Posted on 02/14/2009 4:53:57 AM PST by reaganaut1
[A] growing community — offline and online — [] is enthusiastically embracing bartering, particularly in this economy, when it is often more palatable to spend time than money.
As we all know, exchanging goods and services goes back, well, forever. But being a neophyte barterer, I was surprised, once I started checking around, at the deals some friends, and friends of friends, have negotiated.
Jane Heyman, an artist in Los Angeles who paints portraits, has traded her work for top-of-the-line haircuts, legal services and even plastic surgery.
“I had a show, and the doctor liked my painting of Warhol, which I gave him and got a free nose,” Ms. Heyman said. “He liked my work, and I liked his work.”
She figured it was a good deal — the plastic surgery would have cost about $7,000, while her work sells for $3,000 to $5,000.
“I traded a portrait of an attorney’s son for legal services, and painted my pediatrician’s children for six months’ worth of pediatric care for my daughter,” she said.
...
A friend’s haircutter, who preferred to remain anonymous (because who knows what clients might offer if they realized that she sometimes bartered her services), has exchanged her barbering skills for yoga classes, fresh seafood, Web designs, massages, facials, acupuncture, astrology readings, child care, weekend houses, carpentry and Botox.
(Excerpt) Read more at nytimes.com ...
Since government has largely become an illegitimate scheme for "redistribution" rather than a provider of public goods, I am not upset by the tax evasion depicted, and I think it will become more common as marginal tax rates increase. So will paying cash for services and not reporting it. The people in the article live in the coastal cities (New York, Los Angeles), and I bet most are Democrats who support higher taxes, which they are evading.
That is correct. The chance the people in the article are doing this is effectively zero, as there's no good reason to barter the services other than to avoid reporting the income.
The hairdresser sounds like a bat.
I was talking to a friend who does this in GA through a “club”, but somehow the govt has caught on and they are being taxed on it. Not sure how. Anyone know?
ping
Here’s a bartering piece that talks about how the IRS views bartering:
http://www.gaebler.com/Bartering-and-Taxes.htm
Actually, bartering works if you don’t have the money to pay for something, which does not sound like the case in the situation in the article.
Of course, the IRS isn’t going to let the chance that they are going to miss out on a penny slip by them.
Too bad for them.
True. Even Dumpster Diving is illegal in some parts of the country.
http://www.wikihow.com/Dumpster-Dive
For the official regs about this, check out The Bartering Tax Center on the IRS web site.
The IRS tends to find out about "clubs" and "exchanges" and does pursue members of those kinds of organizations. Individuals are harder to track down, though.
Still, I don't think these people were so smart putting their names in the New York Times.
A good way to keep the tax man’s nose out of your business is keep your nose clean and your mouth SHUT!!!!!!!
Yes, that's true.
I would not have believed people could be that hypocritical with a straight face until I actually met some.
The Times? I'd give them the name Greg Packer.
Bartering is considered by government to involve “imputed” income. You may be familiar with this but most people don’t seem to understand it, imputed income used to be the only income before the concept of money originated. In my youth it was a large source of income for my family and most others I knew. Cutting your own firewood for heating, raising livestock for butchering, milking your own cow, gathering eggs from your own chickens, growing vegetables and fruits for your own table, building your own barn, etc. These were the ways people survived and lived reasonably well on a very small cash income. The government wants to tax any and all imputed income and some really harebrained schemes have been proposed such as taxing someone who owns a home free and clear based on the “equivalent rental” for their home. The idea is that since it could be rented out to earn taxable income that you are earning “imputed” income by living in it.
I would not be surprised to see them try to tax people who mow their own lawn based on what a landscaping company would charge to maintain the lawn. Those who want to barter should be very careful, if you don’t pay taxes then keep it very low profile.
And exploring all the LEGAL options citizens still have to keep dollars out of the hands of Congress:
1. Upping contributions to charity.
2. Putting more pre-tax dollars into IRAs, 401Ks and health slush-funds at work.
3. Mom stays home and Dad works (or vice versa) thus lowering your taxable income and reducing commuting expenses...as well as the added bonus of raising kids that are polite and well-educated. :)
4. Having a small home business or two.
It simply amazes me how uneducated people are about their taxes and how they can tolerate giving an interest-free LOAN OF THEIR MONEY to Uncle Sam for a whole year (when that money could be working for them) and then getting all excited about getting a tax refund...which they tax AGAIN as income!!
Aaarrrgghhh!
But that’s just me, LOL!
We do keep our mouths shut and keep a very low profile.
There’s also the aspect of partial bartering; just claiming enough income or charging enough for a job to be reasonable and not attract any attention. Provide the basic service for income and barter all the extras, which nobody can prove who did.
We’ve done that for some things.
There’s a fine line between bartering and doing a favor for someone who later returns the favor. E.G., neighbor cuts my lawn while I’m on vacation then I return the favor by cutting the hedge between our yards because neighbor has a bad back and can’t stand on a ladder.
Say, neither of us are in the lawn/hedge cutting business.
Is it only real bartering if you normally make money plying the business you are trading?
On another subject - although I support the Fair Tax (consumption tax) on principle, I think it will lead us pretty much into a bartering economy for a lot of goods and services. Not in a formal sense, but low key between friends and acquaintances.
The government would get less money than expected. So we’d still have rising income taxes.
I’m with Walter Williams in that the Fair Tax is a solution only to the extent that the 16th Amendment is repealed at the same time the Fair Tax is initiated.
I agree 100%. However, I don't think the Fair Tax would significantly increase barter transactions. A money-based economy is orders of magnitude more efficient than searching the streets, or even the internet, for someone willing to trade a lawnmower for dress shoes.
Natural barter transactions among friends and neighbors are efficient, to some extent. I'll babysit your child if you'll run my errands along with yours. Low-effort exchange for both of us, since you were driving around town anyway, and I was home with my own kids anyway. I'll give you a bicycle we've outgrown, you give me some school curriculum that didn't work out for your child. Easier for both of us than attempting a cash sale of either item.
This is different, as others have observed, from the subject of the article, who are exchanging their business services to avoid declaring income.
In a rough economy another reason for barter is that neither party has any money to pay the other one. It’s not all about taxes. It’s also neighborly if I’m spelling that right. You use my bull for your breeding, I’ll use your tractor, and then we’ll drink a Coors and kick back under tree at the end of the day.
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