Taxes in the USA are voluntary

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Lovely place the USA - taxes are voluntary. Oh well, some taxes aren't like withholding tax. Oh, and if you are confused by the word voluntarily, you might struggle to realise that you are free. You're just an ungrateful inbreed if you don't.


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The use of CFDs to avoid taxation - the threat of market failure

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There is news here that the US debt is not $17 trillion, but actually $200 trillion. This I assumes is public debt. But I'm more interested actually in the nature of private debt. It occurred to me that its very easy for institutions to use debt to avoid tax. The strategy that they can apply is simply 'to just never sell a security', or at least to defer the sale as long as practical to defer any tax liability. This strategy would entail using 'Contracts for Difference' because the cost of capital is lower than options, and they are as liquid as the underlying security. The strategy involves using CFDs to avoid a tax liability by buying a 'contrary' short position (i.e. a new offsetting position) rather than selling the original security. Now, you are paying interest on that debt, but its such low interest rates at present.
The bad news is that if this is a popular strategy for 'profit-driven' institutions, then I fear govt has actually got itself in a pickle where it will cause the collapse of the financial system. The implication is that it will not bel able to let interest rates rise. It has in fact placed itself in a position where it is 'by default' actually managing the economy. I think if you examine the folly of any autocrat like Hitler; you realise that they did not articulate a plan to arrive at autocracy; they simply manage to get themselves into a delusional pickle of arbitrarily making decisions to get themselves out of an old pickle. This as I see it is the type of situation we are in now. Of course this is not new; and not just in global finance, but across every area of government. This is of course why government needs to be 'wound back' to simply 'facilitating a legislature'. Give it a budget of $1 million a year, and it will not have any power. Politicians as private persons contributing at their discretion in a private meritocracy.
So how bad is this crisis going to be? Well, we must remember that these CFDs net off. The problem is that you'd expect them to sell the 'short' positions in a rising market to realise any losses to offset against some of their gains. After all, you would expect that to reduce liabilities (or their interest expense and tax liabilities as much as possible). That's a problem. It also creates a threat of market failure because investors will be fearing that the govt will attempt to recoup unpaid taxes because this is  blatant 'tax evasion'.
Hehe I saw the tax evasion opportunity some time ago...but the opportunity for 'arbitrary govt policy (tax) to precipitate a financial crisis has just become apparent to me.
Why am I laughing? Well I guess because I hold a share of 4-5 million oz of gold in the ground....and I'm sure there is a lot more there. Since its underground, no brute will be able to get it. More importantly, its in a poor country where they are used to being poor, so they are not going to riot when they are 'still poor'. Whereas you suckers are going to be saying 'what about access to my super'. You have fallen under the spell of 'sanctioning arbitrary government', and look where they have taken you.
When the Roman Empire collapsed, intellectuals looked to 'emerging' poor markets for security. I wonder whether Western intellectuals will look to the 'secular' Asian markets in this fashion. It remains to be seen how these alliances will shape up, but there is destined to be a lot of angry people in years to come. The fault will be everyone's in general, but no one in particular. But really, the fault will be everyone's except the intellectual libertarians. Paradoxically, they will be the most spurned for being 'pro-market'. The reality however is that they were the only one's that did not sanction government intervention in the economy. The closest defender of their values in the US Congress was Ron Paul. He is 'compromised' by his position, but he wanted to abolish the Fed Reserve.

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The Australian Tax Office persecutes another innocent Australian

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The Australian Tax Office (ATO) has claimed another ‘scalp’ under its ‘Shock & Awe’ psychological tracking down of people evading tax. Its an interesting issue because:
1. We elect governments to enforce legitimate law
2. We expect government to act as custodians of people
So what of Jane and Ron Sakovits? They are a couple of small business people convicted of tax evasion. The problem with tax collection is that its ‘unjustified expropriation’. The reason that its justified is because:
1. Its involuntary or coerced
2. It’s unethical
Now, the tax office is acting under an entirely different ethical framework of course. But don’t let that full you, they are acting under the premise of illegitimate gain. So how do they get away with it? Well, they rely on several points:
1. The broader electorate feeling disempowered or unempathetic
2. The broader electorate feeling there is value in the expropriation – never mind that the quality of services under the Gillard government has been shockingly bad
3. The lack of recourse, the disparity in resources available to fight a case
4. The moral ambivalence of the counterparty
5. The conflict of interest of the presiding judges, i.e. getting paid by the govt; retaining the same ‘bureaucratic mindset of the judge’.
6. The belief that compliance is the basis of stability and peace
The reality is that you have what you have come to believe are political rights because the government no longer needs to politically persecute you as long as it has ‘economic claims’ over you in the form of taxation. Now, most of you don’t really believe in this system; you simply feel powerless to overturn it, and you are frankly scared to confront the government, with its unlimited resources provided by you. What you are of course lacking is:
1. A strategy to mobilise in defence of rights
2. A moral conviction – your source of courage
3. An issue – empathy for those persecuted by this system

Now, the Australian Tax Office is picking off individuals because they like to make ‘examples’ out of people. They particularly like to make examples out of high-profile, flamboyant people like Rene Rivkin (Australian stockbroker) and Kim Dotcom (NZ-based German). In NZ, the NZ authorities have been shown to act with contempt for ‘due process’. The authorities got it wrong; no one went to prison, and PM John Key said 'sorry'. Does that not strike you as a total anomaly. Not to mention the fact that theft is ok under statutory law, but illegal under common law? Remarkable.

The reality is that there is nothing to say this process is actually fair; simply its been sanctioned by a disinterested electorate. The reality is that you’d need a lawyer to understand the tax code, and you need an accountant to pay. Its rediculius…and you all know it because you all:
1. Reduce tax by overstating deductibles
2. Accept cash as income
3. Over-use public services and burden people with your excessive use.
It’s human nature to do it. These people don’t need to feel guilty for evading tax; they are heroes in my mind, because they acted on their own personal convictions; and didn’t sacrifice their judgement for the ‘whims’ or practical extortion imposed by others. They defined a mob of thieves, and if people had any empathy, they would rise in protest at their incarceration.

Justice Peter Hall said the offenders had engaged in "deliberate, systematic and repeated acts of evasion" between April 2001 and June 2006. 

By what moral code have they acted illegitimately. The reason they went to such efforts is because they care about their money…so much so that they used their own money to pay for accounting and ‘evasion’ services. Whose money did the tax office use to hunt them down and to prosecute them? The taxpayers. The ATO is using taxpayers money to persecute taxpayers.

Justice Peter Hall: “The tax system relies heavily on the honesty and integrity of those who participate in it...This was a breach of the community's trust . . . The sentences are intended to show that all community members must contribute to the tax system according to their means”.

No, the tax office does not rely on ‘trust’, it relies on fear of prosecution. So long as people remain fearful they will be stuck with tax liabilities. The reality is that the tax office cannot afford to place people in prison, nor to administer a ‘heavy’ bureaucracy. Instead they rely on ‘shock and awe’ tactics of high profile ‘lynchings’. But the problem with ‘high profile’ lynchings is that low profile people think they can get away with it, so you have to make advertised campaigns to say you are going after certain sectors. These judges and ATO officials have no integrity. They can no more identify a coherent theory of values from our legal tradition than you can. In fact, taxation is legal only as ‘statute law’. Extortion and theft are of course criminal offences under common law; which is a far more logical framework. In fact, the statutory legal system is actually for the most part a breach of the spirit of the law. How can you expect law to be ‘just’ if it entails mob imposition on minorities? It gives no objective mode of defence to people who object to taxation. If it did, then these people would use it.

We let off people who protest whale hunting more leniently than the tax office; and these people earnt this money. The tax office didn't. It is persecuting these people to 'make an example of them'.


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Australian tax office pursues Google and Apple

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The Australian government intends to amend the 31-yo transfer pricing provisions of the tax legislation to collect more tax from internet portals like Google and Apple who collect a high volume of sales online. This revision to the tax code is just one of a litany of measures which purportedly closes another ‘loophole’. Australia is not the only country seeking to close such loopholes - Britain and China are also targeting the likes of Amazon, Apple and Google.

Treasurer David Bradbury has asked Treasury’s head of revenue, Rob Heferen, to develop a brief on possible measures it can take, before being presented to an advisory group comprised of representatives from business, tax agents, academics and the broader community. 

Treasurer David Bradbury: “It is not my usual practice to mention companies by name or to publicly canvass the tax position of particular taxpayers.  Nor is it my normal practice to publicly discuss strategies employed to minimise corporate tax.  However, I will be departing from my usual practice today as I believe there is a strong public interest in drawing attention to practices that have the potential to undermine the future sustainability of Australia’s corporate tax base”. 

Why would any member of the public have any specific interest in how much tax a company pays unless (i) they are parasites sanctioning extortion, (ii) corporations living in fear or disdain of a system that extortions. There is limited public interest in this issue; and those effected are easily consulted through their industry associations. The Treasurer’s sole interest is scoring political points. 

Treasurer David Bradbury said that increasingly, governments were discovering the lack of effectiveness in the digital age of international tax concepts created for the industrial age. “This has been highlighted by the compelling evidence revealed by the UK Public Accounts Committee examination of the Taxation of Multinational Corporations”. 

Did it occur to him that the extortion of funds from companies is also a legacy of the pre-Industrial era, and that such extortion of wealth was customary in the Middle Ages, and persists only today at a much larger scale because governments distort the economy to such an extort that they precipitate boom-busts that offer a defence for the welfare system…and other elements for tragic liberals. 

“Cranking up the scrutiny on big companies is a vote winner, particularly when it is aimed at companies that pay minimal tax or whinge about the tax they are paying, such as multinationals engaging in elaborate transfer pricing rackets”.  

I am at a loss to hear of occasions when Google has complained about its tax rate. I suspect there will be no complaint….and it is perfectly within their right to complain….is it not…or should they be guilted into compliance. But note how the government lumps all multi-nations in the same bag. The mining multinationals were pays 37% tax before the government raised it over 50% because it was so impressed with their earnings power. The government had no qualms undermining the interest of shareholders. The minerals boom was 2 decades in the making – why could it not act before miners were so profitable, that it had to extort wealth without notice from shareholders, and in the process undermine the sovereign credit rating and perceptions of Australia. Because fascist governments are:

1. Centralised and slow

2. Non-empathetic with the people’s interests they presume to protect

This all goes to advance the argument that representative democracy is a framework for extorting wealth. There are legitimate justifications for having a resource rent; but the time to apply it is not at the peak of the boom; it’s when earnings are modest (for income tax), or when titles are issued (for indirect taxes/charges).  

“Treasurer David Bradbury cited media reports that Amazon paid no tax in the UK yet made more than £3 billion in sales. It did this through an elaborate “routing” of transactions through Luxembourg, where it faced an effective tax rate of 2.5 per cent”.  

We might welcome competition between governments in the realm of administration and taxation…after all is that not the best means of achieving efficient government…if we must have it. The problem is that we have unprincipled governments ‘ring-fencing’ earnings in order to collect taxes which result in businesses having to play circus in order to minimise taxation. It’s a false economy. Why not just adopt ‘user-pay’ charges? The reason is because:

1. Politicians have demonstrated that they are of no ‘use’

2. Politicians cannot enslave people for dubious ends if they cannot extort a surplus they cannot earn

Treasurer David Bradbury would have you believe that these companies have acted against the law. This underwrites his justification to apply the tax revision retrospectively from 2004. 

“It is a complex web but governments in need of revenue will pull out all stops to get back what rightfully belongs to the country”.  

The problem is – it’s not rightfully the governments. It’s not even the people’s. The role of government is to protect people; not to extort wealth from them, and use some notion of ‘mandate’ or majoritivism to achieve it. That is ‘mob rule’, and is akin to the type of politicking we expect from unions, not governments. This is why Labor in government is dangerous. The bulk of Labor Party supporters come from the union movement; and they enjoy the support of many in the media. So in what sense has Google and others acted contrary to the law. If they broke the law, why does the law need to change? If the government was ‘rightful’, why did they lose a litany of court cases?

Treasurer David Bradbury: “Many in business reject the notion that paying a fair share of tax forms part of a broader social compact, instead believing that it is just another cost of doing business. On this point, I vehemently disagree”. 

Business leaders are goal-orientated. They are good in business because they just get in and do it. It is fair to say that they would be far less functional if they concerned themselves with ‘taxation issues’ or politics over which they know they have little control, because they are a minority. For this reason, business plays just one card – the ‘pragmatic, nation’s interests’ card, and it’s played against ‘common good’ proclamations by organised unions. It’s a shame, because there are compelling moral arguments to be heard in defence of capitalism, and they are not made because you have business and union-liberal interests attempting to extort influence over an unthinking electorate whose framework for engagement is anything but rational. Given that this extortion system creates the sanction for legislation, you have judicial officers interpreting laws which are anything but rational. This juxtaposes two forms of law in conflict:

1. The principled, common law applied to specific contextual issues, i.e. This gives rise to the ‘spirit of the law’

2. The unprincipled statutory law which is arbitrary, and not able to apply to any context which is not defined. i.e. this demands a ‘letter of the law’ interpretation that gives rise to a constant stream of amendments to prevent loopholes, which create more loopholes. 

3. The unprincipled or pragmatic teleological ‘intent of the law’; which is another foundation for context-dropping.

Treasurer David Bradbury: “These businesses benefit from operating in an economy built on social and economic institutions — our markets and regulators, the rule of law and our judicial system — not to mention physical infrastructure and human capital that is funded or supported by the taxes paid by others”. 

No they don’t; they are greatly penalised by the institutions which tax and regulate them. If the Treasurer is so convinced that government is so good for corporations; why does he not give them the discretion to pay for the services which companies use or sanction? The reason is because our tax and regulatory system is not a system of justice, but a system to extort and to justify the existence of politicians. The government is functioning on the premise that:

1. Government is a value – irrespective of whether its constituted to protect or to extort. 

2. Government services to the extent that Google and others use them; are paid for. i.e. Google, if it goes to the High Court, to challenge a tax, will pay fees for such services. 

3. Government has a legitimate position to interfere in the voluntary trade between a counterparty and these companies. Google has offered a service to these counterparts, and voluntarily received payment from them. The same cannot be said of government. No one asked for the government to act; it just assumed that role because:

a. It is embarrassed by the unfairness of its ‘unprincipled’ tax system

b. It needs the money to ‘pragmatically’ fill a hole in its budget…because it cannot meet a ‘promise’ to its union thug-members. 

Now, if you are not convinced that our politicians and tax collectors are a pack of thieves….read this:

“Where some multinational businesses enjoy the benefits of these public goods but refuse to pay their fair share, they are free riding on efforts of others”.  

How possibly can a politician or tax bureaucrat who depends on the ‘extorted wealth’ of companies complain about companies, who engage in voluntarily relationships with their counterparts. Well, I’m aghast. Knowing that the tax commissioner is not an extortionist, but a man of principle, I shall duly ask him to reflect on his position if I ever meet him in the High Court. Rest assured that the government does not have the courage to confront me in court. If they did; rest assured that they would persecute my by using your hard-earned taxpayer funds to keep me in court for a decade…until my hair falls out…or goes grey like other ‘defendants’…like Julian Assange. Institutions for protection or preservation of illegitimate, unprincipled, self-interest….you decide. 

No this government and the media will not allow principled people like me to vent our opinions because we are an embarrassment to them. We challenge people to think. They need people’s mindless acquiescence; so they will use any trick in the book to keep people like me ‘off radar’. In the old days they would just persecute or imprison non-compliants; today, they just simply stop you have any effective voice. Your ‘right to associate’ or ‘freedom of speech’ means nothing if you have an ‘arrangement’ with media to preserve their market dominance. 

What is wrong with this framework? Well, I would suggest that there are several problems with this regime:

1. The tax office’s advisory group comprises ‘yes groups’, i.e. Business passes through its costs to consumers, and gets generous tax concessions on the way through. The complaint is that these internet companies are getting it ‘too good’. And yes, that is probably the case at 2.5%, but there is no such thing as a ‘good slave’. So the ‘solution’ of the tax office is entirely untenable if good slavery means taxing Google et al like other slaves at 16-30%. The solution is to end slavery and give people to pay for the services they use; and having an objective framework for determining those rates, and an ‘objective judicial’ process for assessing their rates if they want to challenge the rates applying to them as a ‘trader’. 

2. The efficiency of the tax system given that it has been 31 years since the government sought to amend it. Yes, government is so efficient that it takes 3 decades to arrive at solutions. Consider that gambling laws in Australia took 3-4 decades; and NZ is still waiting for legislation to regulate offshore shipping after its ‘letter-of-the-law’ framework failed to hold the owners of HMAS Rena accountable for damages. 

3. The spectre of a court which functions as the lap-dog of the legislature. I ask you whether it sounds like justice when you have a government enduring ‘a string of losses in the courts’ prompting a ‘unpopular government’ to revise the law. In what moral context did the courts reject it; and upon what moral premises will they be obliged to accept the revisions in future. The basis is political extortion.

Source of quotes: “Knives sharpened to cut Google's sandwich” by Adele Ferguson, SMH Online, website, November 22, 2012.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

International banks and EU be damned!

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What to hear about a government that has a very sound approach to the financial crisis; which acts in the interests of its people, and not in the interests of international banks. Read this story - you will not hear about it from your local media conglomerate, and you ought to wonder why.

Iceland was in a financial crisis. Initially the ECB negotiated with the new government of Iceland for Icelanders to pay back their nation's debts. The problem of course is that the Icelandic people realised that it was ridiculous for them to be carrying the burdens of the state, and most particularly, the debts of privately-owned banks. So they lobbied the government to change their policy. Iceland has since snubbed the global financial community, and is looking at financing its own activities. Sounds like a good model. I hope Greece and the other 'weak states' of EU follow suit.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Doctors wronged by Internal Revenue NZ

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A NZ couple - both doctors - have been found by the NZ Supreme Court to have engaged in tax avoidance. Their crime was diverting income away from their personal identities with the intent of reducing tax. There are several problems I have with this:

1. They have caused no injury to anyone

2. We have an incredibly unfair, immoral, unprincipled tax system

3. Unlike the government - this couple did not extort the money from others - they worked for it, and as doctors, they saved lives.

4. The government, which has the capacity to change the law, lobby the community for principles, spend money wisely, and withdrawal from its extortive practices, fails to do so.

So I ask you, who would you prefer to have the money, earned by the doctors, and extorted by the Internal Revenue Dept? I personal would love to see government funded, but not on the current terms. Given the huge public deficit, they cannot even do that. Not just NZ either. There are 9 of the 24 OECD countries around the world which have unacceptable deficits, and consider this as well:

1. There has been no substantive (debt crippling) war in 65 years

2. Add a 10th country, as Australia was until the unprecedented 'China-inspired' commodities boom a 'banana republic'.

This pair of doctors ought to be national heroes. As heroines, should we not expect them to fight for their cause - for a fair tax system? Perhaps, but I suspect they never had the moral or intellectual ammunition to defend their beliefs. Is that their responsibility? I say that its the governments. After all, our politicians are the custodians of the 'moral forces', namely the military, the police, and quarantine. Ought we not expect justice and principles from them. Where is the moral framework. I can't even see any mention of moral principles or human rights on the National Party website. What I do see is that the National Party philosophy is 'pragmatism', i.e. a philosophy of non-principle, and the National Party president Peter Goodfellow is the nation's 16th wealthiest men. Might we expect that, since the nation's governing party is also presided over by 'big business', and small business is getting such tax rorts, that it is the NZ salary earner, which includes doctors, who are getting such a bad deal. This couple is being persecuted for being doctors; for not having the time to attend to the government's complicated tax system, to create the same 'avoidance structures' as the wealthiest in the country. I personally can't be bothered to invest in such dishonest structures. I have neither the time for such 'low productivity', wealth-destruction measures, that I simply don't do it.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The government's days are numbered

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Are you inclined to accept the government's claims that they are effective providers of justice...think again....its all a grand effort to manage perceptions. Our precious state has failed.. It is on its last legs. Expect civil unrest in the next few years. The government is falling apart. Not just in the Middle East, but it will spread to the West. No one is paying tax....and rightly so...and government is woefully inefficient.

Of course no one wants civil unrest...after all people have avoided it for 200 years. But when your house goes into foreclosure, when your savings are pilferred by some corporate fraud, you take to the streets, like the people in the Middle Easy, who have nothing to lose.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Australian Tax Office engaging in psychological welfare

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We are approaching the end of the financial year again; and once again, the tax office is working in concert with the media to extort wealth from you. The psychological manipulation is 'in play' once again. Governments are increasingly using fear or 'shock and awe' techniques to extort wealth from you. Consider these media headlines:

1. "Eight ways to beat the taxman" in the Sydney Morning Herald, as if you are under some obligation or compulsion to have a relationship with them, or comply with their demands.

2. The pursuit of high profile 'tax evaders' by the tax office to impress upon you the unlimited resources (i.e. your money) that the government can use to pursue you. Refer to my posts on Wesley Snipes and Paul Hogan.

3. Often there are argues of the nature 'The tax office is targeting deductions, or 'fringe benefits', etc. Every year there is a different psychological threat made upon you.

The tax offices pursuits of course rely on your acceptance or ambivalence about whether you actually are obliged to pay tax. This of course relies upon your ability to argue in a court of law that you ought not to, and that you have a right to legal aid. Most of course don't have the skills to argue these points....so they live in fear of the tax office. The reality is that there are ways of protecting yourself from government that few people appreciate.

In conclusion, the tax office likes to smear or discredit people as 'tax evaders', but as far as I'm concerned, these people are righteously acting in their self-interest, and that is an entirely reasonable thing to do given that:

1. The state does not deserve an effectively 'unconditional' or arbitrary sanction to tax

2. The state is not acting as it was intended, i.e. as an agency for the extortion of wealth for the sake of its own self-serving ends. i.e. Acting on the basis of perceptions rather than facts, or demonstrating that it acts without regard for rights, or gives no regard to your interests are all evidence of its failure to comply with its constitutional requirement of 'good governance'. So our government is in breach of the 'spirit of the law'.

3. The ability of the tax office to use its 'unlimited' taxpayer funds to persecute you...keeping you in court for a lifetime under the threat of pernicious 'arbitrary' statutory law.

4. The government is entirely inefficient and unfair in its collection and expenditure of public funds. It is not a moral custodian, and it can be reasonably argued that it is not acting within the spirit of the constitution. Anyone with a solid grasp of the philosophy of law will realise this.

So I say to you....if you pay your fair share of tax; take every measure you can to reduce your burden. I personally would celebrate any effort which repudiate the govts right to impose arbitrary imposts upon you, fair or unfair. There is no question of fairness when it comes to extortion. You are not morally obliged to suffer because others are subject to extortion. You are not a slave to other taxpayers; just as you ought not be a slave to the tax office.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Cate Blanchett driving taxpayers to the grave

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In recent times we have supported so-called 'tax evaders' like Paul Hogan and Wesley Snipes for their efforts to deny the extortionist governments that enslave them. We now turn our attention to those political apologists for slavery like Cate Blanchett. So how is Blanchett a "slave driver". Well, she isn't. She is the apologist, the appeaser, the moral sanctioner who gets on her high horse and breaches:

1. The virtues of helping the poor - with others money

2. The virtues of saving the environment - even though she has no insight of merit. She has not studied climate. She probably barely even reads newspapers given the demands of being overpaid to create stories which allow people to snub their minds and engage in mindless escapism at the movies. Then she has the balls to enter the real world and make her fictional values 'contemporary'.

Interestingly she sights her 'vested interests' as a mother. I wonder whether she is sabotaging the development of her children by spoiling them with everything they need. The moral principle surely has not dawned on her because she stands her advocating, not just ignorance of climatology as her moral credentials, but also for welfare. Most people would not sanction spoiling children, and for the same reason they should not sanction unconditional or coerced wealth redistribution. Why? Because its not earned. Its guilt-induced; it makes people feel like they are the centre of others survival. Very narcissistic of Blanchett, but entirely not insightful or helpful. It is actually destructive to human character.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Trusts another false economy thanks to government

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Its an election year in NZ, and the NZ Herald is drawing attention to a tremendous false economy. The resources that people sink into setting and administering trusts. The problem of course is that this piece of statutory folly is destined to change because its senseless policy. Yes, you might decide to set one up, then the rules arbitrarily change. It effectively turns you into a slave to the tax code. Citizens of other countries beware! This is what arbitrary government can do to you.

We need to get rid of trusts. Get rid of deductions! Get rid of subsidies! Get rid of tax! Bring the country back to its essential services. Strip out the minimum wage and watch the price of labour fall. Strip out all forms of private and public extortion and watch costs fall, and see people resume spending. No one but the super-rich can afford to build in NZ at the moment given:

1. The high cost of building approvals by local govt

2. The extortionate regime for land ownership (i.e. zoning) - worse in Australia because it actually has a growing population. You can still but cheap in NZ where the population growth rate is negative....if you can get a job.

3. The extortionate mark-ups by builders to buyers, whom are effectively using the market power given them by their customers to run a cozy deal with the hardwares. Tradesmen need then only work for 3 days. If they were aspirational, they'd just go to Australia for a 50% higher wage.

Trusts are a form of unfair tax persecution that hurt the poor more than anyone else. They are a productivity nightmare. It is not just the professionals you need to pay, its what its doing to people's judgement. People's capacity to think conceptually is impaired when their lives are governed by arbitrary ideas - as opposed to the logical, long range ideas that they would live by if the market actually followed principles, and not arbitrary statutes. If you want to succeed as an investor in this market, you need to sleep with Ben Bernacke, not study economics. Yep, if you are a seductive prostitute, you might just be over-qualified in the modern era.

Read more about the trusts industry in NZ.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Tax collection - its all in the interpretation

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Do you happen to think the tax office has too much power? Well, you would be right for a number of reasons:

1. Legal extortion: The tax office actually has the 'near' unlimited resources to spend on tax policy or 'precedent', whilst you, as a taxpayer are constrained (in most cases) with minimal resources, and a desire to seek redress for just your case. Doesn't it seem like an unlevel playing field? Well, you ought to be more anxious than you know. The implication is that for a minor expense of say $5000, you might need to fight your case to the High Court, which might cost you $500,000. Oh, and tax payers will probably pay $5mil. The bureaucracy are happy, because they just made the state $300mil a year (my guesstimate) in additional revenue.

2. Arbitrary powers: The power for the tax office to extort more money from business and individuals is a very arbitrary matter. The reason is that many moons ago, common law was supplanted by statutory law. Now, common law is rather commonsensical, whereas statutory law is 'ok' on a good day (when its enacted), but it quickly turns to quicksand in the interpretation. The reason is that, unlike common law, which actually has a context established by its framework tied to fact, statutory law has no framework, so policies are only inclined to ensure its correspondence to their existing policy. i.e. Rationalism. The implication is that one bad law begets another bad law, after business finds loopholes, or the judiciary is forced to interpret bad law.

Here we have an example of the arbitrary powers of NZ Internal Revenue. It was probably asked by the government to find more revenue. The reason is that the NZ govt is between a rock and a hard place. Its an election year, and the government has a non-performing treasury dept. It needs money and it is reluctant to cut spending, even if the polls suggest its ok. Well, of course they will do that after the election. In the meantime, the tax office is after cash.

Here we have NZ Internal Revenue arguing that you cannot claim deductions for software development which is unsuccessful; the argument being being that unsuccessful development does not lead to revenue. This is silly policy because:

1. The development is undertaken with the intent of making a profit. If this principle is not retained, then capital losses would seek to be deductions, as well as a great many other expenses and losses.

2. The policy is not consistent with other laws, or even other countries.

Frankly, I think the tax office cannot reasonably expect such an interpretation to stick. The business community will lobby against it. Why would the tax office do this then? I would suggest the NZ government is engaging in some creative accounting of its own. With an election in one year, a budget due before then, the NZ government will use the law as the basis for its budget, and then after it has benefited from it, it will reverse the decision. Its the public sector equivalent of a corporation making a provision for some contingent liability....except its contemptibly dishonest. Sounds like government, our moral authorities, doesn't it? They are fictitiously creating revenue that they have no desire to collect, lest they upset their constituency.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

WikiLeaks engaging in persecution

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Julian Assange is making a grave moral error by publishing the private client details of Swiss bank customers. This was always going to be the folly of a man who lacks coherent moral principles. He does not realise that not all secrets are bad. If a man points a gun at your head and demands 'your money or your life', are you going to avail his offer because you don't want to keep secrets. This is the same reasoning that people hide money from the government, and the same reason they evade tax. This moral relativism has the potential to impose immoral persecution upon 'morally' innocent people. Switzerland is a state that has a lower level of coercion than other countries. It is not morally coherent, its just better by a relativist standard..or a matter of degree. Democracy is extortion and Switzerland is a democracy.

The good news is that WikiLeaks need not exist. I would not be surprised to see it disappear, nor would I miss it. The good news is that it will in all likelihood be the precursor to a group with a sounder philosophical base than it. It can be expected to spark a plethora of 'copycat' organisations. The problem of course is that governments around the world will conspire to end such 'leaks'. They will adopt computer systems to stop people copying data; they will globally adopt laws to stop such action. But Assange does at least show that 'where there is a technical capacity, there is a way. But can we also count upon tech geeks to be a great leader AND philosophically correct? It cuts down the odds significantly.

With this latest action, WikiLeaks is helping global governments to persecute private persons. It will want to be very sure of its principles. These people have a legitimate moral right to their wealth....even if those rights are not acknowledge in flawed, contradictory law. Even though statutory law contradicts the spirit or 'principle' of common law.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Hogan claims to have paid 'enough tax'

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Sadly, I don’t think Hogan is a proud ‘tax evader’. I think he would have us believe that he pays all his dues. The question of what constitutes ‘enough tax’ as he calls it; the reality is that the government has no moral right to expropriate, coerce or deceptively extort money or assets from anyone. That is the principle that has to be upheld. In all honesty, I don’t think Paul Hogan has the convictions to defend that principle. I think it’s simply about the money. Is it any wonder that the wealthy continue to see their wealth pilfered and the poor justifying their claims to it....not to mention the middlemen in the tax office.

There is no such notion as ‘enough tax’. Firstly, tax is not paid on a ‘user pays’ basis as it should be, so what is enough. The basis upon which tax levels are imposed is nothing but extort. There is no rational basis for it; its totally arbitrary. Society’s whole notion of taxation is morally bankrupt. i.e. We celebrate the provisioning for the poor in terms of ‘spending increases’ with no consideration for the utility of that spending.

Some would argue that it’s hard to test the efficiency of such spending. It actually is very easy. The reason that it isn't done is because collectivists in the community don’t care, and certainly the government doesn't. Rather than advance a moral principle, Hogan has resorted to moral relativism, arguing:

'I have come to this great tax haven, the USA, where the IRS (Internal Revenue Service) are gentlemen compared to our lot’.

Really, he is setting himself up for failure there because he might find the IRS is the next agency to pursue him. More importantly, ask most Americans, and you will find that the Australian government is second only to the USA in terms of pernicious tax policy. The US like Australia is very aggressive in pursuing offshore income.

When Hogan arrived in Australia last year, the ATO issued a Departure Prohibition Order against him, which prevented him leaving the country until the alleged tax debt was paid or settled. Hogan argued:

“The only reason he was allowed to leave Australia was due to the publicity to his case by the international media. 'Guilty until proven innocent?’”.

This is precisely the point. You only get (slim) justice if you are a high profile personality. The law is arbitrarily applied. It shows just how weak legal protections are. There is consequently little justice for anyone because we are forced into a tyrannical compliance.

I frankly would be pleased if Hogan disclosed that he is a ‘tax evader’ and proud of it. But instead we have wealthy, high profile people defending or seemingly complying with an illegitimate system. This is how bad systems prevail because ‘good people do nothing’. Moral cowardice all round.

When will high profile people like actors, business people stand up and attack the legal system. The problem of course is that these so-called 'practical people' are so intellectually mal-formed that they don't see the distortion that government has on society at all levels. Government is 30% of GDP, which is probably worth 30c in the dollar, but add to that all the distortion to justice, pernicious laws, obstacles to investment, the protection of criminals, corruption, and malfunctioning of laws, and corruption of personal values...there is a lot of damage. Let us consider for a moment....a comparison....between China and Western countries. People think that China GDP grows at 10% per annum because of cheap labour. The reality is actually that its because its unencumbered by government....at least effectively so. There is some level of 'structural' impact, but that is no different than the structural benefit realised by Australia's mining industry, and the state of WA in particular. The government actually hobbles our performance, it diminishes your moral character, it turns you into an utter moral sceptic, so you repudiate ideas cynically, because you wouldn't know a good idea if it struck you in the face. It leads people into psychological repression, which is ultimately why people just turn their backs on logic. That is a summary of the moral cowardice involved at all levels of society.

Sources: Daily Mail UK, IMDB.com and Tax Abuse.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The legal standing of the US tax code

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Are you wondering how honest and compliant the US government is with the US constitution - listen to the following extract from the movie by Aaron Russo. In this movie, Russo exposes the extortion perpetrated by the Internal Revenue Service (IRS). Recognise that the US government is probably moving to 'voluntary compliance' because it knows that - on the basis of its own laws - it is acting unlawfully in several respects:

1. They are acting in contravention of the US Constitution

2. They are coercing the US people into paying taxes

3. They are incarcerating people for not paying tax - when they are not legally required

This movie highlights the incoherence of the IRS tax code, as well as the disingenuous character of the IRS, however what is not explored in this video is the moral indecency of taxation. Any force of coercion INITIATED against others is an abomination. I encourage you to view the whole movie by Aaron Russo called 'Freedom to Fascism'.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Wesley Snipes - moral crusader for taxpayers?

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Another media celebrity, actor Wesley Snipes, is being persecuted by 'all powerful' government. The problem I fear is that this is another media celebrity without a good defense. Not that it ought to be hard to defend oneself from thieves. After all, why do common criminals get sanctioned for thieving, but its legitimate when the government does it. Its not a very common sense system is it. Well, that should not surprise you because the voting system is not sensible either. Why would an election between candidates you don't know result in a leader following prudent policy if you don't know the person, and they are not accountable for you for 3 years, and what's more, you have only a choice of two candidates to start with, because there are only really two parties contesting the election. Does this not surprise anyone? Moral scepticism perhaps. This is my fear, that Wesley Snipes, is just another taxpayer who is annoyed by the system, who does not have a well-conceived or sophisticated defense against this system.

This system of persecution has to stop. These are innocent people. Taxation is slavery. These guys are 'quasi-heroes' for standing up against the system. Unfortunately, they probably don't have a well-conceived defense. We live in hope. Paul Hogan tried to circumvent the system, so he looks like a 'tax cheat'. In his defense, morally-speaking you don't have to be honest with immoral people. You are perfectly ok to lie and cheat the tax office of funds they did not earn. To the extent that there is utterly no public accountability, there is a good chance many of your are paying too much tax, and even if you are paying too little...good for you, since you did not sanction this system...even if you voted for it...you could argue that you only wanted a better class of idiot.

I want to applaud Wesley Snipe's courage....I hope his intellect and choice of lawyers stands up to scrutiny. I tried emailing Paul Hogan's lawyers....but they are moral sceptics. There is no other way but an appeal to morality. Any win in the court system necessarily has to take the court back to the start of statutory law. Our political system was corrupted in the 1200s. Why? Well, we were still in the Dark Ages, and during that time, extorting money under the threat of fear was considered good practice. You would not stand by and watch an authority figure extort money from a child, a private person...so why do you stand by why the government does it 'unconditionally' to you. That's right. There is no limit to what the government can do to you. Even in countries with a Bill of Rights....that protection is moot in a system of arbitrary 'morally sceptical' legislature.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Thieving ATO targets Paul Hogan

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The Australian Tax Office has scaled up its extortion racket by extracting accusations by a tax advisor to Paul Hogan and John Cornell. Why do I say this? It has long been the practice of the ATO to target high-profile, wealthy Australians who clearly don't believe in paying excessive taxes to support regimes they don't believe in. One cannot say what justification Hogan & Cornell had for minimising taxation. I can only say that any law based on extortion, unconditional and 'initiated' coercion, whether it is the arbitrary law of a 'representative' government or some mob, is still theft. There is no moral legitimacy behind the law, and the fact that it is a 'tyranny of the majority' who condemn these men because of their own cynical acceptance of slavery, in no way admonishes them. Slavery is bad for everyone. Unconditionally funding government results in the worst form of public administration.

Send a message to the ATO that you do not support persecution of wealthy Australians for the sake of its self-serving power plays. Does anyone remember the efforts the government went in pursuit of Rene Rivkin. In the meantime, you can't even get the govt to look at disclosure issues. This is where it should be focused. Fraud and disclosure - to protect the legitimate interests of Australians...not stealing money from those who have 'made it'....why? Because they have more than you.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Kloppers carbon tax - is it a dodgy boardroom deal?

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Isn't it highly suspicious that a lone mining CEO (i.e. BHP's Marius Kloppers) would suggest a need for a carbon tax just after his company (BHP), Rio Tinto and Fortescue Metal Corp won a huge tax concession over Resource Rent Tax. Maybe he is just a 'born again' liberal, or is there some sinister backyard deal here for Labor to get traction with this ugly tax. Science is not a popularity context. Business CEOs ought not be accepting "popular" scientific opinions.

I don't think this ought to strike anyone as a surprise given that Labor did exactly the same thing before the election. It shored up support with just 3 miners in order to imply that 'reasonable' miners can accept a Resource Rent Tax. It appears to be doing the same here with the Carbon Tax, with another dirty boardroom deal. You cannot trust politicians or CEOs. Its all about their political survival or financial interests. Maybe Gillard even has a Swiss bank account like Graham Richardson. It is not even necessary. It does not have to involve money to be corrupt. Gillard might actually just be a 'socialist', with nothing but contempt for money. But that is hard to fathom when you need it so much in politics. But one can draw a line between ones personal politics and personal lives....compartmentalisation comes easy to people with no principles.

What a shame we abandoned moral philosophy in the late 1890s...we could use it right now. You don't have to worry about corruption when reason is the standard of value. It only takes one right person to set the debate right.

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Is China really a threat to Australia?

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Maybe the problem with the administration of George Bush was not simply his poor policy judgement, but his choice of friends, and ‘advisers’. According to the SMH Online, Philippa Malmgren, an adviser to George Bush as well as Deutsche Bank, is suggesting that Australia should lock China out of owning Australian resource assets. The problem with this policy is:

1. Imperialistic fear peddling at its worst, i.e. The old ‘them & us’ talk of China taking over the world.

2. Poor role model. Are we not trying to encourage China to end its collectivist history of socialism, by adopting capitalism, i.e. free markets. This counter positioning of fascist imperialism is not the antidote. Intellectual integrity is.

3. Poor empirical evidence for his views. If we look at Japan, Australia was not taken over by Japan. China is 10x bigger, so it will have 10x the impact Japan did, if not more

4. How do we make China more threatening by making it depend on us less

5. Plenty of competition – if we make access to Australia difficult for China, they will go elsewhere

6. Respecting the role of China – If we respect the role of China as a processor of raw materials, we stand a better chance of being respected as a ‘reliable supplier; of minerals....it might then not look elsewhere for minerals

7. The Australian government retains the right to arbitrarily tax all production from Australia. A power it should not exercise.

8. Why would it make good policy to impose a specific tax or ‘control’ upon the Chinese. Does that not descend to the worst levels of political diplomacy.

9. China buying up a lot of resources can only be good for Australia. We will only benefit from the mass liquidation of wealth, which we can free up for other purposes.

10. Why should we fear China buying into Australian mines. It could only raise gross export revenues for Australia. Australians would be better educated to appreciate the value of iron ore and other mineral assets, so these assets are fully valued when sold to the Chinese.

We don’t need to resort to extortion in order to produce wealth...we need only do what we do best, and allow the Chinese to do the same. Capitalism is based on the principle of trading value for value for mutual benefit.

The greater issue for Australia is how we will squander the wealth that we derive from China's participation in our economy. We have to fear the prospect of 'easy money' resulting in excessive welfarism as well as decadence. The pertinent precedence in this instance is Norway.

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Foreign criticism of Australian tax policy

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It is interesting how elections draw out all types of personal commentaries. Consider the latest criticism from Nobel Prize-winning US economist Joseph Stiglitz - which strikes me as self-defeating. He is critical of the "mining industry having too much influence on the political debate on Australia's mining tax". Why then should he seek any influence at all, and why did he take any position at all when he is not an Australian citizen, and clearly does not understand mining. I always knew how the Nobel Prize went to the undeserved...this is a case in point. Lack of critical insight being his problem.

He makes a comparison between the mining industry and regulation of the financial industry. Firstly, if one is having wealth expropriated from you, who else has a legitimate interest in the outcome other than the victim. The mining industry lives according to the rules. Is it fair and reasonable than shareholders and miners loose out because the government decides to change the rules in the middle of the game? Shareholders invested in mining projects based on a certain tax regime. The government has decided near the top of the boom to steal the upside in the stock price, which can only impose losses on shareholders in a specific sector of the economy. Its not even broad-based. It is grossly discriminatory.

He adopts the idea that 'resources were public' property. True enough, some years ago, the government adopted another arbitrary law saying all resources are govt owned. It then entered into mining title on certain terms, and now it wants to arbitrarily change them AGAIN. If it wants to do that it ought to do it to any new title applied after the law is enacted, not 'effectively' retrospectively applying to existing mining title.

There is a big difference also between public ownership of resources and public ownership of 'mineable reserves'. These companies have spent a lot of money proving up these resources, and the government wants to come in and take the 'value-add'. Rest assured if they thought mineral prices would collapse for the next 3 decades, they would drop the tax proposition because it was always about the money. It is utterly self-serving, unprincipled and unjust.

How can you compare that with regulation of the mining industry. Regulation ought to be about protecting citizens. This resource rent tax is utter and blatant extortion and expropriation. The fact that it is supported by a former 'paid' bureaucrat ('grim reeper') in the World Bank, is reason for questioning his ethical pretext.

He also said that "to date the windfall gain from the rise in iron ore had gone disproportionately to the companies, while a disproportionately small fraction had gone to Australian citizens".

The reality is that Australians have the opportunity to benefit from the mining industry if they so desire....they ought to invest, not support expropriation. I might add the people who made the 'windfall' are not necessarily the existing shareholders. Shareholders chage. In any respect, any wealth was 'made' by these companies and shareholders in accordance with the law. The law is to protect, not to sanction abuse.

His next argument is that: ''The natural resources belong to the people".

That's right, under some prior imposition government forcibly assumed ownership to all mineral resources. It has since sub-leased those lands to the mining industry, and the industry has acted in good faith with those laws, which were adopted by the government. Those resources are now 'mineral reserves', upgraded by the definition of valuable metal through drilling, geological and geophysical surveys. They are a value proposition, and these people saw the value, and the government wants to take it away, even though it defined the rules. If anything it is a testimony to the fact that governments can't see 'value', so why ought they be controlling it? They cab only result in the Australian people losing value. Expect all future exploration to go abroad. The trend was already there as it becomes much more difficult and expensive to find minerals (other than iron ore and coal) in Australia.

Its possible the govt is exposing taxpayers to huge market risk. Who knows. It also raises the spectre of corruption. Rudd/Gillard could have done a backyard deal with Rio Tinto and BHP to get their deal. That is why arbitrary law like this is wrong. It is a recipe for corruption. BHP in recent years has already been caught engaging in corruption...despite it supporting an ethics committee. Might these executives have a Swiss bank account since they met personally with the PM and ministers. Let's have some laws based on defensible principles.

Why does the Australian people have to benefit. They didn't create any value. Let them make their own wealth and not impose on others thrift or initiative.

I accept the argument that there could be a better system for auctioning exploration title, but actually that might only result in the government getting less, and market traders getting more, as it would only attract more speculators. Its not an issue of competition. Competition suggests more players, buyers and sellers, and that can only result in higher prices for title, as it will result in broader recognition of value. That is why Australia is cheaper than overseas markets, because we are a smaller market. But regardless, the benefit will go to speculators, not the government.

The reason why the govt needs to impose on others is because they are not able to efficiently run the economy. Despite miners producing a lot of value, they are unable to motivate the broader population of Australia to work, so they have to burden the mining industry with 40% tax, when Google pays just 0.5% of its income in tax. Why? Its going for the 'cheap shots'. Google can more easily shift its operations abroad than miners can move their mines abroad. Its pure extortion of those who are defenseless from the arbitrary power of government.

Arguments comparing tax expropriation to questions of regulation have no validity, and highlight the bias of this 'red-card' bureaucrat. He was an advisor to Clinton for heavens sake.

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Australia - Don't Vote!!

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Here is a YouTube video by a guy who presents a very eloquent justification for not voting in the forthcoming Australian election in August 2010.

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Author
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking | www.SheldonThinks.com