Really Private Banking?
Katherine Mangu-Ward | May 3, 2007, 3:40pm
A man operated a "warehouse bank" out of his suburban home, taking at least $28 million from people around the country who wanted a discrete bank account, according to court documents.
An IRS investigator said Robert Arant had hundreds of customers, many of whom apparently used his bank, Olympic Business Systems LLC, to conceal assets for the purpose of evading taxes.
On his now-defunct Web site, Arant advertised his services to those "who would rather not deal directly with the banking system," court records said.
This guy would have been a libertarian hero in the 1970s and '80s. A little history for you:
Warehouse bank schemes were popular as illegal tax shelters in the 1980s, but several have been busted in more recent years — including one broken up in Boring, Ore., in 2000, involving $186 million in deposits from 900 people over 14 years. The six organizers of that scheme were sentenced to up to four years in prison.
The king of semi/illegal tax shelters: Former LP presidential candidate Harry Browne, who originally make his name (and fortune?) with books like Harry Browne's Complete Guide to Swiss Banks (1976) and You Can Profit from a Monetary Crisis (1974).
Via Fark, which describes the news thusly: "IRS agents discover man running a "secret bank" out of his suburban home. In other news, there are people willing to give nearly $28 million to a guy running a bank out of his house."
Anonymous Resister | May 4, 2007, 1:32am | #
As a principle and "guiding light" for thought and action, I don't think minarchism is superior to anarchism. Here's a good essay on the subject, titled "In Search of a Word: Limited Government versus 'Anarchy'",
http://www.voluntaryist.com/articles/082a.php.
An excerpt:
"With that background, let's now come to the question of limited government versus anarchy and which term, if either, a thinking person could adopt as his philosophical badge. (And so as not to let it cloud our minds, let's try to leave out of account the fact that anarchy, as popularly understood, is a pejorative term, bringing to mind images of terrorism.) Baldy Harper, Leonard Read's first associate at FEE and later founder of the Institute for Humane Studies, looked at it in a way that I find attractive. He had no more idea than the man in the moon whether we or our descendants will ever actually see a "total alternative," as he put it, to political, tax-supported-government. But he pointed out the importance of holding the ideal clearly in mind as a heuristic device and a compass to help us keep moving always in the direction of freedom. The analogy he used was that of the north star and the mariner who steers by it. The mariner doesn't expect to reach the star. But, steering by it, which is a process entailing innumerable small decisions and self-corrections, not one of which he could make without the star, he eventually reaches Liverpool. We need a transcendent ideal always in mind, Baldy would say, to help guide our everyday decisions that determine whether or not we keep on our heading toward freedom. . . . Baldy didn't have an all-encompassing word, but he wasn't beating any drums for government, limited or otherwise."
For me, the biggest sticking point in plotting a course towards total anarchy is the apparent need for some kind of military defense (which, especially given our geographical location in the world, should entail a miniscule fraction of the cost it entails today), to prevent other governments from invading us and to prevents warlords from rising up within our own borders and establishing new governments. All other forms of protection for persons and property could theoretically be established by purely voluntary associations, truly and not fictionally based on the consent of the governed, for which people actually sign up (and presumably in most associations would pay some kind of dues to keep their membership in good standing). If two parties who are members of the same association have a dispute, the dispute would ordinarily be resolved according to the methods of the association. But if my neighbor's association wants to haul me into its court if it has one or throw me in its jail or take my property because of something I allegedly did to my neighbor, and I am a member of a different association (hopefully the charter of my association provides only limited protection from other associations if I do something against the laws of my own association) or am not a member of any association, that could be a serious problem. Logically, the government would most likely need to establish tribunals to adjudicate such potentially violent conflicts. Beyond these bare functions, I don't see a compelling case for further government.
The Wine Commonsewer | May 4, 2007, 10:27am | #
that is that when people cheat the system by not paying their taxes, it means that the honest people among us end up paying more.
I do not agree with you. The law says you, Dan T, are required to pay X dollars based upon your marital status, overall earnings, deductible expenses like mortgage interest and property taxes, number of kids and their ages, and your blended rate of tax. That does not change based on the fact that some largely unknowable number of people are not paying some largely unknowable amount of tax.
Secondly, those who shave their taxes or avoid them altogether are only easing out of income taxes (& possibly social security taxes), they are not exempt from any other kind of tax such as sales, excise, property, fuel, or fill-in-the-blank.
Thirdly, the underground economy is a vital part of the overall economy and generates far more in growth than it takes away in unpaid tax. It works like a tax-free investment or the growth in an IRA. The 25% you would have given to the government compounds along with the rest. Now don't be thick here, of course the tax scammers aren't investing their ill gotten tax savings 100%, but they are spending money in the local economy that wouldn't otherwise be there, which is a boost for everybody. When Leona put in a pool with the tax she was supposed to give to Uncle Sugar all the little people who worked on that job benefited from it and would not have had that job if the money went to the treasury instead.
Saying that tax cheats force you to pay more tax is like saying that GWB's tax credits for people with kids force unmarried and childless people to pay more tax. Superficially plausible, but demonstratively false. Tax rates have not changed for people without kids in the six years or so since the child tax credit was enacted.
Another way to view that is to assail those with 401(k) plans for forcing the rest of us who don't have them to pay more tax. After all, there are billions of tax free dollars going into those plans every year.
And finally, when the government needs more money they print it or borrow it. And in the end your taxes are going up regardless because no matter who is in power in DC the spending is going to go up. And up. And up. Which is why I always argue for tax cuts now. And, as you know, there is very little connection between tax receipts and spending.
And finally (again), tax cheats are simply making use of higher risk tax shelters than the ones that wealthy people have access to because they have both money and knowledge.
There is, however, one good reason not to cheat on your taxes. The penalties are very severe. I would say that in most cases, the risk isn't worth the reward. Even if you aren't jailed, the financial penalties can easily reach 50% or more of the original tax when you get caught. Yes, that's right FIFTY PERCENT.
Secondarily, it isn't very easy to cheat on your taxes given that every aspect of your financial life is reported to the government. In essence, if you work for someone else you are audited every year by IRS computers.
I'm done, sorry for the sermon. I let the kids sleep in my bed last night. Like sleeping with two bags filled with fighting raccoons and baseball bats.
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