Personal Finance Friday - Tax and Regulation

So this will be a little bit of rant about taxes and regulation...

Now this isn’t about taxes being theft, or that they are too low on the rich, or that we need more or less regulations, this is the fact that we have gotten to the point where things are so complicated that it has become a form of dictatorship/tyranny. 

What do I mean?

For many people, things are pretty clear and simple for taxes and most things they do in their day to day life. As long as you don’t stray outside of normal lines and do anything unique then the rules seem fairly clear. But once you do step out of the box, things get complicated and most cases very unclear.

I work in an industry (investments) that has so many rules upon rules upon rules, sometimes things are clear and many times they are not. But this is true in personal taxes, corporate taxes, banking laws, environmental laws, building codes, etc etc. No longer can you do most things yourself without running a real risk of missing one fine point or not being up on the latest “guidance” by regulators. You are at the mercy of people who specialize in particular things, and everyone of those people will talk about how this area or that area is gray, that we can’t know for sure if you won’t get in trouble with regulators. 

In the past week I’ve run into two circumstances personally where the rules are unclear, or that regulators have just not stated exactly what to do (FBAR reporting, NY annuity rules) and this is something that I have experienced over and over. Most people are like ohh well. But if that is your view, you are ignorant to what that means. It means that people who are trying to build things, make things better, or invent things are hampered at every turn by the fact that no one knows for sure what exactly is okay and what will get you in trouble. That means we are all worse off. And it also means only the rich and powerful can navigate this world, with their army of specialists and money to stand behind them.

In addition, these gray areas are a weapon that can be used by those in power. Those building codes not too clear? Well next time a person who isn’t on the good side of the mayor, or building inspectors goes to pull permits they might have a harder time, and lose lots of money. That tax law not very clear? Well let’s start selectively enforcing it one way on a group of people that we don’t like. A certain environmental law undefined? Well that industry didn’t support the current president’s bid, lets start enforcing the law under a new “interpretation”. 

This is not good, this is bad for freedom. These can be used against you and your family if you are ever on the wrong side of power. Be aware of the slow demise of your safety and freedom, in the guise of increasing your security!

So what does all this mean for personal finance… well… well… ohh I’ve got it. As you start down your path to financial freedom, make sure you find a few of those good specialist that I mentioned, you’re going to need them!