Turning a Paperclip into a House

(From BoingBoing) Kyle MacDonald has managed to turn one red paperclip into a house. Awesome & funny — congratulations to Kyle.

Kyle happens to be a citizen of Canada.

If Kyle were a citizen of the United States, I could not possibly imagine how complex his 2005 and 2006 tax returns would be. The IRS would have had a field day.

Are there any implications as a Canadian citizen?

Update: Mention income taxes and, of course, a comment appears claiming that income taxes are illegal. In this case, a violation of human rights. Read the wikipedia Tax Protester article for background.

Niomi — the tax protester (technical label, not meant as an offense) — succinctly described the situation I implied. Kyle will have to estimate the value of each trade and pay taxes on the monetary value of the resulting profit made.

Unfortunately, modern economics makes participation in a pure barter system illegal unless the valuation of each trade is 100% equivalent in cash value.

I dare anyone to find two horse traders willing to claim that neither party got the better deal…

10 Responses to “Turning a Paperclip into a House”

  1. Niomi says:

    Yep, there are the same implications, if not more seeing as Canadians pay more taxes. It really depends on the value of the house, and whether or not he will be the official proprietor of it (maybe there’s something in the fine print stating he can’t make a profit by owning or selling the house..). Generally speaking, he’ll have to pay serious taxes if he ever sells the house, plus there’ll be some interesting calculations, no doubt, to get an estimated value of all of the trades up until this point, as he’ll have to pay taxes on any profits he makes, even though it’s bartered.

    Also of note: Federal income taxes are illegal, and against human rights, in both Canada and in the United States. So, theorectically he could go to court and fight the government for demanding he pay taxes anyway. It’s pretty hush-hush but there are quite a number of individuals who are standing up for their rights and NOT paying taxes. It is not fraud or tax evasion if said taxes are illegal in the first place. You aren’t lying, or evading, you’re just maintaining your human right not to be taxed. Good luck, however. The courts don’t look to kindly on people who don’t agree with illegal federal taxes. You have to be smart, and strong to fight Revenu Canada (and the IRS) because they’ll just keep hounding you and bringing you to court until you a) GIVE UP and pay the taxes they’ve aggressed out of you, or b) have enough proof that RC is harrassing you and intimidating you, at which point you can counter-sue them with a harrassment claim. If you win (and people have) Revenu Canada will be forced by the Canadian supreme court to cease and desist from harrassing you to pay (again, ILLEGAL) taxes.

    I am by no means advocating tax evasion or fraud.. I am, however, strongly advocating that one fights for their human rights!

  2. Erik J. Barzeski says:

    I never understood why, in bartering, things weren’t automatically assumed to be of equal value. Each trade the guy made was between items of equal value, resulting in no taxes. Sure, some people may value something more than others (which led to his paper clip to house transition), but that’s true anywhere: some people are willing to pay more or less for the same item(s) depending on a variety of factors.

  3. After thought » Kyle and the Paperclip says:

    […] (via bbum) […]

  4. Chris Hanson says:

    There’s always the old saying about diplomacy and negotiation: A successful negotiation is one where both parties come away equally unsatisfied. One could infer equivalence from this…

  5. Oscar Morales Vivo says:

    It’s actually pretty easy to calculate: your income is calculated from the difference between what you started with (paperclip) and what you ended with (house). The exchanges in-between can probably be tricked into non-existance for tax purposes.

  6. John C. Randolph says:

    I’ve read many arguments against the federal income tax in the US, and what all of them fail to take into account is that whether or not there is a legal basis for direct taxation of the wages of individuals, there is a de facto power to do so. One may object to the tax, and one’s reasoning may be perfect, but it is naive to assume that any government operates strictly according to its own laws.


  7. Niomi says:

    HI! Thanks for posting my comment.. I should mention, however, that I am from Quebec, the highest tax bracket in all of Canada (and North America), and most Quebecquois feel that they are taxed unfairly by a federal system that they don’t agree with. I protested FEDERAL taxes, but you’ll notice I didn’t mention provincial or municipal taxes, nor did I mention any other taxes. I was only referring to Federal Income Taxes. I believe very strongly in paying one’s dues to society, however I have been an accountant for over 10 years and see the numbers and facts from quite a different point of view. When you’ve worked for some of the world’s largest conglomates, and watch them dodge their taxes and suck up government grants like no tomorrow (hundreds of billions) for the sake of $100,000 lunches for10-person meetings (very common), 50k paintings in personal offices (common), and multi-million dollar homes being bought for senior executives (pretty much standard practice for large corps), come back to me then and label me a “Tax Protester”.

    This is about corporate fraud, the Quebec seperatist movement, and arbitrary economic policy (like, for example, The Iron Law of Wages), and many many other factors.. not *simply* tax protesting.

    Please don’t lump me into a stereotype. Did I do that to you?!

    In any case, I don’t want to get into a debate.. if I do I’ll post something on my own blog.. sorry for changing the topic from the red paperclip story..!


  8. Niomi says:

    Ha. I should also mention: my bark is worse than my bite. I may not believe in paying certain taxes, but I still do. Unfortunately.

  9. bbum says:

    Niomi — Thank you for the thought provoking comments. The label of “tax protester” was not meant as an offense, but simply as an accurate generic term for someone who disagrees with the tax system. It is a dictionary term, nothing more, nothing less.

    And, frankly, this conversation is on topic. The whole red paperclip thing was about some guy bartering his way from a paperclip to a house. All trades where each participant felt they got a fair deal. Yet, taxation effectively squelches the barter system; very sad given market histories.

    So, please don’t take offense — none was meant.

  10. John C. Randolph says:

    Let me mention that “tax protestor” is not a pejorative term at all, except to socialists and other misanthropes. The Magna Carta and the Declaration of Independence are both tax protests that changed the world for the better.


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