Some historical and global examples of tax resistance → Spain → comprehensive disobedience movement → Troika Fiscal Disobedience Consultancy

Some links that have graced my browser in recent days:

The Satyagraha Foundation for Nonviolence Studies recently came to my attention. It has a few pages that touch on tax resistance, including:

  • An interview with Kathy Kelly. Excerpts:
    Street Spirit
    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.
  • Correspondence between Bart de Ligt and Mohandas Gandhi. Here’s some of what de Ligt wrote in :

    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:

An article by Alba Muñoz that appeared in PlayGround examines the Troika Fiscal Disobedience Consultancy project (translation mine):

Troika Fiscal Disobedience Consultancy

A Tax Haven For All: The Decisive Rebellion?

Disobedience.eu is born, a consultancy designed to resist the Troika

An old guy on my block used to say: “If you’re going to steal, steal big. Because if you stay small, you’re just a thief, but if you steal big you’ll be a millionaire. All it takes to be rich is to skim a little from everybody.”

“You make a lot of sense!” I thought. But the old guy never stole, at least not on a grand scale, and to me, frankly, the proof is in the pudding. The world is an unfair place, sir, and what are you going to do?

He who has the most pays the least, and this, at least when it comes to taxes, goes without saying: all of the companies in the IBEX 35 — those that are publicly traded and have the most liquidity in Spain — are located in tax havens and pay minuscule amounts to the Treasury in comparison to their earnings. Citizens, small- and medium-sized businesses, aren’t so fortunate with the tax collector.

It’s unfair, but legal. They bask in the sun on a private beach, and to the rest of us they leave only a miserable puddle to splash around in. Is there really nothing that can be done?

Beyond complaining, there’s a new plan — a yet untried option: drag our towels and camping chairs onto the private beach to say, “Hello, buenos días, good morning, guten morgen, we are also in the club.”

, Disobedience.eu, the first tax rebellion consultancy meant for the common people, was launched.

It all began when the artist Núria Güell contacted Enric Duran, the activist known as the “Robin Hood of the banks” for swindling — or expropriating, you might say — some half a million euros from various financial institutions in , with the motive of finding a way to buck the Troika. From there a small tax advisor emerged, the Troika Fiscal Disobedience Consultancy.

A score of European activists, and Duran from the underground, launched what may come to be the largest hack of the financial system in Europe, at least on the part of the citizenry.

“It starts by resisting the Troika through financial strategies, by playing with the law in the same ways as the neoliberal corporations,” says Güell.

The idea is to imitate Apple, Google, and Banco Santander — not for personal gain, but “to stop paying an illegitimate debt and to start financing the common good.”

“The Troika is dedicated to commandeering and privatizing the commons, it has a colonizing nature: all the countries that are subjected to it, like Spain, Ireland, or Greece, lose their sovereignty. We must create a parallel financial system.”

Fiji, the Cayman Islands, Liechtenstein, your home

If we were to do a math problem, it might go as follows: Say that John has a balance last trimester that comes to 2,000 euros VAT. John sends an email to Disobedience.eu with the amount he wants to resist (2,000 euros) and they will supply him with an invoice for that amount.

John will pay 8% for the service: management fees (1%) and a contribution to a common fund (7%). “The rest (92%), although recorded as paid, will not actually be charged. As far as I know, to forgive a debt is not a crime,” says Güell.

So John has an invoice that states that he has made a tax payment in Spain, although in reality no such thing happened.

“In the EU there is free trade, but in practice there is no common fiscal policy, and the justice system is not coordinated. The countries as a result have trouble obtaining information from one another. The big companies benefit from this, and now the little guy can do so as well. It would be very difficult for the administration of the country where he is consulting to know who has not claimed the income.”

John has evaded taxes, mimicking the techniques of the big multinationals, but for another purpose.

“92% of the money is yours. The idea is that you can dedicate it to projects for the common good, which are increasingly privatized or abandoned by the state.” For example, a support network for refugees or school libraries.

Desobedience.eu was inspired by the Coperativa Integran Catalana and the Right of Rebellion Collective, and will be linked to the international Fair Coöp collective. For this reason, Güell expects there will be a rapid increase of clients, projects, and affinity groups: “The assignment of the funds is up to each client. Nobody will be monitoring or checking on where it is going.”

Isn’t this a do-gooder form of tax evasion? How can you prevent “dishonest” evaders from using this tool?

Activists will sift the clients: “If a capitalist business wants to use this service to evade taxes, it will be turned down. On the other hand, a group of lawyers with a social focus have already been accepted.”

Gandhi versus Starbucks

The tax disobedience initiative has sparked interest, but also an understandable fear of possible legal problems. Güell asserts that the activists involved have everything sorted out: “The only people who run a real risk are those who put in their names to form the company, but they are insolvent and that protects them.”

Throughout history there are numerous examples of economic disobedience. “From the Boston Tea Party in to the Salt March of Mahatma Gandhi in .” Though there are also much more recent examples:

In the residents of Crickhowell, a town in Wales, grew tired of paying much more in taxes than Starbucks and decided to declare themselves a tax-free town and to create a company in the Cayman Islands: “They initiated a collective action of tax resistance, and since then the State has not done anything.”

With the activists of Disobedience.eu there is more resolution to attack the core of the system than fear of the possible repercussions. Furthermore, for Güell, economic disobedience is better politics than voting in democratic elections.

“If we do not have autonomy with respect to the Troika and the markets, there is no way to advance the many initiatives that we put forward. They are the obstacle, because they are above democracy. The dictator is only a dictator if he has subjects; disobedience is the only way remaining to us. Furthermore, disobedience is intrinsic to democracy.”

The real hurdle is to go beyond the environmental activists and the more politicized minorities and to extend the initiative across the whole population.

“Workplace exploitation; inability to make ends meet; a rainbow assortment of pills for depression; daily suicides from eviction, foreclosure, or meaninglessness; and murderous barbed-wire over some fictitious dividing lines. Why dedicate your life to feed this machinery that only benefits a minority?” asks Güell.

“You just need to open your eyes to notice that Europe is at a dead-end, caught between the technocrats of the Troika and the anti-immigration nationalists. The European Union is no more than a financial plan for plundering social wealth and impoverishing the workers, a set of legalized financial crimes that act to transfer the income of citizens to the banks and large corporations.” And as such, the response should be collective and in the financial sphere.

As Aristotle told us, politics does not manage the public sphere, rather our everyday actions are what create policy.

The actual mechanism by which the tax evasion happens is left a little obscure by this article, but as best I can gather it’s something like this:

In Europe there is a value-added tax, which is something like a sales tax. It is added to the price of the good as it increases in value during its manufacturing stages, but intermediate goods that are sold to other sellers (for instance, goods purchased by merchants for resale) do not have more tax added to them.

If you’re buying something for resale, rather than paying the tax at the time you buy it, you indicate to the seller that you’ll be adding the tax to the price of the goods at the time you resell it, and then whoever sells the goods to you sells you the goods tax-free. An exchange of invoices allows the tax agencies, in theory, to follow the supply chain to whoever is responsible for collecting and remitting the tax.

But this process is frequently gamed. For instance, if the final seller is a sort of Potemkin business that vanishes before taxes are due, then the taxes never have to get paid. Or, apparently, if that seller is officially domiciled outside the European Union — say, in the Cayman Islands or something.

So what the Consultancy seems to be doing is to be providing invoices saying that they’re responsible for paying any value-added tax that ordinarily would be paid by a resisting small business. They charge the business for the cost of the goods, but they don’t bother to collect most of the money. So the business is off the hook for the tax, the Consultancy doesn’t generate any income that might make it liable, and everyone walks away a little happier.

Something like that, anyway.

They also seem to be doing some of their transactions (the percent of the invoice they do intend to collect, for instance) in “FairCoin” — a bitcoin-like currency. I’m not sure what advantages if any this gives to the Consultancy or the businesses that use it, but it seems like something that could boost the value of FairCoin as a currency, and maybe that’s the point.

There’s a new NWTRCC newsletter out, with content including:

In other war tax resistance news: