2021-03-16_Should_You_Cheat_on_Your_Taxes_to_Save_Money
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00:00:31.660 | Welcome to Radical Personal Finance,
00:00:32.820 | a show dedicated to providing you with the knowledge,
00:00:34.500 | skills, insight, and encouragement you need
00:00:37.160 | to live a rich and meaningful life now
00:00:39.460 | while building a plan for financial freedom
00:00:40.940 | in 10 years or less.
00:00:42.340 | My name is Joshua Sheets.
00:00:43.260 | I am your host.
00:00:44.100 | And today on the show,
00:00:45.340 | we're gonna talk about this simple question.
00:00:47.300 | Should you
00:00:48.580 | evade your taxes in order to save on taxes?
00:00:55.980 | I guess if I were gonna try to use
00:00:57.520 | more emotional language, I would say,
00:00:59.220 | should you cheat on your taxes
00:01:01.520 | in order for you to save money on taxes?
00:01:04.300 | Should you simply say, I'm not going to pay.
00:01:07.660 | No matter what they say I owe,
00:01:09.020 | I'm just not going to pay them
00:01:10.840 | even though they want money from me,
00:01:12.300 | and thus I'm going to save on my taxes.
00:01:14.940 | Here at Radical Personal Finance,
00:01:16.100 | as we come through tax season in the United States,
00:01:18.540 | we're gonna be talking about some new tax planning ideas.
00:01:21.840 | And this is an idea that,
00:01:23.280 | while of course no financial planner
00:01:25.140 | or financial advisor would advise it,
00:01:27.080 | this is an idea that I think the many people,
00:01:29.460 | I don't know if the majority,
00:01:30.460 | but many people have thought about doing.
00:01:32.740 | It's simply, well, I'll just not pay them
00:01:35.820 | what they say that I owe them.
00:01:37.220 | I'll just keep my money myself.
00:01:39.700 | And I wanna talk to you today about that idea.
00:01:42.620 | Now, I'm not going to make a moral argument for you today.
00:01:46.540 | And in fact, let me not bury the lead.
00:01:47.760 | My answer is no, I don't think you should do that.
00:01:50.320 | I think you should pay the taxes that are required of you.
00:01:53.260 | But I'm not gonna today moralize about it.
00:01:55.300 | I'm not gonna make anything other than two
00:01:57.100 | very simple practical arguments
00:01:58.900 | that I want you to consider as you consider this question.
00:02:02.260 | Because I think these two practical arguments are powerful
00:02:05.380 | and they're persuasive enough, at least for me,
00:02:08.300 | to make sure that I'm gonna report
00:02:10.340 | every dollar of income I make
00:02:11.740 | and I'm gonna pay every dollar that they say that I owe.
00:02:15.500 | And I'll explain why in this particular show.
00:02:18.760 | Let's begin with reason number one.
00:02:22.740 | As I see it, the very first most important reason
00:02:26.020 | for you to pay what they say that you owe
00:02:28.620 | is simply this, to stay out of prison.
00:02:31.780 | Sounds silly, but it's really true.
00:02:34.940 | You want to stay out of prison.
00:02:36.180 | Here at Radical Personal Finance, we're all about freedom.
00:02:38.660 | Freedom in every sense of the word,
00:02:41.020 | including financial freedom and all of the other freedoms
00:02:43.420 | that financial freedom can help you to enjoy.
00:02:46.140 | But the very cornerstone of freedom,
00:02:48.140 | kind of the basic level,
00:02:49.580 | the most important things that you need
00:02:51.900 | in order to declare yourself free,
00:02:53.940 | the minimum viable concept of freedom is this,
00:02:57.020 | not be in prison.
00:02:58.060 | Now, I guess someone like me could come up with a show
00:03:01.260 | of how to be free in your mind in prison.
00:03:03.140 | But listen, realistically, if you are in prison,
00:03:07.180 | you are not free.
00:03:08.860 | You are not free to do anything else.
00:03:10.280 | You're not free to enjoy your money.
00:03:11.440 | You're not free to do any of the good things of life
00:03:13.440 | if you are sitting in prison.
00:03:15.200 | You're simply not free.
00:03:16.860 | And so the foundation of freedom is don't go to prison.
00:03:22.080 | Now, what's the foundation of not going to prison?
00:03:24.680 | What are those fundamental concepts
00:03:26.340 | that you wanna make sure that you abide by
00:03:27.800 | so that you don't go to prison?
00:03:29.760 | Well, as I see it, foundational concept number one
00:03:32.580 | for you not to go to prison is don't do things
00:03:37.080 | that might result in your going to prison.
00:03:39.180 | That's it.
00:03:42.080 | If you can just not do things that will result
00:03:45.760 | in your not going to prison,
00:03:47.780 | you will be in a far better situation.
00:03:49.840 | Now, I would be quick to be one of those who would add
00:03:52.640 | that that might not be enough to consciously not do things
00:03:56.600 | that might result in your not going to prison.
00:03:58.320 | I've done many shows here at Radical Personal Finance
00:04:00.160 | about the importance of making sure that no matter what,
00:04:03.200 | things like you don't talk to the police.
00:04:05.060 | Experts often estimate that you and I probably commit
00:04:08.540 | on average about three felonies a day in the United States.
00:04:11.560 | We just don't know what they are.
00:04:13.000 | But there are so many laws
00:04:14.320 | that if we had enough information,
00:04:15.560 | we could hang you up, guaranteed.
00:04:18.160 | And so you want to make sure that you're careful.
00:04:20.800 | But don't talk to the police,
00:04:22.640 | don't answer questions, things like that.
00:04:25.560 | But the very basic level of entrances,
00:04:29.040 | don't do things that are illegal.
00:04:30.800 | I think it's stupid.
00:04:32.080 | And it's especially stupid
00:04:34.120 | when you have a little bit of money.
00:04:36.240 | Now, I think we could all understand.
00:04:38.480 | You think of a classic tale like "Les Mis," right?
00:04:40.520 | Jean Valjean, he goes to prison
00:04:42.460 | for stealing a loaf of bread.
00:04:43.960 | I think most of us could look at somebody who steals
00:04:47.040 | to feed their family because they're totally poor.
00:04:49.280 | And while we wouldn't condone
00:04:50.840 | that kind of immoral behavior,
00:04:52.600 | it's an understandable kind of immoral behavior.
00:04:55.440 | We wouldn't say it's okay,
00:04:56.760 | but we would say we understand why.
00:04:58.740 | It makes sense to us.
00:05:01.240 | But when you have enough to eat,
00:05:02.640 | when you have enough money to do things
00:05:04.700 | that might result in your losing your freedom, is stupid.
00:05:08.760 | If you have a little bit of money,
00:05:10.020 | you have enough to live on,
00:05:11.320 | one of the foundational concepts
00:05:13.240 | that should never be broken in your life
00:05:15.080 | is don't do stupid things that might send you to prison.
00:05:18.800 | So what are some examples of this?
00:05:20.760 | Well, if you've got a business idea,
00:05:22.620 | but it's illegal in the place that you are
00:05:24.620 | wanting to live and work, don't do it there.
00:05:27.900 | Go somewhere else where that business idea is legal.
00:05:30.440 | If you wanna do something that's forbidden
00:05:32.080 | in the place that you are, no matter how horrible, right?
00:05:34.340 | You wanna, I don't know, you wanna sleep with prostitutes
00:05:36.880 | or you wanna go and do drugs.
00:05:38.880 | Well, don't do them where you live
00:05:40.940 | if those activities are illegal there.
00:05:42.400 | Go to some place where drugs are legal
00:05:44.560 | or go to some place where prostitution is legal.
00:05:46.400 | If you wanna drive fast, don't drive fast
00:05:48.600 | on the interstate in the United States, go to a racetrack.
00:05:52.340 | Go to Germany and drive on the Autobahn.
00:05:54.920 | Go and do those things where they're legal
00:05:57.160 | so that you can avoid going to prison.
00:05:59.600 | Years ago, I developed a very simple concept.
00:06:01.380 | I call it the meter concept.
00:06:03.460 | It's always cheaper for you to feed the meter
00:06:05.840 | than to pay the ticket.
00:06:07.040 | And I learned this many years ago through, wait for it,
00:06:10.280 | getting parking tickets.
00:06:12.640 | And I realized that I thought I was super smart.
00:06:15.680 | I've got the perfect parking space
00:06:17.360 | where I can just save a few bucks back here.
00:06:19.520 | I'll save a few bucks or I'll just put in just what I need.
00:06:22.520 | And I got these stupid parking tickets
00:06:24.000 | and I finally realized that the hassle to my life
00:06:27.060 | and the money that I was spending
00:06:28.740 | by getting these parking tickets was far more
00:06:31.780 | than what it would cost me to simply pay the meter.
00:06:33.680 | So I developed a personal philosophy.
00:06:35.520 | Pay the meter, it's cheaper to feed the meter
00:06:38.320 | than it is to pay the ticket.
00:06:40.240 | And I apply this in every area, right?
00:06:42.000 | Speeding, right?
00:06:42.960 | Years ago, when I was younger, I got speeding tickets
00:06:44.880 | 'cause I would drive too fast.
00:06:46.000 | And finally I decided I'm not gonna drive fast anymore.
00:06:48.720 | This is dumb.
00:06:50.080 | It's cheaper for me to leave a little bit earlier
00:06:54.000 | or to be a little bit late and just drive the speed limit
00:06:56.680 | than it is for me to get a speeding ticket.
00:06:59.040 | So I disciplined myself to be ahead of time
00:07:01.360 | so that I'm never late.
00:07:03.080 | Or if I wanted to get somewhere fast,
00:07:05.000 | it's gonna be cheaper for me to take an airplane
00:07:07.760 | than to pay the speeding ticket
00:07:09.000 | and far less disruptive for my life.
00:07:10.820 | It's cheaper to pay for the cab or the Uber
00:07:13.480 | than it is for you to drive drunk,
00:07:15.040 | no matter how long of a cab ride is.
00:07:17.000 | I promise you, it's cheaper to feed the meter
00:07:20.160 | than to pay the penalty.
00:07:21.720 | And it comes the same way with taxes.
00:07:23.320 | It's cheaper for you to pay the taxes
00:07:27.200 | than it is for you to pay the penalty,
00:07:29.840 | especially when that penalty can include prison,
00:07:32.960 | a place that you and I do not want to go.
00:07:36.940 | So they put people in prison for not paying their taxes.
00:07:41.200 | They put people in prison for not reporting their income.
00:07:44.160 | So I strongly recommend to you
00:07:46.280 | that you simply pay your taxes and report your income.
00:07:50.520 | As far as I'm concerned,
00:07:51.480 | it's a completely unacceptable risk to go to prison.
00:07:54.760 | That's argument number one.
00:07:55.640 | We'll come back to this in just a moment.
00:07:57.240 | But argument number two, I think,
00:07:58.440 | is perhaps even more powerful and more persuasive.
00:08:00.840 | Argument two is this.
00:08:02.720 | If you are committed to cheating on your taxes,
00:08:07.720 | you will be doomed to a lifetime
00:08:11.220 | of low-income, off-the-table work,
00:08:14.180 | instead of being able to flourish
00:08:16.100 | and develop to your maximum potential.
00:08:18.320 | As I see it, you're never going to win in the long run
00:08:23.140 | by being a tax cheat.
00:08:24.980 | Again, I'm not making a moral argument.
00:08:26.500 | I'm not saying it's morally wrong
00:08:28.140 | for you to not pay taxes.
00:08:29.140 | We'll talk about that in a future show.
00:08:31.300 | I'm simply saying, practically,
00:08:33.080 | you're not going to succeed at a very high level
00:08:35.240 | if you're always looking over your shoulder,
00:08:36.960 | wondering if the taxman is there
00:08:38.560 | to put you in handcuffs and lead you away to prison.
00:08:41.520 | And here's why this is so important.
00:08:43.280 | You and I both know that thousands, nay, tens of thousands,
00:08:48.280 | nay, hundreds of thousands, nay, millions of people
00:08:51.640 | in the United States of America cheat on their taxes.
00:08:54.880 | According to some industry statistics,
00:08:57.440 | Wikipedia, in the article on tax evasion,
00:09:00.220 | says that the United States has one of the highest levels
00:09:03.040 | of voluntary compliance of tax paying in the world.
00:09:06.080 | It says, "Nearly all Americans believe
00:09:08.640 | "that cheating on taxes is morally
00:09:10.120 | "and ethically unacceptable."
00:09:11.480 | We'll talk about that another day.
00:09:12.840 | "The voluntary compliance rate,"
00:09:14.540 | which is a technical measurement of taxes being paid
00:09:16.680 | both on time and voluntarily,
00:09:18.720 | "in the United States is generally around 81 to 84%.
00:09:22.240 | "This is one of the highest rates in the world.
00:09:24.240 | "By contrast, Germany's voluntary compliance rate is 68%,
00:09:27.880 | "and Italy's is 62%.
00:09:29.840 | "So in the United States of America,
00:09:31.020 | "we have a very high voluntary compliance rate.
00:09:33.140 | "And yet you and I both know that millions of people
00:09:35.920 | "all across the country cheat on their taxes."
00:09:39.080 | Well, why then are not millions of people in prison
00:09:42.320 | for cheating on their taxes?
00:09:44.080 | Because while the United States of America
00:09:45.940 | has one of the most aggressive police forces in the world,
00:09:48.600 | by, in my opinion, the United States of America,
00:09:50.940 | if not a police state, in some ways comes very close
00:09:54.240 | to the very definition of a police state.
00:09:56.240 | The United States of American population
00:09:58.820 | is 5% of the global population,
00:10:01.160 | and yet accounts for 25% of the world's prisoners.
00:10:05.660 | 5% of the world's population,
00:10:08.240 | and yet has 25% of the world's prisoners,
00:10:10.920 | people sitting in prison.
00:10:12.280 | And the United States of America,
00:10:13.880 | roughly one in 100, at least as of about 2012,
00:10:16.640 | which is the last time I remember the story,
00:10:17.960 | I don't know if it's been updated,
00:10:18.800 | but about one in 100 U.S. Americans
00:10:21.600 | is currently incarcerated.
00:10:23.760 | It's actually one in 99.
00:10:25.040 | More than one in 100 is currently incarcerated.
00:10:28.640 | Those one in 36 Hispanic Americans is incarcerated,
00:10:32.400 | and one in 15 black adults, sorry, these are for adults,
00:10:36.080 | one in 100 American adults are in prison.
00:10:40.440 | Those are astonishing numbers.
00:10:42.240 | What's more fascinating is if you look
00:10:43.640 | at the imprisonment rates on the population,
00:10:46.140 | the United States of America has the highest
00:10:48.160 | imprisonment rate across the population in the world.
00:10:51.120 | In the United States, roughly 716 people
00:10:54.000 | per 100,000 people are imprisoned.
00:10:58.440 | The next closest is Rwanda at 492 people per 100,000,
00:11:02.640 | followed by Russia at 475.
00:11:05.800 | United States, 716 out of 100,000.
00:11:09.000 | Rwanda, 492.
00:11:10.280 | Russia, 475 out of 100.
00:11:12.680 | Brazil, 274.
00:11:14.160 | Spain, 147.
00:11:15.320 | Australia, 130.
00:11:16.680 | Pretty shocking when you actually look at it.
00:11:19.800 | China has 121 people out of 100,000 in prison.
00:11:24.520 | Roughly, I'm gonna guess this is what,
00:11:26.420 | six times, seven times?
00:11:27.840 | The United States has six to seven times
00:11:29.360 | the prison population of China.
00:11:31.960 | You're not playing around with people who play around
00:11:36.980 | when it comes to putting people in prison.
00:11:39.120 | One of the most amazing things, over the last 40 years,
00:11:41.560 | the US prison population has risen roughly 700%.
00:11:45.240 | So you're dealing with a country
00:11:46.880 | that puts more of its population in prison
00:11:51.080 | for more reasons than any other country
00:11:53.120 | on the face of the earth.
00:11:54.480 | And that's only skyrocketing.
00:11:55.740 | You're dealing with a country that has
00:11:56.920 | one of the largest police and military forces in the world.
00:12:00.120 | You're dealing with a country that uses
00:12:01.520 | some of the maximum levels of force
00:12:03.280 | to control its population.
00:12:05.120 | You're dealing with a country that operates
00:12:06.880 | the world's largest spy network,
00:12:10.120 | that literally snoops on the emails and phone calls
00:12:12.820 | and movements of almost everyone on earth
00:12:15.700 | in some way, shape, or form.
00:12:17.100 | You're dealing with a country that has showed
00:12:19.960 | no reservation about using its military force
00:12:22.760 | all around the world.
00:12:23.900 | This is the culture of the country,
00:12:25.760 | and you're gonna mess around with this?
00:12:28.280 | You're gonna mess around with that kind of police presence?
00:12:32.080 | You say, "Joshua, whoa, whoa, whoa, whoa, whoa, whoa.
00:12:33.400 | "Hold on a second, hold on a second, okay.
00:12:35.200 | "I get that, and I get that the United States
00:12:37.160 | "has an incarceration problem,
00:12:38.260 | "but that's just because we lock people up who smoke weed,
00:12:41.020 | "right, and if we just change the laws
00:12:42.380 | "and legalize marijuana, then that would fix all the problem.
00:12:45.000 | "After all, nobody goes to prison for tax evasion."
00:12:47.880 | And you're right, sort of, okay?
00:12:51.580 | The United States of America tax collection system
00:12:55.040 | is a system that runs on intimidation.
00:12:58.160 | We don't actually put that many tax offenders
00:13:01.400 | into prison on an annual basis,
00:13:02.880 | something like 500 people per year,
00:13:05.000 | which when compared to the number of people
00:13:06.800 | that file a tax return in the United States
00:13:08.720 | is a relatively small number of people.
00:13:10.940 | But who does the country put into prison?
00:13:14.080 | That's the bigger question.
00:13:15.440 | Well, they put people in prison
00:13:18.200 | who owe a lot of money on tax and who are high profile.
00:13:21.280 | Why?
00:13:22.120 | Because the system runs on intimidation.
00:13:24.960 | And so the tax enforcement agencies
00:13:27.880 | are always looking for people who are high profile
00:13:30.080 | and who owe a lot of tax.
00:13:31.720 | And you're dealing with a system
00:13:35.020 | that pays tax informants, snitches,
00:13:39.320 | a percentage of the revenue received by the IRS
00:13:42.920 | in order for them to inform on you.
00:13:44.780 | So if there's anybody that knows about your tax cheating,
00:13:50.880 | could be an employee, a disgruntled employee,
00:13:54.200 | could be a disgruntled brother-in-law,
00:13:56.820 | could be a disgruntled ex-wife.
00:13:59.120 | If there's anybody who knows about your tax cheating
00:14:01.280 | other than you, they can simply call the IRS,
00:14:04.600 | say, "Hey, IRS, so-and-so doesn't pay their taxes."
00:14:07.520 | The IRS will start the case,
00:14:08.700 | they'll start working it through the process.
00:14:10.640 | And if you're a big enough fish,
00:14:11.800 | they will take you through and they will hang you.
00:14:15.040 | Not literally, but in every other way they possibly can.
00:14:19.580 | They will take all your money
00:14:20.640 | and they'll lock you in prison.
00:14:22.200 | That is a system that is stacked against you
00:14:26.240 | if you make a lot of money.
00:14:28.400 | So what do you do to protect yourself?
00:14:29.620 | Well, again, I said that millions of people
00:14:30.840 | cheat on their taxes across the United States
00:14:32.360 | every single year.
00:14:33.280 | Millions of people take some garden produce
00:14:35.660 | and sell it across the back fence
00:14:37.400 | and make a few extra bucks.
00:14:39.000 | Millions of people make tips at work
00:14:40.700 | and don't report 100% of their tips.
00:14:43.800 | Millions of people do it, but they're all little fish.
00:14:46.680 | And you could do this and be completely safe
00:14:50.400 | for, I think, probably your entire life.
00:14:52.740 | You could have a wood cutting business
00:14:55.280 | and you could sell wood off the back of your pickup truck
00:14:57.760 | and do that probably your entire life
00:14:59.640 | and nobody would come after you.
00:15:01.840 | You could probably have a professional job,
00:15:04.760 | make some money, work in your own company
00:15:07.300 | and just not pay your taxes
00:15:08.560 | and you could probably be okay for the rest of your life.
00:15:11.160 | Not get locked up.
00:15:12.440 | Years ago, in the very early stages
00:15:13.960 | of radical personal finance,
00:15:14.940 | I interviewed the guy who wrote "99 Tax Strike Techniques,"
00:15:19.840 | the book "99 Tactics for Tax Strike Resisters"
00:15:23.120 | and their people.
00:15:23.960 | He's not paid taxes for years
00:15:25.880 | and done it very openly, blogged about it,
00:15:27.960 | just not paid taxes.
00:15:29.320 | But here's what's true about every single one of those cases.
00:15:33.240 | They don't make a lot of money
00:15:36.400 | and they don't maximize their potential.
00:15:39.360 | What they often do is choose not to pay taxes
00:15:43.560 | and live in fear.
00:15:45.120 | And this is one of those fears that, in my opinion,
00:15:47.740 | is probably debilitating for many people.
00:15:50.360 | This is one of those fears that can completely mess you up.
00:15:53.160 | If you're sitting around at night thinking,
00:15:55.240 | man, I'd really like to go and do this other thing
00:15:57.360 | but then someone might know about my taxes.
00:16:00.020 | Someone might report on me.
00:16:01.060 | I can't hire too many employees.
00:16:02.360 | I can't bring them in.
00:16:03.200 | I can't grow too much 'cause they'll say,
00:16:05.040 | what about your taxes?
00:16:06.080 | And they'll report on me.
00:16:07.200 | I can't tell my wife.
00:16:08.120 | I can't tell my lover.
00:16:08.960 | I can't tell so-and-so about the money that I make
00:16:10.840 | or they'll say, they'll report on me
00:16:12.760 | and they'll go and collect their percentage of it.
00:16:15.200 | And so you live in fear.
00:16:16.920 | And friend, that's no way to live.
00:16:18.840 | That's no way to live,
00:16:19.680 | especially when you have potential for so much more.
00:16:22.640 | So I wanna give you a couple of solutions here.
00:16:24.960 | I want to play a metaphorical game with you.
00:16:28.320 | Now, I've gotten in trouble
00:16:29.760 | in radical personal finance in the past
00:16:31.160 | because I've compared state governments
00:16:34.400 | with people like local cartel governments.
00:16:37.260 | I've compared state governments with the mafia.
00:16:40.120 | I'm not entirely convinced those are unfair comparisons
00:16:43.720 | but today I'm not gonna do that.
00:16:45.600 | I think there's some lessons there
00:16:46.640 | but today I'm not gonna do that.
00:16:48.080 | I'm just gonna say, let's play a game, right?
00:16:50.940 | Let's put this into another context
00:16:53.360 | and see if we can stimulate some of your creative thinking
00:16:56.080 | so that you can understand
00:16:57.320 | how you can think about your problems
00:16:59.080 | and how to solve them.
00:17:00.680 | Let's pretend that you live in a local neighborhood, right?
00:17:04.080 | We've all seen, you know, "Godfather" movies
00:17:06.220 | where you think about the mafia living in New York.
00:17:08.360 | So let's pretend you live in a certain neighborhood
00:17:10.240 | in New York where the mafia is acting
00:17:13.400 | or could be a local cartel or something like that.
00:17:16.440 | Some local organization that takes upon themselves
00:17:20.640 | the need to provide protection for their residents.
00:17:23.640 | Okay, we know how this works from the movies.
00:17:25.400 | They, you don't need to have any real experience.
00:17:27.240 | We know how this works, right?
00:17:28.080 | They come and they knock on the door and they say,
00:17:29.760 | "Hey, dear Joe, Mr. Business Owner, Joe, listen,
00:17:33.060 | me and the boys, you know, we're gonna make you a deal,
00:17:38.000 | right, we're gonna make you a deal
00:17:39.680 | and we're going to offer you protection
00:17:41.880 | because we know that things are hard, right?
00:17:44.760 | There are people that could come that can mess up your store.
00:17:47.000 | There are people that could probably close your business
00:17:48.760 | if you didn't have someone looking out for your interest.
00:17:51.720 | So me and the boys, you know,
00:17:53.360 | we're gonna look out for your interest
00:17:55.120 | and here's what we're gonna do, okay?
00:17:56.520 | We're not gonna take too much money.
00:17:58.440 | We're just gonna take X number of dollars per week.
00:18:01.480 | Every Friday, our man will come in.
00:18:05.120 | You just hand him an envelope.
00:18:06.800 | He'll walk right out the back door
00:18:08.520 | and we'll keep our guys posted out front
00:18:10.400 | to make sure that you're taken care of.
00:18:13.840 | Now, they come to you and they make you this offer.
00:18:17.720 | Question is this, do you have a choice to refuse that offer?
00:18:22.800 | Even if the guy doesn't say,
00:18:24.960 | "Now, listen, I'm gonna make you an offer you cannot refuse,"
00:18:27.840 | right, he doesn't come to you and say that.
00:18:29.040 | He just says, "This is the offer."
00:18:31.440 | Do you have the choice to refuse that?
00:18:33.440 | Answer is, "Well, if you wanna pay the consequences," right?
00:18:39.640 | If you wanna pay the consequences,
00:18:41.120 | then you have the right to refuse it.
00:18:43.840 | Think about a guy like me, right?
00:18:45.440 | I was born in the United States.
00:18:47.180 | I didn't, nobody really ever came, made me that offer,
00:18:51.160 | but I just know this is how things work, right?
00:18:54.120 | If I don't pay the boys a certain amount of money,
00:18:56.640 | I don't send them my checks, give them their money,
00:19:00.160 | I might face some problems.
00:19:01.900 | Now, if I give them my money,
00:19:03.000 | they give me some protection, right?
00:19:04.760 | They post the police officers out front.
00:19:07.880 | They send the fire department, right?
00:19:09.440 | If my fire, if there's a fire in my place.
00:19:11.840 | They pave the roads, you know,
00:19:13.200 | they take care of the poor people.
00:19:15.300 | So we know the deal, right?
00:19:16.640 | I just pay the money, and if I don't wanna pay the money,
00:19:18.960 | I'm gonna have a problem.
00:19:20.640 | So the question comes down to this.
00:19:22.400 | If you don't pay them their protection money,
00:19:27.800 | they're going to break your legs
00:19:29.480 | if they're the mafia, right?
00:19:33.440 | Now, of course, the IRS agents are a little bit nicer,
00:19:36.480 | right, they send the police, they take all your stuff,
00:19:38.560 | they sell it all at an auction, they seize your property,
00:19:41.080 | they put a sticker over your front door,
00:19:43.000 | say that this property and this business
00:19:45.240 | has been closed for tax collection purposes.
00:19:47.080 | If you don't go through the court process
00:19:48.520 | and you don't cough up some money for them,
00:19:50.040 | then they toss you in jail, right?
00:19:52.280 | And they give you something to think about
00:19:54.280 | for a little while, right?
00:19:56.840 | But if you just pay them, they leave you alone.
00:20:01.840 | Now, here's how the mafia works.
00:20:05.640 | The mafia guys know that they need to charge you
00:20:08.760 | as much money as they can to maximize their revenues,
00:20:12.640 | but not so much money that you're upset with them,
00:20:16.280 | where it's worth your getting together with your neighbors
00:20:18.280 | and saying, "That's it, we're gonna kick these guys out."
00:20:20.880 | Right, 'cause if they did that,
00:20:21.840 | they would have a bit of a rebellion on their hands.
00:20:24.440 | Hmm, that sounds suspiciously like something called
00:20:29.160 | the Laffer Curve, doesn't it?
00:20:31.040 | That sounds suspiciously like,
00:20:33.600 | yeah, I think it is the Laffer Curve, right?
00:20:35.720 | This basic idea that a government needs to charge
00:20:39.160 | an amount of tax money that maximizes the tax revenues
00:20:42.440 | to that government, but not so much tax money
00:20:45.560 | that individuals change their behavior to earn less money,
00:20:48.800 | or they go somewhere else where they're treated
00:20:50.520 | a little bit better.
00:20:51.560 | Hmm, interesting how there's some parallels there.
00:20:54.400 | A lot of parallels.
00:20:55.960 | But think about this for a moment.
00:20:57.280 | All right, they come to you, they make you an offer
00:20:59.200 | you can't refuse, right?
00:21:00.080 | You didn't choose that.
00:21:00.920 | You didn't choose that the mafia
00:21:02.000 | took over your neighborhood.
00:21:02.840 | You didn't choose that the United States of America
00:21:04.680 | owns the land on which you live.
00:21:06.800 | That's okay.
00:21:07.960 | So you have, as I see it, three choices.
00:21:11.840 | What are your three choices?
00:21:12.840 | Choice number one is you can pay them their money.
00:21:15.640 | If you pay them their money, they leave you alone.
00:21:19.200 | They're not gonna come in and mess with you.
00:21:20.520 | They're not gonna break your legs.
00:21:21.640 | They're not gonna harass you.
00:21:22.920 | You just pay them their money.
00:21:25.160 | Things are simple.
00:21:26.920 | And if you pay them their money,
00:21:28.760 | it's probably not gonna be an overwhelming amount of money.
00:21:32.280 | They might change it from time to time, right?
00:21:33.920 | They might look around and realize,
00:21:35.360 | you know, listen, Joe, business looks pretty good.
00:21:37.200 | I think you could pay us a little bit more money.
00:21:40.000 | They might adjust things.
00:21:40.960 | They might say, you're making quite a bit of money,
00:21:42.760 | so we're gonna increase your taxes.
00:21:45.000 | But as long as you pay us our money, you're gonna be okay.
00:21:47.240 | I think choice number one that you have
00:21:48.560 | is pay them their money.
00:21:49.920 | As I see it, I think that's the choice
00:21:52.480 | that the vast majority of people should do, should make.
00:21:55.000 | Just pay them the money.
00:21:56.160 | It's not that much.
00:21:57.040 | It's only 47% of your income.
00:21:58.640 | It's only 35% of this.
00:22:00.040 | It's only 10% of your wealth.
00:22:01.200 | It's not that much.
00:22:02.400 | Just pay them your money.
00:22:03.560 | Then you can live where you live.
00:22:05.080 | You can operate your business.
00:22:06.320 | Maybe you can all get rich.
00:22:08.360 | Joe, listen, you're making enough money
00:22:11.040 | that you can give us our cut
00:22:12.320 | in exchange for your protection,
00:22:13.840 | and you can still get rich.
00:22:15.560 | So choice number one you have is to pay them their money.
00:22:18.320 | And I think that's a fair and reasonable choice
00:22:21.400 | for any of us to make.
00:22:22.840 | Choice number two is you can say, you know what?
00:22:26.720 | I ain't paying you a dime.
00:22:29.200 | And you can do it in whatever way, right?
00:22:31.000 | You can hide the money out back.
00:22:32.320 | You can keep a couple sets of books.
00:22:33.400 | You can do whatever you need to do,
00:22:34.320 | but you can say, I ain't paying you a dime.
00:22:36.920 | If you take that path,
00:22:40.080 | you wind up with potentially very severe consequences.
00:22:45.200 | You might lose some people that you love
00:22:47.560 | because you're locked in prison, of course,
00:22:48.920 | and you can't see them.
00:22:50.520 | And they forget about you and go on with their life.
00:22:53.640 | You might be deprived of your health
00:22:55.920 | because, of course, you're in prison.
00:22:57.440 | I'm saying, you know, obviously,
00:22:58.880 | that people get sick in prison, right?
00:23:03.240 | So there come consequences with choice number two.
00:23:06.120 | Now, I think there are times
00:23:08.800 | in which honorable people might make that choice.
00:23:11.640 | Throughout history, change has often happened
00:23:14.320 | when people said, I'm gonna stand up for what I believe in.
00:23:17.520 | Consequences be damned.
00:23:19.000 | No matter what, I'm gonna do this.
00:23:20.800 | I think that's a reasonable choice.
00:23:22.560 | But those aren't your only two choices.
00:23:25.880 | Choice number three is also available to you.
00:23:28.320 | Choice number three, what is it?
00:23:29.640 | Well, they come knocking on your door,
00:23:32.640 | and they say, Joe, we're gonna make you a deal.
00:23:36.520 | You pay us X amount of dollars,
00:23:38.400 | or you're gonna have some problems.
00:23:40.800 | Well, what could Joe choose to do?
00:23:42.640 | Joe could choose to say, this sucks.
00:23:46.880 | I ain't paying these mafia goons this money.
00:23:49.600 | And Joe closes up his shop, grabs his family,
00:23:52.920 | loads them up, loads up a moving truck,
00:23:54.560 | and goes to the next town over,
00:23:56.520 | where those mafia guys aren't in control,
00:23:58.560 | or goes to the next state over,
00:24:00.400 | where there's a slightly more friendly organization
00:24:03.320 | that doesn't quite put such onerous demands onto him,
00:24:06.120 | and he opens his business there.
00:24:08.160 | Now, that's clearly a disruptive solution.
00:24:11.480 | Joe's family has to move.
00:24:12.760 | Joe's wife has to leave her friends.
00:24:14.960 | Joe's kids get pulled out of school.
00:24:16.680 | Joe has to close his business,
00:24:18.440 | and maybe his business was only suitable in the local area.
00:24:21.720 | But it is a choice.
00:24:23.000 | It is a choice that Joe has,
00:24:25.600 | and it's a choice that gets Joe away
00:24:28.280 | from the goons with guns, peacefully.
00:24:32.840 | Choice is yours.
00:24:37.400 | As I see it, there are only two of those choices
00:24:39.880 | that are acceptable.
00:24:41.120 | Either choice number one, to pay the money,
00:24:43.320 | or choice number three, to leave.
00:24:45.840 | As far as I'm concerned, choice number two
00:24:47.680 | is completely unacceptable for reasonable, rational men
00:24:50.240 | who care about their freedom.
00:24:52.160 | I wish we lived in a world in which principle mattered,
00:24:54.280 | and where you could get all your neighbors together
00:24:55.920 | and say, "Listen, we're not gonna do it,
00:24:57.560 | "but here's the problem.
00:24:58.800 | "Your neighbors like the mafia.
00:25:01.080 | "They like it.
00:25:01.920 | "Hey, in some places, they even vote for the mafia.
00:25:05.160 | "And if 75% of your neighbors have voted for the mafia,
00:25:08.640 | "you only have two reasonable choices.
00:25:11.960 | "Choice number one is live with it.
00:25:14.360 | "Choice number two, or in this case, three, leave.
00:25:18.480 | "You're not gonna change 75% of your neighbors' minds.
00:25:21.800 | "You're not even gonna change 25% of them.
00:25:23.680 | "It's not possible.
00:25:25.000 | "So stop thinking it is,
00:25:26.920 | "and either learn to live with it or leave."
00:25:30.560 | For free-thinking men who are rational, pragmatic,
00:25:37.080 | and who care about themselves,
00:25:38.320 | their families, and their freedom,
00:25:40.160 | I personally see no other choice.
00:25:41.920 | I don't think you should doom yourself
00:25:44.320 | to a lifetime of poverty by taking on some manual job,
00:25:48.160 | some low-level job that just gives you just enough
00:25:50.560 | to get by on because you don't pay tax.
00:25:53.160 | I'm happy it exists.
00:25:54.160 | It exists all over the world,
00:25:55.840 | but I don't think that's a sandbox
00:25:57.520 | that you and I should bother playing in.
00:25:59.800 | So remember, you have choice one or you have choice three,
00:26:03.880 | but choice two, as I see it, is simply not an option.
00:26:07.160 | We'll talk more about some ideas
00:26:09.160 | 'cause here's the good thing about the mafia.
00:26:11.040 | The mafia knows that you gotta run your business.
00:26:13.440 | The mafia knows that if you don't succeed,
00:26:15.560 | they don't succeed.
00:26:16.800 | The mafia wants you to succeed
00:26:18.400 | so that you can pay them their protection money.
00:26:20.440 | And altogether, it might not be a bad deal.
00:26:24.000 | Hey, if I could pay the mafia 100 bucks a week
00:26:26.480 | and they could make sure
00:26:27.520 | that my house didn't get broken into, okay, fine.
00:26:31.120 | That's a reasonable deal,
00:26:33.880 | which is why all over the world,
00:26:35.080 | you see in local areas,
00:26:37.560 | you see people support the local cartel organization,
00:26:41.200 | the local mafia organization.
00:26:42.480 | Why?
00:26:43.320 | Because they get things done.
00:26:44.200 | They deliver things that people want
00:26:45.400 | and they don't mind supporting them.
00:26:46.760 | That's what politics is.
00:26:47.760 | Politics is ultimately force,
00:26:49.160 | and if politicians don't provide
00:26:51.320 | for those that they want to represent,
00:26:54.000 | then they lose their support and somebody else comes in.
00:26:57.960 | Happens all over the world all the time.
00:26:59.960 | We'll talk more about other solutions you have,
00:27:06.160 | but the reality is all of the old tax planning ideas
00:27:09.240 | do work, right?
00:27:10.600 | The mafia gives you a chance to deduct certain things.
00:27:13.400 | They make certain reasonable exceptions for you.
00:27:17.520 | And as long as you play within their rules
00:27:19.240 | and report all your income,
00:27:20.960 | give them all your books,
00:27:22.480 | they'll let you go with whatever they say you owe.
00:27:25.560 | So play that game or leave.
00:27:30.440 | Don't play game number two
00:27:31.440 | 'cause I don't want you to go to prison.
00:27:32.840 | I have no intention of going to prison.
00:27:34.560 | I work very hard to stay squeaky clean
00:27:37.080 | so I can stay out of prison.
00:27:38.520 | A major life goal of mine is not go to prison.
00:27:41.920 | So because of that, I'm gonna follow the rules
00:27:44.480 | and I'm gonna encourage you to as well.
00:27:46.880 | Thank you for listening to today's show.
00:27:48.240 | I wanna remind you that through March 31st, 2021,
00:27:52.040 | I am offering a 50% discount on all of my courses
00:27:54.560 | available for you at radicalpersonalfinance.com/store.
00:27:57.640 | Use the coupon code changingplatforms,
00:28:00.400 | coupon code changingplatforms altogether,
00:28:02.640 | and you'll save 50% on all of my courses
00:28:04.640 | available at radicalpersonalfinance.com/store,
00:28:07.320 | including the course that teaches you
00:28:10.120 | how to go where things are better for you
00:28:12.760 | and times are good or even if they're not.
00:28:15.080 | Be back with you soon.