How you can resist funding the government →
about the IRS and U.S. tax law/policy →
how is tax law/policy/administration changing? →
tax policy tangent to the budget deficit/debt debate
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?
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.
Congress is wrapping up its tax legislation.
Here is some of what I’ve learned about it — particularly those parts that might be important to people trying to eliminate their income tax as I do, by keeping our incomes low:
This is expected to be costly to the U.S. Government.
It is projected to lead to the government collecting $1 trillion dollars fewer in taxes over the next decade.
This will likely show up as increased government debt, as the Republicans had a hard enough time doing the easy part (lowering taxes) and are unlikely to be able to muster enough courage to do the hard part (reducing spending).
Republican optimists hope that by keeping this $1 trillion out of government hands and in the private sector, the economy will boom, leading to higher tax receipts after all, and so things will all balance out in the end.
People who know how to run the numbers, though, don’t seem to be taking that scenario seriously.
The bill reduces both corporate and individual tax rates.
But for a lot of people, what really controls how much they’ll pay is not their rate, but how much of their income is subject to the income tax and how much is safely deducted out of harm’s reach.
In any case, the lowest of the rates (10%) remains the same as before and covers just about the same amount of taxable income, so from the point of view of a low-income tax resister like myself, nothing much has changed here.
Next year, the standard deduction had been scheduled to go up to $6,500, and the personal exemption to $4,150 — shielding $10,650 of a single person’s income from income tax.
The new legislation eliminates the personal exemption, but boosts the standard deduction to $12,000 — thereby adding $1,350 to the amount that’s shielded in this way (people filing as married-joint, married-separate, or head-of-household also see rises to their standard deductions).
Modifications to the child tax credit and credits for non-child dependents are meant to make up for the absent personal exemption for people with dependents.
The bill eliminates some itemized deductions, but also eliminates the limitation on how much of such deductions you can take if you’re well-off.
You will also be able to take a slightly higher proportion of your Adjusted Gross Income (60%, up from 50%) as a deduction for charitable contributions, and the law will become somewhat more generous about allowing you to take a deduction for medical expenses.
I haven’t looked into this very closely, but it’s possible that this holds out some hope to high-rollers that they might eliminate their federal income tax through zealously pursuing itemized deductions.
The bill would allow you to use tax-advantaged education savings accounts to pay for a child’s tuition at a private elementary/secondary school (in the past, these accounts could only be used for post-secondary education).
This could be a useful tax shelter for people who would prefer not to inflict government-run schooling on their children.
It’s surprising to me just how little actual change there is from the status quo.
Everybody complains about the complexity of filing their income taxes, and politicians get lots of mileage about promising to let people file on the back of a postcard and the like.
But after all of the wrangling, this new bill keeps the individual Alternative Minimum Tax and doesn’t even reduce the number of tax brackets — the cheapest trick in the “simplification” bag.
It even introduces a lot of new complexity by means of its new method of taxing “pass-through” income — something that may cause some new headaches (or, may we hope, offer new tax-saving opportunities) to those of us with Schedule C income from sole proprietorships, gig economy work, or small businesses.
I was also a little surprised to see neither the House nor Senate try to boost Health Savings Accounts.
These are a more Republican-identified health care policy reform measure, and I would have thought that as they try to sabotage Obamacare that they would have put some effort into bolstering some of their own alternative ideas.
No such luck.
It makes me wonder if maybe Health Savings Accounts are a craze that has come and gone and that we might expect the program to atrophy at some point.
War Tax Resistance
Some war tax resisters are very public with their resistance, and consider protest and confrontation with the powers that be to be crucial parts of how they make their stand.
Others are more private and understated, refusing to pay but not making a lot of hullabaloo about it. On the NWTRCC blog, Erica Leigh examines public vs. quiet resistance.
War tax resister Larry Bassett looks at “the power of war tax resistance in 2018” — trying to measure the effects of his own resistance and that of the war tax resistance movement.
(As found on Facebook and at Citizen Truth.)
A flash from the past in the Lewis Center, Ohio, ThisWeek Community News gives us a glimpse of a war tax resistance tactic used in the United States during World War Ⅰ.
The government had put a war tax on rail travel, but apparently the tax only applied on tickets above a certain threshold value.
So some travelers split tickets, buying tickets from point A to point B and then point B to point C to avoid paying the war tax that would have applied on a ticket from point A to point C.
Tax Resistance Internationally
Nicaragua’s Blue & White National Unity group has called for a consumer strike and energy strike.
The consumer strike is meant to last three days and aims particularly at those consumer goods like fuel, alcoholic beverages, sodas, and tobacco that are most taxed.
People are also encouraged to not use any utility power from 7 a.m. to 8 p.m., indefinitely.
The group seeks the release of 400 political prisoners.
The Zimbabwe Congress for Trade Union went ahead with an anti-tax demonstration, which the government had banned under the pretense that public gatherings would contribute to a cholera outbreak.
The government of Zimbabwe is trying to impose a 2% tax on all electronic funds transfers and is attempting to force citizens who hold their savings in foreign currency to convert that money into the notoriously hyperinflating Zimbabwean currency.
Police raided the headquarters of the group and arrested 35 of its leaders in advance of the protests.
A report on
migrants from Central America reminds us that fleeing ruinous and
immoral taxation is among the motives causing people to flee. The case
of Guillermo, who as a Central American teenager became the head of his
family, is one example:
Criminal organizations targeted and killed Guillermo’s cousin. The
relative had failed to pay a gang’s “war tax” — money the gang extorts
from people through threats of violence.
They then turned their attention to Guillermo for payment.
In , he was kidnapped and beaten by two
uniformed police officers carrying out the gang’s orders. Their message
was clear: Pay the war tax or face the murder and rape of his siblings.
He realized that as long as they stayed in the region, they would never
be free from gang violence — or the gangs’ attempts to pull them into a
life of crime.
Instead, he fled with his siblings on a 1,500-mile journey to the United
States where he crossed the border, legally, as an asylum-seeker. But here
he faces the threats of yet more criminal government gangs, this time in
Trump’s ICE,
the farcical court system set up to deny refuge in asylum cases, and the
for-profit prison systems that exploit and abuse immigrant detainees.
Drivers’ war on speed cameras and other traffic-ticket-generating robots
continues:
The economy has been chugging along pretty well for a while now, the job
market is tight, and individual income tax receipts are up in the United
States. So why has the budget deficit jumped up 17%?
Two reasons, mainly: the recently passed tax law has led to a sharp
reduction in receipts from corporate income tax, and Congress has been
spending up a storm. Also, interest on the national debt continues to balloon, rising 24% just .
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).
