Today I’ll share some links about tax policy and tax resistance in the United States that have caught my attention recently.
First, though: I’ve started a Wikipedia page on Tax resistance in the United States that covers how theories about tax resistance have shaped (and been shaped in) the U.S., and how tax resistance in practice has played out in the country. Wikipedia is an open, collaborative project that anyone can help to edit, so I encourage you to learn what it’s all about and how to help make it better.
Now on to the links:
Tax Evasion
- The New York Times got its hands on a trove of financial documents concerning the real estate empire of Fred C. Trump, Donald Trump’s father, and published a well-done exposé on what they found. From the point of view of today’s political squabbles and tomorrow’s history lessons, the takeaway is that Donald Trump’s brand, in which he is represented as a self-made business prodigy, is a laughable con job. From our vantage, however, what’s interesting is the extent to which the Trump family used legal, effectively-legal, and illegal methods to evade taxes. They paid a fraction of what they owed, again and again. This may help bolster the widespread feeling that rich people commonly get away with tax evasion, sticking it to the little guy. This in turn erodes “tax morale” which causes voluntary tax compliance to fall.
- Another bit of journalism hammering on this theme (though more free-wheeling and not as methodically precise) comes from GQ: “How Puerto Rico Became the Newest Tax Haven for the Super Rich”. Apparently if you can convince the IRS that you’ve become a permanent resident of the U.S. Territory of Puerto Rico, you’ll find yourself in “the only place on U.S. soil where personal income from capital gains, interest, and dividends are untaxed.”
General Government Failure
- “The federal government could soon pay more in interest on its debt than it spends on the military, Medicaid or children’s programs.” Thus begins a New York Times article on the growing federal government debt. “Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office.” The more the federal government is reduced to being a collection agency for bondholders, the less mischief it can get up to elsewhere. Far from addressing this problem, today’s policymakers are exacerbating it, so we have more such headlines to look forward to.
- Alex Tabarrok and Michael Makowsky used some clever data mining to unveil that when governments make it profitable for police to arrest black and Hispanic people (through property forfeiture laws that allow police to profit from the booty they seize), such arrests increase. They conclude: “The prospects for justice are dimmed when the probability an individual is arrested varies not only by the character of their transgression but also by the potential windfall they present to the public coffer.”
- It’s hard to tell your cops from your robbers, that’s for sure. Take for instance Officer Ebony Nesbitt of the Miami-Dade police force… recently arrested for her part in raking in half a million dollars by filing false tax returns in an identity theft scam.
IRS Follies
- The National Taxpayer Advocate says that the IRS is cooking the books when they report their numbers on how their phone “customer” service is doing just fine. For one thing, they don’t measure the phone numbers with the worst service. For another, they don’t count getting tangled up in an unhelpful “press X for Y” phone menu and then hanging up in frustration as an unsuccessful call. For another, they count merely talking to an IRS operator as a successful call, whether the operator was able to resolve the problem or not.
- The Tax-Expatriation blog has gotten its hands on a letter from the U.S. State Department refusing to issue a passport to a person with what the IRS categorizes as “a seriously delinquent tax debt”.
Miscellaneous
- Republicans are prone to complain about the percentage of U.S. households who are so poor they don’t have to pay income tax (remember Mitt Romney’s revealing “47%” comments way back when? Or the Wall Street Journal’s “lucky duckies” editorials?). But that didn’t stop them from crafting their major tax legislation (the recent “Tax Cuts and Jobs Act”) in such a way that it will increase the percentage of American households who pay no federal income tax. The Tax Policy Center estimates that fully 44% of American households will pay no federal income taxes at all (2% more than ). About 25% will pay no payroll tax either, or their payroll tax will be offset by a refundable income tax credit.
- “Millennials” (says the New York Times) are joining together to swap techniques for quitting the rat race and retiring early, in something called “the FIRE movement.” They begin to live more frugally, squirrel things away, take greater care of their investment decisions, and eye an early modest retirement or semi-retirement. Most of the examples in the article are of pretty well-off people who really just needed to stop living at or above the lifestyle they could afford. But it’s people like them who pay the taxes, and by stepping off the treadmill, they stop doing so or at least stop doing so much. So if you know anyone in that category, send them a link.
- About ten years ago the number of Americans renouncing their U.S. citizenship began to shoot up, from what had been a normal range of two to eight hundred people a year to a high of 5,409 people in . But things seem to have leveled off since then. Why? Your guess is as good as mine, maybe better.
