FedUpUSA

Archive for the ‘taxes’ Category

Law-abiding taxpayers are treated like criminals while the criminal class of financiers and State apparatchiks are free to loot and pillage muppets and taxpayers alike.

I recently received quite an education about how law-abiding taxpayers are treated by the state of California via dozens upon dozens of emails detailing how the Golden State ransacked the bank accounts of law-abiding taxpayers in other states  without notification or due process, as if the citizens being looted were crafty bankers who’d stolen church funds to live tax-free in an offshore tax haven.

As we all know, crafty (and politically protected) bankers are free to loot churches, muppets and the taxpayers at will while taxpayers are looted by lawless government. Here is a typical account of state thievery. It is anonymous for a good reason: As I noted last week, law-abiding citizens are terrified of their governments, local, state and Federal, as they know that these agencies are literally above the law and will exact retribution on anyone who reveals their tyrannical trashing of due process or who questions their feudal pillaging of oppressed debt-serfs. (I previously addressed this topic inWelcome to the Predatory State of California–Even If You Don’t Live There March 20, 2012)

I received a letter last year that we owed the state of California’s Franchise Tax Board $90,000 for taxes in the year 2008.We replied to the Franchise Tax board in a similar manner as RT stating that:

– Did not reside in California in 2008

– Did not file a State income tax return in California in 2008

– Did not have any outstanding tax issues with California in 2008

– Did no business in California in 2008

– Owned no property in California in 2008

The CA Franchise Tax board responded by putting a lien on us in the state – fortunately, our banks and assets have no business in CA or I am certain our accounts would have been robbed as well.

After a great deal of uncertainty and angst, I found an accountant in CA who advised us that we needed to file a complete CA tax return for 2008 even though we did not owe any tax.  We filed the return and received a response that we owed the state $625 to cover the State’s collection fees.   We paid the fee and within two weeks received a “refund” check for the $625.

On reflection, we felt as if we had been “held up” by some powerful gangsters and  if it had not been for an honest tax accountant we would have suffered much financial damage.

This basic story is repeated thousands of times annually, and while California may hold special status as the most predatory, parasitic,  due-process-be-damned state, it’s clear that other state and local governments are pursuing similar strategies of lawless looting under the cover of tyrannical statutes approved by elected lackeys of the financial aristocracy.

Is financial tyranny “legal” if some state legislature  claims it is legal? Or is all financial tyranny above the law, regardless of what the elected toadies and apparatchiks claim?  Would the Supreme Court, another set of lackeys, ever rule that a state cannot steal funds from a private bank account without due process other than a concocted claim that the person might owe the state taxes?

Of course it won’t, for the Supreme Court has long ago given up restricting government’s ability to loot and pillage the citizenry.  The Court can’t even be roused to defend the Bill of Rights, the most sacred set of civil liberties the nation holds (or held– the Bill of Rights has been annulled by the Orwellian “national defense” NDAA–Welcome to the United States of Orwell, Part 1: Our One Last Chance to Preserve the Bill of Rights).

Based on dozens of detailed accounts, I finally figured out how the state of California calculates the tax you owe it.

1. If you ever resided in California or filed a tax return there, even 20 years ago, then any 1099 you receive from anywhere from now until your death is “proof” that you owe tax on that income to  California.

2.  If you live elsewhere but retain a license to do any kind of business in California, you must be hiding income and therefore you owe substantial taxes to California based on bureaucratic calculations of the average income others with your license earned.

3. If you ever filed a tax return in California, if you stop filing tax returns then you will be targeted and brought to earth as a tax dodger.  The only way to escape the lawless wrath of the state’s Franchise Tax Board is to keep filing tax returns in California until you die, even if you moved away years ago and earned no income there.

Yes, the mere cessation of filing is “proof” you’re hiding income and are a tax dodger whose bank account must be stripped clean.  Wells Fargo Bank, a recipient of taxpayer funds in the  billions of dollars, deducts $100 or even $150 to do the state’s dirty work, and then when it’s shown the taxpayer owes the state no taxes, the bank doesn’t refund the fee–are you kidding?

The banks and their management are still free to plunder, loot, defraud, pillage, misrepresent risk, assets and liabilities–all backstopped by taxpayer funds. If this isn’t the acme of Orwellian reversal, then precisely what is? Taxpayers  whose accounts have been looted by the state on the flimsy pretenses listed above must then endure the Kafkaesque torture of pleading with California’a Franchise Tax Board to return the money that was stolen from them without due process.

The Franchise Tax Board tells the powerless taxpayer (let’s call him Josef K.) that if he’s lucky (and who’s lucky when caught in a fearsome web of bureaucracy) his money might trickle back to him in 6 to 8 weeks.  The $100 stolen by Wells Fargo– that’s your “penalty” for ever having admitted that you lived in California.

It’s like the Hotel California–you can move out any time you like, but you can never leave the tax liability. I am not making this up–I have dozens of detailed accounts of people moving out of California many years ago and having no business or property in the state, yet a 1099 from years past or the mere “failure” to keep filing state returns in perpetuity triggers an unannounced and unexplained raid on their private bank account and/or a lien against any property they own in California.

Then, after much anguish and expense, the trumped-up, totally fabricated,  delusional claims of tax liability dissolve and then they begin the bureaucratic nightmare of trying to wrest their money from the rogue state’s grasp.

Meanwhile, Federal prosecution of financial fraud has fallen to a 20-year low. Coincidence? No; lack of  funding and powerful political protection  play roles in protecting the real criminals from any risk. Brown-nosing Republicans have made ceaseless efforts to gut any agencies still clinging to an interest in prosecuting financial crimes, but financial tyranny starts by gutting the statutes themselves so fraud, embezzlement, etc. are no longer crimes.

Not filing a tax return in California even though you moved out of the state 10 years ago, however, is a crime–but as in an Orwellian nightmare, the “law” isn’t written down, it is embedded in some bureaucratic rules that are hidden from the taxpaying citizens. It isn’t “legal,” but since due process has been abolished, who cares what’s legal or illegal?

It’s actually very simple: whatever the state or Federal government does to you, that’s legal. Whatever action you take to protect your rights is illegal.

In case you have any doubts about where our “leadership” is taking us, please review these Assorted quotes by Fascists or about Fascism.

Charles Hugh Smith – Of Two Minds

OH YES YOU DO! ….. (in Michigan anyway)

In the end, this case turns on a single question: whether a statutory exemption from “all taxation” includes excise taxes such as the Michigan Transfer Taxes. Wells Fargo dictates that it does not. Accordingly, the Enterprises are liable for the Transfer Taxes.

Plaintiffs’ and State Plaintiff’s motion for summary judgment is GRANTED. Defendants’ motion is DENIED. The issue of damages remains.

Psst — you know all those counties across the country that seem to be a bit shy on their revenues?

Time to go get the money you’re owed…

Oakland County Order FHFA

The Market-Ticker

Discussion (registration required to post)

Theft has been “legalized” for governments and banks in America.

Every once in a while an event crystallizes the stark reality behind the lacy curtain of propaganda and artifice. Here is one such event.

Correspondent R.T. is a retired accountant who has resided in Arizona since 2001. Prior to 2001, he resided in California.

On March 14, he received a letter from the California Franchise Tax Board  (the agency that collects income taxes) claiming that he owed $1,343 for the tax year 2006. This was the first notification he’d ever received of this claim. This was an interesting claim given that R.T.:

– Did not reside in California in 2006

– Did not file  a State  income tax return in California in 2006

– Did not have any outstanding tax issues with California in 2006

– Did no business in California in 2006

– Owned no property in California in 2006

The number $1,343 is also interesting, as R.T.’s total Federal tax liability in 2006 was $650.  Since the top income tax rate in California is about 9%, and that only kicks in at relatively high income levels above $100,000 annually, then it’s difficult to see how anyone could owe double their Federal tax in California state tax.

But the truly interesting part of the story is that the state took $1,343 out of R.T.’s Wells Fargo bank account on March 2, prior to notifying him of the claim. Wells Fargo charged R.T. $100 for handling the removal of his $1,343.

As R.T. observed: “If I had filed a 2006 California tax return the statute of  limitations would have run out, but since I did not file a 2006 tax return there is no statute of limitations. This is the classic catch 22.”

I do not have copies of the correspondence so I cannot verify this sequence of events, but I have corresponded with R.T. for many years and have found him to be a credible witness to national events.  While some might claim he invented this story of state theft out of whole cloth, there is no basis in our years of correspondence to support that claim.

What is entirely believable is that the state of California, desperate for revenue, is churning out dubious income tax claims stretching back years and collecting the money without due process. This is theft, pure and simple, and charging the account owner $100 for transacting the theft is also theft.

Welcome to the predatory State of California–even if you don’t live there. If any mainstream media journalist wants to pursue this story, email me and I will put you in touch with R.T.

Somehow I doubt this is a unique story. R.T. said he immediately tried to call the California Franchise Tax Board  and was on hold for some time before his call was dropped. As of yesterday his attempts to contact the agency via phone were unsuccessful.  Why are we not surprised by any of this? Perhaps it’s because government/bank thievery and Catch-22 incompetence is now the  backdrop of our culture.

Charles Hugh Smith – Of Two Minds

Oh look here, someone who can balance a checkbook!

In a speech Wednesday that Volcker himself said was intended to be “a little provocative,” he challenged U.S. leaders to go further in raising taxes and cutting spending than suggestions laid out by bipartisan deficit-cutting commissions and panels.

“The problem is the United States can no longer claim unchallenged leadership over the world economy,” Volcker said at the Economy Summit sponsored by The Atlantic. “We have to do better . . . only a strong economy can ensure our political strength and national security.”

Yeah well, there’s a problem with that Paul, and you know damn well what it is.  We’ve got a GDP that doesn’t represent actual demand.  Instead, it’s been “goosed” for the last four years sequentially borrowing more and more money, sending false demand signals.

There’s a difference between a short-term rescue and structural spending as well.  Unfortunately our structural deficit games go back to 2001 post-9/11 and encompass both Democrats and Republicans.

Structural deficit spending is a massive problem and it is how Greece got in trouble.  It’s also how virtually every other nation that has found itself in the middle of a debt crisis got there.  When false demand signals become embedded in the economy they then become politically impossible to remove, as the entire compounded effect of them over time will immediately come off.

Economic advisers thus strongly recommend that politicians do no such thing, as they are well-aware that withdrawal of the false demand will lead to an instant economic Depression and that, of course, leads to immediate loss of power (through electoral defeat.)

In short you have a bunch of lawmakers that are drunk on power and are willing to wantonly, recklessly and intentionally violate their oath of office along with violating the people for their own personal aggrandizement and power.

Am I surprised? No.

But can this sort of thing avoid the inevitable — that which awaits all who try to abuse compound growth functions?  Nope.

I expect Volcker to be ignored for the same reason that everyone else is ignored in this regard, right up until the math forces contraction in government services, increased taxes or both — Volcker is well-aware that every dollar of tax increase is a dollar that doesn’t get spent in the economy, since deficit reduction through tax increases is a net GDP negative on a dollar-for-dollar basis.

He’s right, but he’s also being disingenuous in that Tall Paul is not putting numbers to paper and pointing out exactly how much government must contract or taxes must rise (or some combination of the two) to restore balance.

That’s probably because we’re talking about a doubling of taxes or a 50% reduction — or more — in federal spending.

Best of luck with the path we’re on folks.

Ronald Reagan once famously declared that inflation is a tax, but sadly most Americans did not really grasp what he was talking about.  If the American people truly understood what inflation was doing to them, they would be screaming bloody murder about monetary policy.  Inflation is an especially insidious tax because it is not just a tax on your income for one year.  It is a continual tax on every single dollar that you own.  As your money sits in the bank, it is constantly losing value.  Over time, the effects of inflation can be absolutely devastating.  For example, if you put 100 dollars in the bank in 1970, those same dollars today would only have about 17 percent of the purchasing power that they did back then.  In essence, you were hit by an 83 percent “inflation tax” and all you did was leave your money in the bank.  So who is responsible for this?  Well, the Federal Reserve controls monetary policy in the United States, and the inflationary monetary policy that the Fed has gotten all of us accustomed to is taxing the living daylights out of us.  This is madness, and it needs to stop.

In previous articles I have discussed how the Federal Reserve creates money.  If you have not read those articles yet, you can find a few of them here, here and here.

The Federal Reserve system is designed to have the U.S. money supply expand indefinitely.

And that is exactly what has happened since 1913.

But when the money supply expands, there are very serious consequences.

Every time more money comes into existence, the dollars that you and I are already holding become less valuable because now there are more dollars chasing the same amount of goods and services.

Right now, the U.S. government says that the annual rate of inflation is somewhere around 2 percent.  Those of you that have to buy food and gas on a regular basis realize how much of a joke that is.

Thankfully, there are others out there that keep track of these statistics as well.  According to John Williams of shadowstats.com, if inflation was measured the same way that it was back in 1980, the annual rate of inflation would be more than 10 percent right now.

But let’s use the doctored government numbers for a moment.  Using the doctored numbers, what inflation has done to all of us is still absolutely horrific.  Just check out the chart below.  This is what the Federal Reserve was designed to do.  It was designed to constantly expand the money supply and create inflation that never ends….

Most of us have been living in an inflationary environment for so long that we have come to accept it as normal.

Most Americans believe that prices are supposed to just keep going up as time goes by.

Unfortunately, we have now entered an era when prices are going up much faster than wages are.  Family budgets are being squeezed tighter and tighter as the inflation tax keeps taking a bigger and bigger toll on all of our paychecks.

I remember the days when I could go into the grocery store and get a large bag of brand name potato chips for 99 cents.

I remember the days when I could get all the groceries that I needed for an entire week for 20 bucks.

Unfortunately, those days are long gone.

Have you been to the grocery store lately?

When I go to the grocery store these days I almost get the feeling that someone is going to ask me to fill out a credit application.

When I get to the checkout counter I almost get the feeling that the cashier is going to ask me if I want to pay with an arm or a leg.

But food is not the only thing going up.  Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.  There are millions of American families that are keeping the heat really, really low this winter in an attempt to make ends meet.

Health care is another thing that has become ridiculously expensive.  During the Obama administration, worker health insurance costs have risen by 23 percent.

Has your paycheck increased by 23 percent?

Of course we all know what is happening with the price of gasoline.  The average price of a gallon of gasoline in the United States is now up to $3.72.  It has increased by more than 90 percent since Barack Obama became president.

This is why so many economists get so upset when the Federal Reserve starts printing money like there is no tomorrow.  Inflation is a tax that is very cruel to average American families.  It destroys their wealth and it destroys the purchasing power of their paychecks.

Unfortunately, this is always what happens when a society adopts fiat currency.  Our dollars are just pieces of paper backed by absolutely nothing.  When more pieces of paper are printed up, the value of the pieces of paper already in existence goes down.

This is one of the reasons why so many people out there are talking about “real money” like gold and silver.  Unlike fiat currency, precious metals tend to hold value over a very long period of time.

For example, it will take you about three times as much U.S. currency to buy a gallon of gasoline in 2012 as it did back in 1990.

But an ounce of silver will actually buy you more gasoline today than it did back then.

Back in 1990, an ounce of silver would buy you about 4 gallons of gasoline.  Today it will buy you more than 8 gallons of gasoline.

Talk about holding value.

We see the same kind of thing happening with gold.

When Barack Obama first took office, an ounce of gold was selling for about $850.  Today an ounce of gold costs more than $1700 an ounce.

It is not that gold is becoming so much more valuable.  It is just that the U.S. dollar is losing value on a continual basis.

So why don’t the U.S. government and the Federal Reserve quit flooding our economy with more paper money?

That is a very good question.

Sadly, our leaders seem to have a never ending addiction to more paper money and the American people are not demanding change.

On Wednesday, Federal Reserve Chairman Ben Bernanke told Congress that the Federal Reserve may have to implement even more stimulus measures in order to help the economy.

Of course such talk is utter insanity considering what Bernanke and his cohorts have already done to the monetary base over the past few years….

Thankfully, the vast majority of that money is still trapped in the financial system.  If all of that money was floating around on the street inflation would be far worse.

Those of you that think that the surging stock market is a sign of “economic recovery” should realize that the market has been pumped up by huge amounts of funny money from the Federal Reserve.  Just because the number of dollars circulating has increased does not mean that things are getting better.

There is much more to all of this of course, but what is important for the man and the woman on the street is the fact that when the Federal Reserve expands the money supply it is a tax on all of us and it makes all of us poorer.

So what do you think about the inflation tax and the reckless monetary policy of the Federal Reserve?

The Economic Collapse

If you make it increasingly costly and risky to open a small enterprise,  then no wonder unemployment remains high.

You hear a lot about Kafkaesque stifling bureaucracy in Greece and other struggling European nations, but America’s Status Quo is trying its best to destroy small enterprise with taxes and crushing bureaucracy.  I am self-employed, and have been for most of my life. When I did take a paid position, it was in  other small enterprises or local non-profit organizations.

I mention this because there is an unbridgeable  divide in any discussion of small business between those who have no experience in entrepreneural enterprise (i.e. they’ve worked for the government, NGOs/non-profits or Corporate America their entire careers) and those who have.

There are all sorts of similar chasms that cannot be crossed and which quickly reveal a surreal disconnect from actual lived reality: for example, the difference between actually playing football–yes, with pads, a muddy field and guys trying to slam you to the ground–and being an armchair quarterback who’s never been hit even once, never caught a pass or ever struggled to bring down a faster, bigger player. (And yes, I did play football in high school as a poor dumb skinny kid who mostly warmed the bench for good reason, but I lettered.)

At the extreme of this disconnect, we have armchair generals screaming for war  who have no experience of combat or war as it is actually experienced.

You get the point: it’s very easy for well-paid pundits who have never started a single real enterprise or met a single payroll to pontificate about “opportunity” and small business as the engine of growth, blah blah blah.It’s also easy for those with  no actual experience to reach all sorts of absurd conclusions about how easy it is to turn a small business into great wealth. (No, Bain Capital or other Wall Street outposts of financialization are not “small business.”)

In real life, it’s only easy to run a small business into the ground, especially when there’s a thousand tons of junk fees, taxes and useless bureaucratic  requirements on your back. Lest you think this an exaggeration, consider that it took two years and $200,000 to open an ice cream parlor in a vacant retail space:

“Ms. Pries said it took two years to open the ice cream parlor, due largely to the  city’s morass of permits, procedures and approvals required to start a small business.  While waiting for permission to operate, she still had to pay rent and other costs,  going deeper into debt each passing month without knowing for sure if she would ever be allowed to open.“It’s just a huge risk,” she said, noting that the financing came from family and  friends, not a bank. “At several points you wonder if you should just walk away and  take the loss.”

Ms. Pries said she had to endure months of runaround and pay a lawyer to determine  whether her location (a former grocery, vacant for years) was eligible to become a restaurant. There were permit fees of $20,000; a demand that she create a detailed map of all existing area businesses (the city didn’t have one); and an $11,000  charge just to turn on the water.”

There is nothing mysterious about the cause of this Kafkaesque Status Quo:each city, county, state and Federal fiefdom must justify its existence and payroll, and everyone in each fiefdom will fight with every fiber of their being to protect their turf. Politically, it’s a fight to the death to trim even the thinnest slice of bureaucracy, and so little if any ever gets trimmed.

Nobody will care until the city, county and state’s revenues collapse as people opt out of supporting the bloated dead-weight of the Status Quo with their own sweat and blood.

The only way to survive is to not have a “real” business, i.e. you write code in your living room or parents’ basement, or you do enough business in the informal sector (cash) to support your high-cost formal business.

Taxes and bureaucracy are not just urban phenomena, as this insightful report from Eric in Texas shows.  Eric draws a critically important causal line between the stifling of small enterprise and high structural unemployment: if you make it so costly, risky and burdensome to start a business and hire people, then no wonder unemployment is high and will stay high.

One of your recent posts  made me think of how difficult reinventing communities  and coming up with creative solutions for the problems of unemployment and displaced  people in our society is. I think it has to do mainly with the way in which lower  middle class / middle class people are overburdened with taxation. As you stated  in your post, the amount of taxation is staggering. Especially for the self employed, like myself.My wife and I pay much the same percentage taxes as you listed in your post. I live  in a rural area of Texas and from time to time small acreage properties go up for sale around our home. If we wanted to buy some adjacent acreage for the purpose of inviting a few of our friends, who are teetering on the edge of  unemployment and facing the prospect of real poverty, to live next to us and help  each other grow food, take care of livestock and find creative self employment  opportunities in our area together, the resultant burden of taxation would prevent it.

For example, as I see it, my wife and I would now be paying property taxes on two  properties, one would not have the homestead exemption. Any “improvement” on the new  property, e.g. a small house built for our friends, would only increase the property  taxes. We would also have to consider, if we planned to live together in this way  long term with the major contribution of our “unemployed” friends being their labor and time invested in our communal living experiment, what kinds of taxes we might be subject to in the future based on the way we are using each others time and  energy to achieve solutions for food production, child rearing, shelter, etc. I don’t know if we would be subjected to any taxation in doing these things only  assuming we might be.

To attempt to sum up my reaction to your post, I will make a list of what I think  would impede a lower middle class person who has some discretionary income and could  provide a small house and small acreage for the benefit of a few friends on the  brink of poverty, with the view to the arrangement being ultimately beneficial to  all involved.

1. Increased property taxes 2. The possibility of providing mandatory health insurance through “Obama care” 3. Taxes and or restrictions on what produce we can sell through farmer’s markets or through the Internet, e.g. the recent crackdown on raw milk sells, and “cottage foods” like goat cheese, homemade pies, homemade canned goods, etc. In other words, if our whole way of life is to  produce locally grown food for ourselves and our extended “family” and this is  threatened through excessive regulation and or taxation, I wonder if it’s really  realistic to pursue. 4. In Texas taxes are rising, even in this recession school taxes, property taxes, fees, etc. are all going up. 5. Federal taxes look like they are poised to increase.

If I didn’t have to worry about taking on the burden of all these forms of taxation,  property taxes being the most onerous to me, I might could use what capital I have to invest in a communal living arrangement that I would hope to be of benefit to my family and some of our friends.

It’s the idea, ultimately, that I want to reinvent my community (for me that means  bringing friends in close relationship in mutual work for mutual benefit) and provide opportunities to contribute. But if that means having to tangle with bureaucrats  over how much more I now owe because of my desire to do these things, I think I will be doing better to try to take care of myself, my wife, and our children, and  leave the rest of my loved ones to prayer and occasional modest charity.

In short, if we were not taxed every time we tried to do something, we just might  damn well do something!

Let’s focus on getting rid of property taxes, and other forms of ridiculous taxation so that we can free up our energy and time to do the very things you advocated  so well in your post.

I realize the benefit to myself and so many of some forms of government assistance, for example food stamps, child tax credit, energy efficiency rebates…. I think good government programs could be sustained if we did things like close our military bases around the world, brought the troops back to the states, and made education and real estate much less expensive, and allowed people to grow and  market local foods without encumberance.

You wrote:

Here is the ugly truth about the Savior State, welfare state, social welfare state,  or whatever you choose to call the Central State: The Savior State displaces and  destroys community and social capital. By making individuals dependent on the  Central State for free money, free food, free housing, etc., then the State has  taken over the natural function of community.

In my opinion, it is also that the Savior State displaces and destroys even the potential for ( my main point) community and social capital. By placing oppressive, punitive, discouraging, and unreasonable forms of taxation on individuals who may  otherwise extend resources of capital towards helping their neighbors, friends,  and even family. In this way, then, the State has decided to oppress and retard  the development of communities.

Well said, Eric, thank you.Before you jump in to “correct” this view of small enterprise in America, first list how many enterprises you have started, owned or run, and how many people were/are on your payroll.

If you think it’s so easy to get rich in small business, then here’s the keys, and payday’s on Friday.

Charles Hugh Smith – Of Two Minds