lives, which also can reduce the need to generate as much income and income tax.

According to a report that went out over the Associated Press wire , “Consumers turn to bartering for goods, services.”

It’s hard to tell whether it’s a real trend, or some data points and anecdotes waiting for a reporter to tell a story about them. But, if true, it’s encouraging. According to the article:

Jim Buckmaster, chief executive officer of Craigslist… said there were more than 120,000 barter posts on the site in  — double the total from . He estimated that the number increased in to more than 140,000.

Buckmaster says he thinks of bartering as “an inherent friendly and sociable activity” compared with cash sales.

“Sometimes people enjoy getting to know somebody else,” he said. “And maybe more ends up flowing out of that relationship than the initial barter would have led you to expect.”

Another up side to barter transactions is that they typically don’t show up on the radar screens of the Internal Revenue Service. This article’s author, though, sees that mostly-full glass as half-empty:

The main downside of bartering — and one that many consumers are unaware of — is that some barter transactions are taxable, according to the Internal Revenue Service.

The IRS describes as an example of barter a situation in which a plumber does repair work for a dentist in exchange for dental services.

“The fair market value of goods and services exchanged must be included in the income of both parties,” the IRS says. That figure gets entered on Form 1040’s Schedule C, which is titled Profit or Loss From Business, it adds.

At Sunni and the Conspirators, Sunni Maravillosa encourages folks to consider some self defense against the upcoming trillion-dollar bailout fleecing. Excerpt:

First and foremost, the socialist cesspool will be funded by taxpayers — so we need to withdraw that tangible support. The Picket Line is an excellent resource for information and inspiration in that regard. Individuals who can’t easily get entirely out of the IRS’s clutches can almost certainly find ways to maximize deductions and such to reduce the money stolen from one’s income.

Everybody can turn to grey markets for goods as well as services. Roadside produce stands, Craigslist, Etsy, the handyman who’ll fix your various repairs for cash, with no receipts or records — are ways to exchange value outside of the taxers’ reach. Turning to those entities first should become a matter of habit — a principled habit — for those wanting to withdraw support from the USSA kleptocracy.

In a follow-up post, Sunni expanded on this:

The teeth behind [our] warning is that we shrug, as much as possible: we withdraw our activities from the aboveboard market, where inflation and taxation will eat at us with increasing vigor as the government tries to suck our lifeblood to pay bankers who’ve been misrepresenting themselves and cheating us a myriad of ways all along.

Many will argue that they cannot afford to risk becoming tax resisters, especially in such troubled times. As I said , I do understand that such a move is easier for some, both physically and mentally. If you’re having difficulty wrapping your head around dropping out in this way, consider some of the implications of staying within the system:

  1. People who stay in the system will bear the costs of all these nationalizations, in terms of tax increases and a declining value of the USSA dollar.
  2. As such, they will have less of a buffer between their income and ability to support themselves and the fluctuations in the mainstream economy.
  3. Less diversity in one’s income streams means greater risk; this shakeup is far from over, and many of the aftershocks of the moves already made have yet to show themselves.
  4. Less diversity in the type of income (viz., the USSA dollar) one receives means greater exposure to risk if that type of income becomes unstable or devalued.
  5. Being in the system might actually make one more of a target, as new taxes, enforcement of extant taxes that are largely overlooked, and/or seizures of assets may radically change the economic landscape.

As an individual who values freedom, do you really want to maximally support what is an increasingly collectivist and overtly fascist system? Because that’s what you’re doing when you allow yourself to stay under the thumb of their rules, regulations, and reporting that add to business costs but add nothing of value.

According to the Los Angeles Times, the current economic mess means “boom times for barter.” Excerpts:

As the financial crisis makes cash and credit increasingly scarce, the ancient custom of bartering is booming. Cost-conscious consumers are getting creative to make every dollar count.

Some are dusting off books, DVDs, video games and other little-used items to trade for necessities or gifts. Others are exchanging services such as house painting for Web design or guitar lessons for clerical work.

Every recession triggers bartering, economists say. But the Internet has given the practice unprecedented reach. Before the Web connected strangers from all corners of the country, bartering was limited by geography and social circle.

…exchanging something you no longer want or need for something you do is appealing to many. A growing number of websites, including TradeaFavor.com and JoeBarter.com, cater to the cost-conscious. There were 148,097 listings in the barter category of Craigslist in , up sharply from 83,554 , according to the classifieds website. Bartering via Craigslist’s Los Angeles service was up 72% over , with 4,009 listings in . Specialty sites such as PaperBackSwap.com and Peerflix.com, are also popular.

Jessica Hardwick, founder of SwapThing.com, started noticing an uptick in bartering in the spring. Families who were worried about the soaring price of groceries and gas started taking vacations by swapping homes with people who lived within a few hours’ drive. As the kids prepared to go back to school after their trips, they bartered PlayStation games, skis, even a bicycle for school uniforms.

Over the last few months, her Cupertino, Calif.-based site’s membership and traffic have snowballed as more people look to trade their talent and time. With 162,000 members, SwapThing.com, which used to be populated by collectors and video-game enthusiasts, has been transformed into a bustling bazaar for everyday goods and services.

Sunni at Sunni and the Conspirators has some commentary on the Times article.

Most of us have lived through a handful of big collapsing bubbles now. Don’t you get that old déjà vu feeling when you see all of the flailing going on in Washington these days — all the frantic hand waving and deck-chair-rearranging and confident assertions of batty soothsayers with pseudoscientific models and charts?

Could it be that we might wake up some morning to find that the whole kit and caboodle — the dollar, Wall Street, the federal government — has gone out Enron-style?

Dmitry Orlov spoke at a Long Now Foundation seminar in San Francisco a few days back. He sees many similarities between the situation the U.S. is in today and the situation the Soviet Union was in shortly before it disintegrated. You can read the transcript of his talk on his blog.

In some ways, ironically, the fact that people in the Soviet Union had already taken pains to create ways of nurturing relationships and creating livelihoods in parallel to the crushing totalitarian ambitions of the state made it easier for people to adjust to the wrenching changes that took place in the wake of that state’s implosion. Easier, that is, than Orlov anticipates things will be for us in the U.S., who have become far too used to relying on the system to provide for our needs.

But at least in my neighborhood, there’s a thriving renaissance of thinking about economic alternatives — ones that, even if they aren’t consciously designed with financial apocalypse recovery in mind, could be nice tools to have in the box should that event come to pass.

Representatives of several such experiments have come together recently to brainstorm at Bay Area Community Exchange, which had its first meeting last week:

The group met to brainstorm the possibility of “a local currency and/or bartering network in order to facilitate a more just and sustainable local economy” in the San Francisco bay area. War tax resistance was one of many explicit goals of the project, which also included: “community participation in and control over local economy which would better reflect community values, the collapsing economy and the associated rise of poverty, better pay equity and fuller employment, development of stronger community relations, more environmentally sound production of goods and reduced energy use for distribution, supports local workers and withdraws support for exploitation of workers abroad, to enjoy life more [with] less time working at a desk job and more time gardening [and] taking care of family etc., greater self and community sufficiency as peak oil becomes a challenge.”

It is gatherings like these that give me some hope that creative minds will find a way to get to the other side of all of this madness and maybe learn a thing or two from it.

Some bits and pieces from here and there:

And a few more links from here and there:

Some links that have caught my eye recently:

Some brief notes from here-and-there:

In earlier Picket Line entries, I’ve attempted to translate sections from the latest edition of the Spanish Handbook of Economic Disobedience (see , , , , , , , and ).

Today I’ll continue:

The community economy

It can be defined as the pooling of resources for the collective enjoyment of the people who interact, without accounting for the flow of trade. It functions under spontaneous reciprocity, relationships of affinity, mutual aid, and high levels of trust; without expecting compensation in return for what has been shared.

Some ecovillages and repopulated cores spent years functioning with a community economy such that all members of the community held their income and expenses in common with the aim of covering their basic needs. This is the case, for example, of Lakabe, in the valley of Artzibar, Euskalherria.

In many places they include free clothing stores and all sorts of second-hand goods, which are left behind and taken without any sort of auditing. The freestores, like libraries but for any sort of thing, are collective warehouses where everyone leaves what they only use occasionally in order that other people can also use it.

Community gardens, resistance boxes [places where people can deposit extra money, or get money when they’re in need, named from their use during labor strikes], public free meals, are among the other ongoing or periodic examples that show us how a market-free economy is not a utopia but increasingly a part of our reality.

Barter

Non-monetary acts of the exchange of goods, services, and know-how. A direct verbal agreement between the offerer and bidder that satisfies the claims of both parties in relation to the fairness of the exchange.

Multi-reciprocal barter: Alternative currencies

Alternative or local currencies are a tool that goes beyond direct exchange, facilitating multi-reciprocal exchanges and establishing value for goods, services, and know-how that are exchanged. They are also part of the key to relocalizing the economy, promoting human relationships and economies of proximity at the local and bioregional level. It generates a social market open only to activities that incorporate ethical, ecological, and social criteria that permit all people to interact fairly and without middlemen.

Alternative currencies are an opportunity to reduce the hegemony of capitalism. They could gradually replace the euro while guaranteeing abundance, as each individual participates in the creation of resources to meet collective needs, putting their skills and know-how at the service of the community.

An exchange network can be put into motion by a small, critical mass (30–40 people near or far would be sufficient) who associate at the local level to boost economic relations based on trust and proximity, over a range of bioregional action.

As a tool of the transition that inevitably coexists with the capitalist economy, we must promote a mixed system in which the LETS system and the exchange of money complement each other. The LETS (Local Exchange Trading System) system establishes the guidelines for promoting networks of local exchange in which there is no interest on the exchanges. Currency is generated when an exchange takes place (the bidder has a positive balance equal to the agreed value of the exchange, and the claimer is dinged with an equivalent negative balance), permitting a deficit according to the rules of the network.

When it comes to currency exchange, it is usually allowed to change official money (Euro) for liberated money but not the reverse, since the undertaken path is to reduce the hegemony of the capitalist economy.

In addition we mention the transparency required for this new way of understanding the economy based on trust. For this, we use the virtual systems of administrating networks of exchange, which are nothing more than internet software applications and that serve to register the exchanges.

These software applications are much like those used in banks to manage our accounts, with the difference that the basic data of balances and transactions are accessible to all members of the network.

The systems that are supported by the exchange of paper money are essentially fragile, besides the danger of counterfeiting and the cost of printing the currency, they hide fluctuations that occur in the system because we do not know the quantity of money that each person has.

The CES (Community Exchange System) is a management system for alternative currency (online software) with more than 10 years behind it, developed in South Africa. It has thousands of users and more than 500 exchange networks spread throughout the world. The diverse integrated cooperatives and bioregional networks of exchange (Ecoxarxes) that exist so far in the state are being the drivers of CES up to the point where in three years there are already 150 CES networks in the state, being far and away the most prolific place in the world in this system of exchange. However, despite its potential, this software has some weaknesses that limit its expansion and use, so that a more intuitive and agile version is in the works for their next version: the Integral CES. See www.ces.org.za and www.integralces.net.

The transitory relationship with the capitalist economy

To construct a counter-economy is a necessary duty if we want to expel the capitalist economy from our lives. It is evident that for many of the projects of transition we need injections of euros in order to set them in motion. To make use of the capitalist economic resources of a legal character (wages, unemployment, inheritances, scholarships) may not be enough, and here we come to the role of actions of economic disobedience that we have discussed in these pages.

This is a question about which we have to define our own strategy, on a case by case basis. At last, we will have reference to a method that can be very useful for driving the process of transition previously expounded: crowdfunding or collective microfinance.

Crowdfunding is a system of co-financing of projects and initiatives through collective cooperation, where each individual acts as a “patron” by providing some amount of money to drive some project.

Its primary mission is to promote, beyond the individual rewards in exchange for donations, the creation of common goods promoting liberated knowledge. Some examples of this type of platform are www.goteo.org or www.verkami.com.

Among those on the point of launching is Coopfunding.net specifically for helping cooperative and self-managed projects, which has already been used in the Beta period for the “Prison Cannot Hold Disobedience” campaign which, among other projects, has served to assist in the dissemination of this handbook.

I’ll stop here today. There are about five or six pages to go.

While I was working my way through the Spanish Handbook of Economic Disobedience and trying my hand at some amateur translation, interesting links were accumulating in my bookmarks. I’ll share some of these today:

Some tax resistance news from here and there:

  • The campaign against the new water charges in Ireland has hit a milestone. At the end of the first billing cycle, only 43% of households had paid their bill.

    While Irish Water will consider this to be a solid start and in keeping with international experience related to the introduction of such new charges, the anti-water charges movement is already claiming the fact that just 43% of households have paid the charges as a victory for their side.

    Sinn Féin Deputy Leader Mary Lou McDonald said it signals to the Government in no uncertain terms that the majority of the people do not support water charges.

    Anti Austerity Alliance TD Paul Murphy said it represents a massive victory for people power and that a clear majority of 57% of people have sent a message that they will not pay these charges.

  • Two sex workers in Hawke’s Bay, New Zealand stood up to a would-be pimp who tried to impose a tax on them for the privilege of working there. They endured threats and violence and have now found allies of a sort in the local police.
  • It’s hard to tax you if you don’t bother with money. Mark Boyle gave up on money in . Click that link to see a brief interview with him about how his experiment in living a moneyless life has gone.