This page summarizes . I’ve put in some links to previous Picket Line pages that expand on things I mention. You can follow these links by clicking on the “♦” symbols.
Picket Line Annual Report
, the U.S. began its “shock and awe” attack on Iraq. This shameful and repulsive act was the last straw for me and I started what I then called “an experiment” in tax resistance so that I would no longer feel as complicit.♦
My goal was to stop financially supporting the U.S. government.
I hoped at first to do this legally by lowering my income below the federal income tax line, so I quit my job to start my own small business and I began taking advantage of additional legal tax deductions and credits. I missed my goal of avoiding federal income tax, but in I have largely succeeded.
However, I have been assessed a self-employment tax most of these years (this is different from the income tax but also goes to the federal government). In I decided to stop paying this tax as well. I have not found a useful way to do this legally, and so I have simply (but not legally) refused to write the check. Because of this I have been racking up an unpaid tax bill which, along with penalties & interest added by the IRS, minus a bit that they’ve managed to seize from me over the years, now adds up to something in the neighborhood of $50,000.♦
My two-track strategy of legally avoiding income tax while non-legally refusing to pay self-employment tax is somewhat awkward, but is working for me so far.
The IRS has on a few occasions levied bank accounts, with some success: They have seized about $6,000 of the total of about $56,000 (including penalties & interest) that I have refused to pay. I don’t have a fail-safe plan to hide my assets, so I expect that the IRS may continue to seize money if they find it, though lately they haven’t shown much enthusiasm for the hunt.
They haven’t taken anything at all from me in several years, though they still send me pleading letters from time to time. Their recent lack of action may mean they’ve run out of easy seizure targets, or it may mean my overdue amount falls under the threshold at which they start trying harder (budget cuts have caused them to back off on their enforcement). They may also just be biding their time, as the statute of limitations deadline on the oldest unpaid amount doesn’t run out for a year or so yet.
I would not be at all surprised to see the agency turn my account over to the quasi-private debt collectors who have been newly-authorized to pursue federal tax debts.♦
I “owed” and refused to pay $4,247 in federal taxes: $4,147 in self-employment tax and a $100 penalty for not paying in quarterly installments like I’m supposed to.
Although excise taxes are a small part of what the government tries to get from me, I’ve adopted avoidance techniques here too: I long ago gave up owning a car and so I pay little excise tax on gasoline (at least directly), I don’t smoke and so I don’t pay tobacco taxes, and I homebrew beer so as to reduce my contributions to the excise tax on alcoholic beverages.
I want to resist taxes over the long term, so it is important that my expenses remain low enough that my tax-free income is also a sustainable one. was a fair year for me income-wise. I brought in a little under $30,000 in profit from my business.
My regular expenses for things like rent, utilities, food, and transportation come to about $1,325 per month:
Not included in the above pie chart are any business expenses that I can deduct from my income, health expenses (which I pay from my pre-tax Health Savings Account), my self-employment tax assessment (half of which I can deduct), or money I’m saving for retirement (which I do in tax-deferred accounts).
My rent is artifically low because I buy (or grow) and prepare most of the household food and so pay some of my “rent” off that way.
My cat is more than usually expensive as he is diabetic and so needs regular insulin injections and prescription food. My transportation budget is very low because where I live it’s pretty easy to get around on bike and so I don’t own a motor vehicle and rarely need to use one. I’ve been learning to do my own bike repairs and maintenance at the local “bike kitchen,” which also keeps the costs low.
My yearly living expenses took most of the $18,500 that constitutes my “under the tax line” spending money. If I budget-in the imposed self-employment tax, which I don’t intend to voluntarily pay, but which I expect may be seized, that would come to another $6,000 or so, half of which also counts against the $18,500 (and would put me over my limit).
My income was about $5,000 lower than it could have been this year, so I used the tactic of transferring $5,000 from my traditional IRA into my Roth IRA. I must declare that $5,000 as additional income this year, but as my income tax bracket is effectively 0%, this means I won’t pay taxes on that money today, or (according to the rules of Roth IRAs), when I retire either.
My 1040: A walkthrough
Here’s how my 1040 worked out this year. First, my Total Income:
My business income came from two sources: my contract work as a technical writer, and sales of my books. The interest income and capital loss came from a small Lending Club account I started . I don’t think I’ll do that again, as the annual reporting of these numbers to the IRS makes such an account especially vulnerable to seizure (though the agency never seemed to pick up the scent, and I’ve mostly cleaned out that account now).
Now on to my Adjusted Gross Income:
|Adjusted Gross Income||$18,043|
|½ self-employment tax||−$2,080|
|Self-employed health insurance deduction||−$12|
, I put away $10,971 for retirement and $3,350 for future medical spending (or for retirement, if I stay healthy). Together, those savings represent over 41% of my Total Income for .
The self-employment tax deduction works like this: When you work for someone else, your employer pays half of your FICA and the other half comes out of your paycheck. This is just silly accounting for the most part, but it does mean that the half paid by your employer doesn’t count as your income and so you don’t pay income tax on it. If you’re self-employed, you pay both halves of the tax, so the IRS lets you take half (roughly) of your self-employment tax as a deduction to even things out (even if you’re refusing to pay the tax like I am).
My Adjusted Gross Income is below the $18,500 threshold that allows me to get the maximum rate on the Retirement Savings Contributions Credit, so I hit my target and owed no federal income tax this year.
Now we go from Adjusted Gross Income to Taxable Income:
|Adjusted Gross Income||$18,043|
And from there, my tax owed:
|Retirement Savings Contributions Credit||−$766|
|Obamacare tax credit||−$12|
I hope to encourage people to resist taxes and I try to make The Picket Line a good resource for people who are resisting or considering it.
I’ve been doing a little one-on-one tax resistance counseling, and also recently did a webinar for people who want to learn more about tax resistance.
I’ve been more slack than usual this year about writing good content for the blog or for other publications, but I compensated for that by helping to produce some classy new ebook editions of some essential books in the tax resistance library: Tolstoy’s The Kingdom of God is Within You and Ammon Hennacy’s autobiography.
The state of the world and the tax resistance movements
Trump is turning out to be the president America deserves. All of the things that prompted me to turn my back on the government and refuse its demands for help are getting worse day by day.
However, it’s increasingly likely that the empire of the United States will self-destruct under the idiocy and incompetence of its rulers and the narcotic complacency of its subjects. So there’s an up side. Trump may very well be the last president this country has to suffer through, and if he finally puts a bullet through the skull of this old rabid republic, it may not be pleasant, but you can’t say it’s premature.
The IRS continues to be plagued by greater responsibilities but reduced funding, making it less capable and more deserving of contempt. The tax system has become so unmanageable that criminals (some from behind bars while doing time on other charges) are milking it for billions of dollars by means of identity theft and tax fraud, while a thriving overseas industry has grown up around impersonating IRS agents in order to shake down Americans over the phone. These and other factors, such as Trump’s own notorious contempt for taxpaying, are leading to the collapse of the credibility of the federal tax system, and there is hope that the long-standing norm of taxpayer compliance will come to an end.♦
Tax resistance movements
The U.S. war tax resistance movement is starting to kick into a higher gear, now that its progressive base is awake again. It’s struggling a bit with how to coordinate with new tax resisters who are more anti-Trump than anti-war. It remains to be seen if they will stay true to their pacifist roots and continue to promote war tax resistance exclusively, or if they will evolve with the times and embrace tax resistance as a tactic with a broader use.
Good-hearted Americans are alarmed and infuriated by Trumpism, and more and more are allowing themselves to consider tax resistance as a response, whether in protest, in nonviolent resistance, or in conscientious objection. As yet, this is largely a simmering chorus of “we oughta”s, but it could yet coalesce into something real. Few people with stature seem to want to lead this parade, with the possible exception of Gloria Steinem, and those of us without stature seem to be waiting for a leader to follow, so things are currently stalled.
Prospects for the coming year
Assuming no major unexpected expenses, and assuming no big changes to the tax law, I’m well-positioned to live comfortably and well under the income tax line , though I will again “owe” self-employment tax. Some sort of tax law shake-up, though, is pretty likely, so I’ll have to keep on my toes.
I’ve budgeted for the possibility that the IRS may seize money from me for unpaid back taxes, so in case this happens, it won’t be a disaster.
As my tax debt has risen above the $50,000 threshold, I’m subject to the new law that allows the government to rescind my passport. That would be a pain. The law is new enough that it’s unclear how stringently it will be enforced, but I may find out.
Also, since the IRS seems to have largely given up on doing much more than sending me letters, I would not be surprised to see them turn my case over to the newly-deputized private debt collection agencies. If so, I’ll keep close track of how that process takes place, so others can learn from my experiences.
So on to of what no longer seems like an experiment so much as a way of life.