Topple the Pillars of Taxpayer Compliance

If resisters can encourage more people to evade more taxes, even if they do so for non-idealistic reasons, this both takes resources away from the government and increases the number of targets the tax enforcers have to pursue, thereby taking some pressure off of the resisters.

Today I’ll cover how tax resistance movements can contribute to tax evasion in the culture at large. (At the same time I’ll give a sneak preview of some of the slides I’m preparing for my upcoming talk in Colombia — beware: I haven’t asked anyone to proofread my shoddy Spanish translations yet.)

There are three attitudinal pillars of taxpayer compliance that the government relies on to make its tax system function efficiently.

Taxpayer compliance is a challenge for governments to create and maintain, and they spend a lot of effort trying to understand the mechanics of it and engage in a lot of propaganda and other forms of manipulation in order to bring it about.

I’m reminded of the Disney short The Spirit of which told theatergoers that it was Taxes that would Defeat the Axis… or the short film The Tsippori Affair produced by Israel’s propaganda department (with American help) that showed shocked audiences what would happen if nobody paid their taxes (for instance, the schools would all shut down, and school-aged children would lounge about playing cards, drinking wine, and smoking cigarettes).

Pillar #1: Taxpaying is normal, expected behavior. People who do not pay taxes are anti-social deviants.

I’ve noted before one of the ways the IRS supports this pillar. Every year they conduct something they call the “Taxpayer Attitude Survey” in which they ask a set of questions to 1,000 randomly-phoned American households. The survey contains carefully-loaded questions like these (emphasis mine):

  • How much, if any, do you think is an acceptable amount to cheat on your income taxes?
  • [Do you agree that] it is every American’s civic duty to pay their fair share of taxes?
  • [Do you agree that] everyone who cheats on their taxes should be held accountable?

Predictably, people overwhelmingly report that cheating is bad and fair shares are good. The IRS then puts out a press release about how Americans overwhelmingly believe everybody should pay what the government tells them to. Typically the news media go along with it, composing stories that follow the press release script.

Pillar #2: The government spends tax money wisely for things of public benefit.

The government is always eager to draw your attention whenever it spends your money on something nice. There’s hardly a bridge, library, overpass, park, or other partially-public-funded thing in my town that doesn’t come with a plaque attached, listing the names of the city councillors and mayor who signed off on it — though that’s about all they had to do to get such credit.

Pillar #3: Tax evaders are caught and dealt with harshly (but the law abiding are safe).

This is why in the weeks before Tax Day, the IRS breathlessly announces indictments against famous people and big-time tax evaders. Don’t think of stepping out of line, they’re saying, because you’re sure to get caught. Anecdotes speak stronger than statistics here.

Note that these pillars are self-reinforcing. The more people believe the attitudes expressed in the pillars, the more people will be tax compliant. The more people are tax compliant, the more plausible the attitudes expressed in the pillars seem.

It takes a lot less work for the government to keep taxpayer compliance from slipping from 90% to 80% than it does for the government to raise taxpayer compliance from 80% to 90%.

If taxpayer compliance is high, taxpayers will convince themselves of the attitudes in the pillars. Why am I allowing myself to be fleeced like this? Well, I must have good reasons: it’s because I’m a good citizen, and I want to contribute to useful things, and besides if I don’t I’ll get caught. Everybody knows these things.

If taxpayer compliance is low, taxpayers have to be convinced — they ask instead: Why am I allowing myself to be fleeced like this (when so many other people aren’t)? Am I getting played?

Attacking pillar #1: The new message you want people to hear is “Lots of people don’t pay their taxes: rich people, powerful people, and even people like you. People who pay taxes are suckers.” Publicize cases of well-known people and businesses who evade their taxes. Publicize the cases of tax resisters who are “normal people just like you and me.”
For example, Timothy Geithner, U.S. President Obama’s Treasury Secretary, took improper tax deductions and failed to pay taxes due on some of his income. “Even the boss at the Treasury Department is trying to get away with something.”

It is easy to point out how many wealthy people and fat corporations get away with paying little or no taxes. I won’t list examples here as I’m sure you’ve heard plenty, but here’s one way a group of war tax resisters made this a little more in-your-face:

At , a merry band of activists from the local [Bangor, Maine] Peace & Justice Center swapped their cozy jeans & t-shirts for swanky gowns & tuxedos, hopped in a verrry conspicuous white stretch-limo, and motored their way to the P.O./Federal Bldg., to perform a bit of satire-filled street theater.

This division of the “Rich People’s Liberation Front” did a skit to expose the huuuge tax breaks which America’s corporations & our wealthiest citizens receive; then thanked intrigued passersby with Dum-Dum lollipops. (“Suckers for the suckers!”)

Attacking pillar #2: The new message you want people to hear is “The government wastes your hard-earned money and gives it to people who do not deserve it.” Publicize boondoggles of wasteful government spending. Publicize examples of government corruption. Contrast government spending priorities with popular ones.

This is related to what tax geeks call the “salience” of taxation — that is, how aware you are of the hand that is picking your pocket. If you had to write a check to Washington every couple of weeks, your income tax would be very salient. If the money is automatically withheld from your paycheck before you get your hands on it, it’s less salient. If it’s invisibly included in the price of the goods you buy, it’s less salient still. Governments are eager to find ways to tax people in ways that make them less aware that they’re being taxed, because the less you’re aware of it the less you’ll resist.

For example, the War Resisters League publishes a pie chart to inform people about the surprisingly large percentage of U.S. federal spending that goes towards armaments and military expenses.
For example, American war tax resisters hold “penny polls” asking passers-by to distribute pennies among a set of containers representing government spending priorities, as if they were the government making spending decisions. They then contrast this with the government’s actual spending.

There are many other similar examples, both from the war tax resistance movement and from other movements:

  • The “Death and Taxes” poster is a great infographic about U.S. government spending priorities.
  • The Tax Foundation raises a ballyhoo every year about what it calls “Tax Freedom Day” — “the day when the nation as a whole has earned enough money to pay off its total tax bill for the year” and which lately has been arriving about the same time as federal income tax returns are due, which increases the publicity impact.
  • The Mennonite Central Committee turned the penny poll idea into an on-line game; another site put together a $3 trillion dollar shopping spree to give people an idea of what kind of cool things they could be investing in if the government weren’t spending all that money on war.
  • Libertarian Party activists often will hand out fake million dollar bills, each one printed with an estimate of how quickly the government spends that much money. Another tack is to hand out “Certificates of Debt” that show how much government debt each American taxpayer is on the hook for.
  • One war tax resistance group held a “Tax Day” protest in which they facetiously labeled the mailboxes down at the post office with the names of military contractors like Lockheed-Martin, Halliburton, and Bechtel, to point out where the money was really going to end up.
  • “April 15th is ‘Support the Pentagon’ Day” read ads in the New York Times . Under this headline, a cartoon showed a hapless taxpayer with a bit in his mouth, with a load of generals, admirals, and armaments on his back.
Attacking pillar #3: The new message you want people to hear is “Evaders usually get away with it (but the tax agency often persecutes the innocent).” Publicize examples, statistics, and studies that show that frequently tax evaders come out ahead (sometimes even the ones who get caught). Publicize examples of successful tax resisters who have been resisting for years.
For example, long-time war tax resisters can emphasize how long they have been resisting and how mild the actual consequences have been. (Photo shows American war tax resister Wally Nelson holding a sign that reads “Haven’t paid taxes since 1948”)

On a few occasions, tax resisters have turned themselves in to law enforcement as a way of showing how little they are afraid of prosecution. For instance, in Australia’s Northern Territory in , “the residents drew up a monster petition, which almost everybody signed, and insisted on the government standing up to its own laws by taking action against them. They also defied the government to put them into jail.” And in , three war tax resisters went to the IRS headquarters in Washington to turn themselves in. “If the resisters are not arrested and prosecuted,” Mary Loehr of NWTRCC said (and they weren’t, and still haven’t been), “it will expose the myth that people go to jail for not paying their taxes.”

Note that these attacks are also self-reinforcing. The less people believe the attitudes expressed in the pillars, the more people will evade taxes. The more people evade taxes, the more implausible the attitudes expressed in the pillars seem.

As professor James C. Scott said of his studies of resistance to government-mandated tithes in Malaysia, once tax resistance “has become a customary practice it generates its own expectations about what is permissible [and] raises the political and administrative costs for any regime that subsequently decides it will enforce the rules in earnest. For everyday resisters there is safety in numbers and successful resistance builds its own momentum.”

The examples I have given here are largely indirect ways of promoting a cultural atmosphere in which tax evasion seems like more of a good idea. But there are also more direct ways in which people can assist in the tax evasion of others. I’ve already mentioned the tactic of paying in cash so that your transactions leave less of a paper trail for the government to follow. Here are a couple of others:

  • You can spread rumors that a tax has been abolished. This worked with great success at the time of the French Revolution, when such rumors became self-fulfilling prophecies. This was also common in Czarist Russia, when people extrapolated from the propaganda-fuelled image of a benevolent Czar to conclude that such a Czar must have abolished such awful taxes. And the present day United States has long had a cottage industry of people who are convinced (and convincing) that the real United States Constitution would never permit something as awful as the federal income tax.
  • You can manufacture the paraphernalia of tax evasion. For example, in Mexico City, you can visit a taco stand and walk away not only with lunch, but — for a small price — with fake receipts from a variety of restaurants, hotels, and stores, that you can then use to declare business expenses on your tax returns.
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