Have things really gotten that bad? →
U.S. government is cruel, despotic, a threat to people →
robbing the public and spending irresponsibly →
huge deficits / debt / war financed on credit
Zowch! Remember that the medicare bill just passed about a month ago?
At the time the White House was insisting that it had a $400 billion 10-year price tag.
Now that it’s been passed and signed into law, they say it’s gonna be more like $540 billion.
And earlier this week, the Congressional Budget Office said they figured ’s budget deficit would be $477 billion.
Now the White House says that the budget they’re going to submit will have a $520 billion deficit.
He starts by giving us a rundown of deficit spending, tax policy, and how each is manipulated in the cause of economic stimulus:
The U.S. government is running a budget deficit.
Those responsible for the budget aren’t about to jeopardise their reelection chances by “raising taxes to the levels to which they need to be raised to eliminate the deficit even if coupled with reduced spending.”
When you have a broad-based tax cut or rebate, people with less money tend to spend more of the cut or rebate than people with more money do, because they are more likely to have unmet needs that can be met by spending that are more motivating than are opportunities to save or invest.
“Recessions reflect, to some extent, insufficient consumption, generated by reduced income (which in turn causes businesses to spend less, causing even less income).”
(While this is a good argument for targeting tax cuts and rebates at poorer people when you’re trying to use them as a recession-busting measure, there are also arguments that say regardless of their recession-busting promise, measures like this are unwise for other reasons.)
The “trickle-down” theory that tax cuts and rebates aimed at the wealthy eventually have the same sort of stimulating effect on the economy via investments suffers from the fact that while poor people tend to spend their money at home, rich people often invest overseas and so their economic stimulus is especially diluted and indirect.
(I would add to this line of thought the argument that recent tax cuts, because they were accompanied by cuts in government programs for people with low incomes, may not have had the expected effect.
In other words, instead of the government paying for part of Kelly’s child care, now Kelly pays for all of it.
Maybe Kelly now has more money to do so because of the tax cuts, but her new spending doesn’t result in any more jobs.)
Maule continues:
When there is a surplus, because the economy is humming along and tax and other revenues increase faster than does government spending, the question of whether the surplus should be returned proportionately or directed totally or disproportionately to low income households poses an interesting question.
Would the tax cuts be better used by the low income households?
Recall that these households would spend the money.
In this economic environment, with the economy humming along, throwing more money into the consumption bucket would increase the spiral, cause shortages of goods and services, and trigger inflation.
On the other hand, if there is a deficit, a tax cut means that the deficit is larger (no matter who gets the cuts).
Then the question is whether the deficit would be reduced more quickly if the tax cuts were directed to the low income households or to the high income households.
If the high income households are going to funnel their tax cuts to enterprises abroad, the tax revenue would be less than if the money were spent (by any sort of taxpayer) on domestic consumption.
After all, the folks being paid to clean gutters and build home improvements, etc., now have higher income and thus will pay more taxes.
Maule says that the current tax-cut-happy, deficit-spending government’s policies are “like giving candy to a diabetic child. What the nation needs is fiscal discipline.
If the nation is going to provide all that it has promised, the nation needs to pay for it.
One can argue the merits of what should be spent on prescription drugs, social security benefits, homeland security, national defense, and the tens of thousands of other expenditures in the federal budget or waiting to be added (no matter who is elected).
Tax revenue must equal expenditures. Raise one or cut the other.
One can debate how the tax burden should be allocated, and I am not going to reinvent that wheel.
Suffice it to say that the worst thing that can be done is to increase spending (something both candidates propose to do, because votes come more easily that way) without raising taxes (something one candidate promises not to do and something the other candidate seems to support though with campaign trail words very different from the realities of the plan).”
We’ve heard that sort of common sense budget-balancing argument before, of course, but here’s where it gets interesting:
If nobody is willing to pay for all of this spending now, and as sure as “what goes up must come down” somebody’s gonna be left with the tab… who is that somebody going to be, and which piper are they going to be paying?
Is there a huge Federal credit card? No, there is something better.
The government borrows money. From whom? From two sources.
Remember the question about the high income taxpayers and what they’re doing with their tax cuts?
They’re investing in U.S. Treasury bonds (and other obligations).
And foreign governments (especially China), awash in U.S. dollars because of the trade deficit, are also buying U.S. Treasury obligations.
So, instead of the Congress directing tax cuts to people who would spend the money because they have no choice, the Congress directed most of the tax cuts to the high income taxpayers who then loaned the money back to the government so that it could spend it.
When the smoke clears, the government (us) is indebted to the high income taxpayers (and to China, if that makes anyone feel any better).
My next-to-last question: so how is this all that different from a feudal economy, in which the low income serfs were beholden to the high income nobles and royalty (and, tossing in some theology and annoying a few folks, the very high income church)?
Someday, we will wake up and the creditors will be at the door.
My last question: Who is going to pay?
Operation Bankrupt Washington continues:
Republicans want a larger, $800 billion increase in the politically sensitive federal debt limit to ensure the Treasury has sufficient borrowing authority to finance continued high budget deficits , the Wall Street Journal reports.
House and Senate Republicans had calculated that they needed an increase of $690 billion to cover funding needs, but party leaders now have chosen to seek the higher figure intended to carry the Treasury .
The increase would be the third in as many years and bring the debt limit to $8.184 trillion — 37% higher than the ceiling that President Bush inherited in 2001.
Republican budget writers say they may have found a way to cut the federal deficit even if they borrow hundreds of billions more to overhaul the Social Security system: Don’t count all that new borrowing.
As they lay the groundwork for what will probably be a controversial fight over Social Security, Republican lawmakers and the Bush administration are examining a number of accounting strategies that would allow the expensive transition to a partially privatized Social Security system without — at least on paper — expanding the country’s record annual budget deficits.
The strategies include, for example, moving the costs of Social Security reform “off-budget” so they are not counted against the government’s yearly shortfall.…
They include treating the cost of Social Security reform not as a present-day expenses, but more as a prepaid benefit for future retirees that should not be counted against current deficits.
Or they may take the costs “off-budget,” meaning Social Security spending would not be included in the calculation of the annual budget deficit.
Excuses, excuses: Between working hard at this contract and experiencing a two-day internet outage at home, I haven’t been able to update The Picket Line much lately — which is too bad, because there has been plenty to write about.
As Yoo saw it, Congress doesn’t have the power to “tie the President’s hands in regard to torture as an interrogation technique.”
He continued, “It’s the core of the Commander-in-Chief function.
They can’t prevent the President from ordering torture.”
If the President were to abuse his powers as Commander-in-Chief, Yoo said, the constitutional remedy was impeachment.
He went on to suggest that President Bush’s victory in the election, along with the relatively mild challenge to Gonzales mounted by the Democrats in Congress, was “proof that the debate is over.”
He said, “The issue is dying out.
The public has had its referendum.”
And yet there’s activism afoot:
With the sort of astute planning that has made the U.S. peace movement so effective, Northern California War Tax Resistance held a workshop for prospective war tax resisters in the middle of the afternoon on .
Still, the event attracted a dozen people who were determined to start resisting their taxes and were eager to find out how.
The invitation for some of these troops effectively to desert comes from members of the Irish parliament and even a former Irish army commandant, Ed Horgan — who made it clear he wouldn’t make such a suggestion lightly.… ¶ Irish and international law on refugees makes it clear that soldiers are not excluded from making asylum applications, which can be made to any Irish police officer (Garda) or immigration official.
Soldiers who face being forced to obey “unlawful orders” are explicitly mentioned in the refugee statutes.
Deborah Solomon:
The U.S. government has to get money from somewhere.
As a two-term former Republican senator from Florida, where do you suggest we get money from?
Connie Mack:
What money?
DS:
The money to run this country.
CM:
We’ll borrow it.
DS:
I never understand where all this money comes from.
When the president says we need another $200 billion for Katrina repairs, does he just go and borrow it from the Saudis?
Susan Pace Hamill, a law professor at the University of Alabama, has spent a lot of time trying to persuade people that Jesus (yes, the Jesus) had a strong opinion about tax policy that just happens to coincide for the most part with the sentiments of liberal Democrats.
Seriously.
Check this out:
I… provide a complete theological framework that can be applied to any tax policy structure.… I prove that tax policy structures meeting the moral principles of Judeo-Christian ethics must raise adequate revenues that not only cover the needs of the minimum state but also ensure that all citizens have a reasonable opportunity to reach their potential.
Among other things, reasonable opportunity requires adequate education, healthcare, job training and housing.… I also establish that flat and consumption tax regimes which shift a large part of the burden to the middle classes are immoral.
Consequently, Judeo-Christian based tax policy requires the tax burden to be allocated under a moderately progressive regime.
I discuss the difficulties of defining that precisely and also conclude that confiscatory tax policy approaching a socialistic framework are also immoral.
Inspired perhaps by the mighty guffaw that Hamill’s scholarship gave me, I decided to take another look at what Jesus actually said about tax policy.
I wasn’t able to find the verse where he says “give unto Cæsar what Cæsar needs to provide job training and housing to those of his subjects in Judaea who need an opportunity to reach their potential” but I’m no biblical scholar.
In in Bolivia, a Jehovah’s Witness named Alfredo Díaz Bustos was drafted into the military and attempted to avoid military service as a conscientious objector.
The authorities, recognizing no conscientious objector exemption, granted him an exemption certificate that classified him as unqualified for service, but demanded a special “military tax required of persons declared exempt from military service.”
He asked to be released from this requirement for the same reasons of conscience that did not allow him to serve the military directly.
This was denied.
Bustos then appealed to international law, in this case the American Convention on Human Rights.
Incredibly, it worked! The government of Bolivia backed down and released Bustos from any obligation either to serve in the military or to pay the exemption tax.
Furthermore, the government agreed to formally recognize the right to conscientious objection to military service.
With that in mind, I noted a handful of confrontational real-world protests that seem to be reaching for new tactics and new targets, and which seem worth keeping an eye on:
Over at the The Volokh Conspiracy, guest-blogger Kirk Stark has been writing up some posts based on the book War and Taxes that he co-wrote along with Steven Bank and Joseph Thorndike.
This is only tangentially related to tax resistance, but gives some insight into the politics behind the puzzle of why the Iraq War was accompanied by tax cuts, whereas other American wars have been accompanied by tax increases.
Some commentators have called this unprecedented and outrageous.
War and Taxes
“The basic objective of our book is to evaluate the historical claims implicit in these comments.
Is it in fact true that ‘President Bush is bucking history’ and that ‘we have always accepted heavier burdens as the price those at home pay to support those under fire on the front?’
Unafraid to make bold, daring historical claims, our answer is… yes and no.”
The Evolution of GOP Attitudes toward Wartime Taxes
“For more than a century — from the founding of the Republican Party through the war in Vietnam — Republican leaders consistently supported high wartime taxes.
Indeed, support for higher wartime taxes was a defining feature of being a military hawk among the GOP faithful.”
Taxes and Defense Spending as a Percentage of GDP
“…in my view there is a strong parallel between Lyndon Johnson and George Bush with respect to the war financing question.…
Johnson refused to pursue a tax increase to help pay for the war in Vietnam in and , despite the urging of his economic advisors, because he feared doing so would endanger political support for his cherished Great Society programs.
Similarly, President Bush has no interest in paying for the war in Iraq out of new taxes because doing so would necessarily involve repudiating his own chief domestic priority — the and tax cuts.
Thus, in both cases, we see an administration seeking to preserve its own domestic policy agenda at the expense of future taxpayers.”
Is Rangel’s Call for a Draft Tax-Driven?
“House Ways and Means Chairmen Charlie Rangel has been one of the few politicians to dare call for reinstituting the draft during the current Iraq conflict.
A veteran of the Korean War, Rangel has long advocated the draft as a way to supplement the troops in Iraq and elsewhere and to spread the sacrifice more equally.
He also has said that it would have kept us out of the war in the first place.
Nevertheless, a draft — and in particular a controversial draft — arguably would also serve another purpose: It would help advance Rangel’s tax policies.”
Are the Renewed Inflation Fears a Harbinger of War Taxes?
“…can [we] expect politicians to justify the adoption of war taxes as a response to inflation if the rise in energy and food prices spreads more generally?
Highly doubtful.
One big change in the past quarter century since Vietnam has been the increased importance of the Federal Reserve Board….
to a large extent, it has been successful in keeping inflation relatively low even in the face of rising deficits.
Tax is now considered too crude an instrument for the job.
Nevertheless, it would not be surprising to see at least some anti-inflation rhetoric used in support of tax increases if the Fed falters and to see renewed support for more narrowly-tailored measures such as tax indexing as a general response.”
The Volokh Conspiracy is a conservative group blog with a focus on legal issues.
It’s one of the last conservative blogs I can still stand to read.
Even so, it has its awful moments.
I find it less-exasperating if I filter out David Bernstein (whose commentary on the Middle East is a predictable and uninformative litany of why Israel is good and those who disagree are evil), Jim Lindgren (who seems determined to post the daily Republican talking point about Obama from now until they run out of spin), and their annoying “Sunday Song Lyric” (why do people do this?).
You can subscribe to this filtered feed too if your tastes run similar to mine.
How I learned to stop worrying and love the national debt.
The United States Joint Forces Command has released its Joint Operating Environment report, meant to anticipate future challenges to the U.S. military and how they might be met.
The report paints the familiar picture of federal government spending, and particularly its spending on interest on the national debt, rising and rising, while tax revenue stays flat, then concludes:
The foregoing issues of trade imbalance and government debt have historic precedents that bode ill for future force planners.
Habsburg Spain defaulted on its debt some 14 times in 150 years and was staggered by high inflation until its overseas empire collapsed.
Bourbon France became so beset by debt due to its many wars and extravagances that by the contributing social stresses resulted in its overthrow by revolution.
Interest ate up 44% of the British Government budget during , inhibiting its ability to rearm against a resurgent Germany.
Unless current trends are reversed, the U.S. will face similar challenges, anticipating an ever-growing percentage of the U.S. government budget going to pay interest on the money borrowed to finance our deficit spending.
A more immediate implication of these twin deficits will likely mean far fewer dollars available to spend on defense.
In defense spending accounted for some 49% of total government expenditures, but by had dropped to 20% of total government spending.
Following current trend lines, by the defense budget will likely consume between 2.6 percent and 3.1 percent of GDP — significantly lower than the 1990s average of 3.8%.
Indeed, the Department of Defense may shrink to less than ten percent of the total Federal budget.…
This “shrinking” of the military budget the report decries, it typically represents as a shrinking of the percentage of government spending that goes to the military — and this is more a factor of increased government spending and expanded government in general than a hint of any actual real reduction in military spending.
In other words: They’re getting a smaller slice of a bigger pie, and getting fatter than ever.
But it’s true that budget pressures will become more severe in the coming years, to the point where the now-sacred Pentagon budget may indeed go on the chopping block along with everything else.
My worry, though, is that instead of seeing our bloated military as a liability that the government should cast overboard in pursuit of budget sanity, our political class will come to see it as an asset that we should rent out dearly to the highest bidder in order to recoup our investment.
Who wants Kashmir?
Pakistan?
India?
China?
How badly do you want it?
We can help you get it if the price is right.
On , I made a visit to my dear friend, Jonathan Farnum, at Uxbridge, who was very far gone in a consumption.
I sat up with him during and in we had some serious conversation together, in the course of which, after mentioning that he had given up all expectation of recovery, and felt resigned in mind, and willing to leave all, even his dear children, he said considerable about the taxes and something about the paper money that he had been much exercised upon these subjects, and it appeared clear to him that Friends ought to have nothing to do with either.
It also appeared to him, he said, that such as took the money helped the people to use the sword, “And oh!” said he, “that Friends may keep their hands clean, and not defile them with blood.”
I suppose his meaning was that the money, being made expressly for the support of war, to give it currency was at least remotely helping forward and promoting war, and in that sense assisting people to use the sword.
Some time after he said: “Such as have tender scruples in their minds ought not to be discouraged, but otherwise.
But how can those who are in the spirit of the world judge of these things?
They must be redeemed before they can be judged.
They must come out of the spirit and reasonings of the world; for it is not reasoning upon policy that is the thing, but waiting to feel what the Lord requires; and there is no way of safety when we have tender scruples, but in attending to them, and not reason and reason ourselves into the dark.
I believe I had, when the first bill was presented to me, a sufficient check, had it been attended to, to have prevented my touching it.
I believe so.
We must have a care of that spirit which says, “We cannot live without taking it.”
David said he had never seen the righteous forsaken, nor his seed begging bread; and I believe God never will forsake the faithful, nor will their seed beg bread.
This spirit of the world — oh! that Friends may be redeemed out of it.”
Having for nearly a year declined taking the paper currency, agreeably to the secret persuasion which I had of my duty therein, as before mentioned, I have now the satisfaction of comparing the different rewards of obedience and disobedience.
For though, from the very first circulation of this money, I felt uneasy in taking it; yet fears and reasonings of one kind or another prevailed on me to take it for a season; and then it became harder to refuse it than it would probably have been at first; but growing more uneasy and distressed about it, at length I refused it altogether, since which I have felt great peace and satisfaction of mind therein; which has, in a very confirming manner, been increasing from time to time, the longer I have refused it: and although I get almost no money of any kind, little other being in circulation, yet I had much rather live and depend on divine Providence for a daily supply, than to increase in the mammon of this world’s goods, by any ways or means inconsistent with the holy will of my heavenly Father: and the prayer of my soul to him is, that I and all his children may be preserved faithful to him in all his requirings; and out of that love of things here below, which alienates from the true love of and communion with him.
About the latter end of , an old acquaintance of mine, being now collector of rates, came and demanded one of me.
I asked him what it was for.
He said, to sink the paper money.
I told him, as that money was made expressly for the purpose of carrying on war, I had refused to take it; and, for the same reason, could not pay a tax to sink it, believing it my duty to bear testimony against war and fighting.
I informed him, that for diverse years past, even diverse years before the war began, and when I had no expectation of ever being tried in this way, it had been a settled belief with me, that it was not right to pay such taxes; at least not right for me, nor, in my apprehension, right in itself; though many sincere brethren may not at present see its repugnancy to the pure and peaceable spirit of the gospel.
I let him know I did not wish to put him to any trouble, but would be glad to pay it if I could consistently with my persuasion.
He appeared moderate, thoughtful, and rather tender; and, after a time of free and pretty full conversation upon the subject, went away in a pleasant disposition of mind, I being truly glad to see him so.
Diverse such demands were made of me in those troublesome times for diverse years: I ever found it best to be very calm and candid; and to open, as I was from time to time enabled, the genuine grounds of my refusal; and that, if possible, so as to reach the understandings of those who made the demand.
At our Yearly Meeting this year, , the subject of Friends paying taxes for war, came under solid consideration.
Friends were unanimous, that the testimony of truth, and of our Society, was clearly against our paying such taxes as were wholly for war; and many solid Friends manifested a lively testimony against the payment of those in the mixture; which testimony appeared evidently to me to be on substantial grounds, arising and spreading in the authority of truth.
It was a time of refreshment to an exercised number, whose spirits, I trust, were feelingly relieved, in a joyful sense of the light which then sprung up among us.
On the whole, I am renewedly confirmed that, however the burden-bearers of the present generation among us may hold on their way, or fall short and give back, the Lord will raise up a band of faithful followers, who, preferring Jerusalem’s welfare to their chief joys, will press through the crowd of and follow the Lamb whithersoever he leads them.
Some tax resistance links that have scrolled by in recent days:
I noted that a chapter of one of the largest political parties in the Democratic Republic of the Congo had called for a tax strike against the Kabila autocracy.
That call has now been joined by organization Lucha, based in North Kivu, which is asking citizens to stop paying taxes, utility bills, fees, royalties, and licenses until Kabila steps down.
Departing IRS chief John Koskinen, in his final news conference, warned that continuous budget cuts have pushed the agency to the breaking-point.
A catastrophic malfunction of the agency’s decrepit information technology “is not a question of whether, simply a question of when,” he said.
In addition, budget cuts and personnel losses have reduced the agency’s ability to credibly deter tax evasion.
“If people think that many others are not paying their fair share or that they’re not going to get caught if they cheat… our voluntary compliance system will be put at risk,” Koskinen said.
“A 1% drop in the compliance rate translates into a revenue loss of over $30 billion every year.”
Howard Waitzkin, in Monthly Review looks at some of the prospects for would-be revolutionaries in “the Global North,” including the potential for tax resistance as a revolutionary activity.
Excerpt:
Besides direct action, revolutionaries can change what we do with our money,
especially in the realms of taxes, investments, and local economic activities.
Such changes can disrupt, undermine, and create space for further
revolutionary actions. We in the 99 percent persist as the main funders of the
capitalist state, which passes our money on to corporations that exploit
workers, destroy nature, raise the earth’s temperature, and keep us in
permanent war and perpetual inequality. We need to change our habits of giving
up our money, and if enough of us do so, the capitalist state no longer will
be able to prop up the capitalist economy for the benefit of the ultra-rich.
Tax resistance can take several forms. For more than a century, pacifists in
the United States have resisted taxes that pay for war, some eventually going
to prison but the vast majority, like me, suffering no substantial harm as a
result. As a card-carrying conscientious objector, I openly resisted half of
my income taxes for more than a decade during and after the Vietnam War. If
one honestly declares one’s income, there is nothing illegal about claiming a
war deduction of 50 percent, which is the approximate percentage of the
federal budget that pays for past, present, and future wars. Later, with a
young daughter, I was starting to feel inconvenienced and a little bored by
appeal procedures inside and outside the Internal Revenue Service because of
open tax resistance. So I reluctantly made the same decision that Trump and
his ilk make, to avoid taxes through loopholes rather than resistance of
conscience.
The problem with either explicit or implicit tax resistance is that we number
in the thousands rather than millions. “Death and taxes,” the two
inevitabilities, as we are taught, seem hard to resist, but corporations and
rich individuals understand very well that at least taxes actually are not
inevitable. In Latin America, tax resistance usually proceeds according to the
Trump model for corporations and the rich, but ordinary people can succeed in
massive tax resistance through non-reporting or under-reporting of income.
During the dictatorships in the Southern Cone, the autocratic governments had
trouble raising sufficient tax revenues, despite extensive attempts through
bureaucratic and police surveillance, and tax resistance became one of many
tactics to bring down those regimes. Ironically, a major motivation in Cuba
for allowing expansion of private small businesses involves a perception that
private-sector business activities were expanding anyway, along with rampant
tax evasion; if permitted officially, small businesses could generate
substantial taxes for social programs. Even in Cuba, tax resistance has
interacted with political organizing in Poder Popular and community-based
organizations to enhance popular participation. As a revolutionary strategy in
the United States, tax resistance must flourish, so millions of us stop
functioning as the main financiers for the capitalist state.
John Stoner, at Mennonite World Review, invites Mennonite taxpayers to find the courage to be a conscientious objector.
Excerpt: “In the United States, conscription has ended and we as persons are not conscripted for war.
But war goes on unobstructed, because our money is conscripted.
We could be conscientious objectors to war by being conscientious objectors to taxation for war.
So, why aren’t we conscientious objectors to taxation for war?”
Businesses in Tunisia have responded to surprise tax hikes by vowing not to pay.
I’m going to try to wait to comment on the tax bill oozing through Congress until something actually becomes law, but Calvin H. Johnson couldn’t wait.
He says that the proposed tax cuts will push the U.S. federal debt past the point where it threatens the stability of the fisc.
And not a moment too soon.
Using smartphone-tracking data and precinct-level voting, we show that
politically divided families shortened Thanksgiving dinners by 20–30 minutes
following the divisive 2016 election. This decline survives comparisons with
2015 and extensive demographic and spatial controls, and more than doubles in
media markets with heavy political advertising. These effects appear
asymmetric: while Democratic voters traveled less in 2016, political
differences shortened Thanksgiving dinners more among Republican voters,
especially where political advertising was heaviest. Partisan polarization may
degrade close family ties with large aggregate implications; we estimate 27
million person-hours of cross-partisan Thanksgiving discourse were lost in
2016 to ad-fueled partisan effects.
Today I’ll share some links about tax policy and tax resistance in the United States that have caught my attention recently.
First, though: I’ve started a Wikipedia page on Tax resistance in the United States that covers how theories about tax resistance have shaped (and been shaped in) the U.S., and how tax resistance in practice has played out in the country.
Wikipedia is an open, collaborative project that anyone can help to edit, so I encourage you to learn what it’s all about and how to help make it better.
Now on to the links:
Tax Evasion
The New York Times got its hands on a trove of financial documents concerning the real estate empire of Fred C. Trump, Donald Trump’s father, and published a well-done exposé on what they found.
From the point of view of today’s political squabbles and tomorrow’s history lessons, the takeaway is that Donald Trump’s brand, in which he is represented as a self-made business prodigy, is a laughable con job.
From our vantage, however, what’s interesting is the extent to which the Trump family used legal, effectively-legal, and illegal methods to evade taxes.
They paid a fraction of what they owed, again and again.
This may help bolster the widespread feeling that rich people commonly get away with tax evasion, sticking it to the little guy.
This in turn erodes “tax morale” which causes voluntary tax compliance to fall.
Another bit of journalism hammering on this theme (though more free-wheeling and not as methodically precise) comes from GQ: “How Puerto Rico Became the Newest Tax Haven for the Super Rich”.
Apparently if you can convince the IRS that you’ve become a permanent resident of the U.S. Territory of Puerto Rico, you’ll find yourself in “the only place on U.S. soil where personal income from capital gains, interest, and dividends are untaxed.”
General Government Failure
“The federal government could soon pay more in interest on its debt than it spends on the military, Medicaid or children’s programs.”
Thus begins a New York Times article on the growing federal government debt.
“Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office.”
The more the federal government is reduced to being a collection agency for bondholders, the less mischief it can get up to elsewhere.
Far from addressing this problem, today’s policymakers are exacerbating it, so we have more such headlines to look forward to.
The National Taxpayer Advocate says that the IRS is cooking the books when they report their numbers on how their phone “customer” service is doing just fine.
For one thing, they don’t measure the phone numbers with the worst service.
For another, they don’t count getting tangled up in an unhelpful “press X for Y” phone menu and then hanging up in frustration as an unsuccessful call.
For another, they count merely talking to an IRS operator as a successful call, whether the operator was able to resolve the problem or not.
Republicans are prone to complain about the percentage of U.S. households who are so poor they don’t have to pay income tax (remember Mitt Romney’s revealing “47%” comments way back when?
Or the Wall Street Journal’s “lucky duckies” editorials?).
But that didn’t stop them from crafting their major tax legislation (the recent “Tax Cuts and Jobs Act”) in such a way that it will increase the percentage of American households who pay no federal income tax.
The Tax Policy Center estimates that fully 44% of American households will pay no federal income taxes at all (2% more than ).
About 25% will pay no payroll tax either, or their payroll tax will be offset by a refundable income tax credit.
“Millennials” (says the New York Times)
are joining together to swap techniques for quitting the rat race and retiring early, in something called “the FIRE movement.”
They begin to live more frugally, squirrel things away, take greater care of their investment decisions, and eye an early modest retirement or semi-retirement.
Most of the examples in the article are of pretty well-off people who really just needed to stop living at or above the lifestyle they could afford.
But it’s people like them who pay the taxes, and by stepping off the treadmill, they stop doing so or at least stop doing so much.
So if you know anyone in that category, send them a link.
About ten years ago the number of Americans renouncing their U.S. citizenship began to shoot up, from what had been a normal range of two to eight hundred people a year to a high of 5,409 people in .
But things seem to have leveled off since then.
Why?
Your guess is as good as mine, maybe better.
The fan and the shit are failing to practice social distancing as March comes to a close.
If you want the latest on epidemiology, hygiene tips, or obnoxious things people have tweeted recently, you won’t find it here.
But I will try to sift through the news a bit and find things that might be of some interest to those of us in the tax resistance fringe.
If among your fondest dreams is something to do with delivering the federal government’s budget a crippling body blow, you may have reason to smile right now.
Tax revenue has got to be dropping fast: personal income is surely way down as unemployment claims are at unprecedented levels; probably also many self-employed people who don’t normally qualify for unemployment are out-of-work as well.
Businesses are closing their doors and foregoing revenue.
Industries like travel, professional sports, casino gambling, are taking across-the-board hits.
So business income is in the shitter too.
Capital gains? Remember those?
Tariffs, Trump’s favorite go-to tax, also down as international borders close, shipping runs into quarantines, and customers dry up.
Boy would this be a good time for the government to dip into its rainy-day fund that it’s built up by running budget surpluses during the fat years.
Heh nope.
The budget deficit has ballooned during the Trump administration.
But that hasn’t stopped the politicians.
In desperation they enacted a bipartisan $2 trillion economy-goosing bill — a mix of loans and cash giveaways (and suspiciously-targeted tax breaks and the usual pork).
For comparison, the entire federal government budget is a bit over $4 trillion; the national debt is was about $23 trillion.
This new stimulus bill was on top of another bill enacted a little over a week ago that cut the payroll tax for and provided new tax credits for many companies, and also made more people eligible for federal unemployment insurance payments.
This paragraph is based on preliminary news reports about the just-enacted law, and so may be wrong in some or many particulars:
The new stimulus law includes a provision for sending $1,200 checks to just about everyone in America (plus $500 for dependent children).
Early reports say that the checks will only go to citizens and legal residents with incomes under a certain threshold, which is based on the income on their 2019 tax returns, and that they’ll phase out as they approach that threshold.
The checks will be treated as advance payments on a tax credit that will apply on the 2020 tax year’s filing, and so if your income is lower this year than in 2019, you’ll make any adjustment then if you actually qualify for more money than you ended up getting this year.
I hear tell that they’ll be issuing checks even to people with an existing tax debt, so even a scofflaw like me might get a payout.
That’d be hilarious.
However, what about people who don’t file tax returns — either tax resisters who choose that method of resistance, or people with very low incomes who aren’t legally required to file?
I haven’t heard how they plan to handle this.
Meanwhile, the IRS is sending almost all of its employees home, at a time of year when the agency would normally be having all-hands-on-deck to deal with tax filing season.
The tax filing (and paying) deadline was pushed out a few months, to , which takes some of the pressure off, but still this is a pretty big deal.
I’m going to go out on a limb and guess that an agency whose databases are still running fifty-year-old CoBOL probably doesn’t have state-of-the-art remote working capabilities, either.
In any case, according to the union contract, in order for an IRS employee to work remotely they must have high-speed internet and “an alternative space that’s conducive to working.”
Without those things, the IRS can’t force them to work, and has to put them on “weather and safety leave” instead.
The agency has already suspended deadlines for tax payments, installment payments, and offers in compromise payments.
They’ve also put a halt to any new liens and levies initiated either by field collection officers or by their automated systems.
They’ll also stop referring tax delinquents to private tax collection agencies, or reporting them to the State Department to have their passports denied.
In short, their collections & enforcement division is taking a breather until mid-July at the earliest (and a lot of us can breathe easier too).
Some recent links of note:
Earn less money so you owe less taxes and fund less of the government’s bad deeds, or earn more money so you can donate more to good causes and offset the damage done by your taxes? Such a decision becomes even more complex when your finances are entwined with those of a partner. Lindsey Britt thinks over her options at NWTRCC’s blog.
The Congressional Budget Office recently released its projections for what the U.S. federal government budget is likely to look like in the future based on current law and economic conditions.
It is an eye-opener.
Last year when they issued their report, they thought the U.S. government debt would be about 79½% of the nation’s gross domestic product, a number that raised eyebrows at the time.
But that was before the coronavirus.
Now they say the number will be upwards of 98% — a level the country has not seen since the all-out mobilization for World War Ⅱ.
And it just keeps climbing from there.
By 2050 it is projected to nearly double to 195%.
This is because government spending as a percentage of GDP is expected to rise, from “rising interest costs and the costs associated with an aging population and excess health-care cost growth”.
The federal budget deficit this year is projected to be $3.3 trillion, which is just freaking unprecedented.
“It is hard to overestimate what a dismal fiscal future the Congressional Budget Office foresees.”
Catalan separatists, on the other hand, seem to be turning up the heat.
They have identified a set of basic infrastructure companies that are in favor of Catalan secession and that are working to disentangle their Catalan operations from the Spanish state: companies in the telecom, energy, petrol, insurance, and banking sectors for example.
They are encouraging people in Catalonia to shift their consumption to those companies, and also to pay their federal taxes through the Catalan tax agency, as a way of easing the eventual transition to independence.
