Tax laws create burgeoning (>$1 trill) underground economy

[marcus_of_augustus]

edit:removed bad calc. (thnx tom)

http://www.businesswire.com/news/home/20110418006433/en/Book-Reveals-Tax-Laws-Spur-Huge-Underground

Book Reveals Tax Laws Spur Huge Underground Economy

The United States has an “underground economy” – in which no taxes are paid – that already amounts to more than $1 trillion a year and is growing fast, according to a new book, which notes that this underground economy is now greater than the total economies of all but fifteen other countries

WASHINGTON--(BUSINESS WIRE)--In his book, “Class Tax Mass Tax: America and Its Underground Economy,” author Peter Rush cites example after example of how congressional tax laws discriminate against average, hard-working American families and in favor of loopholes for wealthy individuals, unions and corporations. He notes that this trend has accelerated in recent years as federal and state spending has ballooned.

He shows how the convoluted, archaic and unjust tax code has led to increased “tax cheats” and the expansion of the shadow economy. Furthermore, Rush sees a direct connection between this growing underground economy and the current Tea Party movement to the Boston Tea Party protesting British tea taxes in 1773.

“By taking a page from our revolutionary past, American taxpayers are taking the problem of over-taxation into their own hands,” he writes. “Working out of sight of the tax collector is a direct and effective way to reduce personal taxes. Penalizing work and thrift makes no sense to the average man – and we are a sensible people.”

He urges all Americans to make their voices heard at both the federal and state levels to tame spiraling budgets and irresponsible government spending. Tax avoidance, he argues, is thoroughly understandable and may be expeditious, but it does not address the underlying problems, nor does it contribute to the ultimate cure. If most of the people in the country are breaking the law, isn’t it reasonable to examine the law?

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[tomcollins]

You are forgetting the velocity of money component.

For example, I may spend $50,000 in a year.  But I don't need to have $50,000 at any time to do this.  Say I only trade with one other guy.  I sell him potatoes and he sells me oranges.  I sell him $1000 a week, he sells me $1000 a week.  We only really need $2000 in this economy.  But there might be $100,000 of economic activity in any year.  This is because we trade 50 times the same money.

No one is going to sit on that much of their cash.  They'll spend it and they'll earn it.

[ptd]

The philosophy of not paying tax to government to attempt to prevent it from spending/existing is called agorism. Bitcoin will mean we don't even need tax loopholes to do it.

[James1970]

Anyway, world without taxes is impossible. The only way  to make it better is to make them work right

[barbara44]

Anyway, world without taxes is impossible. The only way  to make it better is to make them work right

That is the absolute truth that you have just revealed here. It seem baseless to me when we have people that  are calling for a tax less society and they think because bitcoin was created as anonymous coin means they should not spend money freely without taxing, I totally do not support such a thing because a country that need to function properly needs tax.

Any country without tax will be a dirty country because there will be no form of latest infrastructures, no development because of lack of money and more so, the government would not have any power which will make the country a lawless one.  that little tax you are looking at has a whole lot of roles to play in a country and when you see most of these advanced country with high technology, it's because they live on tax.

[audaciousbeing]

There are always situations where people want to trade or carry out their activities without the official channel and by so doing avoiding to pay tax and this happen in all our daily activities. Someone who probably attach his luggage to a friend going the same direction so as to avoid paying shipping fees to an agency who would therefore add taxes to his charge and also even send money to overseas through a friend rather than going through the route of international money transfer companies because of trying to avoid the charges and taxes that would arise from such.

However, for the author to largely claim the reason for people wanting to try that route and thereby having that amount of transactions under the radar is because government expenditure is increasing is something I do not agree with because its all boils down to operating in a circle. When government increase its spending, thereby increasing taxes you don't do that without increasing the wages that would make the people more disposable to it following the canons of taxation. This would in turn give more money to the people and government gets its portion to finance its own activities.

[gantez]

When government increase its spending, thereby increasing taxes you don't do that without increasing the wages that would make the people more disposable to it following the canons of taxation. This would in turn give more money to the people and government gets its portion to finance its own activities.

That is now the issue. I have known of governments who increase rate of tax to the citizen but not an to the salaries. This is what is called economic sabotage, feeding on the people while not making them happy. This is what fiat does because is under government control.

[davinchi]

When government increase its spending, thereby increasing taxes you don't do that without increasing the wages that would make the people more disposable to it following the canons of taxation. This would in turn give more money to the people and government gets its portion to finance its own activities.

That is now the issue. I have known of governments who increase rate of tax to the citizen but not an to the salaries. This is what is called economic sabotage, feeding on the people while not making them happy. This is what fiat does because is under government control.

I am not really certain if our people too are ready to be liberated yet form this bondage of fiat, because this introduction of bitcoin should be a yardstick for them to dump their fiat and embrace bitcoin payment system, but most people you see in the cryptocurrency space are just in for the gain alone, and once they get the gain, they still change it into fiat and then keep to make bank have more money in their jurisdiction which they often do use as power to control their clients.

If people really want to be free from the burden of too much tax, they need to start making use of cryptocurrency for their transaction to an extent while they still pay their tax based on what they feel the government deserve on their income.

[buwaytress]

You are forgetting the velocity of money component.

For example, I may spend $50,000 in a year.  But I don't need to have $50,000 at any time to do this.  Say I only trade with one other guy.  I sell him potatoes and he sells me oranges.  I sell him $1000 a week, he sells me $1000 a week.  We only really need $2000 in this economy.  But there might be $100,000 of economic activity in any year.  This is because we trade 50 times the same money.

No one is going to sit on that much of their cash.  They'll spend it and they'll earn it.

And that's really the simple way some economies decide how much money to print each fiscal year. They assume these 2 guys if their individual output grows at average gdp they need only that much more cash to circulate.

But yeah, we also remember not all of these are instant transactions or even recorded ones. IOUs still really prevalent where I come from, recorded only in pocket size notebooks or in memory.

I almost am sure that might qualify for underground economy, even if the intention is far from sinister!