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Government, taxes and bartering

 
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"Although the govt would love for us to pay taxes on our barters, there's very little they can really do about it if we don't. Even if the govt could somehow levy taxes on barter, it would be very easy to stay under the radar. I mean, we know that a great percentage of the population works under the table and the govt can't do anything about it even though they are paid in govt-printed money. So enforcing taxation upon barter would be a losing proposition in terms of money spent on undercover agents or however they would have to do it."

Well the ole gumn't has a term for barter -- 1230 exchange. Even have a whole book of rules no how to calculate it. And never mind about the gumn't fussing over 'lost causes' they are the Saint of Loss Causes. Just look at their balance sheet! They would be right happy to send 2 IRS agents and 4 FBI guys to pick your pockets for the $1.50 you made on the barter. Just 'cuz you understand. We don't want the citizens getting uppity.
Staff note (James Freyr):

This post and the seven that follow were split off from the Living without money thread found here: https://permies.com/t/40/14161/Living-money

 
pollinator
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It's true the government can do almost anything. Speaking as someone who lives in a very regulated economy called The Welfare State.

However, I have found that they very rarely bother to actually force a citizen do something. All government officials that I have come across with personally have just given me advice, helping me to follow the rules but not punishing me. If I work with them, they are mostly willing to compromise. Even though the rules are very strict in theory. This is just my experience and I do realize that I may have been lucky and things could have gone differently.
 
pollinator
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There are a few places where I shop, that no longer take cash. They only want to sell the people with a charge account, or to take certain types of plastic.

This does a few things for them. It makes it less likely that they will be audited and accused of hiding a bunch of cash sales. No one has to make bank deposits and there is little chance of robbery. They would only get away with whatever is in the employees pocket.

But I think the main thing it does, is discourage small spenders who are looking to take up lots of employee time, getting some little thing. They deal almost exclusively with small and large contractors who tend to need hundreds or thousands of dollars worth of stuff on each visit. Those people don't want to wait behind someone who is looking for minor amounts of something.

I was one of the cash customers and I have reluctantly adapted. So far, this has been limited to a couple of industrial supply stores where you might buy specialized tools and equipment, and to one place where I buy safety supplies and anything to do with the handling of asbestos or other toxic materials.

I don't like this, and anyone running an illegal business really doesn't like it. It makes it too easy for the government to see who has bought what , and how much money they are spending. Suppose someone is hoping to do asbestos removal without all of the paperwork the government would like to see. Shopping at that store is a sure-fire way for them to get on somebody's radar.

Sometimes, living without cash is not a choice.
 
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Nina Jay wrote:It's true the government can do almost anything. Speaking as someone who lives in a very regulated economy called The Welfare State.

However, I have found that they very rarely bother to actually force a citizen do something. All government officials that I have come across with personally have just given me advice, helping me to follow the rules but not punishing me. If I work with them, they are mostly willing to compromise. Even though the rules are very strict in theory. This is just my experience and I do realize that I may have been lucky and things could have gone differently.



The little guy can win.

I took on the USDA in Federal Court and WON! Just a little ole dumb family sheep farmer, took on the big ole USDA in Federal Court and actually won.

Granted no one was more surprised than I was, and they said it was the first time it ever happened in Maine, but it did happen.
 
pollinator
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john mcginnis wrote:"Although the govt would love for us to pay taxes on our barters, there's very little they can really do about it if we don't. Even if the govt could somehow levy taxes on barter, it would be very easy to stay under the radar. I mean, we know that a great percentage of the population works under the table and the govt can't do anything about it even though they are paid in govt-printed money. So enforcing taxation upon barter would be a losing proposition in terms of money spent on undercover agents or however they would have to do it."

Well the ole gumn't has a term for barter -- 1230 exchange. Even have a whole book of rules no how to calculate it. And never mind about the gumn't fussing over 'lost causes' they are the Saint of Loss Causes. Just look at their balance sheet! They would be right happy to send 2 IRS agents and 4 FBI guys to pick your pockets for the $1.50 you made on the barter. Just 'cuz you understand. We don't want the citizens getting uppity.


I think here in the Netherlands the gov't has different rules for official barter (between entrepreneurs) and 'exchange without money' (between citizens). In the first case off course they have a way to calculate taxes (the Dutch gov't is one of world's best at taxes ... and rules & regulations). when citizens exchange products or services (like in a LETS), most of the time they do not have to pay taxes over it.
 
Dale Hodgins
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The little village in the Philippines also has a Futures Market. Suppose your pig is pregnant, and you need 100 pesos for something. One of your relatives may give you the 100 pesos, but when the baby pigs are born, you owe them pick of the litter. And it doesn't have to be 100 pesos. Maybe the family has run out of rice or bananas. The lender supplies that product instead of money.

Those little pigs are worth several times that much, so it's like dealing with a loan shark, where you get seriously screwed. Financial ussery is not limited to wealthy New York banks. This sort of arrangement can loan money against just about every future possibility that these folks have. Loan money until a really meagre old age pension check comes in. Loan money until the corn is harvested. Loan money against other money that is being sent for school fees. Of course when the payment is made, there won't be enough money to pay the school fees. This can get them in trouble with whoever is paying those school fees. I know that the rich often screw poor people out of everything. Poor people are also very good at screwing one another. We're talking finances here not the reason there's a baby boom.😅

The worst abuses seem to happen when someone has run completely out of food. People who are hungry will make deals that do not help their future self.

When we went to the Village, one of Nova's uncles give us a chicken for supper. The next day he petitioned me to buy him a chainsaw. Nova said this would happen. As we were eating it, she said that I shouldn't have accepted the chicken. A chainsaw is worth about 25 of those chickens. She gave him 300 pesos which is about 6 American dollars and a little more than that chicken was worth. And she told him to go away and not bother us.

So it appears that people with little or no money will still find ways to create various financial instruments. Some are very helpful and some allow people to dig themselves a deep hole that they may not get out of.
 
Travis Johnson
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Dale Hodgins wrote:The little village in the Philippines also has a Futures Market. Suppose your pig is pregnant, and you need 100 pesos for something. One of your relatives may give you the 100 pesos, but when the baby pigs are born, you owe them pick of the litter. And it doesn't have to be 100 pesos. Maybe the family has run out of rice or bananas. The lender supplies that product instead of money.

Those little pigs are worth several times that much, so it's like dealing with a loan shark, where you get seriously screwed. Financial ussery is not limited to wealthy New York banks. This sort of arrangement can loan money against just about every future possibility that these folks have. Loan money until a really meagre old age pension check comes in. Loan money until the corn is harvested. Loan money against other money that is being sent for school fees. Of course when the payment is made, there won't be enough money to pay the school fees. This can get them in trouble with whoever is paying those school fees. I know that the rich often screw poor people out of everything. Poor people are also very good at screwing one another. We're talking finances here not the reason there's a baby boom.😅

The worst abuses seem to happen when someone has run completely out of food. People who are hungry will make deals that do not help their future self.

When we went to the Village, one of Nova's uncles give us a chicken for supper. The next day he petitioned me to buy him a chainsaw. Nova said this would happen. As we were eating it, she said that I shouldn't have accepted the chicken. A chainsaw is worth about 25 of those chickens. She gave him 300 pesos which is about 6 American dollars and a little more than that chicken was worth. And she told him to go away and not bother us.

So it appears that people with little or no money will still find ways to create various financial instruments. Some are very helpful and some allow people to dig themselves a deep hole that they may not get out of.



You are finding out what I learned a long time ago, although I admit that it is a very cynical way of looking at money:

You have a little pile of money, and everyone wants a little part of it.

It might be as simple as a Union taking their Union Dues. Or it might be the insurance company convincing you you need life insurance. Or it even may be Girl Scouts looking to sell you cookies, but whatever it is, people want a little pile of your cash no matter what form "cash" takes. Yes, some expenses are inevitable, but we can all work at minimizing the spending.

The more you have...money, land, equipment, tools, etc...the more people try and figure out ways to get it. I always picture myself stooped over it, guarding it with intensity. Again; cynical, but the truth.

It is a relentless battle to keep it, and that is why I track every penny I spend, I want to know where it goes. The more I know where it goes, the better I can guard against future losses. It does not mean I do not give it away, but that is my choice.
 
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I'm going to likely annoy everyone by suggesting that the question is improperly structured. Perhaps it's not "money" we're seeking to avoid, but the dependence on mega-corporations for things which used to be produced locally, and for reliance on, yes, barter with others in the wider community, exchange of labor, and so on.

In this vein I want to mention another way to "opt out" of the consumerist network. This has nothing to do with a goal of eliminating all use of currency, but with self-sufficiency in a world where we likely will patronize even companies we don't like (cough cough oil industry) or do (certain purveyors of tools, supplies, and so on). My teeny contribution is to point out that there are many resources occurring "naturally" in the environment which are largely ignored today. One way to find out about them is to learn what the indigenous people of the area were doing in terms of economy (as defined by anthropologists---material interactions related to subsistence or acquisition).

The most obvious category of available natural products is food. Nearly everyone can encounter edible flowers, berries and even nuts just by walking through a relatively unspoiled area. There is "economic" wealth in the form of very nutritious and tasty food products. Some are commonly known (rose hips, blackberries, walnuts), and others not. I am for some reason fascinated (or perhaps obsessed) with discovering means of harvesting and utilizing hackberries. These are nutritious in the manner of both berries and nuts, and grow in most ecosystems we're likely to live near. They've been a food source for human types since Homo erectus.

And moving beyond the food (and herbs), many items of furniture or home (and barn, yard, orchard, etc.) improvement can be derived directly from natural resources. A friend of mine once made a front fence and gate with archway out of STICKS and it was amazing. Of course he had far more artistic talent than I have, but still impressive works are possible.

For garden accoutrements, many of the possibilities are obvious. I used to use redwood lateral branches to make large trellises for plants.

And there are things gathered and processed of natural origin which will bring money if you present them appropriately.

Yes this isn't about living without money, but about substituting natural interactions for financial ones, and even making money with things gathered and produced.
 
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Money is just really an indirect method of bartering.  Way back, before money was invented, if I wanted a pig, but had an excess of honey I would find someone that wanted/needed honey but had an excess of pigs.  I got rid of something I had too much of and acquired something that was of greater value to me.  The other person accomplished the same thing.  Win-win.

Money enables me to sell my honey to someone that has no goods or services to offer that are desirable or valuable to me.  Then I can go buy a pig from someone that doesn't want/need my honey.  So the market for my honey is now everyone that wants honey regardless of whether have pigs at all, let alone a pig I want.  And the pig market available to me now includes everyone raising pigs ((and lots of different types of pigs), so I can get the pig I really want instead of just the type that honey-fiends happen to be raising.

Barter works well when the people that participate are well matched to each other in terms of their surpluses and needs.  Money just makes that whole system more efficient and flexible.  Philosophically, at least for me, I see no particular advantage of one over the other.  But money is certainly more flexible and predictable.  Though bartering has advantages in terms of relationships with people you deal with.
 
Travis Johnson
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I actually barter a lot. I think that comes from knowing so many people, and trust. I think both are in place because I have been here all my life, and my father, and my grandfather, etc. I think with people knowing I will not be here today, and gone tomorrow; there is a bit mores sense of security.

I have had good barters and bad, but for the most part, they have been good.

And surprisingly, for the most part I pay taxes on my barters. It is required by law anyway. You have to record the value of what was traded. Since most of the time the trade is the same in value, it is a wash, so there is no net loss, or no net gain from it on my taxes, it is just a place to note the transaction. I have no issue with that, it is what it is, and I decided long ago that I would run my farm above board. This was a big change from my Grandfather who tried to keep everything under the table, and ended up worrying his whole life that he would get caught.

Me? I have a legitimate farm, so I am availed to low interest loans and grants, and I think I am better off for it. I know my farm is far more improved because of those capital improvements, which are things I could never have funded on my own.

But in that sense it is a barter too. I get some low interest loans and grants, and my farm puts food on the national food chain.
 
Nina Jay
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Lately I have found interesting forms of barter that I didn't use to think were barter, but I know realize they can be thought of as barter, too.
Such as bartering advice to psychotherapy and bartering advice to advice.

For example, some neighbours give me advice on how to build things and what to do with our animals, if they are sick. And what to do with the old buildings: which building is worth renovating, which is too far gone, what are the most crucial things I need to repair first.
I give advice on how to write and use email and how to speak with clarity and conviction. And sometimes (in rare cases) I empathically listen when they talk about their childhood traumas. The latter is such a special form of service that it of course cannot be done with just anyone, it has to be a special long time acquaintance with whom I have built trust over a long period of time.
 
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