Reduce your debt!! ... I'm curious.

[Fusion_power]

With regard to the legality of the U.S. tax system, please remember that "legal" is a moving target. What is legal today may be illegal tomorrow. For today, the tax system is 'legal' because failing to abide by it is illegal.

With regard to the Fed causing a tremendous amount of the present difficulty, I have to agree. The problem gets down to seeing how to address the underlying fiscal necessities of a modern culture. The Fed is one effort to find that solution. WRT the legality of the money we use as legal tender, if you don't like it, barter. You can barter anything of value for any other thing of value and so long as money (legal tender) does not change hands, it is generally tax free. I know there are a lot of arguments on this, feel free to post alternate positions.

I generally agree with cheesehead's rather overly pedantic grandiloquently histrionic idiosyncratic position.

DarJones

[Mini-Geek]

Originally Posted by Fusion_power

WRT the legality of the money we use as legal tender, if you don't like it, barter. You can barter anything of value for any other thing of value and so long as money (legal tender) does not change hands, it is generally tax free. I know there are a lot of arguments on this, feel free to post alternate positions.

I'm pretty sure that the government taxes bartering as well, but they don't know of every barter, just like they don't know of every person-to-person cash payment.

[cheesehead]

Originally Posted by Fusion_power

With regard to the legality of the U.S. tax system, please remember that "legal" is a moving target. What is legal today may be illegal tomorrow. For today, the tax system is 'legal' because failing to abide by it is illegal.

Yes, but what most of the fringe tax protesters are trying to argue (as in the "coins" argument) is that the current tax law is invalid and unenforceable because it does not have a proper legal foundation. They are mistaken.

With regard to the Fed causing a tremendous amount of the present difficulty, I have to agree. The problem gets down to seeing how to address the underlying fiscal necessities of a modern culture. The Fed is one effort to find that solution.

For anyone to claim that the Fed _in particular_ is to blame is off-the-mark. Inflation, deflation, business cycles, financial panics, market crashes -- all existed before the Fed did. Inflation, etc. exist in countries that have no Fed or equivalent. There is no known monetary/financial system that does not have some kind of problems when applied to our modern culture. (If there were such a system, whoever thought it up has done a lousy job of publicizing it.) Arguing that the Fed is "the" cause of standard financial problems such as inflation is, often, based on ignorance of history -- of what happened before the Fed existed.

You can barter anything of value for any other thing of value and so long as money (legal tender) does not change hands, it is generally tax free.

Wrong!! (in the US, anyway)

I know there are a lot of arguments on this, feel free to post alternate positions.

It's not a matter of argument; it's a matter of established law! (in the US, anyway)

http://www.irs.gov/taxtopics/tc420.html

Topic 420 - Bartering Income


Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.


Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report this income, correct your return by filing a Form 1040X. Refer to Topic 308 for Amended Return information.


A barter exchange or barter club is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.


The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B for all transactions unless certain exceptions are met. Refer to Barter Exchanges for additional information on this subject. If you are in a business or trade, you may be able to deduct certain costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds From Broker and Barter Exchange Transactions. The IRS also will receive the same information.


If you receive income from bartering, you may be required to make estimated tax payments. Refer to Publication 525, Taxable and Nontaxable Income, for additional information.

http://www.irs.gov/businesses/small/...113437,00.html

Barter Exchanges

Bartering is the trading of one product or service for another. Usually there is no exchange of cash. Barter may take place on an informal one-on-one basis between individuals and businesses, or it can take place on a third party basis through a barter exchange company. A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.


Unlike one-on-one bartering, members of exchanges are not obligated to barter or purchase directly from a seller. Instead, when a barter exchange member sells a product or a service to another member, their barter account is credited for the fair market value of the sale. When a barter exchange member buys, the account is debited for the fair market value of the purchase.
Internet-based Barter

The Internet provides a new medium for the barter exchange industry. Pure Internet-based barter companies differ from traditional, organized trade exchanges in that they do not have a physical office. In modern Internet barter exchanges, there is an agreement or process in place to value goods and services exchanged, which is facilitated by the barter exchange for a fee. A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves.
Trade Dollars

Barter exchanges have their own unit of exchange, usually known as barter or trade dollars. Trade dollars or barter dollars are valued in U.S. currency for the purposes of information returns. Trade dollars allow barter to take place between parties when one party may not have a simultaneous need or desire for the goods or services of the other members. Barter exchanges act as the bookkeeper for keeping track of trade dollars that participants accumulate. Earning trade or barter dollars through a barter exchange is considered taxable income, just as if your product or service was sold for cash.
Requirement for Barter Exchanges to File Information Returns

Barter exchanges are required to issue Form 1099-B Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the Internal Revenue Service. Learn more about information return filing requirements for barter exchanges.


References/Related Topics

• Bartering Income
• Bartering Information
• Tax Requirements for Barter Exchanges

Some (not many, but some) of the people claiming that income taxes are illegal, or that bartering is always tax-free, are deliberately and knowingly trying to mislead others in order to cause trouble. They have succeeded.

[joblack]

Originally Posted by cheesehead

There is no known monetary/financial system that does not have some kind of problems when applied to our modern culture. (If there were such a system, whoever thought it up has done a lousy job of publicizing it.) Arguing that the Fed is "the" cause of standard financial problems such as inflation is, often, based on ignorance of history -- of what happened before the Fed existed.

There is a monetary system which solves the boom-gloom-doom crash cycles. It's called Freiwirtschaft / Freemoney ('free economy','free money').

It was successfully tested in the Great Depression in Wörg (Austria) and Unterguggenberg (Germany).

It is also known as the 'Wunder von Wörgl' (The wonder of Wörgl) and worked fine until the central bank banned the alternative money system.

http://en.wikipedia.org/wiki/Freigeld

[ewmayer]

Originally Posted by cheesehead

Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.

Hmmm ... the danger there is "where does it end?" A married couple shares the housework ... he does trash/yardwork/recycling/laundry/automotive-maintenance, she does shopping/cooking/cleaning. Clearly a form of barter, with a well-defined fair market value. Similarly, given that the IRS is weighing whether to tax the sex trade (and any form of legalized prostitution would clearly be taxable), if one member of a couple takes the other out for a nice dinner, and the recipient of the dinner reciprocates via a right randy postprandial shag session (and let's assume they use birth control, i.e. the sex is purely for pleasure), would that not also constitute an "exchange of goods or services" with a well-defined fair market value?

[cheesehead]

Originally Posted by ewmayer

A married couple shares the housework ... he does trash/yardwork/recycling/laundry/automotive-maintenance, she does shopping/cooking/cleaning. Clearly a form of barter, with a well-defined fair market value. Similarly, given that the IRS is weighing whether to tax the sex trade (and any form of legalized prostitution would clearly be taxable), if one member of a couple takes the other out for a nice dinner, and the recipient of the dinner reciprocates via a right randy postprandial shag session (and let's assume they use birth control, i.e. the sex is purely for pleasure), would that not also constitute an "exchange of goods or services" with a well-defined fair market value?

Yes, but the tax consequences may depend on whether the couple is filing jointly or separately. If they're joint filers, any barter between themselves might have no tax consequence. IANAL, so consult a qualified tax attorney.

[cheesehead]

Originally Posted by joblack

There is a monetary system which solves the boom-gloom-doom crash cycles. It's called Freiwirtschaft / Freemoney ('free economy','free money').

It was successfully tested in the Great Depression in Wörg (Austria) and Unterguggenberg (Germany).

http://en.wikipedia.org/wiki/Freigeld

If there's no incentive to store the Freigeld, then are there no savings accounts? Credit cards? Where does business startup investment come from?

[99.94]

Originally Posted by ewmayer

Hmmm ... the danger there is "where does it end?" A married couple shares the housework ... he does trash/yardwork/recycling/laundry/automotive-maintenance, she does shopping/cooking/cleaning. Clearly a form of barter, with a well-defined fair market value. Similarly, given that the IRS is weighing whether to tax the sex trade (and any form of legalized prostitution would clearly be taxable), if one member of a couple takes the other out for a nice dinner, and the recipient of the dinner reciprocates via a right randy postprandial shag session (and let's assume they use birth control, i.e. the sex is purely for pleasure), would that not also constitute an "exchange of goods or services" with a well-defined fair market value?

I don’t want us to get bogged down in tax (God help us!). I don’t know much about it - and nothing about the US system - but it might make sense to approach the question something like this.

If we make the large assumption that the intent of the US tax gatherers is not to hit everything that moves, then the answer to your question is, it depends on the purpose of the activity.

The plumber and the urologist who agree barter their skills to repair each other’s pipes have a plain commercial purpose. That would be taxable.

The married couple who trade jobs about the home are not involved in a commercial activity; there is no right to payment in any conventional sense and no money changes hands.

The lovers who go out together for a pleasant meal to enjoy each other’s company and a postprandial snog are likewise not engaged in trade and commerce. There is no right to payment in a conventional way and no cash value attaches to what occurs.

If that is right, then you could conclude that the tax man will want to know about what you are up to only if it involves something you do for a living with a right to payment or where there would be an expectation you would be paid for your service. That would catch the plumber or a professional punter, but not a casual gambler’s winnings or the spouses or lovers in your example.

Just a thought ... .

[joblack]

Originally Posted by cheesehead

If there's no incentive to store the Freigeld, then are there no savings accounts? Credit cards? Where does business startup investment come from?

Of course you have saving accounts and all the other products.

The todays problem is that money is only invested if you get a certain return (let's say 6 percent interest), if not you hold it back for better chances (=speculation).

Today's problem is that money is held back and people/banks are going in a bankruptcy/credit crunch.

The incentive is that just cash will loose value over time - to retain the value you have to invest it. The bank will invest the money so you're money will have the same value or more (depends on the investment).

Albert Einstein was talking about the Freigeld invention of Silvio Gesell:

"Ich erfreue mich an dem glänzenden Stil von Silvio Gesell. ... Die Schaffung eines Geldes, das sich nicht horten läßt, würde zur Bildung von Eigentum in anderer wesentlicherer Form führen."

http://www.politik-forum.at/freiwirt...ise-t6514.html

Translation:

"I enjoy myself on the glossy style of Silvio Gesell. ... The creation of money which can be hoarded, would lead to the formation of property in other form of major lead."

[cheesehead]

Originally Posted by joblack

Of course you have saving accounts and all the other products.

The Wikipedia article says

"The name results from the idea that there is no incentive to store the money as it will automatically lose its value after some time"

and I wasn't sure whether that applied only to the paper currency, or to abstract accounts.

The todays problem is that money is only invested if you get a certain return (let's say 6 percent interest), if not you hold it back for better chances (=speculation).

Today's problem is that money is held back and people/banks are going in a bankruptcy/credit crunch.

The incentive is that just cash will loose value over time - to retain the value you have to invest it. The bank will invest the money so you're money will have the same value or more (depends on the investment).

I don't understand how Freigeld solves that problem, then.

When we say people are holding onto "cash", that means paper currency plus demand (checking) accounts (and the demand accounts total is higher than the paper currency total IIRC).

If Freigeld demand deposit accounts don't lose value over time like paper Freigeld does, then it seems to me that there's no more incentive for folks to move their Freigeld out of those accounts into investments (but see below) than there would be with dollars. Correct?

But if Freigeld demand deposit accounts _do_ lose value over time, that would lessen the incentive to deposit it in the bank in the first place, rather than hold onto also-value-losing-but-no-worse paper currency, wouldn't it? (Some incentive remains, such as security. But that's the same with dollars.) So, again I don't see the advantage of Freigeld.

Now, with fractional reserve banking, the banks are allowed to invest a portion of their demand deposit balances. Does Freigeld make any difference there, or does fractional reserve banking work the same with it?

[cheesehead]

Originally Posted by 99.94

If that is right, then you could conclude that the tax man will want to know about what you are up to only if it involves something you do for a living with a right to payment or where there would be an expectation you would be paid for your service. That would catch the plumber or a professional punter, but not a casual gambler’s winnings or the spouses or lovers in your example.

Correct.