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My name is Joshua Sheets. I am your host. And today on the show, we're gonna talk about this simple question. Should you evade your taxes in order to save on taxes? I guess if I were gonna try to use more emotional language, I would say, should you cheat on your taxes in order for you to save money on taxes?

Should you simply say, I'm not going to pay. No matter what they say I owe, I'm just not going to pay them even though they want money from me, and thus I'm going to save on my taxes. Here at Radical Personal Finance, as we come through tax season in the United States, we're gonna be talking about some new tax planning ideas.

And this is an idea that, while of course no financial planner or financial advisor would advise it, this is an idea that I think the many people, I don't know if the majority, but many people have thought about doing. It's simply, well, I'll just not pay them what they say that I owe them.

I'll just keep my money myself. And I wanna talk to you today about that idea. Now, I'm not going to make a moral argument for you today. And in fact, let me not bury the lead. My answer is no, I don't think you should do that. I think you should pay the taxes that are required of you.

But I'm not gonna today moralize about it. I'm not gonna make anything other than two very simple practical arguments that I want you to consider as you consider this question. Because I think these two practical arguments are powerful and they're persuasive enough, at least for me, to make sure that I'm gonna report every dollar of income I make and I'm gonna pay every dollar that they say that I owe.

And I'll explain why in this particular show. Let's begin with reason number one. As I see it, the very first most important reason for you to pay what they say that you owe is simply this, to stay out of prison. Sounds silly, but it's really true. You want to stay out of prison.

Here at Radical Personal Finance, we're all about freedom. Freedom in every sense of the word, including financial freedom and all of the other freedoms that financial freedom can help you to enjoy. But the very cornerstone of freedom, kind of the basic level, the most important things that you need in order to declare yourself free, the minimum viable concept of freedom is this, not be in prison.

Now, I guess someone like me could come up with a show of how to be free in your mind in prison. But listen, realistically, if you are in prison, you are not free. You are not free to do anything else. You're not free to enjoy your money. You're not free to do any of the good things of life if you are sitting in prison.

You're simply not free. And so the foundation of freedom is don't go to prison. Now, what's the foundation of not going to prison? What are those fundamental concepts that you wanna make sure that you abide by so that you don't go to prison? Well, as I see it, foundational concept number one for you not to go to prison is don't do things that might result in your going to prison.

That's it. If you can just not do things that will result in your not going to prison, you will be in a far better situation. Now, I would be quick to be one of those who would add that that might not be enough to consciously not do things that might result in your not going to prison.

I've done many shows here at Radical Personal Finance about the importance of making sure that no matter what, things like you don't talk to the police. Experts often estimate that you and I probably commit on average about three felonies a day in the United States. We just don't know what they are.

But there are so many laws that if we had enough information, we could hang you up, guaranteed. And so you want to make sure that you're careful. But don't talk to the police, don't answer questions, things like that. But the very basic level of entrances, don't do things that are illegal.

I think it's stupid. And it's especially stupid when you have a little bit of money. Now, I think we could all understand. You think of a classic tale like "Les Mis," right? Jean Valjean, he goes to prison for stealing a loaf of bread. I think most of us could look at somebody who steals to feed their family because they're totally poor.

And while we wouldn't condone that kind of immoral behavior, it's an understandable kind of immoral behavior. We wouldn't say it's okay, but we would say we understand why. It makes sense to us. But when you have enough to eat, when you have enough money to do things that might result in your losing your freedom, is stupid.

If you have a little bit of money, you have enough to live on, one of the foundational concepts that should never be broken in your life is don't do stupid things that might send you to prison. So what are some examples of this? Well, if you've got a business idea, but it's illegal in the place that you are wanting to live and work, don't do it there.

Go somewhere else where that business idea is legal. If you wanna do something that's forbidden in the place that you are, no matter how horrible, right? You wanna, I don't know, you wanna sleep with prostitutes or you wanna go and do drugs. Well, don't do them where you live if those activities are illegal there.

Go to some place where drugs are legal or go to some place where prostitution is legal. If you wanna drive fast, don't drive fast on the interstate in the United States, go to a racetrack. Go to Germany and drive on the Autobahn. Go and do those things where they're legal so that you can avoid going to prison.

Years ago, I developed a very simple concept. I call it the meter concept. It's always cheaper for you to feed the meter than to pay the ticket. And I learned this many years ago through, wait for it, getting parking tickets. And I realized that I thought I was super smart.

I've got the perfect parking space where I can just save a few bucks back here. I'll save a few bucks or I'll just put in just what I need. And I got these stupid parking tickets and I finally realized that the hassle to my life and the money that I was spending by getting these parking tickets was far more than what it would cost me to simply pay the meter.

So I developed a personal philosophy. Pay the meter, it's cheaper to feed the meter than it is to pay the ticket. And I apply this in every area, right? Speeding, right? Years ago, when I was younger, I got speeding tickets 'cause I would drive too fast. And finally I decided I'm not gonna drive fast anymore.

This is dumb. It's cheaper for me to leave a little bit earlier or to be a little bit late and just drive the speed limit than it is for me to get a speeding ticket. So I disciplined myself to be ahead of time so that I'm never late. Or if I wanted to get somewhere fast, it's gonna be cheaper for me to take an airplane than to pay the speeding ticket and far less disruptive for my life.

It's cheaper to pay for the cab or the Uber than it is for you to drive drunk, no matter how long of a cab ride is. I promise you, it's cheaper to feed the meter than to pay the penalty. And it comes the same way with taxes. It's cheaper for you to pay the taxes than it is for you to pay the penalty, especially when that penalty can include prison, a place that you and I do not want to go.

So they put people in prison for not paying their taxes. They put people in prison for not reporting their income. So I strongly recommend to you that you simply pay your taxes and report your income. As far as I'm concerned, it's a completely unacceptable risk to go to prison.

That's argument number one. We'll come back to this in just a moment. But argument number two, I think, is perhaps even more powerful and more persuasive. Argument two is this. If you are committed to cheating on your taxes, you will be doomed to a lifetime of low-income, off-the-table work, instead of being able to flourish and develop to your maximum potential.

As I see it, you're never going to win in the long run by being a tax cheat. Again, I'm not making a moral argument. I'm not saying it's morally wrong for you to not pay taxes. We'll talk about that in a future show. I'm simply saying, practically, you're not going to succeed at a very high level if you're always looking over your shoulder, wondering if the taxman is there to put you in handcuffs and lead you away to prison.

And here's why this is so important. You and I both know that thousands, nay, tens of thousands, nay, hundreds of thousands, nay, millions of people in the United States of America cheat on their taxes. According to some industry statistics, Wikipedia, in the article on tax evasion, says that the United States has one of the highest levels of voluntary compliance of tax paying in the world.

It says, "Nearly all Americans believe "that cheating on taxes is morally "and ethically unacceptable." We'll talk about that another day. "The voluntary compliance rate," which is a technical measurement of taxes being paid both on time and voluntarily, "in the United States is generally around 81 to 84%. "This is one of the highest rates in the world.

"By contrast, Germany's voluntary compliance rate is 68%, "and Italy's is 62%. "So in the United States of America, "we have a very high voluntary compliance rate. "And yet you and I both know that millions of people "all across the country cheat on their taxes." Well, why then are not millions of people in prison for cheating on their taxes?

Because while the United States of America has one of the most aggressive police forces in the world, by, in my opinion, the United States of America, if not a police state, in some ways comes very close to the very definition of a police state. The United States of American population is 5% of the global population, and yet accounts for 25% of the world's prisoners.

5% of the world's population, and yet has 25% of the world's prisoners, people sitting in prison. And the United States of America, roughly one in 100, at least as of about 2012, which is the last time I remember the story, I don't know if it's been updated, but about one in 100 U.S.

Americans is currently incarcerated. It's actually one in 99. More than one in 100 is currently incarcerated. Those one in 36 Hispanic Americans is incarcerated, and one in 15 black adults, sorry, these are for adults, one in 100 American adults are in prison. Those are astonishing numbers. What's more fascinating is if you look at the imprisonment rates on the population, the United States of America has the highest imprisonment rate across the population in the world.

In the United States, roughly 716 people per 100,000 people are imprisoned. The next closest is Rwanda at 492 people per 100,000, followed by Russia at 475. United States, 716 out of 100,000. Rwanda, 492. Russia, 475 out of 100. Brazil, 274. Spain, 147. Australia, 130. Pretty shocking when you actually look at it.

China has 121 people out of 100,000 in prison. Roughly, I'm gonna guess this is what, six times, seven times? The United States has six to seven times the prison population of China. You're not playing around with people who play around when it comes to putting people in prison. One of the most amazing things, over the last 40 years, the US prison population has risen roughly 700%.

So you're dealing with a country that puts more of its population in prison for more reasons than any other country on the face of the earth. And that's only skyrocketing. You're dealing with a country that has one of the largest police and military forces in the world. You're dealing with a country that uses some of the maximum levels of force to control its population.

You're dealing with a country that operates the world's largest spy network, that literally snoops on the emails and phone calls and movements of almost everyone on earth in some way, shape, or form. You're dealing with a country that has showed no reservation about using its military force all around the world.

This is the culture of the country, and you're gonna mess around with this? You're gonna mess around with that kind of police presence? You say, "Joshua, whoa, whoa, whoa, whoa, whoa, whoa. "Hold on a second, hold on a second, okay. "I get that, and I get that the United States "has an incarceration problem, "but that's just because we lock people up who smoke weed, "right, and if we just change the laws "and legalize marijuana, then that would fix all the problem.

"After all, nobody goes to prison for tax evasion." And you're right, sort of, okay? The United States of America tax collection system is a system that runs on intimidation. We don't actually put that many tax offenders into prison on an annual basis, something like 500 people per year, which when compared to the number of people that file a tax return in the United States is a relatively small number of people.

But who does the country put into prison? That's the bigger question. Well, they put people in prison who owe a lot of money on tax and who are high profile. Why? Because the system runs on intimidation. And so the tax enforcement agencies are always looking for people who are high profile and who owe a lot of tax.

And you're dealing with a system that pays tax informants, snitches, a percentage of the revenue received by the IRS in order for them to inform on you. So if there's anybody that knows about your tax cheating, could be an employee, a disgruntled employee, could be a disgruntled brother-in-law, could be a disgruntled ex-wife.

If there's anybody who knows about your tax cheating other than you, they can simply call the IRS, say, "Hey, IRS, so-and-so doesn't pay their taxes." The IRS will start the case, they'll start working it through the process. And if you're a big enough fish, they will take you through and they will hang you.

Not literally, but in every other way they possibly can. They will take all your money and they'll lock you in prison. That is a system that is stacked against you if you make a lot of money. So what do you do to protect yourself? Well, again, I said that millions of people cheat on their taxes across the United States every single year.

Millions of people take some garden produce and sell it across the back fence and make a few extra bucks. Millions of people make tips at work and don't report 100% of their tips. Millions of people do it, but they're all little fish. And you could do this and be completely safe for, I think, probably your entire life.

You could have a wood cutting business and you could sell wood off the back of your pickup truck and do that probably your entire life and nobody would come after you. You could probably have a professional job, make some money, work in your own company and just not pay your taxes and you could probably be okay for the rest of your life.

Not get locked up. Years ago, in the very early stages of radical personal finance, I interviewed the guy who wrote "99 Tax Strike Techniques," the book "99 Tactics for Tax Strike Resisters" and their people. He's not paid taxes for years and done it very openly, blogged about it, just not paid taxes.

But here's what's true about every single one of those cases. They don't make a lot of money and they don't maximize their potential. What they often do is choose not to pay taxes and live in fear. And this is one of those fears that, in my opinion, is probably debilitating for many people.

This is one of those fears that can completely mess you up. If you're sitting around at night thinking, man, I'd really like to go and do this other thing but then someone might know about my taxes. Someone might report on me. I can't hire too many employees. I can't bring them in.

I can't grow too much 'cause they'll say, what about your taxes? And they'll report on me. I can't tell my wife. I can't tell my lover. I can't tell so-and-so about the money that I make or they'll say, they'll report on me and they'll go and collect their percentage of it.

And so you live in fear. And friend, that's no way to live. That's no way to live, especially when you have potential for so much more. So I wanna give you a couple of solutions here. I want to play a metaphorical game with you. Now, I've gotten in trouble in radical personal finance in the past because I've compared state governments with people like local cartel governments.

I've compared state governments with the mafia. I'm not entirely convinced those are unfair comparisons but today I'm not gonna do that. I think there's some lessons there but today I'm not gonna do that. I'm just gonna say, let's play a game, right? Let's put this into another context and see if we can stimulate some of your creative thinking so that you can understand how you can think about your problems and how to solve them.

Let's pretend that you live in a local neighborhood, right? We've all seen, you know, "Godfather" movies where you think about the mafia living in New York. So let's pretend you live in a certain neighborhood in New York where the mafia is acting or could be a local cartel or something like that.

Some local organization that takes upon themselves the need to provide protection for their residents. Okay, we know how this works from the movies. They, you don't need to have any real experience. We know how this works, right? They come and they knock on the door and they say, "Hey, dear Joe, Mr.

Business Owner, Joe, listen, me and the boys, you know, we're gonna make you a deal, right, we're gonna make you a deal and we're going to offer you protection because we know that things are hard, right? There are people that could come that can mess up your store. There are people that could probably close your business if you didn't have someone looking out for your interest.

So me and the boys, you know, we're gonna look out for your interest and here's what we're gonna do, okay? We're not gonna take too much money. We're just gonna take X number of dollars per week. Every Friday, our man will come in. You just hand him an envelope.

He'll walk right out the back door and we'll keep our guys posted out front to make sure that you're taken care of. Now, they come to you and they make you this offer. Question is this, do you have a choice to refuse that offer? Even if the guy doesn't say, "Now, listen, I'm gonna make you an offer you cannot refuse," right, he doesn't come to you and say that.

He just says, "This is the offer." Do you have the choice to refuse that? Answer is, "Well, if you wanna pay the consequences," right? If you wanna pay the consequences, then you have the right to refuse it. Think about a guy like me, right? I was born in the United States.

I didn't, nobody really ever came, made me that offer, but I just know this is how things work, right? If I don't pay the boys a certain amount of money, I don't send them my checks, give them their money, I might face some problems. Now, if I give them my money, they give me some protection, right?

They post the police officers out front. They send the fire department, right? If my fire, if there's a fire in my place. They pave the roads, you know, they take care of the poor people. So we know the deal, right? I just pay the money, and if I don't wanna pay the money, I'm gonna have a problem.

So the question comes down to this. If you don't pay them their protection money, they're going to break your legs if they're the mafia, right? Now, of course, the IRS agents are a little bit nicer, right, they send the police, they take all your stuff, they sell it all at an auction, they seize your property, they put a sticker over your front door, say that this property and this business has been closed for tax collection purposes.

If you don't go through the court process and you don't cough up some money for them, then they toss you in jail, right? And they give you something to think about for a little while, right? But if you just pay them, they leave you alone. Now, here's how the mafia works.

The mafia guys know that they need to charge you as much money as they can to maximize their revenues, but not so much money that you're upset with them, where it's worth your getting together with your neighbors and saying, "That's it, we're gonna kick these guys out." Right, 'cause if they did that, they would have a bit of a rebellion on their hands.

Hmm, that sounds suspiciously like something called the Laffer Curve, doesn't it? That sounds suspiciously like, yeah, I think it is the Laffer Curve, right? This basic idea that a government needs to charge an amount of tax money that maximizes the tax revenues to that government, but not so much tax money that individuals change their behavior to earn less money, or they go somewhere else where they're treated a little bit better.

Hmm, interesting how there's some parallels there. A lot of parallels. But think about this for a moment. All right, they come to you, they make you an offer you can't refuse, right? You didn't choose that. You didn't choose that the mafia took over your neighborhood. You didn't choose that the United States of America owns the land on which you live.

That's okay. So you have, as I see it, three choices. What are your three choices? Choice number one is you can pay them their money. If you pay them their money, they leave you alone. They're not gonna come in and mess with you. They're not gonna break your legs.

They're not gonna harass you. You just pay them their money. Things are simple. And if you pay them their money, it's probably not gonna be an overwhelming amount of money. They might change it from time to time, right? They might look around and realize, you know, listen, Joe, business looks pretty good.

I think you could pay us a little bit more money. They might adjust things. They might say, you're making quite a bit of money, so we're gonna increase your taxes. But as long as you pay us our money, you're gonna be okay. I think choice number one that you have is pay them their money.

As I see it, I think that's the choice that the vast majority of people should do, should make. Just pay them the money. It's not that much. It's only 47% of your income. It's only 35% of this. It's only 10% of your wealth. It's not that much. Just pay them your money.

Then you can live where you live. You can operate your business. Maybe you can all get rich. Joe, listen, you're making enough money that you can give us our cut in exchange for your protection, and you can still get rich. So choice number one you have is to pay them their money.

And I think that's a fair and reasonable choice for any of us to make. Choice number two is you can say, you know what? I ain't paying you a dime. And you can do it in whatever way, right? You can hide the money out back. You can keep a couple sets of books.

You can do whatever you need to do, but you can say, I ain't paying you a dime. If you take that path, you wind up with potentially very severe consequences. You might lose some people that you love because you're locked in prison, of course, and you can't see them.

And they forget about you and go on with their life. You might be deprived of your health because, of course, you're in prison. I'm saying, you know, obviously, that people get sick in prison, right? So there come consequences with choice number two. Now, I think there are times in which honorable people might make that choice.

Throughout history, change has often happened when people said, I'm gonna stand up for what I believe in. Consequences be damned. No matter what, I'm gonna do this. I think that's a reasonable choice. But those aren't your only two choices. Choice number three is also available to you. Choice number three, what is it?

Well, they come knocking on your door, and they say, Joe, we're gonna make you a deal. You pay us X amount of dollars, or you're gonna have some problems. Well, what could Joe choose to do? Joe could choose to say, this sucks. I ain't paying these mafia goons this money.

And Joe closes up his shop, grabs his family, loads them up, loads up a moving truck, and goes to the next town over, where those mafia guys aren't in control, or goes to the next state over, where there's a slightly more friendly organization that doesn't quite put such onerous demands onto him, and he opens his business there.

Now, that's clearly a disruptive solution. Joe's family has to move. Joe's wife has to leave her friends. Joe's kids get pulled out of school. Joe has to close his business, and maybe his business was only suitable in the local area. But it is a choice. It is a choice that Joe has, and it's a choice that gets Joe away from the goons with guns, peacefully.

Choice is yours. As I see it, there are only two of those choices that are acceptable. Either choice number one, to pay the money, or choice number three, to leave. As far as I'm concerned, choice number two is completely unacceptable for reasonable, rational men who care about their freedom.

I wish we lived in a world in which principle mattered, and where you could get all your neighbors together and say, "Listen, we're not gonna do it, "but here's the problem. "Your neighbors like the mafia. "They like it. "Hey, in some places, they even vote for the mafia. "And if 75% of your neighbors have voted for the mafia, "you only have two reasonable choices.

"Choice number one is live with it. "Choice number two, or in this case, three, leave. "You're not gonna change 75% of your neighbors' minds. "You're not even gonna change 25% of them. "It's not possible. "So stop thinking it is, "and either learn to live with it or leave." For free-thinking men who are rational, pragmatic, and who care about themselves, their families, and their freedom, I personally see no other choice.

I don't think you should doom yourself to a lifetime of poverty by taking on some manual job, some low-level job that just gives you just enough to get by on because you don't pay tax. I'm happy it exists. It exists all over the world, but I don't think that's a sandbox that you and I should bother playing in.

So remember, you have choice one or you have choice three, but choice two, as I see it, is simply not an option. We'll talk more about some ideas 'cause here's the good thing about the mafia. The mafia knows that you gotta run your business. The mafia knows that if you don't succeed, they don't succeed.

The mafia wants you to succeed so that you can pay them their protection money. And altogether, it might not be a bad deal. Hey, if I could pay the mafia 100 bucks a week and they could make sure that my house didn't get broken into, okay, fine. That's a reasonable deal, which is why all over the world, you see in local areas, you see people support the local cartel organization, the local mafia organization.

Why? Because they get things done. They deliver things that people want and they don't mind supporting them. That's what politics is. Politics is ultimately force, and if politicians don't provide for those that they want to represent, then they lose their support and somebody else comes in. Happens all over the world all the time.

We'll talk more about other solutions you have, but the reality is all of the old tax planning ideas do work, right? The mafia gives you a chance to deduct certain things. They make certain reasonable exceptions for you. And as long as you play within their rules and report all your income, give them all your books, they'll let you go with whatever they say you owe.

So play that game or leave. Don't play game number two 'cause I don't want you to go to prison. I have no intention of going to prison. I work very hard to stay squeaky clean so I can stay out of prison. A major life goal of mine is not go to prison.

So because of that, I'm gonna follow the rules and I'm gonna encourage you to as well. Thank you for listening to today's show. I wanna remind you that through March 31st, 2021, I am offering a 50% discount on all of my courses available for you at radicalpersonalfinance.com/store. Use the coupon code changingplatforms, coupon code changingplatforms altogether, and you'll save 50% on all of my courses available at radicalpersonalfinance.com/store, including the course that teaches you how to go where things are better for you and times are good or even if they're not.

Be back with you soon.