The Phone Tax Is a Tax Worth Dodging

Phone tax resistance went mainstream , with Donald Luskin of calling the federal telephone excise tax “The Tax Worth Dodging”:

Want to save some money on your taxes? It turns out there’s a tax you may be able to simply stop paying. And if you don’t want to be that aggressive about it, just be patient — the tax is arguably illegal, and someday you’ll probably get a refund as part of one of the largest class-action suits in history.

He’s talking about the flat-rate long distance loophole I’ve discussed here before (most recently ). I think he’s being a little optimistic about the likelihood that the recently-filed class-action lawsuit will really make the government cough up all of that money — if the government starts to lose the game, it can always just change the rules.

The unlikely vanguard of the antitax movement is antiwar activists who see not paying the tax as one way to cut off the money that pays for the war in Iraq. They’re not too worried about being dragged off to jail for nonpayment, either. They see what they’re doing as a classic act of civil disobedience. According to the National War Tax Resistance Coordinating Committee, nonpayment is “relatively risk-free because the amounts are small.”

The Committee also says your phone company isn’t likely to cut off your service if you don’t pay the tax portion of your bill. They claim, “IRS regulations… clearly state that the phone company is supposed to collect the tax, but has no power to enforce collection… Some companies have established special billing accommodations for war tax resisters and will provide you with a form.”

Of course you don’t have to be a war protestor to want to save a few bucks on taxes every month. So maybe you should just call your phone company and tell them you’re not going to pay the excise tax anymore. Your phone company may be very happy to help.

Luskin goes on to report on the class-action lawsuit seeking $9 billion in refunds from the IRS. “The reason why the suit isn’t seeking even more,” Luskin says, ”is that there is a three-year statute of limitations on IRS refund claims. According to attorney Jim Glass, whose blog has been providing the best ongoing coverage of this story, you can stop the clock on the statute of limitations by filing a ‘protective refund claim’ for the past three years of taxes you’ve paid. Your tax preparer can help you do that easily.”

, New York’s Sen. Charles Schumer publicly called for the IRS to make refunds to all cellphone users. In a press conference , Schumer said, “The courts have now made it crystal clear that this tax is illegal, and yet the IRS continues to put it on everybody’s cellphone bill.”

Liberal Democrat Schumer isn’t normally a friend of tax cuts. But for this one, an open-and-shut IRS abuse which hits so many consumers right in the pocket book, he’s making an exception. “The IRS asks all of us not to violate the law,” Schumer said. “Well, now we’re asking them the same.”

Who knew? Liberals supporting tax cuts! War protesters hand-in-hand with big business! Apparently there’s one thing that can still unite Americans — outrage over an unfair and illegal tax. This could be the Boston Tea Party all over again.

“Just How Big is the Defense Budget?” asks Winslow T. Wheeler of the Center for Defense Information.

On , Congress passed a defense appropriations bill, which according to the press releases of the House and Senate Appropriations Committees, and many news articles subsequently written, funded “defense spending” for the United States for the . The impression made by the press releases and the news articles was that the $453 billion advertised in the bill, H.R. 2863, constitutes America’s defense budget for .

But hiding elsewhere in the budget (and outside of it in supplemental appropriations bills) are funds for certain other “defense”-related things — little things like the wars in Iraq and Afghanistan or the building and maintaining of the U.S. nuclear arsenal. Wheeler does a full run-down, and concludes:

If you count all these costs, the total is $669.8 billion. This amount easily outdoes the rest of the world. In fact, if you count just the costs of the National Defense budget function, the approximate $538 billion we spend is $29 billion more than the $509 billion the entire rest of the world spends.