How Obama’s Tax Compromise Will Play Out

Even my not-at-all-magical crystal ball is clear enough that I could look into it last week and see the future: the liberal wing of House Democrats would whine a lot about the tax package Obama negotiated with the Republicans but in the end they’d just give in like they always do.

Not that this is a bad thing in this case. The Obama-Republican version of the bill means much less for the Treasury than the liberal alternative — and is even (hide your eyes, liberals!) a better deal for the poor, particularly with its temporary payroll tax cut. Indeed the payroll tax cut means even my tax rate will be going down next year, and I haven’t paid federal income tax since .

But, to be on the safe side, I refrained from blogging about this tax plan until it got through Congress and to the President’s desk. But now I’ll highlight some of the features that may be of interest to tax resisters:

  • The bill allows for something called “bonus depreciation” of assets that businesses purchase between , at 100%. What this means is that for assets that qualify, a business can write-off the whole cost of the asset as a business expense rather than portioning out the expense over a particular span of time. Tax resisters who have a business or who are self-employed can use this feature to lower their taxable income this year or next year if they are in danger of rising to a taxable income level. The bill also raises the limit for “Section 179” depreciation, which I believe applies to a larger class of business assets.
  • The bill temporarily reduces the “employee portion” of the payroll tax by two percentage points (for only). The employee portion is what you see on your paycheck stub (your employer pays what used to be an equivalent amount that you don’t see on your paycheck stub). Self-employed people will just see their self-employment tax rate drop by two percentage points (the income tax deduction self-employed people take based on the amount they’re charged for self-employment tax, however, will not change, which will make this calculation a little more complex).
    • You may wonder: “isn’t Social Security and Medicare running low on cash? What is going to happen when their trust funds are taking in so much less payroll tax?” Well, as I’ve tried to patiently explain before, these trust funds are just accounting fictions, and the government takes money from wherever it wants and puts it wherever it wants without much regard for trust funds or particularly-earmarked taxes. In this case, the new bill explicitly says that the General Fund (where your income tax money goes) will pay into these trust funds any money they would have received from the payroll tax rate if it had not been lowered by the bill.
  • A number of tax credits and deductions that Congress perpetually extends “just one more year” have been extended for one more year yet again. Also extended is the provision that allows people who have reached retirement age to exclude from income amounts they donate to charity directly from their 401ks and IRAs.

I recently read through Robert Cooney’s & Helen Michalowski’s The Power of the People: Active Nonviolence in the United States. My copy of the book was published in as an expanded version of a original, and it is currently out-of-print.

That’s too bad, because it’s a fine book, one of those large-sized volumes full of photos from the archives and such. It tells the story of the development of nonviolent political action theory and practice in the United States, with brief bios of some of the important figures, and in-depth looks at some of the movements that most exemplified or advanced nonviolent resistance — such as the anti-war movements, the women’s suffrage movement, the civil rights movement, and the labor movement.

Of course I kept a close eye out for any mentions of the tactic of tax resistance so I could report my findings here. The book has a more complete story of the founding of Peacemakers in than I’d seen elsewhere. Peacemakers launched the modern American war tax resistance movement, and just about anyone who practiced war tax resistance in America between World War Ⅱ and the Vietnam War was connected with that group.

According to The Power of the People, Peacemakers was founded mostly due to the efforts of Ernest & Marion Bromley and Juanita & Wally Nelson, and it drew about half of its original membership from a leftist anarcho-pacifist group called the Committee for Nonviolent Revolution that had been founded in Chicago a couple of years earlier.

Peacemakers was more Gandhian than it was Marxist and rejected much of the rhetoric of CNVR in favor of small direct action projects. It was organized as a network of local radical pacifist cells, participants in its local activities being deemed members. During the following ten years [after it was founded in ], until the formation of the Committee for Nonviolent Action (CNVA), Peacemakers was the most active nonviolent direct action group and the initiator of organized war tax resistance.

A sidebar goes into more detail:

Peacemakers was one of the first organizations to be formed after World War Ⅱ by radical activists inspired by the growing theory and accomplishments of nonviolence throughout the world. There was a growing conviction among many that the times called for a grass-roots movement, no matter how small in its beginnings, which was committed to a vigorous and unmistakable disassociation from military power. Although it never became a large organization, Peacemakers did have an important effect on many of the people and organizations which came to make up the modern nonviolent movement.

Peacemakers attempted to build a decentralized and self-disciplined movement which stressed local initiative and group coordination along the lines of the nonviolent revolutionary movement in India. Emphasis was put on building intentional communities which practiced communal living. “Groups or cells are the real basis of the movement,” Peacemakers announced, “for this is not an attempt to organize another pacifist membership organization, which one joins by signing a statement or paying a membership fee.” Instead, Peacemakers emphasized a living program which included resistance to the draft and war taxes, personal transformation, and group participation in work for political and economic democracy.

Uniquely non-organizational, Peacemakers has no national office, paid staff or membership list; decisions are made at yearly Continuation Committee meetings. The major connecting link between individuals and groups considering themselves Peacemakers is The Peacemaker, published since as a forum for letters, announcements, and accounts of the experiences of radical pacifists.

Peacemakers initiated organized work against war taxes and since a number of its members have been imprisoned for refusing to pay for war. Peacemakers at the Ohio cell organized a land trust to remove property from the market place and established the Peacemaker Sharing Fund, a mutual aid plan designed to insure aid to dependents of imprisoned Peacemakers and to help finance group projects. During the Vietnam war, the sharing fund became the main vehicle for donations to meet the needs of war resisters’ families. When the government seized the land trust home where Peacemakers Marion and Ernest Bromley lived, in , allegedly to collect taxes on the “income” to the sharing fund, Peacemakers exposed the fraud and persuaded the government to withdraw its case.

Peacemakers organized a number of direct action projects in the late Forties and Fifties, including demonstrations in Puerto Rico against U.S. colonialism and a disarmament bicycle trip across Europe by four pacifists which preceded the San Francisco to Moscow Walk by nearly ten years. Peacemakers also sponsored the “Walk for Survival” in , the first large post-war peace walk in the U.S., and set up Operation Freedom, a fund to aid people in Tennessee and Mississippi who had been deprived of home or job for seeking their civil rights.

Peacemakers lost some of its initial impetus by the mid-Fifties as it encountered the difficulty of maintaining a decentralized and largely anarchist program and at the same time keeping a disciplined and well organized radical group functioning. Some Peacemakers went on to join or form other nonviolent groups which incorporated the radical view Peacemakers helped to germinate, while others in the organization gave more emphasis to life style and nonviolent principles. Peacemakers published a “Handbook on the Nonpayment of War Taxes,” and has also offered summer training and orientation programs in nonviolence since , often organized and led by long-time resisters and Peacemakers Wally and Juanita Nelson.