Some Questions about Income Tax Audits

Some Questions about Income Tax Audits

11/09/2021George Reisman

An income tax audit is essentially a search. Why, consistent with the Fourth Amendment to the US Constitution, doesn’t it require a search warrant signed by a judge?

Since income-tax audits sometimes lead to criminal prosecutions and jail sentences, why is it not a requirement that anyone whom the IRS wishes to audit first be given a Miranda warning, with its notification of the right to remain silent and to have an attorney present?

Why isn’t the Fifth Amendment to the US Constitution and its protection against self-incrimination a routine basis for the refusal to submit to an audit, thus requiring the IRS to make its cases without the cooperation of citizens forced to help in their own incrimination?

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The Zero Tax Plan: End Business Taxes

8 hours agoStephen Apolito

If you followed the 2012 Republican presidential nomination (which seemed like ages ago) you undoubtedly remember Republican Herman Cain’s “9-9-9” tax proposal in which he advocated a nine-percent flat income tax for corporations, a nine-percent flat income tax for individuals, and a nine-percent national sales tax.

Other Republican presidential candidates issued their own tax reform plans. Texas governor Rick Perry had a Steve Forbes inspired plan. Under his plan both corporations and individuals would pay a 20 percent flat tax, and government spending would be capped at 18 percent of GDP. 

The 2012 Republican primary was won by Mitt Romney who did not have a flat tax proposal. He proposed instead cutting personal and corporate income tax rates by 20 percent and 29 percent, respectively.

But flat-tax proposals die hard. During the 2016 Republican primary, Senator Ted Cruz proposed a 10 percent flat tax on individuals and a 16 percent “Business Transfer Tax” on corporate income and payroll.

No one, however, proposed anything like me--the zero-percent solution. Under my plan corporations pay no income tax. Nothing!

I haven't lost my senses. In fact, I have given my zero-percent solution careful analysis-- drawing on over thirty-years’ experience in the tax profession. Here’s why I have concluded that corporations should pay no income taxes:

A corporation, like a partnership, is a legal entity, one generally established to conduct one or more business activities. Unlike people, who are natural persons, corporations and partnerships are creatures of law, and owned by others: Corporations are owned by stockholders, and partnerships are owned by partners, both of whom more often than not are natural persons who do pay taxes.

Partnerships, however, do not pay income taxes. Even in tax-happy states like New York, partnerships pay no federal or state income taxes. And a partnership’s profits can be quite substantial-- often in the millions.

Limited Liability Companies (commonly referred to as LLCs) like partnerships pay no income taxes. In fact, there is nothing in the U.S. Tax Code or IRS regulations requiring the taxation of LLCs. In general, LLCs are taxed like partnerships--which means they are not taxed at all. I read recently that PriceWaterhouseCoopers (PWC) is the largest Limited Liability Company in the U.S. PWC is a public accounting firm with more than 150,000 employees worldwide. They pay no U.S. federal income taxes.

One of the simplest (and popular) ways to conduct business is the sole proprietorship. I have conducted my accounting and tax practice as a sole proprietorship for many years. Like partnerships and limited liability companies, there is no income tax on a sole proprietorship's profits. Indeed, the IRS treats the sole proprietorship as a “disregarded entity” and, therefore, is not taxed.

To summarize:

● There is no partnership tax;

● There is no limited liability company tax; and

● There is no sole-proprietorship tax.

But consider the corporate form of doing business. It’s a mix of good and bad news. The good news is that corporations with no more than 100 shareholders can elect not to be taxed. This can be done by the timely filing of a simple document: Form 2553 -- Election by a Small Business Corporation. Once approved (and it generally always is) the S corporation (as it is often called) is on an equal tax footing with partnerships, limited liability companies, and sole proprietorships. No tax!

The bad news (unless you have fallen in with the “corporate greed” crowd) is that once a corporation needs to raise additional capital in order to expand its operations, more often than not it must sell shares to the public--the usual route of most successful corporations.

Private corporations go public via an initial public offering (IPO) of its common stock. Once the corporation crosses the 100 shareholder line, however, it no longer qualifies as an S corporation, so it’s forced to choose between staying private and paying no tax, or going public and having Its profits eaten up by federal, state, and local taxes. Money that could have been used to buy equipment, build factories, and hire workers (heaven forbid) goes instead to support the government and its many friends in places high and low.

Let’s look at Proctor and Gamble (P&G) to illustrate the problem. P&G, the manufacturer of Tide and Bounty, had pre-tax earnings for the fiscal year ending June 30, 2022 of $17,995 million. It paid income taxes of $3,202 million--an effective tax rate of almost 18%. Its net earnings after taxes, therefore, was $14,793 million. During the same fiscal year, it paid dividends of $8,770 million. Dividends are a distribution of after-tax net earnings paid to the owners of the business--the shareholders. Contrary to what many believe, dividends are not a deductible expense. As a result, dividends do not reduce a corporation's taxable earnings. The dividend yield on P&G’s stock is just 2.43%. That represents the investment return to P&G shareholders.

The story, however, does not end there. Let’s say you owned 1,000 shares of P&G stock in 2022, and each share of stock pays a $3.65 dividend. Since you owned 1,000 shares, your total dividends for the year will be $3,650. During January 2023 you will get an important tax document in the mail from P&G--just in time to prepare your income tax returns. It’s called Form 1099-DIV. P&G is required to report to you and the IRS the dividends paid to you. And you must report these dividends on your tax return and pay federal, state, and local taxes on this income.

Those who have been paying attention to what I have been writing should be jumping up right now saying, “Wait a minute. Wasn’t that money already taxed?”

Since dividends are a distribution of after-tax net earnings, the taxation of dividends is in fact a double tax on profits: Once when earned by the corporation, and again when distributed to shareholders.

Partners, LLC members, S-corporation shareholders, and sole proprietors pay tax on their pro-rata share of business profits. The profits are said to “flow through” to the owners--even when undistributed. Any subsequent distributions to the owners are generally tax free because there is one tax (not two) on business profits. Since corporate dividends are taxable, and the dividends are paid from profits that have already been taxed, the only way to level the playing field and bring some semblance of tax fairness to the system is to exempt corporations from income tax.

When corporations are free of the double taxation on profits, an explosion of business activity will surely follow. Investment and production will be set free from the deadweight of government tax confiscation. Equity will replace debt as the favored method of business financing. Projects that are uneconomical on an after-tax basis will now become viable. Investments in property, plant, and equipment will expand, thus creating jobs, new products and services, and real wealth. That’s why I propose a zero-percent solution, but don’t hold your breath. There are too many in the “deep state” that are dead set against this ever happening.

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Don't Forget that Property Taxes Also Create Economic Harm

Understanding taxes is pretty simple. When the government takes a dollar away from a citizen, it makes him and society poorer. When it takes less, the opposite happens.

We have to give it more thought to understand why government pulls in more after cutting tax rates. Moreover, there are different dynamics at play depending upon whether you’re talking about taxes on income, or taxes on property.

When public coffers fill up after income tax rates are cut, it’s usually a sign of good things. 

In the immediate sense, economic activity picks up because people have more in their pockets to spend. Even more so if the code is simplified. We then save more money (AND time) on preparation assistance like Turbo Tax.

It bodes even better for the long-term.

These positive actions send a signal: “this administration plans to take less from you.” It allows for more planning into the future. That results in more investing, and risk-taking by entrepreneurs. 

Those are the two biggest factors that determine how much prosperity society enjoys. And when we’re more prosperous, we’re earning more. And when we’re earning more, we’re paying more taxes, even if rates were lowered. 

A gusher of tax revenue might also be indicative of good things on the local level. The number of households in a jurisdiction could have grown, which would enhance the workforce. It also might be the result of new-business formation.

The governing jurisdiction could even knock a few cents off the tax rate and shield more in home values via increased exemptions. 

Why though, would property taxes rise way more than the population and the number of taxable units? Inflation and rising prices. The cause of those? Poor monetary policy and the fallout from the domineering pandemic shutdowns, respectively.

The lack of support for a strong, stable dollar on the federal level has been a regrettable reality this entire century. It makes it more susceptible to weakening, which subsequently means it takes more to buy things.

It also compels investors to seek out safer returns via established assets. 

Gold is usually the traditional option. The sneaker resale market arguably emerged as a new, albeit temporary way to preserve value recently. Another reliable way has always been housing, and sure enough, many home sales in the last few years have been to investors. 

Enter local and state governments in the age of the coronavirus. 

As long as federal ‘aid’ was flowing in (CARES, ARPA), they felt little urge to remove their boot from the neck of productive citizens and businesses. Some of those folks’ work(ed) in the home-building industry, where materials were caught up in the subsequent supply bottlenecks.

These policymakers were/are either oblivious to econ 101, or have been happy to rake in the excess cash produced by the shortages and inflated values they helped create. (The standard retort was “if it saves just one life,” never mind the horrid tradeoffs they ignored.)

But who doesn’t want to see their wealth increase, right? The problem in this case (home values) is that it’s not necessarily linked to an increase in earnings. Therefore, there’s not a corresponding rise in the ability to pay the consequential hike in our property tax bill. 

That’s not a problem with our 401K investments, because the growth in their value isn’t taxable, despite the efforts of some. The only time those real investments can be taxed is when they’re sold. Not so with taxes on our homes. That bill comes due every year.

It’s reminiscent of a scene from the classic mob movie “Goodfellas”: “lose your job? Too bad; pay me. Have an expensive emergency? Boo-hoo; pay me. Paid off your mortgage? Big deal; pay me.” That’s paraphrased, but the omitted expletives apply nonetheless. 

In a way, the property tax is the most egregious tax. After a day of doling out incentives to big businesses, with what they take from homeowners, local representatives roll up in their driveway, and look their neighbor straight in the eye with a pleasant greeting. 

Meanwhile, their actions that day essentially said “Wanna keep being my neighbor? Pay me!”

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Tucker Carlson Gives Misleading Information in His Attack on Apple

Tucker Carlson slammed Apple on his 11-29-22 nightly broadcast for restricting the use of the Airdrop feature on its iPhone — in China only. With widespread protests over China’s “zero-covid” policy that indirectly led to the deaths of 10 people in an apartment fire, Tucker views the limitation of a communications app as a clear sign that Apple is an instrument of the Chinese Communist Party.

After rightfully blasting US mainstream media for failing to report on tanks being rolled into action to intimidate protestors, Tucker said:

We can say, we know for a fact, that Apple is covering for the government of China. . . . [In spite of it being located in the US and run by an American], Apple is in no sense American. Apple’s loyalty is to the government of China. 

If you think that’s an overstatement consider this: Earlier this month [November, 2022] Apple did the bidding of the Chinese government to crush domestic protests against the Communist Party there. Apple did this by disabling its permanent Airdrop feature in China — and so far only in China, the only country in which it’s disabled. 

So why did Apple disable that feature in China?

Well, because that feature — permanent AirDrop — allows iPhone users to communicate directly with one another — without using the internet or cellular networks, both of which in a totalitarian state like China are controlled by the government.

And that means without permanent Airdrop it’s effectively impossible for freedom-minded citizens to organize with one another — they’re powerless. Apple, of course, knows this, and that’s why when iPhone users in China began using permanent AirDrop to complain about the Communist Party Apple just shut it down.

Apple didn’t shut it down. 

Let’s look at some details. Here is what the AirDrop control page looks like on an iPhone in the US — presumably the same as it would look anywhere else, including China. 

“Contacts” are people who are included in their Phone app and is the default setting. If they want to transmit or receive information using AirDrop with people not in their contacts, such as in a mass protest, they can change the setting to “Everyone.”

Even today protestors in China can do it. But according to reports they can only do it 10 minutes at a time. After 10 minutes they have to reset it from Receiving Off to one of the other options.

Yes, it’s a hassle, but it works.

Apple is a big company that tries to market its products around the world. It is subject to market forces of competition as well as state forces of coercion. Monopoly power lies with the state, not the company, no matter how big it is. 

Every state, including the US, has “pay to play” rules. If Apple wants to sell iPhones in China, it must satisfy state bureaucrats as well as customers. This is one of many prices we pay in a world run by states.

Blogger Don Surber reports on what happened to wealthy Chinese entrepreneur Jack Ma, co-founder and CEO of Alibaba, when he gave a speech in October 2020

He criticized the Communist Party, in the foolish belief that being the richest man in Red China protected him. It did not. Chairman Xi had him seized and sent off some place to be re-educated. He had money, not freedom. Now he is gone. Criticized by the pope, Stalin asked how many divisions does the pope have? Xi knew Ma also had no divisions. As George R.R. Martin wrote, power is power.

Neither does Apple have any divisions. Apple could’ve removed its AirDrop feature altogether for China. Maybe Xi will order it removed. But for now, it’s at least available in hobbled form.

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The way forward: A Practical Roadmap to Reclaiming Individual and Financial Sovereignty

12/01/2022Claudio Grass

Those who are familiar with my ideas and my writings undoubtedly know that one the issues I’m most passionate about is individual freedom, on all levels. I believe that free-thinking people know what’s best of them and they need no “guardians”, no “nannies” and certainly no bailiffs and enforcers, to limit or to dictate their choices “for their own good”. As long as those choices cause no harm or damage to nobody else and they violate no property that isn’t theirs, all that should govern the individual’s choices is their own conscience.

However, today’s “leaders”, in politics and in the corporate world alike, clearly think otherwise. They view humans as fundamentally flawed, as eternal children to be educated and scolded, as cattle to be herded and as weaklings to be protected and patronized. And they believe themselves to be different, to be above us all, unaffected by all the imperfections and shortcomings that make us human. They really think they are wiser and smarter than most of their fellow men and women. They’re more compassionate too: this is why they view it as their duty to guide the rest of us, to show us a better way; their way. And if we dare question it, or god forbid, resist it, well… Then we’d be a danger to the “greater good” and we’d be treated as such.

None of this a new problem, of course, as these dynamics emerged together with the first organized society. However, modern technologies, new modes of communication and the way that globalization ensured that the “butterfly effect” would be a daily occurrence, ensured that this sort of oppression and suppression went from being “a” problem, to “our” problem. Each and every one of us is directly affected. Honest, productive, decent, free-spirited and questioning people are being punished, ostracized and penalized even day.

But even those who find the current status quo “comfortable” and who enjoy life in an increasingly centralized system and under an increasingly overreaching State, will undoubtedly soon come to regret it. After all, for any ruling elite to continue ruling, there must always be an enemy within and that’s historically a moving target. The “greedy rich” or the “freeloading poor”, the “rabble-rousing minority” or the “oppressive majority”, it doesn’t matter which group one will be assigned to. Nobody’s safe, not for long anyway.

It takes extreme cynicism or pitiable naivety to decide to play this rigged game and to choose to remain in a system as clearly corrupt and inhumane as this. In fact, one would assume that the majority of rational, sensible, self-respecting and responsible people would have left this system already - and yet they haven’t. Not “the majority” anyway, but perhaps “not yet”.

The reasons that would stop someone from “opting out” are understandable and relatable. Fear of being outside one’s community is probably chief among them. However dysfunctional and malicious that community it might be, it still offers a sense of “belonging to a group”, something that every human is hardwired to seek out and to value. We are social animals and since the day we’re born we know that our survival depends on being accepted by a tribe. 

It is indeed a huge leap of faith: to go at it alone, to purposefully detach and isolate oneself, in search of a “better” group - one that embraces the same values, principles and morals. At the beginning of the journey, nobody knows when and even if they will find their new “tribe”. Doubts and regrets test the resolve of even the strongest and most determined amongst us. The whole endeavor of reclaiming and defending one’s independence can start to look like a pointless exercise, like a pre-doomed, quixotic undertaking, fit for children and rebellious teenagers.

However, there is a stage after that, and quite regrettably, most people don’t ever get to experience it: after overcoming fear and doubt, there is a precious adventure to be had, a path of discovery inwardly and outwardly, many surprises, twists and turns and countless valuable lessons learned along the way. This, in my humble opinion, is the true prize: the journey, not the destination.

That being said, I can understand why most people would focus on the destination - this is the entire purpose, after all, is it not? Well, as is so often the case with any new journey, that “final stop” seldom looks like what one had imagined in the beginning. For liberty-loving individuals, there are historical examples of communities and social structures that most of us would find appealing and there are also contemporary ones too. But most importantly, there is the possibility to make one’s own blueprint, if what has or does exist does not seem adequate, and look for people who agree with and want to contribute to growing that vision. The only necessary prerequisite is that each of us understands that one man or woman alone cannot design, predetermine and dictate the choices of others. Not only is that unethical, it also doesn’t work, never did and never will.

Or, as Mises himself put it

Moreover, the mind of one man alone—be it ever so cunning, is too weak to grasp the importance of any single one among the countlessly many goods of a higher order. No single man can ever master all the possibilities of production, innumerable as they are, as to be in a position to make straightway evident judgments of value without the aid of some system of computation. The distribution among a number of individuals of administrative control over economic goods in a community of men who take part in the labor of producing them, and who are economically interested in them, entails a kind of intellectual division of labor, which would not be possible without some system of calculating production and without economy.

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We Need a Che Guevara of Our Own

The title might be misleading at first, but there is a good reason for that. To understand the needs and opportunities for the contemporary Right, we first need to understand what got the Left into power at first.

Enter Che Guevara, or more exactly, enter Ernesto Guevara de la Serna.

For anyone in either the free-market or the classical conservative sphere, the travel log of his motorcycle trip around Latin America should be a required reading. Not because it is an historical account of the radicalization of one man, who from well-educated Argentinian bourgeois doctor went to terrorist, revolutionary and guerrilla leader, but because it shows the seeds of how a simple man with ideas (albeit in his case, the worst ones) can become an archetype, a religious icon for a set of beliefs.

Even for someone like Murray Rothbard himself, Che Guevara was someone worth of interest, to the point of writing a highly critical but yet prophetic obituary for him, and Rothbard, of course, was right, because Che Guevara has probably become the most well-known political figure in recent Latin American history, and outside of the developed West, that is, the US-led Anglosphere and Western Europe, his face and his name have become synonymous with armed struggle, with guerrilla warfare, with an utopian socialist ideal that knows no limits nor boundaries.

His death at the hands of the Bolivian Army, helped by the CIA, in a failed attempt to spark an agrarian Marxist revolution in the Andean Altiplano, only contributed more to his already legendary status among those who oppose the ideas of freedom and civilization.

In practice, his death made him a martyr of the Left, a religious symbol of a revolution that never came but is always presented as the gospel of egalitarianism. Say what you want about Che Guevara, say he was a killer and a terrorist, and you will be right. But that doesn't take away the fact that Che was ready to die for his ideas, and in fact did so.

The Right, neither conservative nor libertarian, doesn't have a single person who has gone to such extents. We don't have martyrs, and our beliefs are not religious. We may think of the self-immolating acts committed by the likes of Alex Jones or Kanye West as martyrdom for our causes, like free speech, but they are nothing but counterproductive folk activism.

In fact, our beliefs, are quite the opposite to a religious fanatism, for they are rooted in the reasonable analysis of history, nature and society, and as such, the results of our ideas, even if adequate on a long term, are not easy to sell to high-time preference masses, who have become used to receive subsidies from governments and have internalized the propaganda created by the corporate-managerial class that works in tandem with policy-makers.

Our society is deadlocked between an individual struggle for freedom and an organized struggle for power, and our times are stranger than ever, for they represent what Francis Fukuyama still insists is the End of History, but look closer to the civilization end stage described by Oswald Spengler in his Decline of the West magnum opus.

The problem is that if we take either Fukuyama's or Spengler's words for granted, we're still left without some key elements to understand the mechanics of our age: liberal democracy is indeed the dominant system all around the world, but it is not liberal (for it is not generous, as defined by Erik von Kuehnelt-Leddihn, and because it creates false, unstable prosperity out of heavy taxation, inorganic monetary emission and general government intervention of the economy), nor it is democratic (for it allows everyone to vote, no matter who or what "the People" is or is intended to be, and reserves power only for an unelected managerial class.)

If this account of facts is remindful of James Burnham's ideas, it is because he, like Spengler, identified elements of our current collapse, and tried to predict its future by equating the imminent managerialism of the West with Soviet Stalinism and Italian fascism, and in many senses, Burnham was right, and Western managerialism has indeed become something akin to fascism, although without the nationalism, as Lew Rockwell has repeatedly warned us.

But where does that leave us and how is Che Guevara connected to all of this?

Simple: for Burnham, as well as for Spengler, as theorists of Western collapse, the system that would be in place in the endgame of civilization would depend on strongmen like Cecil Rhodes to work smoothly, for they, as the Great Men in History described by Thomas Carlyle, would be the only ones able to take the reins of power to direct society.

This mention of Cecil Rhodes is not random, because he could probably be considered the best example of how a Great Man idea must be compensated with a sound understanding of historical processes, and because Rhodes, like Che Guevara, was strongman, a tactician and a born leader. In Hans-Hermann Hoppe's words, he was a natural elite.

From an English boy with poor health, the son of an Anglican priest, he became a mining magnate and then an important politician in South Africa. His talent for business allowed to thrive and prosper, and his short stay in Oxford University shaped his worldview into one of British dominance and influence.

In the same fashion as other strongmen before him, Rhodes was elevated into the highest prestige in his last years and after his death, with the British colonies he helped to acquire getting named after him (not unlike Bolivia being named after Simón Bolívar), with his South African estate becoming the campus for the University of Cape Town, and with his large fortune left to fund the Oxford scholarship named in his honor, which has helped educated thousands of politicians and enterprise heads from all around the Anglosphere, with the original intent of shaping them to think in the same way Rhodes himself thought about a British-dominated world.

But his legacy hasn't prospered as much as the almost religious veneration Che Guevara has acquired, for the idea of Rhodes, the imperial businessman and politician, once respected as an ideal of the British Empire, has now become anathema even in the very institution he attended and donated his fortune to, for the gospel of egalitarianism cannot allow the veneration of natural elites, in their own times and contexts.

Che Guevara, on the other side, by living fast and dying young, by focusing and sacrificing himself to his ideas, created a myth around and about himself, a myth that men like Cecil Rhodes could have never even achieved.

And now, in our Populist age, where political and business leaders emerge out of the polarization of ideas and beliefs, where strongmen and magnates like Ron DeSantis and Elon Musk can lead thousands of supporters and yet still have troubles to hold or exercise power in their own spheres of influence, the question remains: what are we missing that the Left does have?

We may not realize it, but the Left is currently lacking this key element: they don't have natural elites, they don't have caudillos, they don't have true leaders.

In their inflation of their egos, they have elevated the likes of Klaus Schwab and Samuel Bankman-Fried into their demigods, and when the societal collapse they have caused themselves may finally come, they won't be able to prevent it or to mitigate it.

But here is where and when our duty becomes clear: if the Left is a fanatic religious movement focused on enforcing egalitarianism, and if the Left has had its martyrs like Che Guevara, then our fight, just as Rothbard said, must also be a religious crusade, one for the defense of freedom and civilization.

But to fight such a fight you don't only need fighters, you need leaders, tacticians, strategists. Not everyone can be one, because our natural differences make us spontaneously inclined to different activities and positions in life, but extreme circumstances do create extreme leaders.

Ernesto Guevara did not become El Che from day to night, he was transformed by his trip around Latin American, radicalized by the poor living conditions of his fellow men, and engaged by the common identity of a single continent from the Rio Grande to Patagonia. It just happens he took to wrong path and he fought for the wrong ideas, and instead of prosperity to the masses, the only things he brought were death and misery, in Cuba, in Angola, and in Bolivia.

His face, now a symbol, still represents carnage and poverty wrapped around an utopian ideal, but ultimately proves the point of this essay: Che was, and still is, a symbol.

We, in the Right, cannot take him for our side, because it would be incoherent and counterproductive, but we must understand what made him as such. Che emerged under the most unlikely conditions and circumstances. Our Che will probably emerge from the most unlikely of the places as well.

Because if one thing is true, that our conflict with the left is indeed a religious fight against a fanatic progressive dogma, then we will also need leaders and martyrs, just like Che was for the Left in the past.

We need a Che Guevara of our own.

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Liberty in Our Lifetime: Lessons from Prague

11/29/2022Robert Aro

In a city that looks like Paris meets the Iron Curtain, with nice restaurants, city tours, and where I was even able to shoot an AK-47 at a gun range (after going through training and while under supervision), I attended the 2022 Liberty in our Lifetime event in Prague. Last month the “City of 100 Spires” hosted an international gathering of who’s-who of libertarians, Austrians, and others in the free market crowd. Parallel Structures, referring to the creation or use of a voluntary system instead of or in replacement of an involuntary one, was the conference theme, a concept foreign to most, but not for long.

Cryptocurrencies exemplify this idea. For better or worse, cryptocurrencies are used for exchange when two parties do not want to transact in a national currency. Bitcoin is probably the most well known parallel structure, but this can be applied to any new system which attempts to escape the State’s monopoly of force.

Homeschooling is another parallel structure. Consider that property taxes are typically used to support State sponsored schooling. But schooling for some is socialist indoctrination for others. For those able and willing, homeschooling offers a viable solution; the caveat, like all parallel structures, is that the onus is on the individual for success or failure.

Fortunately, little things have a way of turning into much bigger things. With the emergence of parallel structures, their continual implementation and eventual growth provides solutions the world desperately needs, with the possibility of eventually supplanting the State entirely. One day, we may very well find ourselves living in the world's first Free Private City, as written about by Titus Gebel in his book Free Private Cities, who also presented at the event.

There appears to be two methods these structures can be implemented. I alluded to this a few weeks ago, about how something needs to change or else socialism will consume us all.

Either we change the system from within, or remove ourselves from the system entirely; if not by internal change or external flight, eventually we’ll be consumed by it.

At the conference, there were some groups wanting to create private dwellings in the ocean on moveable pods which could be physically joined to form communities. There were other groups promoting the “digital nomad” lifestyle, for those who have the option of living and working in various countries across the globe. The idea of flight is understandable, and historically a winning strategy under repressive regimes, in which a societal transformation seems all but impossible.

However, there were also those who wanted to stay, essentially fighting the government to better society. One non-profit organization in South Africa called Sakeliga describes itself a “club of businesses, professionals and investors together taking up their constitutional duty to resist state power, help establish a just commercial order, and form thriving trade and financial networks.” I was fortunate enough to meet the Executive Director Russell Lamberti, an Austrian economist, author, and investor who has written several articles for the Mises Institute. In his presentation he made it clear that South Africa is his home, and his organization intends to use litigation and all legal means to thwart government corruption and overreach.

The involuntary nature of government will always make it a force for evil. The real question is whether it’s possible to escape the system through fleeing or fighting it head on. Luckily, the beauty of a parallel structure is that its potency can transcend physical location. Wherever in the globe it is being implemented, it will always act as a force against State power through competition.

No one size fits all approach works best. But if some in the liberty crowd seek greener pastures elsewhere, while others seek to change society from within, the rise of parallel structures, such as work, media, culture, education, finance, and eventually a political or social system itself, will continue to exist as a beacon of hope.

Combine the rise in these new structures against the inevitable failure by the State, there becomes a real opportunity this decade to create a monumental shift towards a voluntary society and to find that “unbridled capitalism” we so long for.

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Zelensky’s Well-Documented History of Crushing Dissent

11/29/2022Liam Cosgrove

The following is a long-forgotten story regarding the true nature of Ukrainian President Volodymyr Zelensky’s attitude towards free speech. Zelensky has been lionized by the western press since the start of Russia’s invasion, but in the not-so-distant past, many international human rights organizations and concerned Ukrainians were sounding the alarm on dangerous and anti-democratic patterns of behavior exhibited by the President.

Here is what happened…

“They [Zelensky Administration] believe that it is possible to return Donetsk and Luhansk to Ukraine by force,” read a headline from Ukrainian news outlet Newsone in December of 2021. “Only a suicide and a narrow-minded person [could believe that].” The article is quoting Viktor Medvedchuk, owner of Newsone, who is criticizing the President for reneging on his campaign promise of finding a peaceful solution to the conflicts in Eastern Ukraine, an issue BBC reported was Zelensky’s “number one promise.”

On February 3, 2021, President Zelensky circumvented parliament to enact sanctions on three television stations believed to be affiliated with Medvedchuk, a leader of the Opposition Bloc party and duly elected member of parliament. The channels were immediately taken off air, including Newsone. Zelensky also sanctioned the air travel company used by Medvedchuk and pressured American social media companies like YouTube and Facebook to deactivate the accounts of Medvedchuk-affiliated companies, which they ultimately did.

Justified by Medvedchuk’s ties to Putin, these actions were nonetheless widely condemned by international, European, and Ukrainian human rights NGOs. Free press advocates like the International and European Federations of Journalists (IFJ and EFJ), who collectively represent hundreds of thousands of journalists across 140 countries, jointly denounced the decree, calling it “an extra-judicial and politically motivated ban and a blatant attack on press freedom that must be urgently reversed.”

A division within the United Nations (UN) released a statement declaring that the decision had not been made by an impartial authority and lacked proper justification and proportion. The National Union of Journalists of Ukraine (NUJU), a group that has repeatedly condemned Russia for today’s invasion, openly criticized the 2021 sanctions, “Depriving Ukrainian citizens of access to media without a prior trial and banning hundreds of journalists and media outlets of their right to work is an attack on freedom of speech.”

Medvedchuk, still a sitting member of parliament at the time, attempted to create a new media organization called First Independent. Zelensky dissolved the outlet a few months later.

Gross negligence on the part of Ukrainian law enforcement also became a central issue internationally and was flagged by US intelligence agencies. A 2021 US State Department report on Ukraine blamed “government inaction in solving crimes for the emergence of a culture of impunity.”

“Government authorities sometimes participated in and condoned attacks on journalists,” the report went on, citing credible allegations that “the government prosecuted journalists in retaliation for their work.”

Doubling Down

Ignoring international backlash, on August 20, 2021, Zelenksy passed broad sanctions against various digital media publishers, yet again without parliamentary involvement. Strana, one of Ukraine’s largest outlets at the time with 24 million visits per month, was a primary target of the sanctions. After its primary url ( was cut off, the outlet was forced onto another domain (, which is still forbidden in Ukraine. Strana’s viewership dropped by more than 94%.

Human rights organizations once again found the justification of “pro-Russian” ties uncompelling. The previously mentioned journalistic freedom cohorts, IFJ, EFJ, and NUJU, issued a shared statement calling the decree an “extrajudicial action” and lambasted it as a “threat to press freedom and media pluralism in the country.” The EFJ further specified that “ is one of the few remaining opposition media in Ukraine.” Freedom House, an American pro-democracy non-profit once chaired by Eleanor Roosevelt, urged US President Biden to take a stronger stance against Zelensky’s actions. “Zelensky continues to use executive power, without judicial review, to sanction media outlets, tech platforms, journalists, and websites under the pretext of fighting disinformation,” the group said in an open letter to the US President.

Perhaps the most interesting target of the August 2021 sanctions was Anatoly Sharij, a Kyiv-born journalist and blogger with a devoted Ukrainian fanbase who founded a political party in his name in 2019. The “Party of Sharij” received nearly 10% of the vote in some localities during Ukraine’s 2020 national elections with several candidates attaining office at the city and regional levels.

Anatoly Sharij, in a photograph taken in Spain, where he lives. Credit: El Independiente

Sharij was forced to flee persecution by Viktor Yanukovych, a past Ukrainian President whom many western media outlets accuse of being aligned with the Kremlin. Far from exhibiting “pro-Russian” sentiment, Sharij strongly condemned Putin’s invasion back in May, stating in an interview with Spanish publisher El Independiente, “The war is an aggression and invasion by Russia against the Ukrainian people.”

A UN-affiliated organization investigated Zelenky’s sanctions against Sharij and concluded “Sharij is misportrayed by the authorities as a journalist being pro-Kremlin, pro-Putin, pro-Russian Federation.” At a conference in Brussels, Sharij shared his belief that Donbas and Crimea are part of Ukraine but disagrees with Zelesnky’s approach to the conflict. In response to being painted as a Russian sympathizer, Sharij said, “The Ukrainian government comfortably uses such labels against anyone who expresses any criticism… I have the right to criticize the corruption of the president and the government.”

The Party of Sharij was among several political parties disbanded by presidential decree at the start of Russia’s war, a decision upheld by Ukraine’s Supreme Court without opportunity for further appeal.

In the Words of Ukrainians

A local perspective on Zelensky’s press relations is provided by a Ukrainian outlet now familiar to many westerners, The Kyiv Independent, whose Twitter following rocketed from just 11,400 followers a few weeks before the invasion to more than 2.2 million as it provided English-speakers around the world with live war updates.

Having been celebrated in Forbes earlier this year for their reports on Russian war crimes and op-eds calling for western sanctions against Russia, it’s difficult to portray the outlet as pro-Kremlin. Before the invasion, in January 2022, The Independent published a piece titled “How Zelensky's administration moves to dismantle press freedom in Ukraine.”

“The past four months have seen a surge of attempts to control the media,” The Independent reported, highlighting the government's pattern of behavior characterized by “threats of criminal prosecution against media outlets and journalists.” Condensing the Zelensky presidency in a single sentence, the author wrote, “Instead of improving its dialogue with the press, Zelensky’s government decided to take a more direct route: amplify supporters and pressure critics into silence.”

Rethinking Our Support

As we consider the image of Zelensky portrayed not only by numerous human rights groups but by his own citizens and compare this to the version pushed by western media, we should also reconsider our continued military support for the President.

In an environment rogue missiles land in Poland and blame is tossed around in a hysterical frenzy, nuclear war is a real possibility. Nuclear war means billions dead, the end of modern civilization, and perhaps the end of humanity. Is that risk even remotely commensurate to the benefits of ensuring one corrupt despot maintains power over eastern Ukraine instead of another corrupt despot?

I don’t see how anyone with minimally functioning cognitive faculties would have a hard time answering this question.

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It Beats the Alternative? Let's Think about That!

As people get older, we sometimes hear them joke that it beats the alternative, which is usually left unsaid.

There’s another sense in which the alternative is assumed to be far worse than one’s present condition: The type of government almost all people live under, which is the state, here used in the Max Weber sense of an entity successfully claiming a "monopoly of the legitimate use of physical force within a given territory.” As bad as states might be — the argument goes — it certainly beats the alternative, anarchy.


Is it possible states create the conditions normally associated with anarchy, thought to be a condition of widespread chaos and lawlessness? If we look at history, we find evil in government. It violates every notion of human decency and justice, though there are degrees of difference. A few examples may serve to freshen our memory. 

The current war in Ukraine brings to mind Stalin’s imposition of starvation on the Ukrainian people in 1932-1933, as part of his collectivization of farming, which according to this study resulted in an estimated 4.9 million total deaths. Stalin seized Ukrainian crops and grains as punishment for failing to meet quotas and for resisting collectivization. Also known as the “Great Famine, or Holodomor (extermination by hunger), Ukrainians suffered unspeakable horrors at the hands of Stalin’s “collectors.” 

Peasants accused of being food hoarders typically were sent off to prison, though sometimes the collectors didn’t wait to inflict punishment. Two boys who were caught hiding fish and frogs they’d caught, for example, were taken to the village soviet, where they were beaten, and then dragged into a field with their hands tied and mouths and noses gagged, where they were left to suffocate.

Stalin’s wife, Nadezhda Alliluyeva, committed suicide in late 1932, which according to playwright Mikhail Shatrov stemmed from her violent disagreement with Stalin over his murderous policies. 

Anarchy would have been a blessed option for Ukrainians had they been able to free themselves from Stalin’s grip. Given the power of today’s left-dominated governments and the global push for a Great Reset, humanity’s ultimate horror may still lie ahead.

Is democracy the answer to state growth?

One could argue that democracy — people power — prevents the rise of totalitarian regimes. A researched analysis of the fraudulent covid pandemic, however, where Western governments turned authoritarian overnight and most people obeyed, scraps that idea.

The state, as sovereign, de facto outlaws genuine democracy. 

Doubt it? How about a vote on the income tax or the state’s official counterfeiter, the Federal Reserve? Not a chance. Our bipartisan overseers won’t allow it. Even worse, thanks to government schools and the state’s official propaganda ministry, most people are at peace with government theft as long as standard euphemisms are applied, such as Treasury’s “taxes” and the Fed’s “accommodation.”

By the way, have you, a non-government citizen, been consulted about the tactical advantages of limited nuclear war? No? How do you like that arrangement?

According to most dictionaries, synonyms for anarchy include lawlessness, disruption, turmoil, disorganization, and disintegration. This is a fair description of conditions in the US and other countries during the so-called pandemic. Such terms also describe countries being bombed back to the stone age, such as Iraq and Afghanistan, where “righteous” states have intervened to eradicate evil or “defend the freedom” of their clueless citizens thousands of miles back home.

Turmoil also depicts the current state of Venezuela, where “dangerously softhearted” World Vision says that

One out of every three Venezuelans is food-insecure and in need of urgent food supplies, according to the World Food Programme (WFP). Once-eradicated diseases like cholera and malaria have returned, and children are increasingly dying of causes related to hunger and malnutrition. . . .

Venezuelan migrants who returned to the country after losing their jobs abroad in the wake of the pandemic have been unable to earn wages back home. Shortages of fuel, electricity, and clean water have sparked riots and left many migrants with no choice but to flee again.

Even Zimbabwe, once the poster child for hyperinflation, is at it again as the Zimbabwean dollar “has been devalued by over 40% since the beginning of the year.” To avoid another currency collapse, central bank governor John Mangudya has inaugurated a program allowing Zimbabweans to exchange their dollars for gold coins. 

Gold, the hallmark of a fully free market, meaning a society that enforces property rights, is coming to the rescue of Zimbabweans. Apparently, when corruption runs its course, some states will try anything, even a temporary return to honest money.

Given what the US state and its coalition partners have done to small countries, to American military personnel, to the cultural climate of peace and liberty that makes civilization possible, it’s hard to imagine a stateless America would be even worse. 

What makes our leaders “great”?

Lincoln, Wilson, and FDR are not renowned for their anarchist views. Through the state they had the means to go to war while forcing others to do the killing and dying. Through the state they had the propaganda tools and the arms to keep most of the public compliant. Through the state they had the means to steal wealth from their citizens to pay for it. Even today, with their crimes detailed online, they remain among the “great” in American history because of a pliant public and a state-controlled media and educational system.

It wasn’t anarchy that produced the massive death and devastation of the two world wars. It wasn’t anarchists who built atomic bombs. It wasn’t anarchists who dropped them on civilian populations.

And it’s not anarchists who've created the conditions for nuclear Armageddon today.

It beats the alternative?

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The Kultusgemeinde and Its Relevance to American Anarchism

11/23/2022Kyle Stephens

Among the many practical issues facing anarchism there is one that attracts the biggest amount of criticism from minarchists: the size of a community. They point out that we do not live in a Hutterite or Anglo-Saxon but urban and global society. As such, size matters. As a settlement grows larger, libertarianism becomes harder to enforce as a covenant. Small communities are easily formed outside the urban matrix, they are not easily sustained on an economic level.

For example, a libertarian community might have a population of 150 people. If a reasonable small business employs a minimum of 25 people, there could only be a total of 6 businesses in that town. To attract additional labor implies if not settlement, nearby arrangements (i.e., company towns and hamlets). If this is the bulk of all its employment, it wouldn't matter. There are only 150 customers to attract, thus little profit to encourage such a business expansion in that community to begin with.

Certainty reigns, so does opportunity cost. Though amassing great company encampments outside the covenant community could become profitable, there is a big metropolis a few miles away that is inhabited by millions of people. Where is the entrepreneur going to go?

Worse, these encampments or company towns amount to enlarging your covenant community. Most bigger cities are actually smaller quarters, separated by wealth or racial characteristics and enjoined as one later on. Suburbs formed from a massive migration of workers to the rust belt. Over time, suburbs became metropolitan areas in tandem with an independent city that is controlled by singular municipal statesmen.

None of this is mitigated with automation or technology either. Companies could invest in it with cloud computing and the like, that would eliminate the issue of opportunity cost previously discussed. However, lacking production means the need to import most goods.

Now, trade makes that easy but that is flawed in a covenant community. Importation implies transportation. If there are top few customers in this small covenant and a large metropolis boasts many, the cost to transport this product is likely greater than what minimal revenue comes from sale. Thus, opportunity cost remains a burden as not only production but importation crash.

The Owenite communes died out for one big reason: people lacked opportunity and sought it elsewhere. It is easy to suggest that this fate was a consequence of its economic model and for sure, communal living does fail. However, it is naive to assume we are in the clear with size in mind.

Though economics are technically secondary to libertarian theory, a community whose population all emigrates makes attempting it fairly futile. Economics in that sense does matter to our success. How could this problem be addressed? Easy.

Within any larger city, there are separate neighborhoods and boroughs with similar characteristics uniting them each. If these became covenant districts, the city itself is only a geographical assembly of covenants. However, labor and capital flows more practically between them. As such, it is sustainable and requires no modification to the broader covenant approach.

This might appear an only minor addendum, but I find the examples most intriguing for it. In areas such as Vienna, Orthodox Jewry tends to live together but differently than he might in Poland with his shtetl. While any gated community is plumbline covenant, these operate with mutual aid in mind (as an extension of religious identity).

Its pricing is not a donation, but mandatory like a tax. This keeps it relatively homogeneous, not only in culture but class too. It is too easy to ridicule that word, "tax" until you realize it is no more an obligation than the bylaw your covenant binds you to. In fact, the covenant most typically proposed by anarchists on the right - though devoid of taxation mention looks more like a social "contract" than a voluntary community (3). Voluntary, it is insofar as you do not need to live there. That is already the way by which a social contract operates, this only excepting its positive law component.

That this too, is basically a social contract, I do not accept as I believe they turn into states with time. Rather, I propose an easy alteration to it. First, let's understand how these orthodox communities factor in interests. As is the deal with any other typical covenant community, misbehavior means expulsion. However, mutual aid in our typical model covenant community is detached from that contract and only intended as a mitigative measure to be encouraged in lieu of welfare.

If mutual aid is basically a given, the Orthodox Jew loses it once he misbehaves. He loses it however, because he got expelled altogether. In my proposal, misbehavior does not necessarily result in your expulsion (this could vary by the heinousness or pettiness). However, the misbehaving party is no longer eligible for mutual aid. Is that all? No. Though he is no longer, ceasing payment does in fact mean expulsion. He pays and does not receive; this payment then goes to the victim party.

That is not all. So, in a Frankpledge, bylaws are per se voluntary too. This sounds insane, but it isn't. In them, those who opt-out of the covenant bylaws are not eligible to go to court and it could even implement social credit to classify him as a parasite. Essentially, he no longer abides by the community conduct but is totally ostracized for it.

Not all people receive aid, but everyone pays in. But the needy paid in over the years, having already explained residents pay an expensive fee to live here. What if someone does not pay in more than once or twice, now he receives?

First, leeching would qualify as a misbehavior in the code. Second, how is this defined? Well, two ways. One, new residents might not be eligible for its receipt but only after they have resided there for a number of years. Two, such aid has a time constraint (e.g., a year's worth). Those who are eligible for aid may at no time receive for longer than one year at a time.

After that year, they must pay it back. They pay it back in a way that is very similar to tax deference. If you do not pay it back, you are expelled. Think there has to be a limit on how frequently you may receive these years’ worth of aid? No. What happens if you, an insured driver gets into an accident? You pay a higher premium, being that you are a risk to the insurance company. Well, every time a resident here eligibly receives aid, the amount of money he is expected to pay back (in addition to the regular fee) is increased more and more.

Not only does this act as a dual vetting process for immigration, but it also then increases the odds that you get expelled for exploitation. Being as it is voluntarily contributed, mutual aid appears to already have its built-in mechanism against exploitation (i.e., people do not enjoy being exploited). However, collective finance means he who contributes does not decide who might receive.

He might, be it operated by its members with transparent books or in that a mismanaged charity alienates its contributors who then move to a competing organization. That risk has not discouraged charities today from doing so, they simply try not to get caught. If that is to happen, so too will a popular demand for its regulation. An anarchist society is only stateless, it cannot outlaw that a state be invented. As such, what in this public choice analysis feels unfashionable makes it no less relevant.

If the social contract does not in stateless form become a state, it remains collective. In his book, Democracy: The God that failed, Hans Hermann Hoppe addresses voluntary individual behavior as pertains the use of his or her own property. He addresses this, not only as pertains use but permission to invite and so forth. However, his covenant is only stateless and not voluntaryist. Autonomy is a voluntary description of inhabitance or association but that is with the use of property, all. Auberon Herbert described it differently, much closer to the Frankpledge that I have previously outlined.

There could be elements of both these visions, especially regarding mutual aid and whether to have it at all or that of immigration already incorporated in the Kultusgemeinde that I example. Nonetheless, options are worth exploring if we are to attract the more hesitant anarchists screaming tyranny at the former.

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Counterfeit Inclusivity

11/22/2022Robert Aro

In a recent speech, one of the lesser-known Fed Governors, Philip N. Jefferson, discussed the importance of having a home:

Beyond location, a home provides both basic needs, such as shelter, and invaluable benefits, such as a sense of personal safety and dignity. It is a refuge in which our minds and bodies can recuperate and regenerate so we are prepared to participate in all aspects of life, including the next day's work. The costs of living in disadvantaged areas or of dealing with financial hardship can be seen in all areas of life. Higher stress, the frequent necessity of working more than one job, the absence of benefits, and the time and money spent commuting—all these exact a financial and psychological toll.

On some level, he must understand that most Americans are under tremendous financial hardship, given the increase to both the cost of living and interest rates.

He asked the question:

What can the Fed learn from research on opportunity and inclusive growth?

Then tried to elaborate further what this meant:

The better we understand the channels that affect the health and function of the overall economy, the better we can calibrate our policy decisions to deliver on our dual mandate.


In pursuing its dual mandate, the Federal Reserve is essentially trying to foster and maintain the conditions in which the economy and all its participants can thrive.

And again:

Pursuing our dual mandate is the best way for the Federal Reserve to promote widely shared prosperity.

For well over a hundred years the Austrians have documented the economic problems a currency monopoly creates. Even beyond the mechanics of money creation lies moral, ethical, and legal considerations. The summary to Bastiat’s The Law, provides a succinct account:

The question that Bastiat deals with: how to tell when a law is unjust or when the law maker has become a source of law breaking? When the law becomes a means of plunder it has lost its character of genuine law. When the law enforcer is permitted to do with others’ lives and property what would be illegal if the citizens did them, the law becomes perverted.

Bastiat, as one of the proto-Austrians, or predecessors to the school, shared countless ideas which have always remained relevant. Hayek built upon this idea, explaining one of the problems with central planning:

The economic planning which was to be the socialist means to economic justice would be impossible unless the state was able to direct people and their possessions to whatever task the exigencies of the moment seemed to require. This, of course, is the very opposite of the Rule of Law.

What the Fed has successfully done over the last century is normalize one of the biggest crimes of the century: Counterfeiting.

Not a day goes by where the Fed is not mentioned on all business channels. Whether it’s CNBC, Bloomberg, on TV, or in print, a significant amount of effort goes into talking about the Fed, what they will do next, and how they may help or hinder the economy. Mainstream economists seem to revere the Fed, with the institution being widely incorporated into their dogmatic beliefs.

But let’s never forget: The Fed is a counterfeiter.

Should one individual try to pass even $100 of fake note as legal tender, they may face grave punishment. And depending on how large the scheme, the individual could face consequences stiffer than murder charges. Yet, when the Fed prints billions to trillions of dollars, not one in a thousand economists think anything of it. If anything, they’ll applaud the inflationary policy.

Like democracy through the barrel of a gun, or dropping a bomb for freedom, the words and actions of a central planner are usually diametrically opposed to each other. If the Fed was serious about helping the poorest members of society, wanted to ensure more “inclusivity,” and really wanted Americans to know the joy of home ownership and the pursuit of the American dream, then the best thing it could do is to stop everything it is doing today. If they really cared, they’d surrender to the rule of law, and not the law of the central planning authority.

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