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NSA (and IRS) Surveillance –The 1%’s Tax Evasion Nightmare

Crossposted at The Agonist.

We believe in freedom and that the NSA’s surveillance activities over the past dozen years include many activities that are illegal. While we look forward to the court system resolving these problems, we take comfort in the knowledge that of all the people on the planet, the 1% have more reason to fear surveillance than anyone else. Here’s why:

There are two groups who nominally have much to fear from surveillance:
IRS 1040
1. The politically active
2. The Rich– and their concomitant Tax Evasion and use of Tax Shelters

Everybody else , including terrorists, are unaffected by surveillance. The great majority of people stand the best chance of being ignored, because they are not terrorists, not politically active, nor rich, and thus too boring to be of interest. On occasion, Government seems to hound the innocent, evidently to try to control and terrorize the rest of us – but that can’t happen to everyone all the time.

Terrorists do not fear surveillance, first because if they get killed they become martyrs, and second because surveillance does not detect or prevent terrorist actions. Ask any person with more than a scrape of brain if a drone attack is effective in accomplishing its objective. We agree that it can kill people, but it cannot control the reaction to the attack. It seems probable that each attack merely creates a larger pool of angry people, who want to avenge the death of their relative(s). How can that make the “world’s remaining superpower” more secure? We think that US drone attacks are great recruiting tools, but not for the US. (This makes drone attacks a strategic mistake of significant proportions, unless you actually want to increase the pool of angry people that may want revenge.)

Now let’s look at the Politically Active. One imagines that government might surveil them, if for no other reason than to increase their chances at election time. But to a large extent, the politically active groups are immune to surveillance. Their best defense against surveillance is to make all their actions public. It is free marketing, and completely defeats the purpose of the Government knowing their secrets, because they have no secrets. Any action by the Government or authorities actually brings publicity to the cause, and furthers their cause, because “There is no such thing as bad PR.” So, all this surveillance may not actually harm politically active people.

It’s is hard to prosecute people for “conspiracy” if they first issue a press release. If they are unwilling to issue a press release the activity might conceivably be illegal, but transparency is proof that one is not doing something wrong. Citizens are constitutionally entitled to their privacy, but governments and other large organizations need to be transparent. That’s how they prove to citizens that they are doing no harm.

But there’s one group which should be scared green of all this surveillance: the rich, the 1%, so beloved by all. Let’s describe how surveillance could track, collect, and provide substantial proof if they were to be involved in any illegal activities, such as Tax Evasion.

Let us suppose the Government could track all phone calls, emails, faxes, credit card charges and payments, plane flights and money transfers.

Let’s suppose for example, that a fictional Mr. Broker wants to evade taxes on his income for his “small business” which gather a few billion in revenues worldwide per year. Some of the money is deposited in US banks, some in offshore Banks where the company actually sells products and buys materials and labor, and maybe also banks in other countries where the sole purpose is to evade taxes (Bermuda, Cayman Islands, Isle of Man, Channel Islands, Lichtenstein, Switzerland and others). Now a smart IRS agent would first decide to track Mrs. Broker’s or Miss Broker’s credit cards, because women shop more and possibly may be less careful with their purchases and hiding transactions than Mr. Broker.

Tracking credit card purchases would be a big job if Visa and Master Card did not cooperate. However a short NSL can fix that problem. Miss Broker is easily mistaken for that well known terrorist Mustafa el Kebab al Sharif bin Laughin, because they’ve both been to the same city and the same airport at some point in their lives, ergo they must be conspiring.

The nice short NSL, unlike a warrant or subpoena, also does not have to be reviewed by Mr. Broker’s expensive and effective Law Firm, who can leap over IRS agents with a single brief.

Isn’t the Patriot Act wonderful when properly applied?

All the transactions by Miss Broker, including her offshore credit cards, (issued by a nice Bahamian Bank), records of exits from and entries into countries, fuel for her private jet, payment for her first class air tickets, ownership and property taxes on the homes where she stays, are tracked. All the payments to the card for car, fuel, flights, property taxes etc. are traced back to the paying bank account. Every other payment from the account is traced to determine whose bills are also being paid, and thus the identity of all her family members.

Knowing all these people related to Miss Broker, plus the spending patterns and the pattern of who is paying the bills will eventually map out their complete network of finances. For what good is their offshore money if they cannot spend it? And spend it they will, for something.

Eventually there will be reports of undeclared money received from offshore, benefiting Miss Broker and her family, Mrs. Broker and Mr. Broker of receiving money, directly or indirectly from funds which have evaded taxes. How do we know this? Nobody is perfect, so reports will surface sooner or later, due to their own mistakes.

Thus their predilection for Tax Evasion will be proved, and all a good IRS agent has to do is to examine their taxes, and ask difficult question of their lawyers and accountants. Because Taxes in the US are subject to annual disclosures of income by taxpayers, failure to disclose “mysterious offshore sources” of income become actionable items. And the income subject to tax, penalties, forfeiture, and even imprisonment.

Who said they wanted the Government to become more efficient?

Thus the 1% rich becomes the 1% felons. And much less rich. Clearly, they are obvious targets; in spite of that, to date, they have not opposed the surveillance state that we seem to have become, with secret spying on Americans, and secret courts rubber-stamping the secret spying.

What’s not to like about surveillance?

No one has more to fear from surveillance than the 1%. Time was, they controlled the government.

Will there be a popular uprising to protect the 1% from the clutches of the IRS? We think not.

Photo from 401(K) 2012 licensed under Creative Commons

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