Tax Day News

Tax day has arrived, and with it the various news fluff pieces about lines at the post office. But there are a few bits here and there about tax protests of various sorts, worth reviewing:

  • George Bush is continuing the long-standing Republican theme of lowering taxes, or wanting to, anyway. More power to him. Wait — can I take that back? Chances are the Repubs will propose a bunch of tax breaks that’ll mostly benefit the people who share their income brackets, then the Demos will respond with some populist, feel-good, middle-class benefits like higher per-child deductibles and the like, then both parties will remember how much fun it is spending other people’s money and cut their proposals in half. With any luck, though, things’ll drop a bit.
  • Some legislator or other had the bright idea of introducing a bill to move tax day from April 15th to the first Monday in November so that it’d fall right before election day. Clever. Good luck to you.
  • Some Libertarian Party chapters protest on tax day by handing out fake million-dollar bills at post offices, explaining that the government spends that much of our money every five seconds.
  • There’ve been a few news items about the few folks like me who are purposefully reducing our incomes below the tax line, here’s one: Eleanor Bonney Simons, 83, of St. Johnsbury, hasn’t paid federal income taxes or the federal tax portion of her telephone bills in , and said she always makes sure to give away enough money each year that she doesn’t have any tax liability. “I find I can live very well this way,” Simons said. “It makes me feel good to know I’m not supporting the war effort.”
  • Some people are withholding something on the order of half of their income taxes, and then including a letter with their tax forms saying that they will not willingly pay the portion of their tax that goes to the military. The IRS sometimes goes ahead and pulls the remainder from their bank accounts, but these protesters are satisfied with their symbolic protest and with not paying the taxes voluntarily.
  • There’s another idea in the form of a bill that gets floated from time to time in the U.S. Congress that would create a sort of “conscientious objector” tax that would be paid into a fund that is only spent on those parts of the federal budget that are non-military in nature. Yeah, right. (link: National Campaign for a Peace Tax Fund.) Of course this, like the symbolic withholding above, doesn’t actually have any bottom-line effect. It’s just an accounting shuffle. In fact, I’d wager that it would have an overall negative effect, because it will encourage even more people to pay taxes by enhancing the illusion that it’s a morally neutral or morally acceptable act.
  • I’ve seen many news articles about how the IRS has been doing less and less enforcement, with fewer and fewer auditors over the last several years, so that it’s much easier to get away with being a tax cheat. Even the most blatant and wacky phony tax dodges often work simply because the IRS doesn’t have the resources to go after most of ’em. (, the IRS revealed that over the previous two years it had mistakenly paid out thirty million dollars to people who were claiming a “slavery tax credit”.) A lot of these articles have a “but this year things will be tougher” spin, and seem to have been prompted by a preëmptive IRS press release, but the numbers seem to support the suspicion that people who pay their lawful share are either a willingly generous group or are being played for suckers.

“I think people fear the IRS much less,” says [tax analyst Jackie] Perlman. Her suspicion is supported by data.

A government survey found that 24 percent of taxpayers think it’s OK to cheat on their taxes — up from 13 percent in . And the fiscal consequences are huge: If all Americans had paid their taxes year, according to IRS estimates, an additional $207 billion would have poured into federal coffers — enough to pay the projected federal deficit for , and have $7 billion to spare…

“I think that people have come to see paying income tax as driving 55 m.p.h: Only a fool would do it,” says Deborah Schenk, a law professor at New York University. “If the attitude spreads, the whole system will collapse.”

Because of a series of recent budget cuts, the IRS’s number of full-time personnel declined by 16 percent . The result: the average taxpayer’s chances of being audited dropped dramatically. , the IRS audited 1 of every 78 tax filers. , the fraction shrank to about 1 in 170. That steep decline in audits, experts say, has emboldened brash millions to try to pay less. “It’s not a secret that the IRS is understaffed and it can’t enforce as much as it would like,” says Perlman.