Guest Post: Welcome to the United States of Orwell, Part 2: Law-Abiding Taxpayers Treated As Criminals

Tyler Durden's picture

In a follow-up to yesterday's Part 1: Submitted by Charles Hugh Smith of OfTwoMinds,


Welcome to the United States of Orwell, Part 2: Law-Abiding Taxpayers Are Treated as Criminals While the Real Criminals Go Free   (March 27, 2012)

Law-abiding taxpayers are treated like criminals while the criminal class of financiers and State apparatchiks are free to loot and pillage muppets and taxpayers alike.

I recently received quite an education about how law-abiding taxpayers are treated by the state of California via dozens upon dozens of emails detailing how the Golden State ransacked the bank accounts of law-abiding taxpayers in other states without notification or due process, as if the citizens being looted were crafty bankers who'd stolen church funds to live tax-free in an offshore tax haven.

As we all know, crafty (and politically protected) bankers are free to loot churches, muppets and the taxpayers at will while taxpayers are looted by lawless government. Here is a typical account of state thievery. It is anonymous for a good reason: As I noted last week, law-abiding citizens are terrified of their governments, local, state and Federal, as they know that these agencies are literally above the law and will exact retribution on anyone who reveals their tyrannical trashing of due process or who questions their feudal pillaging of oppressed debt-serfs. (I previously addressed this topic in Welcome to the Predatory State of California--Even If You Don't Live There March 20, 2012)


I received a letter last year that we owed the state of California's Franchise Tax Board $90,000 for taxes in the year 2008.

We replied to the Franchise Tax board in a similar manner as RT stating that:

-- Did not reside in California in 2008

-- Did not file a State income tax return in California in 2008

-- Did not have any outstanding tax issues with California in 2008

-- Did no business in California in 2008

-- Owned no property in California in 2008

The CA Franchise Tax board responded by putting a lien on us in the state - fortunately, our banks and assets have no business in CA or I am certain our accounts would have been robbed as well.

After a great deal of uncertainty and angst, I found an accountant in CA who advised us that we needed to file a complete CA tax return for 2008 even though we did not owe any tax. We filed the return and received a response that we owed the state $625 to cover the State's collection fees. We paid the fee and within two weeks received a "refund" check for the $625.

On reflection, we felt as if we had been "held up" by some powerful gangsters and if it had not been for an honest tax accountant we would have suffered much financial damage.

This basic story is repeated thousands of times annually, and while California may hold special status as the most predatory, parasitic, due-process-be-damned state, it's clear that other state and local governments are pursuing similar strategies of lawless looting under the cover of tyrannical statutes approved by elected lackeys of the financial aristocracy.

Is financial tyranny "legal" if some state legislature claims it is legal? Or is all financial tyranny above the law, regardless of what the elected toadies and apparatchiks claim? Would the Supreme Court, another set of lackeys, ever rule that a state cannot steal funds from a private bank account without due process other than a concocted claim that the person might owe the state taxes?

Of course it won't, for the Supreme Court has long ago given up restricting government's ability to loot and pillage the citizenry. The Court can't even be roused to defend the Bill of Rights, the most sacred set of civil liberties the nation holds (or held-- the Bill of Rights has been annulled by the Orwellian "national defense" NDAA-- Welcome to the United States of Orwell, Part 1: Our One Last Chance to Preserve the Bill of Rights).

Based on dozens of detailed accounts, I finally figured out how the state of California calculates the tax you owe it.

1. If you ever resided in California or filed a tax return there, even 20 years ago, then any 1099 you receive from anywhere from now until your death is "proof" that you owe tax on that income to California.

2. If you live elsewhere but retain a license to do any kind of business in California, you must be hiding income and therefore you owe substantial taxes to California based on bureaucratic calculations of the average income others with your license earned.

3. If you ever filed a tax return in California, if you stop filing tax returns then you will be targeted and brought to earth as a tax dodger. The only way to escape the lawless wrath of the state's Franchise Tax Board is to keep filing tax returns in California until you die, even if you moved away years ago and earned no income there.

Yes, the mere cessation of filing is "proof" you're hiding income and are a tax dodger whose bank account must be stripped clean. Wells Fargo Bank, a recipient of taxpayer funds in the billions of dollars, deducts $100 or even $150 to do the state's dirty work, and then when it's shown the taxpayer owes the state no taxes, the bank doesn't refund the fee--are you kidding?

The banks and their management are still free to plunder, loot, defraud, pillage, misrepresent risk, assets and liabilities--all backstopped by taxpayer funds. If this isn't the acme of Orwellian reversal, then precisely what is? Taxpayers whose accounts have been looted by the state on the flimsy pretenses listed above must then endure the Kafkaesque torture of pleading with California'a Franchise Tax Board to return the money that was stolen from them without due process.

The Franchise Tax Board tells the powerless taxpayer (let's call him Josef K.) that if he's lucky (and who's lucky when caught in a fearsome web of bureaucracy) his money might trickle back to him in 6 to 8 weeks. The $100 stolen by Wells Fargo-- that's your "penalty" for ever having admitted that you lived in California.

It's like the Hotel California--you can move out any time you like, but you can never leave the tax liability. I am not making this up--I have dozens of detailed accounts of people moving out of California many years ago and having no business or property in the state, yet a 1099 from years past or the mere "failure" to keep filing state returns in perpetuity triggers an unannounced and unexplained raid on their private bank account and/or a lien against any property they own in California.

Then, after much anguish and expense, the trumped-up, totally fabricated, delusional claims of tax liability dissolve and then they begin the bureaucratic nightmare of trying to wrest their money from the rogue state's grasp.

Meanwhile, Federal prosecution of financial fraud has fallen to a 20-year low. Coincidence? No; lack of funding and powerful political protection play roles in protecting the real criminals from any risk. Brown-nosing Republicans have made ceaseless efforts to gut any agencies still clinging to an interest in prosecuting financial crimes, but financial tyranny starts by gutting the statutes themselves so fraud, embezzlement, etc. are no longer crimes.

Not filing a tax return in California even though you moved out of the state 10 years ago, however, is a crime--but as in an Orwellian nightmare, the "law" isn't written down, it is embedded in some bureaucratic rules that are hidden from the taxpaying citizens. It isn't "legal," but since due process has been abolished, who cares what's legal or illegal?

It's actually very simple: whatever the state or Federal government does to you, that's legal. Whatever action you take to protect your rights is illegal.

In case you have any doubts about where our "leadership" is taking us, please review these Assorted quotes by Fascists or about Fascism.


If this recession strikes you as different from previous downturns, you might be interested in my new book An Unconventional Guide to Investing in Troubled Times (print edition) or Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.

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Olympia's picture


The over-profits of the shark loans in the USA not only did not turn their dollars into inflationary money, but also they were multiplied and exported abroad in the form of “investments”. The illegally “increased" dollars of the internal USA economy become tons of “investments” abroad. FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing” ...the first state that burdened the international economy with its “breathing” ... and this is where everything started ...this is where the current shabbiness started, Loan sharks that are international today and “hide” behind the vague term of “Markets” are in fact the old loan sharks of the American market. They by controlling the USA monetary system “pumped in air” constantly in order to make profit from the USA “breathing”.




Divided States of America's picture

If I am going to be treated like a criminal regardless, I aint gonna pay my taxes.

Took that right out of our Treasury Secretary's handbook on how to be a good citizen.

battle axe's picture

Calif, the most fucked up state in the  Union. 

Money 4 Nothing's picture

Florida is running a close 2nd.

William113's picture

Nope, Fl is fixing their financial issues and they don't steal from you. Mass hole chuesetts would be second.

blindfaith's picture

by gosh you are right...near 25000 workders have been fired or let go  to 'balance the budget" (guess what that does to the 'fractional' turn over of money).  Florida has changed the property taxes to an a'la'carte get billed for everything as separate item ( property, school, fire, trash, etc.) and each has gone up (but you as a Republican Govornor can claim 'property taxes' have gone down by twisting the facts).  I'd go on but no one in Florida pays attention to facts.

Troll Magnet's picture

liberals just LOVE to tax other people's income, don't they?  why work when you can just live off of other people who are actually productive?  yup.  that's california liberals for you.

The Alarmist's picture

Whine, whine, whine. I've lived in FL and I've lived in NYC ... You don't begin to appreciate how good you have it in FL.

Hugh_Jorgan's picture

I will never understand how Orwell could be so adept at weaving a story around the inevitable nightmare of collectivist, centrally planned Governance, but still apologize for Socialism and Communism.

It is like decrying the horrors of chidbirth, but then advocating for pregnancy as a system of belief. I don't think he understood (or accepted?) the realities of mans avarice.

t_kAyk's picture

I live in Illinois.  We are pretty messed up. 

Blankenstein's picture

We are running neck and neck with California for worst state.   The devil's henchmen reside here:  Michael Madigan (who really seems to believe he is emperor of Il.), Adolf Axelrod, Rahm Emanuel, The Daleys, etc.   Not only do these kleptocrats rule everything here, they have infiltrated the federal government.  Our last two governors are both in jail currently along with a few other various players.  

Ex-mayor Daley is now also working on the globalist agenda:

Marc_W's picture

California is a state of amazing natural beauty and wonder.  The climate is spectacular, and it possesses world class beaches, ski resorts, mountains, hiking, and so forth.  And there are plenty of beautiful women in California.  Along with a laid back culture.


If two states are run by corrupt governments then I'll take the one with all of the above over the one with freezing, horrible winters, rain, pollution, and no real redeeming qualities any day of the week.


There is literally nothing good about Chicago or Illinois.  Nothing.

t_kAyk's picture

I am gonna go ahead and disagree with you on that.  Southern Illinois is some of the most beautiful land I have even seen, more akin to the rolling hills of the forrests of Missouri.  It is great land for making wine, hence the robust community of local vineyards.  Should you ever decide to visit this state then give your finger to the north and head down south.  Fine living and dining all around. 


Chicago is fun to visit for ball games and such, but they are their own world. 

Bring the Gold's picture

Funny thing is I saw that same flag and pic, but with an elephant instead of a donkey in 2002. It was right then, its right now. Silly that folks act like its one party or another. It's about what we as Americans have allowed our country to become.

Wishing all you ZHers the ability to transcend this madness. It all starts within, change that and everything else will change. Don't change what's within and it doesn't matter what party or people run things we will keep getting the same result. All change begins within. May you all have a rich abundance of peace, love and joy in your lives.

Mark701's picture

Actually the dipiction with the donkey is incorrect. Democrats are supposed to be communists, not fascists. Republican policies would be more accurately describe as fascist. These philosophies are at opposite ends of the spectrum so the picture is plain dumb.

V in PA's picture

Your comment reminds me of the Potato/PotAto argument. Call it what you want but ultimately it is the complete oppressive control of the citizenry and their money.

pods's picture

It becomes easier when you look at a linear line.

On one end, you have personal liberty.  On the other, you have government power.

All the -isms are at that end.  Just different flavors to catch the different flavors of statists.


V in PA's picture

I think it looks more like this circle.

Sudden Debt's picture

Hmmm... Left or right.... Decisions decisions....

krispkritter's picture

Struck out on date night again SD? Not sure Rosy Palm cares which way you lean politically...(snark)

Marc_W's picture

That implies there's a difference between flavors of statist.  I say there isn't.


It's not like we're waffling back and forth wildly from right to left when we elect republicans of democrats.  In fact, the tenor and function of government barely changes at all.

Esculent 69's picture

last time i checked it was the democrat party who tries to silence people who oppose their point of view. Just look at global warming, or healthcare, or taxes, or christianity/catholics/mormons/baptists but if you are a muslim then you are golden, or if you want the government to limit their taxing and spending like the tea party, but if you are a anarchist/communist/socialist/progressive/stalinist then you are protected by the democrat party as heroes and the 99%ers, or if you believe in traditional marriage which has a specific definition and who wants to change that. DEMOCRATS!!! The constitution guarantees a REPUBLICAN FORM of government. Republican means a representative form of gov't. Democracy is majority rules.  Meaning they will RULE OVER YOU. The Republicans in congress are the ones we want to get rid of and put in actural representatives of the people.  Fascism tries to silence people by using the gov't.......or community organizers like Obama!  There is a difference. Just not one you will ever recognize. WTFU

Forward History's picture

Hey, past me - what are you doing posting here? I thought I shoved you back into your time machine.

And jeeze - did you mix the Hannity and the hops again this time? I don't remember doing that, so maybe you're from another quantum stream.

So glad I know better these days.

Hot Piece of Bass's picture

I think republicans get a bad rap.  All republicans want to do is use their bought and paid for radio and TV monopolies to overwhelm or control all information so that we will all have to bow to their religion... money!  I mean Jesus!  (Who happens to love you more if you have lots of money)

Republicans want to make sure that the government serves only the interests of the super rich because they are the most loved by Jesus.  It's ok to bail out big rich companies because they make the markets that trickle on us all!  That's how capitalism works you know?  Give as much money and power as you can to as few people as you can.  Democracy is for communists!  What kind of decent person wants to have a say in how they are ruled?  The same people who want you to get gay married! 

Those stupid people who want to organize are evil!  The job of a populace should be to unquestioningly die for the sake of their betters.  If they say go and kill, you should do so and not ask questions.  Doubting your superiors is commu-islamo-fascism.

Besides , how can you even worry about such trivial things like justifications for war or corporate malfeasance when their are men out their buggering each other!  Right now!  In each other's butts!!!

I've seen my own asshole in the mirror and let me tell you... it's no playground.

(sorry for the nonsensical nature of the post but... I felt you were hogging all the stupid to yourself)


tarsubil's picture

I once had a conversation with a smug kid who ended up saying almost exactly what you typed out there. One of the biggest regrets in my life is not breaking his jaw. Oh well.

Charles Bishop Weyland's picture

 You still have time. tiptoe down the hall, go into his room, and punch him while he's sleeping.Kids are SUCH wiseasses these days.

Spare the rod, and all that.

robobbob's picture


socialists and fascists are both branches of the same collectivist tree. one group tends to be more internationalist and collectivist oriented with wanting direct government control of the economy, the other, more nationalist and use of business as a tool for carrying out government economic policy. both look at the people as a resource that needs to be managed for their own good. democrats protecting big banks, repubs growing government. both trashing the constitution. its pointless to try to assign the current US political parties either name. they both represent the same things. the flag in the picture would be more accurate if it had a donkey and an elephant on it.

Gringo Viejo's picture

Public sector unions have destroyed California. Just had another police chief in the Bay Area "retire" last week after 2 FUCKING YEARS ON THE JOB. This is common practice so the next asshole in line gets to jump in, sit there for 2 years and "retire" with a chief's pension.

Extrapolate it over 20 or 30 years and you get the picture.

tarsubil's picture

Ever wonder if unions are a symptom not the disease?

Buckaroo Banzai's picture

Yeah, but sometimes its the symptoms that kill you.

carguym14's picture

Except your chances of a hefty fine and/or prison are a heluva lot higher than being treasury secretary........

chubbar's picture

This is exactly why I support banking privacy and defend the idea that we as individuals should be able move our banking offshore and out of harms way from these overzealous idiots. One isn't a tax cheat just because they don't want some asshole gov't official having the ability to wipeout their bank account (and often times the resources to fight back) at will.

TeMpTeK's picture

Two words......Fuck California!

AGuy's picture

No problem!

I've just added CA to my no fly, no business list. I simply refuse to buy anything or travel to CA. Boycott CA!

"Welcome to Hotel Taxifornia, You can check out anytime you like, but you can never leave."

MiddletonRobert3's picture

my roomate's sister makes $85 hourly on the computer. She has been fired from work for 6 months but last month her paycheck was $16158 just working on the computer for a few hours. Read more here .....

V in PA's picture

I missed when 'Muppets' became a term to desrcibe something other than a Jim Henson creation. Could someone tell me what the new definition is?

narapoiddyslexia's picture

See the link -

He describes the uses of the phrase "muppets." Its us, in general, since the gubmint subsidizes GS losses.

dark pools of soros's picture

if you are around a bunch of traders and don't know who the muppet is.....  you is the muppet

12ToothAssassin's picture

ex Goldmanite did an op-ed in NY Times saying that Goldman insiders referred to their clients as 'Muppets'

sunaJ's picture

It is a pejorative term Goldman Sachs allegedly uses on internal communciations (and in fraternal conversations) to describe their clients.  Muppets are you and me, or those whose existential purpose is to be fleeced by those much smarter and powerful than us.

akak's picture

I prefer the phrase "boiled frogs" myself.

cherry picker's picture

I see what has happened to the good old USA in my lifetime.  My son, an American, says, "so what, I have nothing to hide".

They have trained him well and he doesn't realize what a gift a right to privacy and freedom is because he has never experienced it.  I have experienced freedom and still do as I do not live under Uncle Sam's "protective" shield.

I suppose for most Americans, ignorance is bliss.

CH1's picture

I suppose for most Americans, ignorance is bliss.

Yes, until it isn't.

12ToothAssassin's picture

"So what, I have nothing to hide" is my favorite argument!