People Ask Me About My Experiment in Tax Resistance

I’m fresh back from the playa, having swallowed my reluctance to paying the 50% of the ticket price that goes to the B.L.M. in order to attend the festival that for has been my Mecca.

While out on the playa, I had a few discussions with people who had read about my experiment in tax resistance and wanted to know how it was progressing.

At one point, I mentioned the underground economy and how some people are able to make a substantial, unreported income (and how most people can at least supplement their taxable income with some that comes under-the-table).

One person expressed some concern that I was promoting this option in discussion, while on this site I stress that this experiment in income-tax-free living is something that anyone can do completely above-board (and I use my own case as an example).

He asked me flat out if I was “cheating” by supplementing my low declared income with unreported, underground-economy income. I said “not significantly,” which is true, since I have earned some unreported money this year, but a very small amount (less than $100).

But it pointed out a dilemma to me: I don’t see anything wrong with earning money in the underground economy — in fact, I think it’s a sensible and totally appropriate course of action. On the other hand, I’m trying to promote living below the tax-line as an available option for conscientious people — including those who would rather not break the law. And I’m trying to be a personal case study in how this can be done.

If I were to supplement my income in the underground economy, I wouldn’t be able to hold myself up as an example of living comfortably at an income-tax-free, above-board income. Furthermore, I wouldn’t be able to safely announce or detail this strategy here on The Picket Line because it could be used against me by the IRS. I doubt they’ll come after me for the less than $100 I’ve admitted earning in the underground economy this year, but if I earn more in the future, you won’t hear about it here.

So I guess what I’m saying is that although I still believe that it’s entirely possible to live comfortably and legally under the tax line, I’m not going to commit to keeping my hands free of under-the-table income. My main strategy right now is income reduction and legal deductions, and that’s working fine for me — but if the right opportunities in the underground economy come along, I’m going to take them. So, that said, I’m going to have to be more reserved about using my case as an example of law-abiding income-tax-free living.

I touched on alternative currencies, a concept which is tangential to my experiment, in an entry. If you’re intrigued by that sort of thing, you’ll probably be interested in this interview with Bernard Lietaer. He discusses several alternative or complementary currency systems in use worldwide. He also claims that something called the “time-dollar” that is being used in the U.S. has been ruled tax-free by the IRS, something that I would want to see documented before I’d believe it, since the feds aren’t usually so kind to barter or mediated-barter arrangements.

Well, thanks to Google, the documentation is at hand. Why the Taxman didn’t come explains the background of the ruling and its limitations, and a Time Dollar FAQ goes into more detail, but I wasn’t able to find anything on the Internal Revenue Service website.