Why it is your duty to stop supporting the government →
how tax resistance fits the bill →
how does the government train taxpayers?
So you’re the new state of Israel, it’s , and your citizens are all people who, until recently, were contemptuous of the governments they lived under (whose benefits they were frequently denied, and whose threats they were often first to feel), and who as a result by-and-large considered tax evasion a virtue, not a crime.
Then, in , a candy-maker in Jerusalem commits suicide, blaming it on his tax burden, and in response tax-payer unions across the country launch a tax strike.
What do you do about it?
Turns out that what you do is call in some American experts, experiment with some new methods of intelligence-gathering and record-keeping, and launch a public relations campaign.
In , the American advisers to the Revenue prodded Israeli officials to produce an income tax movie.
Initial fears that the movie would become “the subject of ridicule” were overcome.
The Government Information Administration commissioned a local studio to produce a 12-minute film, called The Tsippori Affair.
This film told the “amusing and enlightening” tale of a tax resister who organizes protests against the income tax only to discover that all government services had been shut down for lack of funding:
He visits a hospital and a welfare office and discovers that they are closed because of the non-payment of income taxes.
He goes to a primary school and meets children who are sitting outside the front door, playing cards, drinking wine and smoking cigarettes.
A small girl puts on lipstick (see fig. 1).
Fig. 1:
A Scene from “The Tsippori Affair”: The primary school is closed. A young girl puts on lipstick.
How Israel went from being a state where tax evasion was the norm to one in which tax compliance was common is the case study that Assaf Likhovski uses in his new paper “Training in Citizenship”: Tax Compliance and Modernity.
Likhovski sees the effort to increase tax compliance in Israel as an example of the larger phenomenon — “the desire of modern states to create self-policing, normalized subjects.”
The starting point of my inquiry is one of the first book-length studies of noncompliance — a book entitled Evasion in Taxation, written by Victor Tranter, a University of London economist.
Tranter’s book described various methods of evasion… and avoidance… in great detail and suggested different ways of curbing them.
Throughout the book, Tranter relied on a criminological distinction between curable and incurable criminals.
Using this distinction, Tranter suggested that the state deal with “curable evaders” by appealing to their sense of patriotism, educating them in the basics of “civics,” initiating public relations campaigns, utilizing the services of teachers, accountants and the clergy and declaring tax amnesties.
As for “incurable” tax evaders, Tranter had the following suggestion.
“So far,” he said “evasion is not a certifiable form of insanity nor are there yet mental hospitals which admit to their wards for kleptomaniacs those convicted of taxation frauds.
We segregate those demonstrably and incurably anti-social in a physical sense, such as confirmed criminals, and those anti-social in a mental sense, such as lunatics and idiots, but not yet those anti-social in an economic sense.”
But, he continued “if the test is whether or not the individual has done a serious injury to the community and may possibly do so again in the future, there would appear to be no logical reason why fiscal fraud should be treated exceptionally.”
Tranter did not see lunatic asylums as the only answer to the problem of incurable evaders.
Another suggestion he made was that “a department should be established to make a scientific investigation of the whole question of evasion.”
At this point, with this linkage of state control and metaphors of disease, you probably smell a
Foucault or
Szasz reference coming.
No disappointment:
Tranter’s interest in using a variety of non-legal techniques and institutions to normalize tax evaders, his desire for “scientific investigation” of the problem and, most of all, his bizarre (but serious) reference to lunatic asylums as a method of tackling evasion, all resonate with a set of critical arguments about the nature of modernity.
These arguments, associated mostly with the work of Michel Foucault but also found in the writings of other social theorists, describe the rise of modern states and related nonstate institutions (for example, mental hospitals or schools) not as part of a progressive trajectory of growing individual liberty but instead in terms of growing constraints on the freedom of action of individuals, who become subject to various practices designed to make them self-policing citizens.…
It’s all about how the psychology of taxpayer compliance works, with a goal of learning ways of exploiting people’s psychology as a way to mold them into compliant taxpayers.
Says Kornhauser:
Research shows that tax compliance is affected by (social and personal) norms such as those regarding procedural justice, trust, belief in the legitimacy of the government, reciprocity, altruism, and identification with the group.
Cognitive processes, such as prospect theory, also influence an individual’s reaction to tax issues.
Studies also indicate that certain demographic factors such as age, gender and education correlate with tax morale.
…[A]n external agent, such as the IRS, can… activate compliance norms in a variety of ways including education, properly framing communications, fair procedures, and a regulatory framework that incorporates current and future findings of tax morale research into its operations and dealings with taxpayers.
Of course, those of us eager to discourage compliance with the tax laws can find plenty of meat to chew on here as well.
And anyone who likes a good horror story will appreciate the spectre of an IRS Behavioral Science Taskforce.
Here’s an interesting side note from the article that confirms something I’d suspected might be the case:
In one experiment, subjects received $18. Half the group was told that $2 had been given to a charity of their choice; the other half was told that they had been given $20 but the government had taken $2 in taxes which was then given to the charity of their choice.
When asked if they wanted to make additional charitable contributions, those that had been “taxed” did not, but those subjects who had simply been told $2 had gone to charity contributed more.
Although neither group had a choice whether to give the initial $2, the “tax” situation highlighted the compulsory aspect (or alternatively framed the situation as a loss situation since $2 of their money had been taken from them).
This crowded out the voluntary charitable behavior.
And here’s one of the author’ proposals, for a marketing campaign:
The IRS should conduct an extensive media campaign regarding taxes in order to reach the widest number of the public.… The campaign’s goal should be to encourage values and norms that enhance tax compliance, not simply to convey tax information.
The campaign should seek to develop those values and norms, discussed in the literature review, that are connected with high compliance including trust in the government and a sense of civic duty to pay taxes.
It should also stress the competency of the IRS.
Many taxpayers may not question the honesty of IRS officials, but they may doubt the efficiency and/or ability of IRS personnel.
The danger of a media campaign, like the danger of an education campaign, is that it could backfire.
It might cause taxpayers to feel manipulated, which would increase cynicism and potentially more non-compliance.
In order to prevent (or minimize) these negative consequences the IRS must move cautiously and with the aid of outside experts.
During World War Ⅱ, the U.S. income tax expanded its reach.
Formerly a tax that targeted the well-to-do, it became a tax on income-earners in general.
In order to help this go smoothly, the government enlisted popular entertainers to create pro-tax propaganda.
I’ve already mentioned here The Spirit of , a Disney cartoon that told citizens that “Taxes Will Sock the Axis.”
Today David Beito reminds us of another bit of this propaganda campaign.
A song penned by Irving Berlin and sung by Danny Kaye: “I Paid My Income Tax Today.” Some sample lyrics:
I paid my income tax today I never felt so proud before To be right there with the millions more Who paid their income tax today I’m squared up with the U.S.A. See those bombers in the sky? Rockefeller helped to build ’em, so did I I paid my income tax today
I paid my income tax today A thousand planes to bomb Berlin They’ll all be paid for and I chipped in That certainly makes me feel okay Ten thousand more and that ain’t hay We must pay for this war somehow Uncle Sam was worried but he isn’t now I paid my income tax today
And that reminds me of this.
The first evidence I’ve seen of a foul-weather war tax resister deciding to give it up at the first hint of sunshine.
Obama’s not even in office yet, and already…
I’m Paying Taxes Now
Do you know how long I’ve been waiting to say that?
I’m paying taxes this year.
Barack Obama has just been called as the next President of the United States.
This war tax resister is going to pay her taxes for the first time in six years.
I can’t wait.
I love this country, and at this exact second, I feel that love.
I will write my check with a happy heart.
I can’t wait to introduce my daughter to our new President.
Sigh.
In Eugene some people feared the possibility of this sort of reaction, but nobody seemed to know of any actual examples of it.
Well, there’s at least one.
The IRS Oversight Board just released their latest Taxpayer Attitude Survey.
The headline they’re pushing for it goes something like this: “Nine Out of Ten Americans Say It Is ‘Not At All’ Acceptable To Cheat on Taxes.”
For the most part, the news media is going along with that.
And since this coincides with the embarrassing tax dodging of members of Obama’s proposed cabinet, we can expect these survey results to get more than usual play in the media.
But the survey uses loaded terms in its questions in order to provoke the results it reports.
It is not so much meant to measure taxpayer attitudes as to shape them by manufacturing and publicizing a consensus.
For example, the question that generated the survey’s most-touted result was:
How much, if any, do you think is an acceptable amount to cheat on your income taxes?
By using the loaded word “cheat” which by definition implies unacceptable behavior, the survey almost guarantees that respondents will label the behavior as “not at all” acceptable.
Other questions follow the same pattern:
It is every American’s civic duty to pay their fair share of taxes.
(Do you completely agree, mostly agree, mostly disagree, or completely disagree?)
Well, if the question already assumes that the share is fair, what is there to disagree with?
Even I think that it’s every American’s civic duty to pay their fair share of taxes; I just think that fair share is zero.
Tax collectors recognize that the perception of social norms of tax paying or tax evasion are very important considerations when an individual is deciding whether or not to cough up money on demand.
The IRS is hoping, with tools like this survey and the help of a lazy news media, to make it appear that taxpaying and condemnation of tax evaders is the social norm.
In other news: A new TIGTA report says that in tax year , the IRS issued $43.7 billion dollars via the Earned Income Tax Credit.
$10–$12 billion of this was in error.
That’s about 25%.
The tax system is a mess.
I’m reading Philip K. Dick’s sci-fi Do Androids Dream of Electric Sheep.
The opening scene of the book has a couple waking up on a future earth with its futuristic equivalents of the alarm clock, the morning coffee, and the couple squabbling about the snooze button.
Among their morning options is what mood to dial in to start the day.
You can dial in a little thalamic stimulant if you need to assert yourself, or a thalamic depressant if your rage is getting in the way of your plans.
Or you can get more precise:
dial
for
481
awareness of the manifold possibilities open to me in the future; new hope
594
pleased acknowledgment of husband’s superior wisdom in all matters
888
the desire to watch TV, no matter what’s on
If you have a hard time getting up the gumption, dial a simple “3” which will induce the desire to choose a dial setting.
You can even dial in despair, if, say, you’ve been overdoing affectless detachment and need a change of pace.
Oxytocin is the molecular reason why people thrive on hugging, Twitter and other people in general.
Oxytocin production facilitates pair bonding and mother-infant attachment by making sex, as well as breastfeeding, feel good.
Oxytocin is relevant to tax policy because it affects people’s decisions to contribute to the funding of public goods, a basic goal of taxation.
For example, oxytocin has a remarkable influence on the impact of prisoner’s dilemma games.
In these games, one player’s decision to share value with other players can create more value overall, but only enriches the first player if others also share with him or her.
Winning such a game thus requires cooperation and reciprocity.
Zak’s research has shown that an infusion of oxytocin (for example, administered through nasal inhalation) increases players’ generosity.
Oxytocin doses have also been shown to increase levels of charitable giving, though study participants had a greater tendency to give to organizations benefiting “in-groups” of which they were members.
Oxytocin infusions might also increase citizens’ willingness to fund public
goods through tax compliance, particularly if taxpayers perceived that their
tax payments would benefit their in-groups. Of course, the government cannot
distribute nasal inhalers along with Forms 1040. But it could try to increase
taxpayer oxytocin levels nonpharmacologically, by presenting tax compliance
as part of a trusting and reciprocal relationship. But what reciprocal
relationship should the government try to trigger? There are at least three
possibilities: (ⅰ) taxpayer-government reciprocity, (ⅱ) taxpayer-taxpayer
reciprocity framed by cooperative funding of public goods, and (ⅲ)
taxpayer-taxpayer reciprocity presented as a more intimate personal
connection, for example with the help of an advertising narrative.
[I]t may be possible to use stories and narratives to frame the duty of
paying taxes as a gift that you give someone who is fairly close to you, like
your neighbor or your grandchild. This links to research on the possible warm
glow that donors experience on the occasion of their charitable donations — typically given to institutions with which the donor has a personal
connection that is more intimate than mere membership in the general
citizenry. It also connects with work suggesting that narratives about
strangers (conveyed, for example, through emotional videos) can trigger
oxytocin release.
If resisters can encourage more people to evade more taxes, even if they do so
for non-idealistic reasons, this both takes resources away from the government
and increases the number of targets the tax enforcers have to pursue, thereby
taking some pressure off of the resisters.
Today I’ll cover how tax resistance movements can contribute to tax evasion
in the culture at large. (At the same time I’ll give a sneak preview of some
of the slides I’m preparing for my upcoming talk in Colombia — beware: I
haven’t asked anyone to proofread my shoddy Spanish translations yet.)
Taxpayer compliance is a challenge for governments to create and maintain,
and they spend a lot of effort trying to understand the mechanics of it and
engage in a lot of propaganda and other forms of manipulation in order to
bring it about.
I’m reminded of the Disney short The Spirit of
which told theatergoers that it
was Taxes that would Defeat the Axis… or the
short film The Tsippori Affair produced by Israel’s
propaganda department (with American help) that showed shocked audiences what
would happen if nobody paid their taxes (for instance, the schools would all
shut down, and school-aged children would lounge about playing cards, drinking
wine, and smoking cigarettes).
I’ve noted before one of the ways the
IRS
supports this pillar. Every year they conduct something they call the
“Taxpayer Attitude Survey” in which they ask a set of questions to 1,000
randomly-phoned American households. The survey contains carefully-loaded
questions like these (emphasis mine):
How much, if any, do you think is an acceptable amount to cheat
on your income taxes?
[Do you agree that] it is every American’s civic duty to pay their
fair share of taxes?
[Do you agree that] everyone who cheats on their taxes should be
held accountable?
Predictably, people overwhelmingly report that cheating is bad and fair shares
are good. The
IRS then
puts out a press release about how Americans overwhelmingly believe everybody
should pay what the government tells them to. Typically the news media go
along with it, composing stories that follow the press release script.
The government is always eager to draw your attention whenever it spends your
money on something nice. There’s hardly a bridge, library, overpass, park,
or other partially-public-funded thing in my town that doesn’t come with a
plaque attached, listing the names of the city councillors and mayor who
signed off on it — though that’s about all they had to do to get such credit.
This is why in the weeks before Tax Day, the
IRS
breathlessly announces indictments against famous people and big-time tax
evaders. Don’t think of stepping out of line, they’re saying, because you’re
sure to get caught. Anecdotes speak stronger than statistics here.
It takes a lot less work for the government to keep taxpayer compliance from
slipping from 90% to 80% than it does for the government to raise
taxpayer compliance from 80% to 90%.
If taxpayer compliance is high, taxpayers will convince themselves
of the attitudes in the pillars. Why am I allowing myself to be fleeced like
this? Well, I must have good reasons: it’s because I’m a good citizen, and
I want to contribute to useful things, and besides if I don’t I’ll get caught.
Everybody knows these things.
If taxpayer compliance is low, taxpayers have to be convinced — they
ask instead: Why am I allowing myself to be fleeced like
this (when so many other people aren’t)? Am I getting played?
It is easy to point out how many wealthy people and fat corporations get away
with paying little or no taxes. I won’t list examples here as I’m sure you’ve
heard plenty, but here’s one way a group of war tax resisters made this a
little more in-your-face:
At , a merry band of activists from the
local [Bangor, Maine] Peace & Justice Center swapped their cozy jeans
& t-shirts for swanky gowns & tuxedos, hopped in a verrry conspicuous
white stretch-limo, and motored their way to the
P.O./Federal
Bldg., to perform a bit of
satire-filled street theater.
This division of the “Rich People’s Liberation Front” did a skit to expose
the huuuge tax breaks which America’s corporations & our wealthiest
citizens receive; then thanked intrigued passersby with Dum-Dum lollipops.
(“Suckers for the suckers!”)
This is related to what tax geeks call the “salience” of taxation — that is,
how aware you are of the hand that is picking your pocket. If you had to write
a check to Washington every couple of weeks, your income tax would be very
salient. If the money is automatically withheld from your paycheck before you
get your hands on it, it’s less salient. If it’s invisibly included in the
price of the goods you buy, it’s less salient still. Governments are eager to
find ways to tax people in ways that make them less aware that they’re being
taxed, because the less you’re aware of it the less you’ll resist.
There are many other similar examples, both from the war tax resistance
movement and from other movements:
The Tax Foundation raises a ballyhoo every year about what it calls “Tax Freedom Day” — “the day when the nation as a whole has earned enough money to pay off its total tax bill for the year” and which lately has been arriving about the same time as federal income tax returns are due, which increases the publicity impact.
The Mennonite Central Committee turned the penny poll idea into an on-line game; another site put together a $3 trillion dollar shopping spree to give people an idea of what kind of cool things they could be investing in if the government weren’t spending all that money on war.
Libertarian Party activists often will hand out fake million dollar bills, each one printed with an estimate of how quickly the government spends that much money.
Another tack is to hand out “Certificates of Debt” that show how much government debt each American taxpayer is on the hook for.
One war tax resistance group held a “Tax Day” protest in which they facetiously labeled the mailboxes down at the post office with the names of military contractors like Lockheed-Martin, Halliburton, and Bechtel, to point out where the money was really going to end up.
“April 15th is ‘Support the Pentagon’ Day” read ads in the New York Times .
Under this headline, a cartoon showed a hapless taxpayer with a bit in his mouth, with a load of generals, admirals, and armaments on his back.
On a few occasions, tax resisters have turned themselves in to law
enforcement as a way of showing how little they are afraid of prosecution. For
instance, in Australia’s Northern Territory in
, “the residents drew up a monster petition,
which almost everybody signed, and insisted on the government standing up to
its own laws by taking action against them. They also defied the government to
put them into jail.” And in , three war tax
resisters went to the
IRS
headquarters in Washington to turn themselves in. “If the resisters are not
arrested and prosecuted,” Mary Loehr of NWTRCC
said (and they weren’t, and still haven’t been), “it will expose the myth that
people go to jail for not paying their taxes.”
As professor James C. Scott said of his studies of resistance to
government-mandated tithes in Malaysia, once tax resistance “has become a
customary practice it generates its own expectations about what is permissible
[and] raises the political and administrative costs for any regime that
subsequently decides it will enforce the rules in earnest. For everyday
resisters there is safety in numbers and successful resistance builds its own
momentum.”
The examples I have given here are largely indirect ways of promoting
a cultural atmosphere in which tax evasion seems like more of a good idea. But
there are also more direct ways in which people can assist in the tax evasion
of others. I’ve already mentioned the tactic of
paying in cash so that your
transactions leave less of a paper trail for the government to follow. Here
are a couple of others:
You can spread rumors that a tax has been abolished. This worked with
great success at the time of the French Revolution, when such rumors
became self-fulfilling prophecies. This was also common in Czarist Russia,
when people extrapolated from the propaganda-fuelled image of a benevolent
Czar to conclude that such a Czar must have abolished such awful
taxes. And the present day United States has long had a cottage industry
of people who are convinced (and convincing) that the real United
States Constitution would never permit something as awful as the federal
income tax.
You can manufacture the paraphernalia of tax evasion. For example, in
Mexico City, you can visit a taco stand and walk away not only with lunch,
but — for a small price — with fake receipts from a variety of
restaurants, hotels, and stores, that you can then use to declare business
expenses on your tax returns.
The book is a sort of evil twin of my own 99 Tactics of Successful Tax Resistance Campaigns.
Such books can be useful to review because they often, in a sort of sideways-fashion, give tips on how one might erode taxpayer compliance.
The book begins by noting that “Governments in the developing world are striving more than ever to mobilise greater tax revenues,” and, under the unquestioned assumption that this “domestic resource mobilisation” is a splendid aspiration, proceeds to review some of the methods they’ve tried.
The process of “foster[ing] an overall culture of tax compliance… can begin with schoolchildren of primary and secondary level, which [sic.] are at a key moment in their socialisation and tax awareness process.”
This need not be as dull as it sounds:
“With theatre, video games, television shows, and interactive play space, taxpayer education can also be a truly entertaining experience.”
Here is one example: “Costa Rica has created a ‘Tribute to My Country’ space for children at the Museo de los Niños de San José, a former penitentiary.”
Some of the features of this exhibit:
“The Ministry of Finance” includes a video game entitled “Tax Statements” which involves completing a tax income statement in a user-friendly format, entering basic details.
The aim is for children to become familiar with tax payments and the taxation cycle.
This space represents the electronic service points located at tax administrations.
“La Facturita” (The Little Invoice Shop) teaches about the general tax levied on sales.
By pretending to buy and sell, children learn how this tax works: how to distinguish which payment receipts are valid and which are not.
They are also encouraged to get used to requesting an invoice.
A European Union program helped Costa Rica convert its penitentiary space into a space for teaching tax compliance to children (and, along with the United States Agency for International Development, helped start a similar program in El Salvador) by bringing in advisors from Argentina, which had pioneered this approach.
Many of the projects described in this book had financial backing and other support from international agencies like these.
It’s interesting to me the extent to which propagandizing the world’s children in order to imbue them with “an enhanced sense of moral obligation to pay taxes voluntarily” is a global project of the West’s superpowers.
Some other bits I found interesting:
“While there is no universally accepted definition or measure of the informal sector, it is the norm in low- and most middle-income countries, estimated to account for nearly two-thirds of the global working population (even more in developing countries).”
The report uses the phrase “bringing them into the tax net” to describe attempts to lure people out of the informal economy, which I thought was refreshingly honest in its predatory implications.
Many of the programs described target children at the grade-school level, and seem to both have a long-term focus on shaping the attitudes of the upcoming generation (and, as one description put it, breaking the cycle of bad attitudes about taxation passed from generation to generation), and a short-term focus on creating what one program calls “tax ‘ambassadors’ ” who will spread these ideas to their elders.
Implied in some of the programs was the idea that the children would also become informers who would rat out tax evaders or people in the informal economy.
The Inland Revenue Board of Malaysia, for example, subjects a few hundred children there to its annual “educational three-day camp” that “aims to instill a sense of responsibility for paying taxes among the younger generation.”
Sounds fun.
Some of the national tax agencies had partnered with Kidzania, a playground-style role playing area where schoolchildren pretend to take on roles in an adult employee/consumer-oriented economy.
The children perform tasks in adult-styled professions to earn “Kidzos” which they can then spend at mini businesses (all with real-world names, exposed to the children as part of Kidzania’s “immersive and interactive brand experience”).
With guidance from the tax agencies, Kidzania now withholds a certain amount from these Kidzo-paychecks, and tax elements of the economy are also part of this experience.
In an effort to further understand tax compliance behavior and find ways to mitigate noncompliance, we examine the impact of goal congruence in the context of how tax dollars are allocated to pay for government programs. Alm, McClelland, and Schulze (1992)* argue that theoretical and experimental work ignores much evidence that tax compliance depends in part upon the use of tax revenue.
Thus, we focus on how tax dollars are spent and the incongruence created when the government’s allocation does not coincide with the taxpayer’s personal views about government policies.
* Alm, J., G. H. McClelland, and W. D. Shulze.
1992. Why Do People Pay Taxes?
Journal of Public Economics 48(1): 21–48.
Accordingly, we propose that in certain instances goals may not be aligned between the government and the taxpayer, providing taxpayers with a potentially justifiable (based on taxpayers’ personal views) incentive to cheat on their taxpaying responsibilities.
Recent examples of misaligned goals are illustrated with growing groups who are intensely opposed to how tax dollars are spent by the government (e.g., tax resisters and conscientious objectors).
The U.S. National War Tax Resistance Coordinating Committee estimates that about 10,000 people “resist” paying taxes in protest against military spending (USA Today 2006).
Tax resisters often pay a portion of their taxes, but “deduct” an amount related to the spending with which they do not agree.
Accordingly in a tax setting, goal congruence may not be an “all-or-nothing” variable, but rather taxpayers may have varying levels of opposition with the tax system.
Thus, we hypothesize that taxpayers with low goal congruence (those who oppose or disagree with how tax dollars are spent) will be less likely to comply than taxpayers with high goal congruence (i.e., those whose goals are more closely aligned with the government).
From here things go a little sideways for a while.
Although the authors have noted conscientious tax resisters as examples of people who do not pay their taxes because of a lack of “goal congruence” with the government, the paper sidetracks into a discussion of taxpayers with a high “Machiavellianism” score (“which measures the tendency of an individual to detach from ethical considerations and perform actions that profit the self”) and suggests that Machiavellian taxpayers are more likely to put their own goals ahead of the government’s while “low Machiavellian taxpayers will make decisions that are more conditioned by their emotions and internalized ethical principles, and goal congruence should have less impact on their compliance decisions.”
In summary, we posit that goal congruence will have less impact on low Machiavellian taxpayers, who are motivated by ethics than high Machiavellian taxpayers, who are motivated by self-interest.
This seems like a non-sequitur to me unless you somehow categorize the war tax resisters as high-Machiavellian people acting from self-interested, non-ethical motives, which doesn’t match any reality I’m familiar with.
The academic tax literature in general seems to be biased toward equating ethical behavior with compliant behavior when it comes to taxation and is reluctant to consider alternatives to this viewpoint even when, as in this case, the alternatives are staring them in the face.
(And as it turns out, their hypothesis about the interaction between Machiavellianism and goal congruence was not ultimately shown by their data.)
Be that as it may, here is a description of one of the experiments they devised:
Participants read a scenario about a hypothetical taxpayer who earned cash from self-employment and were told to assume either a low or high probability of audit.
They were asked to put themselves in the position of the hypothetical taxpayer and to think about their views concerning tax dollars being used to fund national defense programs. Participants then recorded the amount of income that they would report on their tax return.
Goal congruence can be represented by the degree to which a taxpayer agrees with the government’s allocation of tax revenue to particular programs. Participants were informed that approximately 20 percent of the total federal budget is used to fund national defense programs, and they were reminded that when a taxpayer pays more tax, more of their tax dollars go to defense programs. In this experiment, goal congruence is measured by summing participants’ agreement (on seven-point Likert scales) with the following three statements (1) the way the government spends tax dollars on defense programs is effective, (2) defense programs are important, and (3) I support a percentage of my tax dollars going to support the current defense program.
Participants were asked how much of the $45,000 income earned by the hypothetical taxpayer they would report if they were in a similar situation to the hypothetical taxpayer.
Participants recorded their responses on a sliding scale from $0 to $45,000, where the scale was marked in $5,000 increments.
The results: “participants reported less income when they felt low support for a tax program (mean=$34,080.32, s.d.=1058.64) than when they felt high support (mean=$38,183.44, s.d.= 1063.73).
Specifically, taxpayers who agree with the government’s use of their tax dollars report more income than those who do not.”
Furthermore:
Results indicate that when the taxpayer supports a program, a higher audit rate increases income reporting (low audit rate mean $37,034.34 vs. high audit rate mean $39,332.51).
However, when the taxpayer has low support for a program, a higher audit rate does not improve compliance.
In fact, it has the opposite effect (low audit rate mean $35,146.04 vs. high audit rate mean $33,014.59).* Importantly, this indicates that policy efforts aimed at increasing the audit rate may not be beneficial if the taxpayer does not find value in a program
* Consistent with this finding, research has found that deterrence-based compliance measures sometimes can be counterproductive (Murphy, K. 2005. Regulating More Effectively: The relationship between procedural justice, legitimacy, and tax non-compliance.
Journal of Law and Society, 32 (4): 562–589).
The explicit goals of this research project were “to further understand tax compliance behavior and find ways to mitigate noncompliance,” and with this in mind, the authors make the following suggestion:
When taxpayers do not support government programs, their compliance is lower regardless of the audit probability.
This highlights the importance of gaining taxpayer support for government programs and that attempts to align the goals of taxpayers and the government may be fruitful.
Thus, programs such as The Conscientious Objection Act [a Canadian “peace tax” bill] and the [U.S. Religious Freedom] Peace Tax Fund Bill, may increase voluntary compliance among taxpayers.
This will warm the hearts of peace tax legislation supporters, who now have some academic support for their proposals that may resonate with money-hungry legislators.
For those of us who think that to increase “voluntary” compliance with taxpaying is not such a hot idea, this will give us more reason to oppose such legislation.
Some links that have graced my browser in recent days:
The Troika Fiscal Disobedience Consultancy is “building a European network of companies which support a European tax disobedience movement.”
In short, they’re trying to use the same bag of tricks that multinational corporations use to evade taxes on their profits in order to build an alternative economic network of European dissidents.
Fair.coop also has some commentary on the campaign.
Italian pacifist Turi Vaccaro climbed up a satellite dish at a U.S. military base near Niscemi, Italy, and, over the course of about 34 hours, with manual hand tools, did about €800,000 in damage.
Did the U.S. government ever press charges against Voices in the Wilderness for violating the sanctions?
Kathy Kelly
They would bring us into court with some regularity. It was curious because at one point there was a $50,000 fine. I thought, “What are you going to take — my contact lenses?” I just had to laugh. I mean, I haven’t paid a dime of taxes to the U.S. government as a war tax-refuser since 1980. So there is nothing they could take from me. The people that would go over were in the same boat. So good luck collecting from them!
Spirit
But as it turned out, they did fine your group $20,000, didn’t they?
Kelly
Yeah, they finally took us into court. And I think Condoleezza Rice inadvertently might have saved us. This is speculation on my part, but this much is true. Chevron settled out of court, acknowledging that they had paid money under the table to Saddam Hussein in order to get very lucrative contracts for Iraqi oil.
Condoleezza Rice was the international liaison for Chevron while it was paying money under the table to get these lucrative contracts. So when we finally had our day in court, Sen. Carl Levin’s staffers were still digging up this information and it was beginning to become public evidence that Chevron, Odin Marine Inc., Mobil and Coastal Oil had all been paying money for these oil contracts under the table to Saddam Hussein.
So there were big fish in the pond that broke the sanctions and there were little fish in the pond that broke the sanctions. I think some of the big fish said, “That is one hot potato. You drop that hot potato as fast as you can, and don’t make a big deal because those people are little fish but they’re mouthy little fish.” So they never tried to collect a dime from us. The money was just sitting there.
Spirit
Well, what exactly did happen to you when the U.S. government took you to court for violating the sanctions?
Kelly
We were found guilty and were fined $20,000. Federal Judge John Bates wrote in his legal opinion that those who disobey an unjust law should accept the penalty willingly and lovingly.
Spirit
Unbelievable! A federal judge lectures you about lovingly accepting this unjust fine using the words of Martin Luther King?
Kelly
Yes. We said to Judge Bates, “If you want to send us to prison, we will go, willingly and lovingly. We’ve done that before already. But if you think we will pay a fine to the U.S. government, then we ask you to imagine that Martin Luther King would have ever said, ‘Coretta, get the checkbook.’ We are not going to pay one dime to the U.S. government which continues to wage warfare.” At that time, supplemental spending bills appeared every year, sometimes two or three times a year, and congressional representatives and senators continued to vote yes on those spending bills for the military. So we said, “No, we won’t pay a dime of that fine.”
Spirit
You have also been a war tax resister for a long time.
Kelly
I’m a war tax refuser. I don’t give them anything.
Spirit
Oh, you’re not a 50 percent withholder, like many war tax resisters. You’re a 100 percent withholder?
Kelly
Yes, I’m a 100 percent withholder. I think war tax resistance is important but I happen to be a refuser. They haven’t got one dime of federal income tax from me since 1980.
Spirit
Why did you begin refusing to pay federal taxes entirely?
Kelly
I won’t give them any money. I can’t and I won’t. I won’t pay for guns. I don’t believe in killing people. I also don’t want to pay for the CIA, the FBI, the corporate bail-outs or the prison system. But particularly, I began as a war tax refuser. I wouldn’t give money to the Mafia if they came to my door and said, “We’d like you to help pay for our operations.” I’m certainly not going to pay for wars when I’ve tried throughout my adult life to educate people to resist nonviolently.
Spirit
How have you gotten away with not paying federal taxes ? Do you keep your income low?
Kelly
Many years I have lived below the taxable income. But in , someone from the IRS came to my home. I had in some years claimed extra allowances on the W-4 form. And I just don’t file. I haven’t filed . Now, that’s a criminal offense and they could put me in jail for a long time for that. If I was earning over the taxable income, I would just calculate how many allowances I have to claim so that no money is taken out of my paycheck. It says in the small print on the W-2 form to put down the correct number of allowances so that the correct amount of tax is taken out. Well, that’s easy. The correct amount of tax to take from me is zero, so I just do the math.
Spirit
Why do you think they haven’t come after you?
Kelly
Well, they have come to collect taxes. But I don’t have a savings account, and I don’t own anything. The IRS is like my spiritual director [laughs]. I don’t know how to drive a car, and I’ve never owned any place that I’ve lived in. I just don’t have anything to take.
Spirit
So has the IRS given up on even trying to collect?
Kelly
Once they came out to collect in 1998 when I was taking care of my dear Dad, who was wheelchair-bound, and a bit slumped over in the chair. Dad liked to listen to opera and I had a really awful old record player playing a scratchy record. I had been in the back of the house and I didn’t know she was coming, so I ran down to answer the door while the record player was making such a horrible noise. The apartment was fine but it only had a few sticks of furniture.
The woman asked me if I was going to get a job, and I told her I couldn’t leave my father. Then she asked if I had a bank account, and I said no. She said, “And you don’t own a car?” And I told her I didn’t even know how to drive. Then she just kind of leaned toward me and said, “You know what? I’m just going to write you up as uncollectible.” And I said, “That’s a very good idea.” [laughs] They’ve never tried to collect since. There was just nothing to take! Zero. Nothing.
On your side, you state that those who set themselves against Western wars pay, nevertheless, taxes, which are used by the State for war and the oppression of the colored peoples.
That is quite true.
In fact our anti-militarist struggle also is as yet only something very relative, and it must go on extending.
But in any case, we have fixed clear and inflexible borders: we refuse absolutely all direct, personal participation in war and in its social and moral preparation.
But several of us employ still other means of fighting against it.… Moreover, a few of us have already decided individually to refuse to pay any taxes, whilst the organization of which I am a member has already several times been the propagandist of collective refusal of taxation.
But whereas refusal, even on a very restricted scale, to do military service has been morally and socially efficacious, the refusal to pay taxes by a restricted number of citizens only has so far had very little result, as the authorities, in confiscating property and inflicting fines, take possession of sums much larger than a direct payment of taxes would have brought them.
From this point of view, your compatriots have already given some impressive examples of collective refusal, although they also were not able to avoid regular unfair demands of the Government.
I think “the organization of which I am a member” may have been War Resisters International.
Gandhi’s response to this point is an interesting one:
A non-violent man will instinctively prefer direct participation to indirect, in a system, which is based on violence and to which he has to belong without any choice being left to him.
I belong to a world, which is partly based on violence.
If I have only a choice between paying for the army of soldiers to kill my neighbours or to be a soldier myself, I would, as I must, consistent with my creed, enlist as a soldier in the hope of controlling the forces of violence and even of converting my comrades.
You can find more of Bart de Ligt’s thoughts on tax refusal, non-violent struggle, and Gandhi’s campaigns in the essay The Effectiveness of Non-Violent Struggle, also on the Satyagraha Foundation site.
And from the academic and related worlds:
A paper by Jay A. Soled and Kathleen DeLaney Thomas on Revisiting the Taxation of Fringe Benefits notes that many companies are compensating their employees with “a cornucopia of fringe benefits, including frequent-flier miles, hotel reward points, rental car preferred status, office supply dollar coupons, cellular telephone use, home Internet service, and, in some instances, even free lunches, massages, and dance lessons.”
Some of these are proving difficult for the government to effectively tax as income.
Gregg Polsky has come up with a potentially useful way of using Roth IRA conversions to keep money away from the tax collector.
Maciej Bartkowski looks at what causes people to break out of their apathy and join risky movements for social change, in Forming a Movement: Cognitive Liberation.
