From a discussion I’m involved in over at the Claire Files Board:
How much is “zero” taxes? Is it when the amount on your tax return is “0”? Or is it when you qualify for the EITC, so you get reimbursed for some of your FICA tax? Or is it when you pay no net taxes? (sales, property, excise, etc…) Is it necessary (or desirable) to go on welfare (or go to jail) in order to achieve it? Should one go “all the way” to being a tax parasite, er… “consumer” in order to “bleed the beast”?
Good questions all, and hard ones. I’m currently living sustainably at a level where I don’t owe federal income taxes. To be sustainable, I have to bring in a minimum of $15,000 per year; I can bring in $25,000 or more and still stay under the line by using deductions and credits. I’m not poor enough to qualify for EITC. To bring in $15,000 in income, I’d have to pay some FICA.
So, while I’m avoiding the federal income tax, I’m still giving money to The Man. And these days they get about as much from FICA as from the income tax. So that is a real concern.
If I close my eyes and plug my ears and go to that happy place, I can tell myself that FICA only funds social security and medicare, which, although highway robbery of a sort no good libertariish fellow can condone, at least doesn’t involve tearing the arms off of little boys with guided missiles. However, if I open my eyes and unplug my ears, I notice that all the money is really going into one big trough surrounded by politicians with forks and knives. (This deception will become easier to swallow in the near future when FICA contributions start to be less than Social Security / Medicare spending)
So if I really wanted to stop funding the government completely, I’d have to eliminate FICA contributions too. I could do this by not having any earned income (wouldn’t it be nice if I could live off $15,000 a year in interest and capital gains!) But I’m not so lucky, and it isn’t really a path I could recommend to anyone but the lucky.
I could also do this by being a minister (yep, it’s one of the rare FICA exceptions). I’m still looking for the congregation who’s willing to pay me $15,000 a year to be their pulpiteer.
I could lower my income and standard of living further and get to a point where my FICA contributions are matched by my EITC credit. This would be the most consistent position for me to take, given my momentum and my rhetoric. I’m not sure I have the balls for it, though, so I’m sticking with my half-way position for now. I’m one of those wade-in-to-the-pool rather than dive-in-to-the-pool sorts, I’m afraid.
I’d need to take excise taxes into account, too. I’ve already stopped paying the excise tax on my phone bill, but there are taxes on gasoline, beer, ammunition, and even vaccinations to deal with. I suppose I could do without, or factor those in to the FICA — EITC equation.
Some of your strategy depends on submitting to “tax-code social engineering” in order to claim deductions. How do you keep this from being more destructive to your freedom than just coughing up cash?
By this I assume you mean the deductions I claim for putting money in retirement funds, spending it on education, etc. Do things the government thinks are responsible or good for society and they give you a pat on the head and a tax break.
It is condescending, but for me this isn’t much of an issue. I think that putting away money for retirement is a pretty wise thing to do, so I don’t chafe at this being a requirement for qualifying for a credit. The education deduction I can take or leave. If I want, I can earn an extra so-many thousand dollars in a year and spend it on some classes; if not, I don’t earn or spend the money. No problem.
My whole tax resistance scheme is such a broad-brush lifestyle change in reference to the tax code that these little things are just details.