2012 Annual Report on My Tax Resistance

This report summarizes . In some places I’ve put links to previous Picket Line entries that expand on some of the topics I mention. You can follow these links by clicking on the “♦” symbols.

Picket Line Annual Report

, the U.S. invasion of Iraq began. For me, this was the last straw and so I started what I then called “an experiment” in tax resistance.

A review of my goals

My primary goal was to stop financially supporting the U.S. government. I hoped to do this legally by reducing my federal income tax burden to zero — lowering my income below the tax line by taking legal deductions and credits.

Tax Resistance

I missed my goal of avoiding all federal income tax, but in I succeeded.

However, I have had a federal self-employment tax assessment most of these years (this is different from the income tax). I decided to stop voluntarily paying this tax as well. I have been unable to find a useful way to do this legally, and so I have simply (but illegally) refused to write the check. Because of this I have been racking up an unpaid tax bill, along with penalties & interest.

The IRS has periodically attempted to levy bank accounts to seize these back taxes, with mixed success. They didn’t manage to take anything from me , though they send me pleading letters from time to time. Their recent lack of action may be because they’ve run out of obvious targets, or it may be because until this year’s tax filing, my total overdue amount fell under the threshhold at which they start trying harder.

My two-track strategy of legally avoiding the federal income tax while illegally refusing to pay the self-employment tax is an awkward and perhaps untenable compromise, but for me it currently seems the best alternative.

I owed, and refused to pay, about $4,000 in federal taxes, all from the self-employment tax.

In 2007, 2010, and 2011 I owed about $3,500–$4,000 in federal taxes; in 2008 none; in 2009 about $1,250. I didni’t voluntarily pay any of that, but the I.R.S. seized a few hundred dollars to apply to the 2007 total. They have also added some penalties and interest to the amounts they are trying to collect.

The IRS has seized about $6,237 (or perhaps $6,072; our figures differ) of the total of about $17,750 (plus another $1,700 or so in penalties and interest) that I have refused to pay so far. I don’t have a fail-safe plan to hide my assets, so I expect that the IRS will continue to seize money if they find it, though lately they haven’t shown much enthusiasm for the hunt.

Although excise taxes are a very small part of what the government tries to get me to pay, I’ve adopted avoidance techniques here as well: for instance, I long ago gave up owning a car, so I pay very little federal excise tax on gasoline (at least directly), I don’t smoke and so I don’t pay tobacco taxes, and I homebrew beer and hard cider so as to avoid the federal excise tax on alcoholic beverages.

Sustainability

I want to resist taxes over the long term, and so it is important that my expenses remain low enough that my tax-free income is also a good and sustainable one. was a good year for me income-wise. I brought in a litle over $32,000 in profit from my home-based business.

My regular expenses for things like rent, utilities, food, transportation, and such come to about $1,477 per month. Because I’m self-employed, my health insurance premium is a deductible expense that doesn’t count toward the $17,000 tax-free disposable income that I’m allowed to use under my DON Method of tax resistance (in addition, I use a Health Savings Account so my health insurance deductible is also tax-free).

My major taxable monthly expenses, constituting about two-thirds of my total monthly expenses, are rent, food, and drink

Not included in the above pie chart are any business expenses that I can deduct or my self-employment tax assessment (half of which I can deduct). My yearly living expenses, therefore, take about $15,875 out of that $17,000. If I budget-in the imposed self-employment tax, which I don’t intend to voluntarily pay, but which I expect may be seized, that would come to another $4,000, half of which also counts against the $17,000 (and would put me over the top).

Things were pretty fat this year, income-wise, but some of my expenses also rose, as I moved to a new home with a higher rent. In I did a close audit of my spending to try and figure out whether I was sticking to a sustainable budget. I seem to be doing okay, but without a whole lot of wiggle room.

My 1040: A walkthrough

Here’s how my 1040 worked out this year. First, my Total Income:

Total Income$29,822
Business income$32,822
Taxable interest$0
Capital gain/loss−$3,000

My business income came from two sources: my contract work as a technical writer / web programmer and sales of my books. The capital losses are from sales of mutual funds and stocks a couple of years back (carryover losses, that is). I don’t anticipate having much in the way of capital losses to draw on next year, so I may have to limit my income a little further or boost my deductions and credits somehow.

Now on to my Adjusted Gross Income:

Adjusted Gross Income$15,943
Total Income$29,822
HSA deduction−$3,050
½ self-employment tax−$2,318
SEP deduction−$813
Self-employed health insurance deduction−$2,697
IRA deduction−$5,000

, I put away $5,813 for retirement and $3,050 for future medical spending (or for retirement, if I stay healthy). That represents almost 30% of my Total Income for .

The self-employment tax deduction works like this: When you work for someone else, your employer pays half of your FICA and the other half comes out of your paycheck. This is just silly accounting for the most part, but it does mean that half of your FICA doesn’t count as your income and so you don’t pay income tax on it (isn’t that rich — they charge you income tax on money you never saw because it was taken as your contributions to social security — and then they may charge you income tax again on your social security benefits if you’re lucky enough to live so long!). If you’re self-employed, you pay both halves and it’s all considered income, so the IRS lets you take half of your self-employment tax as a deduction here to even things out (yes, even if you’re refusing to pay it like I am).

My Adjusted Gross Income is well below the $17,000 threshhold that allows me to get the maximum rate on the Retirement Savings Contributions Credit, so I hit my target.

Now we go from Adjusted Gross Income to Taxable Income:

Taxable Income$6,443
Adjusted Gross Income$15,943
Standard deduction−$5,800
Personal exemption−$3,700

And from there, my tax owed:

Tax owed$4,031
Income Tax$644
Retirement Savings Contributions Credit−$644
Self-employment tax$4,031

Other Goals

I hope to encourage other people to consider tax resistance and I hope that The Picket Line is a good resource for people doing tax resistance and for those considering it. I keep trying to make it more useful.

I wrote articles on tax resistance and related issues for the New Escapologist and Early Retirement Extreme. I have also spread the word elsewhere, and have done a bit of one-on-one counseling to help new resisters hit the ground running. The write-ups on tax resistance I’ve done for Wikipedia get lifted or paraphrased from time-to-time in mainstream media reports.

I published a second, much-expanded edition of American Quaker War Tax Resistance this year. I also released Kindle editions of some of my books.

I finished my term on the Administrative Committee of NWTRCC, and as a sort of last hurrah, I put in a lot of hours helping to organize the Spring 2011 national gathering in Berkeley and Oakland. I also did a lot of behind-the-scenes work to maintain the NWTRCC website. I’m now on a new NWTRCC committee called the “Rapid Outreach Working Group” which hopes to help emerging anti-war activist campaigns and groups to incorporate war tax resistance into their projects. So far we’ve done a lot of fishing but not much catching.

The state of the world and the tax resistance movements

By now it is clear that the evil of the American government was in no ways diminished by the election of the Nobel Ridiculous Peace Prize laureate. The Obama administration is maintaining America’s repulsive policies on war & militarism, Big Brotherish snooping, impunity for torturers, propping up tyrants, and so forth. The thievery and mendacity of the politicians and the wizards of financial corruption that eat from the same troughs in Washington seems to know no bounds.

My only consolation is that the politicians in charge are so craven and short-sighted as to be unable or uninterested in preventing the entirely forseeable meltdown of the system that nurtures them. The IRS in particular continues to be plagued by greater bureaucratic responsibilities but less funding, making it less capable and more deserving of contempt.

Tax resistance movements

The war tax resistance movement (and the anti-war movement in general) is in the doldrums. Peace activists, though many have recovered from their Obamania, do not seem to have been inclined to adopt stronger tactics, by and large. There has been some soul-searching inside war tax resistance circles about how to improve the image, increase the influence, and expand the reach of the war tax resistance movement.

I confess myself to be frustrated and I despair of seeing Americans rise up to reclaim some dignity and decency. When I started this experiment I was all fired up with the project of convincing all the angry anti-war protesters out in the streets to buckle down and start making resistance and dissent part of their day-to-day lives. Now I more and more see myself as mostly just trying to keep the flame lit so that should people ever feel the weight of that final straw they won’t have to start from scratch.

That said, I certainly admire Bradley Manning’s action, and I did find the WikiLeaks operation to be encouraging. I like some of what I’m seeing from the more overtly antiauthoritarian turn the “anonymous” hacker movement has been taking lately. The “Oath Keepers” — military and law enforcement personnel who have extra-ordinary oaths to disobey anticipated orders they believe to be unconstitutional — also seem worth keeping track of, as they may be the cutting edge of a division between the political and praetorian classes.

The TEA Party seems to be dying out, or to be dissolving into the general muck of electoral politics, and I haven’t seen anything of interest there lately. There were some encouraging things coming out of the Occupy movement last year, but tax resistance wasn’t one of them (“tax the rich” is the more popular message).

Internationally, tax resistance seems to be becoming a more prominent tactic. I’ve noticed examples in China, Spain, Greece, Italy, Mexico, Guinea Bissau, Ireland, and Argentina, for instance. But maybe I’m just getting better at monitoring international news.

The Picket Line

The Picket Line has largely lost its focus on contemporary tax resistance and activism and has more and more become a collection of notecards on tax resistance campaigns of yesteryear. This does concern me a bit, but I have (as yet vague) hopes of bringing things back around to the present day by creating a summary of the lessons from history in the form of a book along the lines of What to Expect When You’re Expecting (to successfully challenge the government with a tax resistance campaign) in the expectation that sooner or later, such a book will be useful.

I finished my series of reproductions from The Vote on tax resistance in the British women’s suffrage movement last year. In addition, I moved The Picket Line from XHTML to HTML5 and created the curious “Chronoscope” chronological search engine for site content.

Prospects for the coming year

Assuming no major unexpected expenses, and assuming the tax law doesn’t undergo any radical changes, I’m well-positioned to have of living comfortably and well under the income tax line.

In any case, I will likely “owe” self-employment tax again . I’ve budgeted for the possibility that the IRS may find a way to seize money from me for unpaid back taxes, so in case this happens, it won’t be a disaster.

I still daydream from time to time of distilling some of what I’ve learned about tax resisters and tax resistance campaigns historically into a book of advice for tax resistance organizers, in the hopes that the campaigns of tomorrow can learn from the successes, failures, and challenges of those that came before. Maybe this year will be the year I get cracking.

So on to of what is looking less and less like an experiment and more and more like a lifestyle.

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