This page summarizes . I’ve put in a few links to previously posted 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 was the last straw for me and so 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 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 $59,000.
My two-track strategy of legally avoiding income tax while non-legally refusing to pay self-employment tax is somewhat awkward, but has been 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 $65,000 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 when 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 until .
This year, for the first time since my tax resistance began, the IRS filed a formal tax lien against me in our local court system. This would make it easier for them to seize money from me if I were to receive settlements or other court-mediated sources of money, and it puts potential creditors on notice that the agency may step in and take money from me before I have the chance to pay them back.♦ The lien has not yet had any practical effect on my life or my resistance, although I’ve been getting an awful lot of automated phone calls lately — I haven’t bothered to answer them, but I suspect they’re from people who want me to buy their “pennies on the dollar” tax debt negotiation services.
I “owed” and refused to pay $5,268 in federal taxes: $5,158 in self-employment tax and a $110 penalty for not paying in quarterly installments like I’m supposed to.
I want to resist taxes over the long term, so it is important that my expenses remain low enough that my income-tax-free income is also a sustainable one. was a good year for me income-wise. I brought in a little more than $36,500 in profit from my business.
Unfortunately, my expenses also have risen. Rents in my part of California have been rising faster than anywhere else in an already high-rent state, and my rent was one of those that rose. Half of the taxable dollars I spend this year will go just to keeping a roof over my head. When I took a close look at my budget and spending , I found that my regular expenses for things like rent, utilities, food, and transportation came to about $1,700 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 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 all of my “under the tax line” spending money, without much of anything left over. 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 $5,000 or so, half of which also counts against the under the tax line budget (and would put me way over my limit). I’ve been adopting some new cost-cutting strategies to try to give myself some extra breathing room.
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||$18,435|
|½ self-employment tax||−$2,585|
|Self-employed health insurance deduction||−$12|
, I put away $12,150 for retirement and $3,400 for future medical spending (or for retirement, if I stay healthy). Together, those savings represent over 42% 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 an income tax deduction to even things out (even if you’re refusing to pay that 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||$18,435|
And from there, my tax owed:
|Retirement Savings Contributions Credit||−$803|
|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 also been doing a little one-on-one tax resistance counseling as part of NWTRCC’s network of counselors.
I put on a “War Tax Resistance 101” webinar for NWTRCC , a recording of which is available on-line.♦
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. I’m astonished at how willing Americans seem to be to go along with it, or to just indulge in complaining about it, without altering their base loyalty to the system.
I remain hopeful 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. 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 ever less capable and more deserving of contempt.♦ 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. A solid majority of Americans now feel the federal tax system is unfair♦, 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 showing some signs of renewed vigor, now that its progressive base is awakening 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 “why we oughta”s, but it could yet coalesce into something real. Few people with stature seem to want to lead this parade, 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. The big tax reform bill that everyone was excited about doesn’t seem to have made any real difference in my strategy or in how much income I’ll be able to earn or how much spending I can budget.♦
I’ve budgeted for the possibility that the IRS may try to seize money from me for unpaid back taxes, so in case this happens, it won’t be a disaster.
The oldest of my tax debts is on the cusp of hitting the statute of limitations cut-off, and so if the IRS doesn’t hurry up, they’ll miss their chance.
As my tax debt has risen above the $51,000 legal 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 soon find out.
So on to of what no longer seems like an experiment so much as a way of life.