Guest Post: iTaxes Vs. Uncle Sam's Friends And Family Plan

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man blog,

Yesterday, news broke that the US government has awarded a whopping $104 million to convicted felon and former inmate Bradley Birkenfeld.

It was a big headline and you likely saw the news… but it’s worth a deeper look. Because if there is one story that neatly summarizes what is wrong with the US these days, it is the case of Mr. Birkenfeld.

Birkenfeld, as you may recall, is a former private banker at UBS. For several years, his job at the bank was to help clients evade taxes, including one now famous instance in which he snuck diamonds hidden in a tube of toothpaste into the United States on behalf of one of his clients.

It turns out that Uncle Sam had his eye on Birkenfeld. Big time. And when the government started leaning on him, Birkenfeld sung like a canary… confessing not only his own transgressions, but also those of his clients.

Birkenfeld was subsequently convicted and sentenced to 40 months. And based on the volume of information he provided, a number of his former clients were also charged, imprisoned, and forced to pay steep penalties to the government.

Look, just to be crystal clear, tax evasion is not OK. I’ve been writing this for years– not paying taxes is stupid. Whether you have the moral or legal justification is irrelevant. When the guy holding the gun gets to make the decision, you lose. It’s simple.

That being said, Birkenfeld violated just about every professional ethic imaginable when he turned on his clients. It’s not like he had a change of heart and suddenly wanted to ‘do the right thing’; this is a guy who used to advise his clients about how to hide their money, and then ratted them out to save his own ass.

Now the government is rewarding this behavior. It’s extraordinary when you think about it– Birkenfeld actively assisted people evading taxes. He helped make the money disappear to begin with. Now he gets a piece of the pie?

This is like driving the getaway car in a bank robbery, then getting a cut of the recovered funds after you dime out your accomplices.

It’s despicable to see such actions rewarded while people who work hard for an honest living struggle to get by. Another triumph of justice, it seems.

Naturally, US politicians are supportive, saying that Mr. Birkenfeld’s reward sends a warning message to tax cheats and dodgy bankers around the world.

Yeah, maybe. It also send a message to every bitter ex-wife, disgruntled employee, and suspicious neighbor out there: you too can become unimaginably wealthy by ratting out your friends, family, clients, and co-workers.

It’s really unfortunate, though not terribly surprising, that Uncle Sam would seek inspiration from Nazi Germany when it comes to taxes. Frankly, I think Singapore serves as a much more powerful example.

Taxes in Singapore are low. Compliance is simple. The laws are easy to understand. The tax code itself is short. They make it so easy, it’s not worth anyone’s while to evade taxes. Amazingly enough, the country is swimming in cash. Shocker.

When he launched the iTunes store several years ago, Steve Jobs fundamentally believed that most people would be willing to pay for music (instead of illegally downloading songs) if they were presented with an easy, inexpensive, legal alternative.

He was right. The iTunes store went on to be a big success for Apple, the record companies, and consumers. There’s no reason why taxes can’t be the same way. It’s certainly a better option than having a nation of weasels.

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Wed, 09/12/2012 - 15:34 | 2787039 hedgeless_horseman
hedgeless_horseman's picture



By chance have you ever lived or worked in the USA?  And Simon that your real name?

Wed, 09/12/2012 - 15:40 | 2787080 Pladizow
Pladizow's picture

This technique worked for the Nazi's - everyone becomes a state informant!

Wed, 09/12/2012 - 15:47 | 2787092 hedgeless_horseman
hedgeless_horseman's picture




"It was almost normal for people over thirty to be frightened of their own children. And with good reason, for hardly a week passed in which The Times did not carry a paragraph describing how some eavesdropping little sneak — 'child hero' was the phrase generally used — had overheard some compromising remark and denounced its parents to the Thought Police."


1984, by George Orwell
Chapter Two


Thank goodness none of our children would ever turn us in for $104 million dollars.

Wed, 09/12/2012 - 15:47 | 2787127 LMAOLORI
LMAOLORI's picture



To Orwell's credit


"Orwell's Socialism was literally knocked out of him by his appalling experiences in the Spanish Civil War. Going out to Catalonia to fight Franco's military revolt against the Spanish republic, he was shot through the throat by a sniper, and while recovering, was caught up in a bloody purge launched by Spain's increasingly Communist-controlled Republican Government.

The experience of being hunted by the secret police and seeing his comrades arrested, tortured and killed by the Spanish Stalinists and their Russian bosses gave Orwell an abiding horror of Marxism, Soviet Communism and Stalin's many British apologists - including his own publisher, Victor Gollancz, who refused to publish Orwell's account of his Spanish experiences 'Homage to Catalonia' for fear of upsetting the Communists. Finally, Orwell saw what crimes could be committed in the name of 'socialism' and devoted the rest of his literary life to denouncing the perversion of the humane socialism he stood for.

Though dying of TB, Orwell lived long enough to transmute his horror of Communism into his twin masterpieces 'Animal Farm' and '1984' and at the dawn of the Cold War, drew up at the request of the British security services a list of 50 of his fellow writers whom he regarded as Communists or fellow-travellers."

Wed, 09/12/2012 - 17:31 | 2787527 MeelionDollerBogus
MeelionDollerBogus's picture

Sadly Orwell was mistaken - these crimes can done in ANY name - capitalism, socialism, fascism, democracy - you name it. It's the Chain of Obedience that is the problem, not the name of the system

The Chain of Obedience - YouTube

Wed, 09/12/2012 - 19:02 | 2787733 tip e. canoe
tip e. canoe's picture

comment from that link:

my parents lived in Fascist & Nazi Europe & the US looked no different to them when they first came here. People have these false images based upon movies. Life was not dramatic for everyday people in Germany or Italy. Just like it isn't here. People lost more? & more rights & accepted it. No different than here.

Thu, 09/13/2012 - 06:36 | 2788583 Slightly Insane
Slightly Insane's picture

If this "informant" was smart, he would head for the hills, as I bet there will be a heavy price put on his head.

Wed, 09/12/2012 - 15:40 | 2787091 Azannoth
Azannoth's picture

Is " hedgeless_horseman" your real name? and before you ask no Azannoth is not my birth name either

Wed, 09/12/2012 - 15:51 | 2787135 hedgeless_horseman
hedgeless_horseman's picture



Just another patriot trying to hit it big as a $nitch.

Wed, 09/12/2012 - 16:16 | 2787254 Lohn Jocke
Lohn Jocke's picture

Welcome to the USSA, my friend.

Wed, 09/12/2012 - 16:31 | 2787318 AcidRastaHead
AcidRastaHead's picture

Nothing has really changed since Aesop was credited with,

"We hang the petty thieves and appoint the great ones to public office."

Wed, 09/12/2012 - 19:31 | 2787788 Grinder74
Grinder74's picture

It used to be Simon White, but then the first black president was elected.  Of course, now he realizes that the 44th white president was also elected, so he's a little conflicted.

Wed, 09/12/2012 - 15:37 | 2787072 Stuck on Zero
Stuck on Zero's picture

It's no worse then accepting a Nobel Peace Prize while knowing full well you were going to sends drones, agents, mercenaries, and the military off to kill thousands.


Wed, 09/12/2012 - 15:55 | 2787160 akak
akak's picture

He didn't hypocritically award himself that medal --- somebody else did that.

Wed, 09/12/2012 - 16:40 | 2787363 Blasé Faire
Blasé Faire's picture

The Norwegians.

Wed, 09/12/2012 - 18:39 | 2787697 toady
toady's picture

Damn Norwegians

Wed, 09/12/2012 - 20:50 | 2787944 masterinchancery
masterinchancery's picture

He very hypocritically accepted it, like other socialist and fascist world "leaders". Gag.

Wed, 09/12/2012 - 15:37 | 2787074 saycheeeese
saycheeeese's picture

a fascist states rewards delation.....  and Mr. Mr. Birkenfeld  will probably not be able to travel abroad ...running the risk to be detained.

Wed, 09/12/2012 - 16:15 | 2787248 cifo
cifo's picture

$50 million goes to lawyers. $25 million goes to taxes. He is left with only $25 million.

Wed, 09/12/2012 - 15:37 | 2787076 The Navigator
The Navigator's picture

No, let me be crystal fucking clear. When the govt takes 60-70% of your earnings and wrecklessly spends it on friends, donators, and bullshit programs to buy votes, tax evasion is your patriotic duty, and to not pay taxes is smart.

Wed, 09/12/2012 - 16:13 | 2787233 LawsofPhysics
LawsofPhysics's picture

Last time I checked the tax on earned income (people actually making real shit) was around 30% while paper-pushing, captial gains and dividend taxes were around 15%.  FAIL.

But you are correct, that which cannot be sustained, won't be.  Long black markets and lots of economic activity out of the eye of Uncle Sam.

Wed, 09/12/2012 - 16:16 | 2787256 Gene Parmesan
Gene Parmesan's picture

Your point on formal "income tax" is taken, but how much of every dollar of your salary ends up being paid to a/the government in one way or another? I guarantee you it's not ~30%. I'm certain it's not less than 50%.

Wed, 09/12/2012 - 20:33 | 2787406 californiagirl
californiagirl's picture
According to the Federal CAFR for the year ended 9/30/2010, the federal government actually spent $4,472,300,000,000.  This is the actual spending amount, not the budgeted amount.  The state and local governments spent another approximate $2.9 trillion in FY 2010.  So, for fiscal year 2010, governments spent approximately $7.4 trillion. According to the World Bank, U.S. GDP for 2010 was approximately $14.5 Trillion.  So, it takes half of GDP to run governments in the USA.  Hello, Sweden!
Taxes and fees income for 2010 for all U.S. governments was approximately $4.2 Trillion ($2.2 Trillion Federal plus $2 trillion for State and Local governments).  That leaves a $3+ Trillion deficit, or new taxpayer debt created by governments in just one year. 

How much do you suppose went for back-door bailouts to the banksters that the public has no clue about?
Wed, 09/12/2012 - 16:44 | 2787383 Urban Redneck
Urban Redneck's picture

30% Federal Income

plus 15% Social Security for anyone self employed

plus 12% for the priviledge of living in the republic of Kalifornia

plus Sales Tax, Gas Tax, Property Tax

Uncle Sam and his 51 evil underlings can easily demand a 60-70% cut if you refuse to be someone else`s wage serf and don`t have the means and motivation to afford a membership in the too rich to tax club.

Wed, 09/12/2012 - 19:02 | 2787734 The Navigator
The Navigator's picture

Yep, and that's where I'm at - 30% + 15% + 10.5% CA + 8.75% sales tax + $9,000 property tax + gas tax, +, +, +, to infinity and beyond.

Fuck the Empire and the Emperor too.

Wed, 09/12/2012 - 20:55 | 2787956 masterinchancery
masterinchancery's picture

39% federal, up to 13% state,10% city, plus sales taxes, real estate taxes, excise taxes, fuel taxes......You can easily be paying more than 60% of your income to various governments.

Thu, 09/13/2012 - 08:29 | 2788847 flyweight
flyweight's picture


Thu, 09/13/2012 - 08:28 | 2788848 flyweight
flyweight's picture

I don't know where you live, but is there no VAT in this country? VAT is 23% on most things you buy over here. Also, the price of fuel is about 70% tax, which drives up the cost of heating, transport and ... everything you buy basically.

Wed, 09/12/2012 - 15:37 | 2787078 larz
larz's picture

If you see something say something help big brother help you - I want to puke and then deny that am of the human species

Wed, 09/12/2012 - 15:41 | 2787096 RSloane
RSloane's picture

I see the Federal Reserve and the Federal government systematically and steadily destroying this country. Who do I report them to?

Wed, 09/12/2012 - 17:00 | 2787438 drbill
drbill's picture

Tell your friends. Tell you family. Tell your neighbors. At first they look at you like you're from Mars. But eventually some of them start to listen.

It's not much, but it's the best we can do at this time.

Wed, 09/12/2012 - 17:41 | 2787565 Umh
Umh's picture

It seems to me that big brother is not human. Maybe I'm an optimist.

Wed, 09/12/2012 - 15:42 | 2787082 LMAOLORI
LMAOLORI's picture



Remember the head of the UBS was obama's golfing buddy


For UBS, a Record of Averting Prosecution



We had to pay this pig $104 Million  way to go scumbag politicians


on another dirty note MF Global


Even Whistleblowing Doesn't Result In Prison Time



Wed, 09/12/2012 - 21:00 | 2787967 californiagirl
californiagirl's picture

Silly me! I thought they gave him such a big windfall so he could donate some more of it to the DNC and the get-Obama-reelected campaign.  That's how you redistribute taxpayer dollars!


Wed, 09/12/2012 - 15:41 | 2787095 Atlantis Consigliore
Atlantis Consigliore's picture

Pie in the Face

GAMESHOW GAMESHOW GAMESHOW!  Name that Crook!    MF Bubble, Fraudie Mae Fraudie Bac, Country Narrow; PFG Da Worst,  and hosted by the Regulators...

Zonk,  you get the pie in the kisser if your guessed:   

Wed, 09/12/2012 - 15:42 | 2787102 Rainman
Rainman's picture

Keep dreaming, Simon. There are 40,000 registered lobbyists in D.C. I'll bet half are devoted to keeping the tax code complicated and riddled with special interest loopholes. That's why every tax simplification idea in the past 50 years tacked on 400 more pages to the tax code. 

Wed, 09/12/2012 - 16:15 | 2787246 Dr. Richard Head
Dr. Richard Head's picture

Federal tax code is very simple.  I spent the past 13 months going through the 73,608 pages of federal tax code  I understand EVERY FUCKING WORD OF IT.  Ignorance is no excuse when it comes to the law son.  /sarc

Wed, 09/12/2012 - 21:03 | 2787974 tip e. canoe
tip e. canoe's picture

haha, how many times did the word voluntary appear?

Wed, 09/12/2012 - 15:42 | 2787103 spastic_colon
spastic_colon's picture

I dont think you understand the name of your own blog

Wed, 09/12/2012 - 15:42 | 2787104 ljag
ljag's picture

Now the government is rewarding this behavior. It’s extraordinary when you think about it


Actually itsnot! Uncle been doing it for a loooooooooooong time.

Wed, 09/12/2012 - 15:44 | 2787110 KidHorn
KidHorn's picture

He'll get his $100 million, but I would guess the feds are going to keep a close eye on him. If he does anything wrong, they'll nab him and make his life hell. $100 million would be ice, but not if you spend the rest of your life constantly looking over your shoulder.

Wed, 09/12/2012 - 15:57 | 2787169 hooligan2009
hooligan2009's picture

You are a moron an symptomatic of whats wrong in the corrupt banking and political system; words cannot express how sickened I am by your analogy.

Do you even know if he has to spend his $100m in the USA? Of course, the CIA can kill people anywhere in the world, maybe you think that is the God given right of the US Government.

Doing the right thing in the first place (not helping frausters evade taxes) the second place by losing just a few years from consecutive individual 20 year sentences under RICO for racketeering ( or the third place to NOT be rewarded under the pitiful pleas bargaining system that encourages corruption (rather than corrupt Treasury officals gizzing in their pants to please Geithner). 

I suggest you go to Church an restrict your abuses to innocent altar boys.

Wed, 09/12/2012 - 18:48 | 2787713 californiagirl
californiagirl's picture

No need to look over your shoulder if you spend the rest of your post-incarceration life sitting on the beach, sipping Mai Tais and keeping out of business and other trouble. Heck, make ole Timmy happy.  Buy a bunch of long-term coupon Treasuries and live off of the tax-free interest.  No need to get involved in any shady investment scams.

Wed, 09/12/2012 - 15:45 | 2787114 jag
jag's picture

He shouldn't have been eligible as a "whistleblower" in the first place. He participated in a crime and, it would seem under normal circumstances, that the best he could have done was to get a plea deal. Who's idea was it to award him these monies under such circumstances? I have no problem with anyone who, for any reason, lets authorities know a crime is being committed.

However, no one should profit from participating in a crime. Give him a plea deal? Sure, part of the bigger picture. Give him a vast fortune instead? How does that pass the smell test of common reasoning?

Wed, 09/12/2012 - 15:52 | 2787147 Winston Churchill
Winston Churchill's picture

Smells like entrapment to me.

That fits with rewarding him.

Wed, 09/12/2012 - 16:15 | 2787249 LawsofPhysics
LawsofPhysics's picture

Correct, what happened to the government I grew up with, you know, the "talk or we kill you" kind, oh wait...

Wed, 09/12/2012 - 20:26 | 2787895 californiagirl
californiagirl's picture

"Who's idea was it to award him these monies under such circumstances?"

It is pretty obvious:

Wed, 09/12/2012 - 23:09 | 2788209 andrewp111
andrewp111's picture

I understand he approached the IRS first, and it wasn't part of a plea deal. They prosecuted him when he was caught holding something back. But they still needed to reward their rat, because it is good 4 business.

Wed, 09/12/2012 - 15:45 | 2787119 Seasmoke
Seasmoke's picture

he should now be able to come in and buy alot of depressed and foreclosed families houses

Wed, 09/12/2012 - 15:47 | 2787126 mkhs
mkhs's picture

  It also send a message to every bitter ex-wife, disgruntled employee, and suspicious neighbor out there: you too can become unimaginably wealthy by ratting out your friends, family, clients, and co-workers.


Who says Simon is simple?

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