Income and Trade

Discussion in 'Economy' started by Paulie, May 4, 2008.

  1. Paulie
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    Paulie Platinum Member

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    My view is that "money" derived from performing work is merely ONE medium of exchange, out of a plethora of other possible mediums, for what is basically a trade. I traded a skill I have to someone who needed my service, and they in exchange gave me something which we both previously decided on as an equal trade.

    I just don't see how labor wages can be considered income. If I trade my skills for an equal amount of compensation, such as an amount of money, how did I profit? Even if it could be construed as a profit in a particular trade, who makes that decision? Who decides that work I performed, building someone a shed, or me replacing someone's toilet, is actually worth less than what I traded those skills for, thereby earning me a "profit"?

    I mean, a company could just as easily be willing to trade items of clothing, or items of food, to employees for the work they performed. It's no different just because someone was handed $100 in cash. Money is just an item of trade, as anything else could potentially be. If I was given 5 t-shirts for one hour of work at, say, a plumbing company, should the government tax me one shirt for each 5 I'm given? Because, I could very well choose to work for actual items instead of cash. But since the method didn't change, and I still traded my work for something else, with the logic of the IRS, I owe them some t-shirts.

    Thoughts?
     
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  2. Care4all
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    Care4all Warrior Princess Supporting Member

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    You make some solid points Paul....and have really had me thinking on this one...

    The business gets to write off your salary/compensation... as a business expense too...along with the cost of materials and cost of freight and cost of electricity to keep the store opened along with heating bills and along with what they pay in healthcare for their employees etc....I am not certain where this fits in to the picture other than the fact that businesses only pay taxes on what they net after all expenses are paid while we do not get to write off our electric and our oil for heat and our materials needed like clothing or rent costs if we do not own a home?

    This is probably a whole different topic though so sorry if it appears to be a hijacking! :confused:

    care
     
  3. Paulie
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    Paulie Platinum Member

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    My line of work is house painting. I have a fledgling business. I also produce music on the side, and often times sell it.

    I put WORK in when I perform those tasks. I put in my time, effort, money, usage and wear and tear of tools, software, etc. That is MY contribution to a specific trade/exchange with someone else.

    If I paint someone's house, I traded them my (fill in the blanks from above paragraph), for their money, in what we decided was an equal trade ahead of time. I did not earn "income", because it was merely a trade/exchange. I could have told the customer that I wanted them to pay me in...say...cheese steaks, because I happen to love cheese steaks, and they run a pizza/sandwich shop. Should I have to file those cheese steaks with the IRS so they can collect their xx% of my cheese steaks? How and WHY, should cash be considered any different in that case? Cash is just paper. That same cash could still buy me all the cheese steaks I would have traded for instead, only I'd be taxed on my cash so I probably wouldn't even get as many cheese steaks as I would if I just traded my work for the steaks straight up.

    Money made from performing work is not "income", at least as far as the IRS would like you to believe it is.

    Income would be if I put my money into a CD, and earned 4% interest on it over 5 years. That's not an equal trade, that's my money working for me. Same thing with stock investing. That's not an equal trade, that is actually INCOME. It's extra money that came in to me. I did not "exchange" anything of equal "value" to make a profit from a stock trade.

    Capital gains are taxable "income". Labor wages? I think not.

    A great way to look at it too, is if you put money into an IRA until maturity, you earned capital gain on that money...however, you earn it tax free. Why is that? That is actually INCOME! You're only not penalized taxes on it because you allowed the government to play with it for 50 years, so their thanks to you for that is not taxing you.

    Meanwhile, I busted my ass to trade my work to someone for $5,000 which we both agreed was an equal trade, and the government milks me for their share, calling it "income".

    Come on, someone's got to have a great rebuttal for this.
     
  4. cbi0090
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    cbi0090 Member

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    It's an interesting arguement but we all know it's not going to go anywhere. Your going to get taxed on the $5000 and the new paint job you put on the house is going to increase the value of the home which is going to raise its assessed value for local taxes. They got you coming and going.
     
  5. Care4all
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    Care4all Warrior Princess Supporting Member

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    i guess this is where ''give unto caesar what is his'', comes in to play?

    money has the gvt's mark on it (so the gvt can tax it), but the cheesesteak doesn't..? hahahahaha!

    honestly though, makes sense to me but why not for the guy that goes to the office too, he's trading his skills too?

    you are soooooo right, workers are unfairly taxed for something that is not even profits...
     
  6. Paulie
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    Paulie Platinum Member

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    Of course the office guy is trading his skills. He's trading his skills of computer knowledge, accounting, whatever, for something in return from his employer. When he/she earns a paycheck for the work they traded their company, they didn't profit. The company and he/she agreed on an amount of money to compensate the employee for his/her skills and time. The employee could either take it, or leave it.

    Now, the money that worker might have invested in a 401k with that company? Well, that's INCOME, so I see the fairness in taxing it.

    And cheese steaks was just one example, out of an infinite amount of examples.

    It can't be "income" if something had to go "out" that you won't get back, to earn the supposed "income". With labor, someone's time and effort, amongst other things, went out that they'll never "get back", and money came "in". My time and effort to paint someone's house was worth just as much to THEM, as their money was worth to ME. Again, even trade. With a stock investment, for instance, nothing really went out. You can always sell that stock for at LEAST the amount of money you put into it. With a CD, you get back what you put in, plus your profit from the interest. That is obviously INCOME, because ultimately, nothing actually went out. Something only came in.

    Any disagreements from anyone?
     
  7. manifold
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    manifold Diamond Member

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    The IRS will still come after you for the fair value even if you accept cheesesteaks as payment...if they find out. This is nothing new. Members of local groups like rotary clubs, masons, knights of columbus etc. exchange services with other members without exchanging cash. Doctors, lawyers, plumbers, mechanics, electricians, accountants you name it. Find one that doesn't have a house painter and you're in. But make no mistake, it's still considered tax evasion and is illegal.
     
  8. Ravi
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    Ravi Diamond Member

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    That's because cheesecake has a monetary value. And I agree on the capital gains bit that you deleted.
     
  9. Paulie
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    Paulie Platinum Member

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    Seriously, ignoring the silliness of accepting cheese steaks for payment, what exactly would they collect as "fair value"? Would they tell me I need to pay them X amount of dollars anyway? Because, frankly, I don't need to accept dollars for my services. I'm only going to spend those inflated dollars on goods I could trade my services for in what could actually be an inflation-proof trade, should I garner enough goods. I could potentially get more goods for my services then what the dollars could buy me at the store.

    It's really just a matter of basic bartering. In a depression situation, bartering could be the medium of exchange. I could, and WOULD, trade my many different skills in the trade industry for goods I needed. Cash is becoming less and less valuable to me, personally. It's only good for capital gain investment as far as I'm concerned. If you get off your ass and interact with your community, you'll find there are so many ways to beat the system.


    I'm not saying it's new. I'm only using it to make my case that labor wages are not income. I was hoping someone could challenge THAT particular part of the topic, rather than tell me what I already know about the history of bartering.
     
  10. RetiredGySgt
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    RetiredGySgt Platinum Member

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    The Government has the right to tax what ever they want. You are aware that Virginia ( at least until recently if they have changed) has you pay every year on your possessions? Not just your cash.

    How is it justified to tax property? It is justified because "we the people" gave the Government the power to do so. There is no requirement that taxes only be on "profit"

    From the Constitution.

    and

    All from Legislative Powers granted to Congress.

    Article I of the Constitution.


    Then we have

    Amendment 16 to the Constitution.

    http://www.law.cornell.edu/constitution/constitution.amendmentxvi.html
     

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