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Sales Tax Destroys Commerce

by Dan Sullivan

Pennsylvania has virtually no shopping malls within 15 miles of Delaware, even though population density in that area is higher than anywhere else in Pennsylvania (and, for that matter, higher than in Delaware). Why the dearth of shopping malls? Because Pennsylvania has a 6% sales tax (7% in Philadelphia), and Delaware has no sales tax at all.


Taxes: 19th-century Sales versus 21st-century Rent

by Fred E. Foldvary
The Progress Report

The sales tax is a 19th-century tax that is becoming ever more unsuited for our global mobile 21st century economy. There is no logical or economic reason whatsoever for taxing sales. Yet there are those who advocate expanding this antiquated tax and forcing high transaction taxes on the global commerce of the internet.

It is unfortunate, and may even be a tragedy, that some USA tax reformers, seeing the evil of the income tax, advocate shifting to a national sales tax. This misguided movement for consumption and sales taxes is splitting the tax-reform movement and diverting energy and time away from realistic and beneficial tax reform.


What it's all about: The Book

The Book, "The FairTax Book", written by right-wing radio talk show host Neal Boortz, is the basis for and Bible for a recent right-wing cult-like movement to replace the current US tax code with a national sales tax. We suggest you familiarize yourself with it by purchasing or borrowing the book from your local library. We want you to be as informed as possible so that you can make a logical decision based on facts, and not on party loyalty or hype.

We consider the FairTax to be nothing more than a smokescreen for a huge tax cut to the wealthiest Americans and a gigantic tax increase for everyone else to make up for it. As you read, ask yourself what you would get from this plan if it was ever made into law. With critical thinking you will find that the FairTax is not only a lie and a scam, but it will throw many Americans into permanent poverty. We believe the FairTax plan taxes hard work - the sweat of our brows and the toil of our labor - while at the same time it makes free welfare money (inheritances, gifts, and capital gains), that wasn't worked for and wasn't earned, completely tax free.

The FairTax increases the size of government making all who sell or trade part of the Big Brother network. This new tax bill gives the government additional powers to rule the poor and literally grants additional rights to the wealthiest people in America. George Orwell would have been proud.

The FairTax is ANTI-FAMILY. The FairTax penalizes poor families for buying food, clothes, shelter, and medical care by taxing all the basic necessities of life. These things are NOT taxed right now (and shouldn't be) but they ARE HEAVILY TAXED under the FairTax plan. Remember this when you get barraged by a FairTax supporter that says the prebate will give you a portion of this additional tax back and you should be grateful to the new Big Brother Government for giving you anything back. The FairTax bill penalizes those who live paycheck to paycheck taxing every dollar spent to make ends meet while UN-TAXING the rich and wealthy who live off of inheritances, trusts, gifts, and old money.



By Claire Wolfe & Aaron Zelman

“Abolish the IRS!”

So goes the cry. And who could disagree? The income tax is unAmerican in the most profound way, punishing people for being successful. The tax code is vast and incomprehensible. The agency that enforces it is universally loathed.

Yes, let's abolish the IRS. And the income tax.

Unfortunately, the statement that usually comes next begins, “And replace it with ...” And there a new round of troubles begin.

Over time, proposals have included replacing the graduated income tax with a flat tax, a VAT (value added tax), or some form of consumption tax. For several years now, the buzz has been growing for a national sales tax. While other “abolish the IRS” reforms have languished, the national sales tax has, as they say, developed legs.

The most durable proposal for a national sales tax – called the FairTax – is promoted by an organization called Americans for Fair Taxation (AFT) ( A bill to implement that tax (H.R. 25; Senate Bill 1943)(1) was introduced in Congress early in the 108th Congress. The so-called “Fair Tax Act” has 54 co-sponsors as of this writing, plus the outspoken support of both Speaker of the House Dennis Hastert and House Majority Leader Tom DeLay. President George W. Bush expressed cautious support for the act in response to a pre-screened questioner at one of his campaign events. In his acceptance speech at the 2004 Republican Party convention, Bush strongly advocated a total revamp of the U.S. tax system. Although he made no specific proposal, his language was similar to that of the FairTaxers. And at the moment, the FairTax is the only serious tax-revamp proposal on the Congressional table.

Finally, many, many ordinary freedom-loving people, weary of the present outrageous system, are cheering the FairTax as a great improvement.

But it's not.

The FairTax is not only not an improvement. We believe it's UnFair, dangerous, and a disaster in the making.


Fair tax is a trap: Demand NO vote on H.R. 25

August 9, 2010

The other night on the boob tube I caught a commercial featuring a talk show host named Neal Boortz, Michael Reagan (adopted son of former president, Ronald Reagan) and the vile Newt Gingrich. All pushing for another dangerous taxing scheme that will not cure the cancer, only continue to feed the beast.

Boortz has been on this “fair” tax bandwagon for years. It’s obvious he has zero understanding of the Federal Reserve and why such a taxing scheme would only continue to steal the fruits of our labor to fund massive government spending.

Michael Reagan is also a talk show host who, like Boortz, has zero understanding of our monetary system and its feeding artery: the IRS.

Newt Gingrich sold out this country decades ago with his votes. Besides being a serial adulterer and ethtically bankrupt, Newt Gingrich is the global master’s trophy boy. He hopes the Republicans take control of Congress in November because there’s no doubt in my mind, Gingrich is out to be president of these united States of America. We can never let that happen. Do you know Newt was caught on tape saying the ridiculous “Contract with America” was nothing but a PR tool for incoming freshmen members of Congress? Yes, that’s a fact. They were obtained by Roll Call. Old Newt pulled a fast one on faithful conservatives. His votes killed MILLIONS of jobs and sent them south of the border and overseas.

In order to understand why H.R. 25 is just another tool of tyrants, you have to go back and see where and when the problem started. Prior to 1913, we had no federal income tax. There was no unconstitutional “Federal” Reserve Banking system and there was no Seventeenth Amendment. This nation thrived in agriculture, manufacturing and industrial output.

The shadow government that has been controlling Congress for almost a hundred years had the downfall of America well planned. First, an income tax to syphon off the fruits of our labor. Even though the Sixteenth Amendment wasn’t legally ratified and did not give Congress any new power of taxation, we all know what that Gestapo criminal syndicate will do to you if you don’t voluntarily submit (with a gun to your head) to looting your earnings.

Full article here

Prices and Taxation

by Fred E. Foldvary
The Progress Report
26 February 2012

Punitive taxes are those which harm the economy and society. All “taxes in substance” are punitive. Taxes in form are compulsory payments to government; taxes in substance are payments to government having no direct link between the payment and any benefit.

One way that punitive taxes are destructive is by changing the information conveyed by market prices. A price is not just what one pays for stuff. The market-based price is a particular amount for a reason. Students of economics learn that the market price is set by supply and demand, at the quantity for which the quantity demanded equals the quantity supplied. That is the equilibrium, where all the gains from trade have been exhausted at that moment.

But let’s go deeper into the dynamics of market prices. Supply is based on the costs of production. The market price at some quantity comes from the cost of producing an extra amount of the good, the “marginal cost”. This cost is not just the cost of the scarce inputs for the firm, but more broadly the marginal cost of society’s resources.

Demand is based on the buyers’ willingness to pay, the most they are willing to pay for a good. The marginal willingness to pay at various quantities determines the demand, which plotted on a graph becomes the demand curve. Just as with supply, the demand more broadly reflects society’s marginal willingness to pay at various prices.

A free-market price reflects the interplay of scarcity and desire. At the market price, society’s willingness to pay for an extra amount just equals society’s cost of providing an extra amount. At a lower quantity, society’s willingness to pay is greater than society’s marginal cost of the resources, so it increases social wellbeing to produce more. At a quantity greater than equilibrium, the marginal cost is greater than the marginal benefit, so society should produce less. At the equilibrium price and quantity, society maximizes its welfare or wellbeing.

Now enters the punitive tax. The tax rudely interferes with the equilibrium price and quantity. Like a robber holding a gun, a sales tax forces they buyer and seller to hand over some money. The seller passes some of the tax on to the buyer, raising the purchase price. The tax reduces the gains from producing, which drives down the land rent that producers are willing to pay.

That sales tax does not just reduce the benefits to consumers and gains to producers and land-rent owners, but distorts the market signals provided by the price. At the higher price and lower quantity, the after-tax equilibrium no longer balances desire and scarcity. People would have benefited from more goods, and sellers would have employed workers to produce more, but the tax has voided the information provided by a free-market price. The price paid by the buyers is a distorted, skewed, falsified signal of desire and scarcity.

Suppose you were reading an instruction booklet, and somebody changed the wording, so that instead of inserting part A into tab X, you did something different. The product would become messed up. Free-market prices are instructions to producers and consumers on whether to produce and consume more or less. Punitive taxes change the instructions, creating a waste of resources and economic damage such as unemployment.

Even worse than the waste caused by punitive taxes are the distortions caused by rent-taking subsidies. By changing prices and moving away from the free-market equilibrium, subsidies cause a welfare loss similar to that of punitive taxes. But even worse, the explicit and implicit subsidies to land value generate an artificial speculative boom and subsequent bust that results in massive economic damage.

This deadweight loss or excess burden of punitive taxation and rent-seeking subsidy can be avoided by replacing taxes with the economic rent of land. Tapping the land rent is not a tax in substance but rather the prevention of an implicit subsidy to landowners as public goods generate land rent and site values. It is economically possible to finance government without the distortions caused by fiscal interventions.

The worst tax of all is the sales tax, because at least the income tax is zero if the profit is zero. The sales tax makes profit go negative if it is low or zero to begin with, forcing the company to shut down. If your wage is zero, you still have to pay sales taxes on what you buy. If you have to borrow funds, the sales tax forces you to borrow even more and then pay more interest.

Therefore what the national sales tax advocates are calling the “Fair Tax” is not only untrue, but deliberately deceptive. There is nothing fair about forcing people to pay much more for the goods they buy, and distorting the economic information provided by market prices. The “Fair Tax” advocates make false claims when they declare that sales taxes are better for the economy than land value taxes. They have not backed this claim with arguments, because they cannot.

The two real reasons for sales taxes are to force the poor to pay taxes, and to subsidize land values. The hidden agenda of sales-taxers is the subsidy to land value provided by public goods financed from sales taxes. Tenant-workers pay twice for public goods, once in taxes and then again in higher rent, while landowners get a rent and land value subsidy. There is no logical reason to want a sales tax other than to force a redistribution of wealth from workers to landowners.

The Destruction of the American Libertarian Party

by Fred E. Foldvary
The Progress Report
March 26, 2012

The American Libertarian Party is being destroyed in its ideology and philosophy. The moral philosophy of libertarianism was, until very recently, full-spectrum liberty. Libertarianism included full civil liberties, with no restriction on peaceful and honest human action. The libertarian economic policy was a pure free market, with no restriction or tax on acts that do not coercively harm others. The foreign policy was peaceful co-existence, defending the homeland while avoiding foreign interventions.

The core of government power and policy is taxation. Governments get funded by forcibly taking property from people. Since libertarians until recently believed in equal self-ownership, they regarded this taking as morally wrong. The slogan was “taxation is theft!” But what that really meant was appreciated only by the Georgist branch of the movement, the geo-libertarians who recognized that the provision of public goods by government generates higher land values, and that if the generated rentals are not paid back, that constitutes a subsidy. A pure free-market policy avoids subsidies, and thus requires that these rentals be paid back to society by landowners. So geo-libertarians recognized that “taxation is theft” applies to taxation in substance, not merely taxation in form, thus not to the repayment of value received.

But in 2012, American libertarians began committing ideological suicide. Today’s libertarians have not been as well educated as those in previous times. They don’t understand the moral philosophy of natural rights, and the economic effects of taxation. American libertarians today are embracing the violation of free trade, the subsidy to land values, and the quantum destruction of private enterprise that is entailed in a national sales tax.

Most libertarians are not anarchists. They are minarchists, favoring limited government. That implies a need for some revenue. Libertarians are aware of the moral and economic objections to the taxation of income, but they have rejected the source of public revenue that is compatible with self-ownership and a free market – public revenue from land rent. This rejection is described in the book by Harold Kyriazi, Libertarian Party at Sea on Land. American libertarians have even rejected the replacement of much of government by private communities financed from the rentals that they generate. No, the doctrine increasingly being embraced is domestic tariffs on trade.

There is a movement in the USA that advocates a national sales tax. Cleverly, they label this a “fair tax,” although there is nothing just or fair about violating free trade. The explanation for the compulsion to tax goods requires a psychological analysis. I have no credentials in academic psychology, but it seems to me that the core American creed is not liberty, but a combination of Puritanism and land grabbing. If the core American creed were liberty, the USA would not have upheld chattel slavery, nor would it have imposed punitive taxation from the beginning.

Economic puritans believe that consumption is bad. They favor the mercantilist policy of promoting production and exports, while stifling consumption and imports. Economic puritans seek to shift taxation from production to consumption. Secondly, Americans from the beginning have profited from land grabbing, first from the Native American Indians, then from the Mexicans and the Spanish, and then indirectly by overthrowing governments such as that of Guatemala, which did not allow American-owned plantation and mining land grabs. Americans are greedy for stolen land because they know it offers one of the best avenues to becoming rich with other people’s money.

Libertarians were once proudly counter-cultural, advocating the legalization of victimless acts, and opposing the welfare-state culture that has become a global religion. But now, US libertarians have succumbed to the core American cultural values, Puritanism and land grabbing. That is why libertarians have rejected explicit subsidies of money and price controls, but not the implicit and much greater subsidy to greater land values. Libertarians framed this policy as allodialism, the complete ownership of land and its rent by those who are “first claimants” by having title, ignoring the fact that imposed taxation pumps up that land value.

Having rejected public revenue from land rent, even from free-market private community rentals, libertarians have replaced liberty with economic Puritanism, the tax attack on consumption. The leading candidate for the Libertarian Party presidential nomination is promoting a national sales tax of 30 percent of the pre-tax price of goods. Endorsed by many state parties, he will surely be the Libertarian Party candidate. As taxation is the core issue, the American Libertarian Party will have been transformed into a national sales tax party. What was once the “Party of Principle” will have degenerated into the party of the ugly side of American culture, Puritanism and land grabbing.

Because the libertarian party is the public face of the libertarian movement, the implicit party slogan, “tax goods, not land” will infect the movement and philosophical base. Perhaps a million sales taxers will join the Libertarian Party, making it a permanent national sales tax party.

There are still some libertarians, especially geo-libertarians, who believe in pure economic freedom. Frustrated by a movement that is libertarian in name but no longer in substance, they may well join or form other parties such as Free Earth or a “Taxation is Theft” party. One can only hope that the attack on consumption by American pseudo-libertarians will not be copied by classical liberals in other countries.

Fortunately, Mason Gaffney has shown in his writing on “sales tax suicides” that governments such as that of pre-revolutionary Russia and France, which adopted high national sales taxes, committed economic and political suicide, and even puritan Americans will balk at the hardship and tax cheating that would be imposed by a high national sales tax on top of state sales taxes. Thus the American Libertarian Party is headed towards both philosophical and political ruin. It may well be that just as the term “liberal” became disassociated with liberty, the term “libertarian” will too become so corrupted by taxed trade that true liberty seekers will have to call themselves “classical libertarians” or free-earthers, and no longer just plain “libertarian.”

Political Parties and Taxation

by Fred E. Foldvary
The Progress Report
April 30, 2012

It is curious but understandable why none of the American political parties on the ballot are proposing the sound tax policies that would spur the U.S. economy to grow faster than China.

The mantra of the Democratic Party is “tax the rich.” They want to increase the marginal tax rates, the rate on extra income, of the wealthy. They say the rich can pay more without being affected. That flies against both economic theory and the evidence of history. Theory and experience say that the higher the tax rate, the greater the reaction of less production and less investment, and the reduction is proportionally greater than the tax increase. Theory says the ideal tax is on things that do not get reduced when taxed, the prime example being land. But the Democratic Party ignores economics, exploiting the ignorance of the masses to cater to the landed interests.

The chiefs of the Republican Party understand the concept of marginal tax rates, and seek to reduce them to spur growth, but to pay for this, they reject a tax shift to land value, and instead seek to cut government welfare to lower-income folks. If the Republican policy is implemented, we will see mass protests, violent occupy movements, general strikes, and an increase in crime. The Republicans don’t understand that before we remove the roof from a poor man’s house, we should first lay the foundation for a new house.

The Green Party seeks to stop the destruction of the environment, yet instead of a pollution tax, its members seek a wasteful welfare state financed by a graduated income tax high enough to prevent “excessive” wealth. They don’t seem to understand that the deadweight loss from high tax rates results in a waste of resources. They reject the free-market environmental policies that would protect nature with incentives and property rights.

The Constitution Party wants to abolish the income tax and levy excise and import taxes. In addition, that party would enact a "state-rate tax," with revenues apportioned among the states in accordance with their proportion of population. With the abolition of the income tax, and the shift of government spending more towards the states, it would be more difficult for the states to have their own income taxes, so tax competition would move them towards property taxes. The party also approves of taxing corporations, which legally taxes the privilege of incorporation. This is a much better tax proposal than that of the Democrats, Republicans, and Greens.

The most ridiculous tax proposal is that of the National Sales Tax Party. They seek what they call a “fair tax” on goods bought by households and governments. Used goods would not be taxed. The federal tax rate would be 30 percent. State sales tax rates have a national average of 6 percent, thus the combined rate would be 36 percent, leaving out higher rates caused by the conversion of state income taxes to sales taxes, and the added tax due to tax evasion.

The exemptions for used goods and businesses would cause huge distortions. For example, a new coin or bar with $1000 worth of gold would sell for $1360, so nobody would buy it at that price, since one could buy gold bought prior to the adoption of the national sales tax for $1000 as a used good. There would be massive tax evasion for new coins sold as used goods, as well as smuggling gold and silver from foreign sources. As for real estate, a new building that has a cost of production of $100,000 would be a new good, and sell for $136,000, while a similar building built prior to the enactment would have no tax. Real estate construction would come to a halt. In practice, Congress will not levy a ridiculous sales tax on buildings.

The “fair tax” movement recognizes that there would be a big incentive for tax evasion by starting a business and buying goods as a business expense. They acknowledge that there would be audits and registration requirements. There would be massive intrusion into both business and households to prevent tax evasion, but as with illegal drugs, much underground activity would happen anyway.

It is unrealistic to suppose that the federal government would let private enterprise be exempt from taxes, while imposing a tax on government. Under the “fair tax,” a private school’s purchases would be tax free, but a government school would have to pay the sales tax. This tax punishment of governmental schools would be politically impossible. In practice, government spending would be exempt from taxation, resulting in a sales tax rate higher than 30 percent.

Land is, of course, always a used good, and the sale of land would be exempt from taxes. As with the income tax, the tax policy of the National Sales Tax Party would provide public goods that subsidize land value. With the income tax, a business that makes no profit pays no tax. With a national sales tax, if a zero or low-profit firm cannot pass on the tax to customers in the global economy, it would shut down. Professor Mason Gaffney calls this a “quantum leap effect,” as high taxes on gross receipts would result in a massive shift of land use to firms that can pass the tax on, resulting in a massive destruction of production and employment.

The National Sales Tax Party was previously called the Libertarian Party. The party is holding its convention on May 2-6 2012 in Nevada. The party will elect Gary Johnson as its presidential candidate. He is popular as the former government of New Mexico and advocate of legalizing marijuana. Johnson also promotes a national sales tax to replace the income tax.

The federal budget and tax reform are the major issues of the 2012 presidential campaigns. By electing a sales-tax advocate as its presidential candidate, the “Libertarian” party will have transformed itself into a sales-tax party. It was to a large extent that already, as its previous candidates favored tariffs and excise taxes instead of free trade.

Now the transition will be complete, and if they still label themselves the “party of principle,” since the principle in 2012 is to tax goods and subsidize land value, the party should honestly call itself the National Sales Tax (and land subsidy) Party. I’m now confident that Gary Johnson will get millions of votes, but these will be sales tax votes by those fooled by the “fair tax” propaganda, not votes for liberty. Genuine libertarians and free-marketeers will either refuse to vote or else turn in a blank ballot.

"Abolish all taxation save that upon land values." -- Henry George

Completely Surreal Photos Of America’s Abandoned Malls
« Reply #1 on: Apr 14, 2014, 12:52:07 pm »


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Completely Surreal Photos Of America’s Abandoned Malls

An inside look at nine abandoned malls. There is nothing creepier and more fascinating.

Matt Stopera
April 2, 2014

Dead malls are popping up all over the states, particularly in the Midwest, where economic decline has sped up the “going out of business” process. This map, put together by a Dead Malls Enthusiasts Facebook group, shows that well.

As Americans are faced with multiple shopping options and more stores are leaving malls, it should be interesting to see if malls and mall culture will survive.

What you are about to see is what happens when malls are abandoned. It’s apocalyptic and really, really creepy.

Rolling Acres Mall: Akron, Ohio

The Rolling Acres Mall opened in 1975 and expanded several times throughout its history. At one point, it had more than 140 stores. On Dec. 31, 2013, the mall’s last retail store closed, and it currently remains abandoned.

"Abolish all taxation save that upon land values." -- Henry George

Re: Completely Surreal Photos Of America’s Abandoned Malls
« Reply #2 on: Apr 14, 2014, 12:57:18 pm »


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There are many more disturbing pictures in addition to the six I posted above. I strongly urge everyone to carefully view all of them at the original article.

As you do so, please keep in mind this simple thought: if this damage had been inflicted by military force -- particularly if that force were executing directives from the White House -- then the entire world would not be revolving around Cliven Bundy right now. But since this damage resulted instead from the silent imposition of horribly flawed economic policies -- policies instituted jointly by BOTH major parties -- practically no one seems to care about the far greater number of lives that have been destroyed, or at least crippled, as a result.

I'm more convinced than ever that the figurative cancer which is consuming our national economy from the inside out is the inevitable consequence of both:

(a) an anti-Georgist tax system, whereby workers and the small business owners who employ them are literally penalized the more they put land to productive use, while rent-seeking speculators are rewarded the more they hold land out of use; and

(b) an anti-Georgist money system, whereby private banks are allowed to parasitically extract countless billions in usurious interest from the economy each year in exchange for all the non-existent "money" they loan (P < P+I).

And, as I've stated elsewhere, both Keynesians and Austrians (despite being supposed "opposites") are united in wanting to make sure both systems stay anti-Georgist.

Democrat-vs.-Republican is not the only "false paradigm," folks.
"Abolish all taxation save that upon land values." -- Henry George


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