44 years ago, the late Harry Browne’s “How I Found Freedom in an Unfree World” was published. Also a couple of years before that, the Libertarian Party was founded. Much discussion on strategy ensued ever since. Harry Browne asserted that if you act alone, quietly, and below the radar, you will find more ways to make life fulfilling. The other side stated that we are not free. That we need to organize and fight for freedom.
A few years later I was torn between which side was right. I was a member of the Libertarian Party. I handed out hundreds of Ed Clark for President brochures in my small city in 1980. I met Ed Clark and his wife twice on campaign stops. In 1982 I was the campaign manager of a California state assembly candidate running on the LP ticket. And I even won a minor office at age 23.
I knew the late Marshall Fritz. Marshall was very active and later went national on his libertarian activism. But even Marshall asked me once, to the effect, “what are you doing with your life?” “It’s noble of you to not pay taxes and not have a job, but…” So I started to think about what Harry Browne wrote: He warned about the futility of crusading – there will be people you thought you convinced to agree with you, then next thing you know, they disagree. I finished my degree in Mathematics and focused on my career.
Two things I noticed: 1) I had money left over after the IRS and FTB and SSI had amounts withheld and 2) I had enough money to invest in the stock market and save for my retirement.
The big item that the ones who claim “we are not free” don’t discuss is that money buys you more freedom. Money buys you time. The State leaves you enough of a paycheck left over to invest for your own future. And gives you an opportunity to reduce what they steal from you over time by the 15% long-term capital gain tax rate as opposed to your ordinary tax rate. The state also allows you to invest in Roth IRAs and Roth 401ks.
Yes you can eventually reduce your effective state and federal taxes to that of Hong Kong: 15%, maybe lower. Taxation is immoral and it’s theft, but too many people just sit and complain instead of think of how to pay less without sacrificing their standard of living.
Some people are quite fine being agorists and living so much under the radar that they don’t contribute to social security, don’t pay medicare, and don’t take advantage of the compounding that stock index fund investing does. Hopefully when they are older they don’t become burdens to society.
Others enjoy modern urban living, working in professional environments – even trading W2 witholding and using social security numbers for the chance to make a lot of money in stocks. Tip: If you do not have a social security number, you miss out on the type of investment that historically grows the fastest and is essential to capitalism – the stock market. You also don’t get a passport. You are stuck in this U.S.A. and your opportunities for making money to provide for your old age are very curtailed.
This is essentially what Marshall Fritz told me in 1983. The idea of registering with government to reduce my own taxes is my own, but evolved over decades of fine-tuning. There are people still who say that if I pay capital gain taxes I am not free. Yet I have the means of more time to do what I want to do because I signed those government forms and have all my basis of my IRAs and 401ks known by the government. And because I know my brokerages send 1099s to the State so that the state knows my gains and can demand 15%. I could have instead decided no, I won’t bother with a brokerage account and I will forego keeping 85% of my gains from the asset class that historically gets investors the best return. But I would be very foolish for doing this. What point would I make especially if I have no retirement savings if I am unable to work? Who is freer? A retiree whose annual income and investments is effectively taxed at 15% and from a career investing in the stock market or the retiree who did not get a social security card, got his earnings under the table his entire career? Who is more likely to be a social burden?