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Response to Tansy_Gold (Original post)

Wed Apr 4, 2012, 09:35 AM

45. Cashless: The Coming War on Tax-Evasion and Decentralized Money By Cris Sheridan

 

http://www.financialsense.com/contributors/cris-sheridan/cashless-coming-war-on-tax-evasion-decentralized-money

There are two major trends taking place that are shaping up as a recipe for disaster. On the one hand, we have massively indebted governments around the world desperate for tax revenues and, on the other, steadily growing multi-trillion underground economies whose main goal is to avoid paying them. According to a recent study, the amount of uncollected tax revenues in the U.S. is estimated around a whopping 500 billion dollars per year(1)—enough money to bailout most of Europe...At 8 percent of GDP, the underground or shadow economy in the U.S. is much smaller percentage-wise than other nations like Greece (25 percent), Italy (27 percent), or Thailand (70 percent)(2), yet, given our overall size, America's untaxed economy is larger than “the official output of all but the upper crust of nations across the globe…bigger than the GDP of Turkey or Austria.”(3)
Question is: How long will the government allow this to last?

When times are good and the economy vibrant, there is less incentive to crack down on tax-evasion; but now, unemployment is at all-time highs, income and property taxes have fallen dramatically, and the government is supporting an increasingly large and record number of people through a wide range of benefits.

Desperate times call for desperate measures


In an interview with Jim Puplava titled “Never Underestimate the Desperation of a Broke(n) Government”, world renowned economist, Martin Armstrong, cites numerous examples of how the U.S. is following a well set historical pattern where, inevitably, the “government is going to be much more aggressive to tax people, chase them down, and put them in prison.” Just recently, noted author and blogger, Charles Hugh Smith, cited how California—a case-study for high taxes, regulation, and smothering bureaucracy—automatically seized funds out of a previous resident’s bank account for not filing taxes in the year 2006—five years after he had long moved out of state. In response to this incident, Smith writes, “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.”(4) If true, and these types of aggressive acts are to become more common, it should be fairly obvious that they won't achieve the desired results. As taxes are raised, regulations and filing requirement made more stringent, more and more people will merely leave the system. Eventually, the government will have to think of a different way to collect. We could change current tax laws and make it less burdensome but, when given a choice between simple or none, most people would rather choose none; and since many realize that by doing everything in cash their transactions are virtually untraceable, the risk of getting caught is quite tiny compared to the benefits of keeping much more of their income. The only option left is to remove the very thing that fuels the underground economy in the first place.

Cash becomes illegal

Italy Intensifies Its All-Out War on Tax Evaders

In addition to banning cash transactions, Italy has included an ad campaign comparing tax evaders to parasites. There have been headline-grabbing raids on stores, hotels and restaurants in affluent Italian cities. For good measure, tax officials have also been stopping luxury cars and asking drivers to show their licenses, then using the information to pull their most recent tax returns.

Recently, best-selling financial author and well-known investor, Doug Casey, offered his perspective on this issue by pointing out that “governments hate cash for lots of reasons…it costs a couple of cents to print a piece of paper currency, and they have to be replaced quite often. As the US has destroyed the value of the dollar, they’ve had to take the copper out of pennies, and soon they’ll take the nickel out of nickels. Furthermore, with modern technology, counterfeiters—including unfriendly foreign governments—can turn out US currency that’s almost indistinguishable from the real thing. And the stuff takes up a lot of space if it’s enough to be of value. So sure, governments would like to get rid of tangible currency. They’d like to see all money kept in banks.”(5)


Italy or Sweden?

Aside from how governments personally feel about cash, some societies are choosing to abandon it voluntarily. As recently reported by the Associated Press, cash only represents 3% of Sweden's entire economy—a trend that isn't being enforced through law but rather embraced by a strongly technological and innovation-loving people.(6) No "headline-grabbing raids", automatic seizure of bank funds, or stopping luxury car owners to check their most recent tax returns. Then again, Sweden is also known for having the highest tax rates in the world...Although the total amount of money changing hands in America's shadow economy is quite massive, again, with respective to our total economy it is fairly small—about 8 percent of GDP. Given the sheer convenience and accessibility of electronic payment options almost everywhere you go, the transition towards a cashless society is certainly "in the cards." However, given the diversity of America's population, our strong desire for privacy and longstanding hatred towards taxes, there will always be a strong demand for some form of cash or non-traceable currencies—something I doubt the U.S. government won't try to supervise or restrict.

Resistance is futile. You will be assimilated

SEE LINK FOR POSSIBLE GOVERNMENT GAMBITS, AND POSSIBLE PERSONAL ESCAPES FROM SAME

References

[1] America's Underground Economy: Measuring the Size, Growth, and Determinants of Income Tax Evasion in the U.S.

[2] Hiding in the Shadows: The Growth of the Underground Economy

[3] America’s ‘shadow economy’ is bigger than you think – and growing

[4] Welcome to the Predatory State of California—Even If You Don't Live There

[5] Doug Casey on Cashless Societies

[6] In Sweden, Cash Is King No More

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