Well, it’s officially tax season, and you know what that means: it’s time to write down a
detailed accounting of all of the crimes you did this year and report them directly to the federal
government. Yes, that’s right, the IRS is not just in the business of taxing legal income—they also
have a fairly detailed set of rules about how to pay taxes on drugs you’ve dealt, property you’ve
stolen, and bribes you’ve accepted. And that raises a few questions like, “what?” and “are you
serious” and “how stupid does the IRS think I am?” Well, first, let’s talk about how, exactly,
the IRS wants you to report your crimes. If you type IRS.gov into your address bar,
assuming that’s not already your home page, you’ll find three main sections dealing with this sort
of thing. The first is their guidance on “stolen property;” technically, if you steal something and
don’t return it, you’re supposed to calculate its fair market value—meaning, essentially,
the average price that that thing would sell for in an open market—and report that as part of your
income for the year. Like, let’s say you’re a beautiful woman who’s stolen someone’s heart that
year—then you’d owe the government about 22% of 1.4 million dollars, which is the approximate fair
market value for a human heart. Next up we’ve got “illegal activities,” which covers direct income
from doing crimes like selling drugs or engaging in prostitution outside of this enchanting patch
of desert—if you ever wondered what the “other income” section on your 1040 was for, it’s this.
And then finally we’ve got bribes. If someone bribes you, the government still wants that money.
So that’s all pretty straightforward, but the question remains: why does the IRS think that I’m
going to give the government a detailed accounting of all of the crimes I committed that year
so that they can take more money from me? Now, the answer to that question is a little complicated,
and it requires us traveling back to a time called history—specifically, the 1920s. The US government
had been taxing different forms of income in one way or another for a few decades by that point,
but trying to scrape a little extra off the bottom of society wasn’t really something that they’d
thought to do, because, well… no one would pay those taxes, anyway. But by the 1920s, crime
had become the hot new fad. Alcohol prohibition was in full swing, and organized criminals were
making a killing—both literally and figuratively. Even though people knew exactly who the biggest
mob bosses were, they were almost impossible to prosecute thanks to an exciting innovation known
as “witness intimidation.” Nailing these criminals for the actual crimes that they committed required
willing witnesses and comprehensive paper trails, and most of these groups were competent enough
that the government couldn’t get either. But then, along comes a woman named Mabel Walker
Willebrandt—while working as an assistant Attorney General for the federal government, she came to a
bright realization: while the government might not be able to catch mob bosses for their cool,
flashy crimes like murder, they might have a chance with something boring like tax evasion.
And sure enough, most mob bosses weren’t paying taxes on their illegal income. So, in 1927,
the government took a bootlegger named Manley Sullivan to court for not paying taxes on his
ill-gotten gains, and Manley Sullivan was like, “hey, what the hell, it’s my legal right as a US
citizen to do crimes without telling you guys about them,” so it went to the Supreme Court,
and the Supreme court was like, “oh man, it says right here in the big book of laws that we can tax
‘the transaction of any business,’ and it used to say ‘lawful business,’ but then we took that word
out in 1921 for some reason, so I guess we can start taxing crimes now. Cool!” The point is: this
became a thing precisely because the government doesn’t expect you to pay taxes on your crimes,
so that most crimes secretly become double crimes. But… that doesn’t necessarily mean that paying
taxes on your crimes doesn’t come with some perks. Though this doesn’t happen all that often,
you can technically write off certain criminal expenses as business expenses—there have been
cases where criminals have successfully listed their legal fees on their 1040 forms because
defending themselves in court is technically something they had to do for their business.
There is also—like Minnesota between the months of January and December—a lot of gray area here;
you might be running a perfectly legitimate business that you want to pay taxes on because
you’re a sweet upstanding boy who has no qualms with the good people at the IRS,
even though your business is, in the eyes of the federal government, a fiendish criminal
enterprise. The best example of this is businesses that sell medical cannabis in one of the 36 fun
states where that sort of thing is legal; because cannabis is still illegal at the federal level,
the IRS considers these businesses to be “trafficking in controlled substances,” and
they get taxed under these laws as though though they’re running kitten-flattening factories. The
lesson is: the government would rather squeeze a couple of bucks out of you than put you in prison,
unless of course they can use the former to do the latter, in which case they’ll definitely do both.
Okay, now, hold on just a second—we’re transitioning to an ad read, but this is not
just any ad read: this is something that I’ve been excited to do for a really long time. A couple of
months ago I wrote a video about the failure of carbon offsets—the environmental projects
you can buy into to make up for the CO2 you emit—and a company named Wren reached out to me,
claiming that they could do carbon offsets that actually work. I’ve turned down countless carbon
offset sponsors before, but I hopped on a call with their team and really grilled them about
the details, and I was seriously impressed—they are the real deal. Instead of just using one form
of carbon offsetting, like forest conservation or stovetop replacement, Wren splits your investment
across seven distinct projects, each of which they research and track with incredible detail
to make sure they’re hitting the right marks. They also fight the climate crisis in indirect
and innovative ways, like investing in Carbon180, a policy group that advocates for new and better
carbon offsets in general, making everything they do more effective in the long run. There’s
not enough time to go into more detail, so I’d recommend reading up on them more on their site,
but Wren has done the hard work of making sure that their offsets have the greatest chance
of genuinely working, which is why I use them for both my business and personal offsetting,
so I’d recommend you do the same—it costs a lot less than you’d think,
and it’s super easy; just click the button on screen or follow the link in the description,
and Wren will offset the first month of emissions for free for the first 100 people to sign up.