Doing the Impossible

Fresh back from a ten-day break in Norway, I was told by my wife to take a look at an article in a local financial paper. A new tax law has been introduced where gifts above €500 are being taxed at 10% when not received from a parent or grandparent.

This affects the way my wife and I have arranged our affairs. My children have been sending me money every year as a gift in return for an early inheritance I bestowed upon them. From the article, it appears that we have no option but to subject ourselves to a 10% tax. However, I wasn't much bothered by this news. I felt intuitively that it was but another law that cannot be properly enforced.

I didn't immediately see a solution to the problem, but I know that a similar law was rolled back in Norway a few years ago due to the impossibility of enforcing it. I also have some experience with tax evasion, and I have what some would call a criminal mind. I don't pay much attention to the laws of the land. The details don't interest me. What draws my attention is whether or not a law can in fact be enforced.

This particular law may have some loopholes for people in my situation, so we will look into the exact letter of the law to see if we are in fact affected by it. However, I can't help dreaming up schemes that will work regardless.

The basis of my thinking is that we're dealing with something that's man-made, as opposed to that which exists in nature. Tax laws are not natural. They are man-made. Hence, we have nature on our side.

The state tends to lean towards Lucifer, which is the antithesis of God, aka nature. As such, we have an advantage due to the way God has constructed the universe. Elements that play to our advantage are time, complexity, size and physical laws of nature. Any man-made law that requires omnipotent powers in relation to these obstacles is impossible to enforce with any degree of success. To believe otherwise is to believe in the state as somehow equivalent to God.

As a staggering example of hubris that I recently came across, I can mention a law passed in Sweden. Its enforcement will result in the establishment of many small electrical generators, and the winding down of large power-plants. The fact that this is physically impossible to achieve because power grids need a large base load to operate, didn't bother the politicians one bit. They passed the law, nevertheless.

It appears that politicians these days see themselves as elevated above God Himself. Even obstacles that exist physical in nature can now be bypassed by one of their laws. However, this is not something to fear. Quite the opposite, the fact that they consider nature irrelevant makes it easier to evade their attention.

In the case of the law related to gifts, now operating in Portugal, there's another aspect of nature that's being ignored, namely the fact that a gift is no different in principle than any other payment. Using an analogy from physics, it's as if the politicians decided to tax potential energy while letting kinetic energy pass without taxation. The result of such an idea would be the production of flywheels where excess energy is stored in a kinetic rather than potential form.

The fact that we have different names for different types of energy doesn't mean that there's any real distinction between them, and the same holds for payments which can come in all sorts of forms, ranging from gifts and discretionary purchases to investments and speculation.

The key to tax evasion is to recognize that most things described by politicians are merely word. They are not part of nature. A gift is a payment. All that's required in order to evade a tax on it is to find some other type of payment that carries little or no tax.

When this insight is combined with the recognition that God's own money, namely gold, is impossible to tax due to the ease with which we can hide and transact in it in secret, we find a solution to my particular problem.

My children will no longer send me any gifts. They are going to invest in my gold. The money coming from them will be declared as an investment, and the price they will pay will be such that no profit is made by me. Hence, there will be a gift of sorts flowing from me to my children. However, that's a direction that is tax free according to the man-made law.

This is preferable to the ultimate evasion which would involve smuggling of cash and/or gold.

My scheme breaks no law in the here and now. I get time on my side. I also avoid the physical hassle and danger related to smuggling. This is how the scheme will work:

• My children in Norway send money to me in Portugal
• The money is declared as investment in gold held by me
• No purchase of gold is necessary on my side because I already own gold
• No gold is sent to Norway because we take care of it in Portugal
• If anyone asks, I can show them the receipts for the gold purchased for my children
• There're enough such receipts to keep the scheme going for years
• Physical possession is real ownership, hence there's no real transfer of gold
• The gold remains an inheritance to my son in Portugal, as originally intended

The only time when this scheme may break a law is when everybody involved forget that the gold was purchased by my children in Norway. However, this is unlikely to be a problem because no records are going to be kept by anyone. There will only be some vague declarations of intent every time money is sent from Norway to Portugal. This is not sufficient to null the fact that it's my son in Portugal that owns the gold.

This is the beauty of time. Things are forgotten. With little to no record keeping, nobody but the involved parties will know what went on, and no-one will bother to dig into the details on a vague suspicion that something dodgy may have taken place.

Nature is complex, big and powerful. Tax offices are small and staffed with people with no motivation to look into something that took place years back in time. Hence, there's little danger of any investigation, and even less danger of anyone finding anything illegal.

The most likely outcome of this, if we choose to implement it, is that there will be no investigation whatsoever, and if there is one, it will happen at a time when no law has been broken.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link