How you can resist funding the government → a survey of tactics of historical tax resistance campaigns → encourage tax evasion, erode general taxpayer compliance → how to encourage tax evasion

A contributor at The Claire Files writes:

Here is an idea [to] help others avoid taxes.

I love to tip with cash. When I was a waiter I was told I had to report my tips… but only half. (I think my boss wanted to help us students out, he did pay us almost minimum wage and we got tips.) Cash tips are easy to under-report. I asked about that recently and was told that most people pay with credit card/debit card and that the government now uses a percentage method for tips. They look at the charged meals, look at the number of total meals served, and then look at the charged tips to figure out how much cash tips you received.

(100 meals served. 50 payed with card, tipping 15%. the government calculates 15% from 100 meals even if cash tips are only 10%)

You can help out by tipping more when paying with cash or better yet, when you pay with card, put 1% tip on it and put the rest out as cash. I even leave a note for the server saying “this is your money, don’t tell your boss, or the government. share it with the buss boy if that is the policy.” This will help lower the average tip figures, but still give the nice server what they have earned.

Catallarchy dredges up this old bit of advice from Dave Barry:

I say we all help President Reagan cut government waste. I say we cheat on our income taxes this year.

I mean, let’s face it: the reason the government wastes hundreds of billions of dollars is that we give it hundreds of billions of dollars. Even an intelligent organization would have trouble spending that much money usefully; the government can’t even come close. So it ends up spending money on things like the Office for Micronesian Status Negotiations. I am serious. According to the Congressional Directory, one of the things the government spend your money on is an office devoted to negotiating the status of Micronesia…

So let’s help Ron out: let’s keep the money out of the government’s hands altogether. Let’s each claim an extra thirty or forty dependents on our tax returns this year. We should view it as our patriotic duty, sort of like buying war bonds.

On Monday I wrote about a new report on the “tax gap” — the difference between the money people earn and what they report to the IRS. I was skeptical that the report was actually measuring what it was reported to be measuring. For more on that debate, from people who are more qualified than I on the subject, click here.

Roth & Company “Tax Updates”, in the course of discussing that recent tax gap report, includes a snippet from James Surowiecki’s The Wisdom of Crowds on “the collective problem of how to get people to pay their taxes”:

[T]here are three things that matter. The first is that people have to trust, to some extent, their neighbors, and to believe they will generally do the right thing and live up to any reasonable obligations. The political science professor John T. Scholz has found that people who are more trusting are more likely to pay their taxes and more likely to say it’s wrong to cheat on them. Coupled with this, but different from it, is trust in the government, which is to say trust that the government will spend your tax dollars wisely and in the national interest. Not surprisingly, Scholz has found that people who trust the government are happier (or at least less unhappy) about paying taxes.

The third kind of trust is the trust that the state will find and punish the guilty, and avoid punishing the innocent… If people think that free riders — people not paying taxes but still enjoying all the benefits of living in the united states — will be caught, they’ll be happier (or at least less unhappy) about paying taxes. And they’ll also, not coincidentally, be less likely to cheat.

If Surowiecki is right, then those of us who oppose the funding of government can possibly invert this and try to attack those three pillars of support for taxpaying. The easiest of these pillars to attack may be “trust that the government will spend your tax dollars wisely and in the national interest.” And to address that point, here’s “Cicero” from To The People:

I’ve never liked saying that members of Congress spend money like drunken sailors, because sailors spend their own money whereas politicians spend other people’s money. But, no matter what you call it Congress is out of control. An October Webmemo by the Heritage Foundation shows conclusively that Bush and the Republican Congress have plundered our nation.…

Highlights:

• Federal spending has grown twice as fast under President Bush as under President Clinton. In 2005, inflation-adjusted federal spending neared $22,000 per household, the highest level since World War Ⅱ.…
• While members of Congress claim there is no “fat” left in the federal budget, Heritage claims otherwise:
  • The Defense Department wasted $100 million on unused flight tickets and never bothered to collect refunds even though the tickets were refundable.
  • The federal government spends $23 billion annually on special interest pork projects such as grants to the Rock and Roll Hall of Fame or funds to combat teenage “goth” culture in Blue Springs, Missouri.
  • Washington spends $60 billion annually on corporate welfare, versus $43 billion on homeland security.…
  • Over one recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 for admission to entertainment events, $48,250 for gambling, $69,300 for cruises, and $73,950 for exotic dance clubs and prostitutes.

And for those Republican loyalists see the evidence that Congress and the Dubya Squad have been inflating the size and power and hunger of the federal government, who respond by saying “at least they’re cutting taxes”… I present for your consideration Dubya’s Treasury Secretary John Snow bragging that Washington has taken in the “highest level of federal receipts in history” since Dubya signed the Jobs and Growth Act.

So you’re the new state of Israel, it’s the early 1950s, 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 1954, 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 1955, 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 1929 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.…

The IRS Oversight Board has released the results of their latest “Taxpayer Attitude Survey.” The numbers haven’t changed much since last year.

Here’s a bit of data that people encouraging tax resistance might find helpful:

Last month, when I wrote about how to craft an effective message promoting war tax resistance, I said:

Economists consider tax compliance to be an irrational behavior. That is, the penalties for tax evasion are not severe or certain enough for it to be an economically rational decision not to try to evade your taxes. And yet, to a great extent, people willingly cough up what the government tells them to. Why?

A few items on this theme have hit the web in recent weeks. For example, Tax Evasion: Cheating Rationally or Deciding Emotionally, a discussion paper from the Institute for the Study of Labor in Bonn, Germany. The authors summarize their paper as follows:

The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance.

On The Becker-Posner Blog, the economics and law sages Gary Becker and Richard Posner consider the irrationality of taxpaying and try to figure out what’s up. Becker begins by explaining the math behind the assertion that tax evasion is rational:

If taxpayers responded only to the expected cost of evading taxes, evasion would be far more widespread. The reason is that only about 7 percent of all tax returns are audited (over a 7 year period), and typically the penalty on under reported income is only about 20 percent of the taxes owed. Virtually no one is sent to jail simply for evading taxes unless that evasion is on a very large scale, or involves massive fraud. If a person were to evade $1,000 in taxes, his expected gain would be 0.93×$1000 − 0.07×$200 (=$1000/5) = $916. On these considerations alone, he should not hesitate to evade paying the $1,000, and presumably much more.

To be sure, the expected gain is not the right criterion since most taxpayers would be risk averse regarding audits and punishments, especially if there is some chance of much greater than the average punishment or likelihood of an audit. However, if the expected gain from evading $1,000 were $916, the degree of risk aversion would have to be huge, far higher than the risk aversion that is embodied in pricing of assets, for risk to explain why there is so little tax evasion.

Becker then tries out some answers:

• Some people accurately report their income because that information is already available to the government in other ways, and a mismatch would be likely to trigger an audit.
• People may fear being labeled a tax evader because this has implications of dishonesty that would interfere with their professional lives in areas in which ethics and integrity are valued.
• People tend to obey a law to a certain extent when there is a social norm to obey the law to that extent. This may be criticized as a tautology begging a bootstrap explanation, but there’s something to the observation that our species tends to fly in tight flocks when it comes to our customs, habits, and ethics.

But he concludes that “audits, punishments, and the other deterrence variables mentioned in the previous paragraphs do not fully explain why there is not much more tax evasion.” He thinks the answer is that “most people believe they have a duty, moral or otherwise, to report their taxable income more or less honestly.” But then he immediately adds the caveat: “I intentionally say ‘more or less honestly’ because a little cheating on taxes is usually considered to be ok, as long as it does not go too far.”

Posner responds by saying he believes that feelings of duty are probably less important than Becker suggests, and rational economic judgment more important. For example:

• The civil penalties for tax evasion are more severe than in Becker’s calculation
• If you are charged, in addition to these penalties, you’ll likely “incur heavy legal and accounting expenses in defending against the charge”
• The audit rate may be low, but it doesn’t represent a randomly-distributed probability: instead, it “is higher for those taxpayers who are in the best position to evade taxes without being caught or whose tax returns raise a red flag because of unusually high deductions or other suspicious circumstances”
• If you’re audited once, your risk of a future audit (and its attendant expenses) rises
• Criminal prosecution is also a possibility
• Successful evasion of taxes is a skill that you must learn, and to learn this skill involves additional costs

Posner concludes:

Most people comply with most laws most of the time. I believe that in most cases they do this not because they feel any moral duty to comply with law, but because the potential payoff does not seem to exceed the costs, including the information costs that I have emphasized. The reason I doubt that there is much of a felt moral duty to comply with tax law is that there is a vast amount of illegal behavior by normally law-abiding citizens. The flouting of the traffic laws, the theft of employer property, the nonpayment of social security taxes on household help, illegal gambling, and the employment (both personal and commercial) of illegal immigrants are only the most obvious examples. These are cases in which law enforcement is so lax that the expected punishment costs for most violations hover close to zero, and there are distinct benefits from violation.

Then Posner takes an interesting tangent: why don’t governments make tax evasion less economically rational by increasing the odds of an audit? He argues that it may in fact be economically rational for the government not to do this:

Every dollar spent by the Internal Revenue Service on enforcement brings in several dollars in additional tax revenue, suggesting that an expansion in the IRS’s budget would be necessary to equate the marginal benefits of tax enforcement to its marginal costs. But this suggestion ignores the fact that the benefits are, as a first approximation, merely income transfers, whereas the marginal costs of tax enforcement are social costs. If taxes are evaded, the resulting shortfall in tax revenues is made up by increasing the tax rate, and there is no social loss unless the increase has worse misallocative effects than the evaded taxes would have had, had they not been evaded. One reason, therefore, that tax evasion is widespread is that it may be cheaper from an overall social standpoint to have slightly higher tax rates than to devote additional resources to law enforcement, though the first-best solution might be stiffer penalties, especially monetary penalties.

At FSK’s Guide to Reality the proprietor engages with my post from several days back about the economic irrationality of taxpayer compliance.

“What is really needed,” says FSK, “is an agorist IRS insurance program. That way, you can be reimbursed for fines, penalties, and even jail time if you get busted for tax evasion.” Something like the War Tax Resisters Penalty Fund but more inclusive both in what sort of resisters may apply and which sorts of penalties they can seek reimbursement for. Last month, I mentioned the Breton Association in 19^th century France, which “proposed, in the first place, to refuse to pay any illegal tax, and in the second place to raise by contribution a common fund for indemnifying any subscriber, whose property or person might suffer by reason of his refusal.”

The members subscribed each ten francs. In the event of any tax being imposed without the consent of the Chambers, or with the consent of a Chamber of Deputies created by any illegal alteration of the existing law, payment of the tax was to be refused, and the money subscribed was to be employed in defending and indemnifying the persons who should so refuse, and to prosecute all who might be concerned in the imposing, or the levying of such illegal taxes.

This was considered so dangerous that the government prosecuted newspapers who dared to print the Breton Association’s manifesto.

Here’s another data point for the debate over why people irrationally (from a purely economic point of view) pay their taxes:

[W]e use a computational modeling approach to examine the long-standing social issue of tax compliance. Specifically, we design an agent-based model — the Networked Agent–Based Compliance Model (NACSM) — where taxpayers not only exist within localized social networks, but also possess heterogeneous characteristics such as perceptions about the likelihood of audit and apprehension. When making compliance decisions, agents in our model factor in their neighbors’ compliance strategy payoffs. We find that for a given enforcement regime, a world with limited knowledge of neighbor payoffs appears to lead to higher levels of aggregate compliance than when agents are aware of neighbor strategy payoffs and factor these into their individual compliance decisions.

As I mentioned a few days back, the IRS is eager to manufacture a public consensus that taxpaying is honorable and good and noble and, above all, normal. The most efficient way to enforce the tax laws is to create a compliance culture in which the citizens police themselves. But if people see their neighbors getting away with not paying their share, or perceive that people in high places are getting away with tax dodging, they’re much more likely to say “to hell with it!” A majority of Americans believe most members of Congress don’t pay all their taxes.

In other news: A new TIGTA report says that in tax year 2006, 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.

A pair of reporters for Bloomberg.com report that tax evasion assistance is a booming business in Mexico:

In a cramped family printing shop tucked behind a taco stand in downtown Mexico City, a worker named Antonio stacks fake sales slips from popular eateries on an October afternoon.

“We’ve got them for McDonald’s, Burger King, all the restaurants anyone wants,” says Antonio, who declines to give his last name as he shows off the phony papers that smell of fresh ink.

Like many shops that line Santo Domingo Square, the store sells the slips, bogus receipts from hotels and retailers and phony invoices for 20 pesos, or about $1.50, apiece. Customers use them to reduce their tax bills by writing off business expenses they never incurred. Or they file false invoices that show they paid tax when they didn’t.

The Tax Administration Service, Mexico’s equivalent of the U.S. Internal Revenue Service, says such maneuvers cost the country 13 billion pesos ($1 billion) in tax revenue in 2009.

Mexico’s cash-based and unregistered businesses further plague tax collectors. The so-called informal economy was about 28 percent of the legitimate economy in 2003, according to a 2008 International Monetary Fund study. Instead of going after scofflaws, the government has chosen to tax 58 percent of Pemex’s total revenue.

Benjamin Gonzalez, who teaches English in a small office in Monterrey, pays taxes. He’s angry that Congress is increasing his income tax and the value-added tax on his service as he struggles to keep his startup going. He says he may look for customers who don’t require a receipt and underreport his income, which would add him to the pool of tax evaders.

“I’m worried as a taxpayer,” Gonzalez, 30, says, pulling out one of the official documents he has to file. “It’s going to force me to look for activities that aren’t regulated by the tax authority.”

Some bits and pieces from here and there:

• In some countries, a value added tax is a major source of government revenue, and there are periodic calls (for instance the so-called FairTax) for something similar in the U.S. For this reason, I like to keep my eyes peeled for news about value added tax evasion and resistance strategies. The Telegraph reports that VAT evasion “has exploded” in Great Britain in recent years. It attributes half of this to “professional fraudsters” and half to “general non-compliance and deliberate evasion by legitimate businesses.” Organized evaders use a technique known as “missing trader” to avoid paying this tax to the government, or, in the case of the “carousel” variety of the scheme, to double the gains by applying for tax refunds on taxes that were never paid in the first place.
• All of the thunder and lightning about taxes and the “fiscal cliff” recently resulted in a major tax bill that ended up being so much about reestablishing the status quo that I’ve had little to say about it here. The major effect on folks like me who are trying to stay below the income tax line is that our payroll and/or self-employment taxes are going back up to where they were a couple of years ago. If you’d like to investigate further and see if there have been any tweaks to your favorite deductions or credits, take a look at the report Tax Provisions in the American Taxpayer Relief Act of 2012 from the Tax Policy Center.
• The Mackinac Center for Public Policy compares the reported tobacco smoking rate in various states with tobacco sales in those states, and how this comparison changes as the tobacco tax rates change in those states and in neighboring states, to estimate how tobacco taxes contribute to tobacco smuggling. Some states, the Center says, have raised their tobacco taxes to levels that amount to a policy of “prohibition by price,” and smuggling has risen to match — New York’s huge $4.35/pack cigarette tax is matched by the Center’s estimate that fully 60.9% of the cigarettes smoked there are smuggled in from other states.
• When the IRS tries to crack down on tax evasion, their gains from increased revenue from enforcement can be offset by the loss of goodwill from innocent taxpayers who get caught in the net or who have to endure more paperwork or encounters with a suspicious bureaucracy. For a good example of how the IRS turned a loyal taxpayer into an enemy, read David Hanger’s letter It Is Not Ineptness of Incompetence, the IRS Is Stealing from You. The government relies on voluntary taxpayer compliance much more than on IRS enforcement and threats to fill its coffers, and so stories like this may represent a big threat.
• The Early Retirement Extreme blog now has a wiki that will capture in a more encyclopedic fashion the wisdom of folks who are using voluntary simplicity principles to escape the rat race in style.

The IRS “Office of the Taxpayer Advocate” has released a preliminary report on its study of tax compliance and noncompliance among sole proprietors, who represent a large portion of the “tax gap” the agency hopes to close.

They want to know the factors that might cause such people to evade their taxes, and so do I, though with much different motives, and so I took a peek at the report. Here are some bits that stood out to me:

Most taxpayers believe tax laws are unfair.

Only 15 percent of both groups agreed or strongly agreed that the tax laws are fair. Rather, most taxpayers believe that:

• Large businesses have loopholes to reduce their taxes that smaller businesses do not have;
• The wealthy have ways of minimizing their taxes that are not available to the average taxpayer;
• Not everyone pays his or her fair share; and
• The federal tax laws are unfair

Those in the low-compliance group were more likely to participate in local organizations.

Among respondents who belong to local organizations, those in the low-compliance group were more likely to report that they usually participate. This was true for various organizations identified by the survey, including local business organizations (50 percent from the low-compliance group usually participate vs. 30 percent from the high-compliance group), local trade, labor, or occupational organizations (40 vs. 24 percent), and local civic, community, or fraternal organizations (67 vs. 47 percent). Thus, active participation in these groups appears to be negatively correlated with tax compliance, possibly promoting social noncompliance in terms of the typology. Perhaps those with a closer connection to local groups feel a weaker connection to the federal government, and a weaker obligation to comply with federal tax laws. They may also chose to associate with those who hold similarly negative views about the federal government and tax compliance, which reinforced their own views

Those in the low-compliance group were more likely to report that other members of local organizations view tax laws and the IRS negatively.

Those in the low-compliance group were more likely than those in the high-compliance group to report that other members of local business organizations believe tax laws are unfair (48 percent of the low-compliance group vs. 28 percent of the high-compliance group) or that the IRS treats taxpayers unfairly (37 vs. 21 percent). They were more likely to report that other members of local trade, labor and occupational organizations believe tax laws are unfair (42 vs. 38 percent) or that the IRS treats taxpayers unfairly (46 vs. 28 percent). They were also more likely to report that other members of local civic, community, and fraternal organizations believe the tax laws are unfair (50 vs. 23 percent) or that the IRS treats taxpayers unfairly (36 vs. 18 percent). Participation in these organizations may have allowed taxpayers to learn that noncompliance is an acceptable norm among other participants, or perhaps they assumed that other participants shared their negative views. In any event, the differences in the responses to these questions by members of the high- and low-compliance groups may suggest that a person’s perception about whether other participants in local organizations feel the tax law or the IRS is fair has an effect on their own compliance behavior (e.g., social and symbolic noncompliance), perhaps eroding tax morale.

Another thing they noted was that “Surprisingly, those in the low-compliance group were also more likely than those in the high-compliance group to believe that the IRS detects and penalizes noncompliance.” This is another data point that suggests that deterrence via tax enforcement is not particularly effective, and that fear of IRS reprisals is not the prime motivator keeping people from refusing to pay.

Also surprising is that people in the high-compliance group were more likely than those in the low-compliance group to report that they felt their business competitors were not tax compliant. This upsets the theory that people “flock” in their tax compliance behavior — tending to behave in the way they believe their peers are behaving.

[T]he results of both surveys [they also did a study that divided people up geographically into low- and high-compliance communities] associate distrust of the national government and the IRS with the low-compliance groups and communities. For example, respondents from the low-compliance group were more likely to report that the government is too big and wastes tax dollars, that tax laws are unfair, and that the IRS is unfair (e.g., often believing the IRS is more concerned with collecting as much as possible instead of the correct amount, and indicating less satisfaction with IRS services).

The results of both surveys suggest that norms and distrust of the national government, the law, and the IRS may promote noncompliance. Respondents from both the low-compliance groups and from low-compliance communities held negative views about government and the IRS and were more likely to participate in local organizations. They were also more likely to believe that other members of those organizations held similarly negative views, which appeared to reinforce their own views, though they generally professed that noncompliance was morally wrong. In other words, they affiliated with others who reinforced noncompliance norms at the local level, and probably feel a closer connection to a local collective than to the national collective. In terms of the typology discussed above [which divides non-compliant taxpayers into several categories based on the causes or motivations for their noncompliance], this tendency to affiliate where distrust of government is the norm may be a form of social and symbolic noncompliance.

The authors say that “social and symbolic” noncompliance are emerging as “the primary types of noncompliance among small businesses.” These are defined as:

Social

Acted in accordance with social norms and peer behavior

Symbolic

Perceived the law or the IRS as unfair

…and are in contrast to a motive they call “Asocial” (“motivated by economic gain”) and a variety of other motives that have to do with ignorance of the law, laziness, difficulty following complex tax laws, or acting on advice from crafty tax professionals. The “Symbolic” category amounts to tax resistance, and so it is interesting to see that the IRS is coming to believe that much of what it has traditionally categorized as selfish, “asocial” tax evasion, is really motivated by feelings of dislike for the government and how it spends tax money (only about 6–8% of respondents believe “the federal government spends tax dollars wisely”).

Interestingly, people in the low-compliance group were more likely to report that everyone should correctly report all of their income — 97%! (And they were just as likely to report that “I feel a moral obligation to correctly report all of my income” — 96%) That should give you some skepticism about the value of such survey questions. The report notes that “the low-compliance group may have answered these questions aspirationally (e.g., they may not be living up to their aspirations because tax morale does not drive their tax compliance behavior) or defensively, to avoid making an admission.”

One caveat: the people who conducted the survey divided the respondents into “high-compliance” and “low-compliance” categories, but they did so not by measuring actual compliance, but by using “IRS tax compliance estimates to identify sole proprietors most likely to have high or low levels of reporting compliance.” These estimates are based on the taxpayer’s “examination activity code,” their “total gross receipts” and their “total positive income.”

[I]t is difficult to measure actual compliance with perfect accuracy. Taxpayers are not likely to confess any noncompliance in response to a survey, and even detailed audits conducted by the IRS’s National Research Program (NRP) are likely to contain errors. Even assuming that NRP audit results, as adjusted by IRS researchers, reflect actual compliance, the audit itself has an effect on the taxpayer’s attitude about the tax system, potentially biasing the taxpayer’s response to any subsequent survey. Thus, TAS decided not to survey taxpayers who had been subject to an NRP audit. While surveying taxpayers immediately before they were subject to an NRP audit might have been more productive, TAS deemed it overly deceptive. Thus, TAS opted to rely on DIF scores as an imperfect, but acceptable, measure of actual compliance.

There’s a possibility that the way they divided people up has biased the results, making some of their conclusions logically circular. And also, you should keep in mind that the “low-compliance” group in this survey is not “a group of people all of whom are less tax compliant” but “a group of people in which the IRS believes you are more likely to find individuals who are less tax compliant.”

Jeffrey Dorfman, at Forbes, draws up the plan for how foes of Obamacare and people who enjoy taking advantage of such poorly-designed government programs will game the system. Excerpts:

[T]he law is almost perfectly designed for tax fraud. This tax fraud, which will be at least somewhat legal, will happen in two stages.

First, the way the Obama administration is implementing the law allows people to state their income with little to no verification. By stating a low income, people can qualify for a large subsidy which gets paid in advance. When people receiving 2014 subsidies file their taxes in April 2015, if it turns out their income was higher than they originally stated, you might think they would then have to repay the subsidy.

But now we get to the second part of the tax fraud. Under the law it is not only difficult for the government to get its money back, in some cases it is legally impossible. There are two limits on the ability of the IRS to collect the overpayment.

The IRS is not allowed to place a lien on your property or garnish your wages in order to collect money owed under Obamacare. This applies to both overpayment of subsidies and to the penalty for not purchasing insurance at all. That means unless a person voluntarily pays what is owed the IRS can only collect money from people who would otherwise be owed a refund on their taxes. If someone owes money either for not purchasing insurance or overpayment of a subsidy, the IRS can deduct the amount owed from the refund the person would have received. If they are not owed a refund large enough to collect the entire amount, there is nothing more the IRS can do.

In addition to the above difficulties that the law places on the IRS, the law also limits the amount of any subsidy overpayment that must be repaid under any circumstances (look at the very end of the law in this link). In other words, if a person lies about their income in order to collect a larger subsidy, there is a good chance that they legally can keep at least some of the overpayment.

For example, for a family with actual income of less than 200 percent of the poverty line (around $47,000 for a family of four), the most that must be repaid is $600. If the family’s income is as high as $115,000, they still cannot be forced to repay more than $3,500.

Given that the Obamacare subsidies for a family of four can easily be $10,000 or more the difference between what is paid as an undeserved subsidy and the amount that must be repaid could be quite large.

Recent reports have described how the IRS has been paying $4 billion per year in fraudulent refunds filed by thieves who didn’t even do a particularly good job of disguising the fraud. The IRS was also found to have paid over $110 billion in fraudulent earned income tax credits over a decade. Thus, tax fraud is a major problem already and Obamacare seems almost to be intentionally designed to make tax fraud easy.

Obamacare is going to be one of the largest government programs we have as measured by spending, with most of the spending occurring through the subsidies designed to make insurance affordable. Yet the program is designed in a manner that invites tax fraud on a massive scale. Just understate your income, arrange your withholding so you are not due a refund, and keep your subsidy overpayment with no fear of reprisal.

Given that an entire industry has grown up helping people commit tax fraud using the earned income tax credit, we should expect a similar phenomenon to arise around the Obamacare subsidies. If the IRS cannot minimize fraud when they have the full range of their enforcement powers, how bad is the fraud going to be when the IRS has both hands tied behind its back?

Some bits and pieces from here and there:

• Anne Grace’s study of the Beit Sahour tax resistance campaign from the Journal of Palestine Studies is now available on-line.
• This sort of news is always an embarrassment for the IRS and contributes to taxpayer cynicism and noncompliance: the agency paid out more than a million dollars in employee bonuses to IRS employees who were themselves not tax-compliant.
• The New York Times published an interesting piece earlier this month on “Raising a Moral Child” that spotlights some of the current thinking on how children learn to become ethically engaged. The summary is that it is important to praise and guide children with an eye to making them value their own characters and to understand how their behaviors form their characters. Another data point that suggests the practical value of an Aristotle-style “virtue ethics” approach.
• Berry Friesen compared token war tax resistance to the sorts of taboos that set early Christians apart from their contemporaries.
• In an interview found on YouTube, Chris Coverdale explains why war tax resistance may be legally compulsory in a post-Nuremberg Trials world.
• Those of us committed to fomenting tax resistance would be wise to keep our eyes on the research of those committed to encouraging tax compliance, as their conclusions often have mirror-images that will be useful to us. The latest in this series is a paper by Richard Lavoie entitled Vox Clamantis in Deserto: The Role of the Individual in Forging a Strong Duty to the Tax System. Excerpt:

  Societies exhibiting high tax morale typically maintain stable levels of high tax compliance over time (establishing a societal “taxpaying ethos”) as these underlying foundational attitudes become enshrined as self-maintaining social norms. However, if the underlying social norms begin to erode over time, a society historically exhibiting a strong taxpaying ethos can quickly flip into a non-compliant one once a tipping point is reached.

  With the exception of some aberrational sub-groups, the United States typifies a society with a strong taxpaying ethos. However, in recent decades the social norms forming the foundation of this ethos appear to have weakened. Scandals at the Service have weakened its public image. The rise of the tea party movement has questioned the efficacy and role of government, as well as promoting the highly questionable proposition that Americans are currently “overtaxed.” Politicians, who should defend the government that they were elected to run, often act to undermine its legitimacy and advocate for steep spending cuts in addition to tax reductions.

  These forces, among others, threaten the very foundations of our tax system by undermining our historical societal faith in the fairness of our tax system and the obligation to fund necessary government services.

• The Tax Foundation has drawn up a map that purports to show how cigarette smuggling in the United States is correlated to the tobacco tax rates in those states. So, for instance: “New York is the highest net importer of smuggled cigarettes, totaling 56.9 percent of the total cigarette market in the state. New York also has the highest state cigarette tax ($4.35 per pack), not counting the local New York City cigarette tax (an additional $1.50 per pack). Smuggling in New York has risen sharply since 2006 (+59 percent), as has the tax rate (+190 percent).”
• The Hartford Courant recently published a look back at Julia & Abby Smith, the tax-resisting women’s rights activists of Glastonbury, and the Worcester Historical Museum and the American Antiquarian Society recently announced that they had digitized and made available on-line The Abbey Kelley Foster Papers, allowing us a deeper look into the life of another nineteenth century American tax resister for women’s rights.
• Wendy McElroy speculates that the IRS may be contemplating revoking passports from people behind on their taxes.
• The phone security consultants “pindrop” have done some back-of-the-envelope calculations on the massive ongoing criminal operation in which American immigrants are shaken down over the phone by people masquerading as IRS agents. They estimate that 450,000 people were targeted by this scam in March alone. Pindrop also posted their analysis of how the scam works, and even some excerpts from a recording of one of the calls.

Some bits and pieces from here and there:

• NWTRCC has reprinted Melvin D. Schmidt’s 1969 paper on “Tax Refusal as Conscientious Objection to War” at its site. The paper gives a brief historical overview of war tax resistance, describes the results of a survey of sixty-one war tax resisters, speculates about IRS policy motives, and looks at the theory of war tax resistance through a Mennonite-focused theological lens.
• Carolyn Yoder brings us a more up-to-date look Mennonite war tax resistance, in a recent article for The Mennonite that includes interviews with fourteen people from the Community Mennonite Church in Harrisonburg, Virginia, who are resisting war taxes in a variety of ways.
• The TaxProf Blog recently reprinted some excerpts from Diane L. Fahey’s new paper “The Movement to Destroy the Income Tax and the IRS: Who Is Doing It and How They Are Succeeding”. The paper, which takes a horrified-liberal perspective on this, asserts that Republicans and others of the right-wing are creating all of this outrage over “the IRS scandal” and other such things not just for short-term political gain but as part of a long-term plan to delegitimize the IRS and the nation’s tax system and erode the culture of tax compliance, at the service of “a small group of financial elites” who want to be able to stop paying. “The article concludes that if this erosion in compliance attitudes continues, it will reach a level of magnitude that a tipping point will be reached and noncompliance will be an acceptable norm.”
• Highway tax portals are still going up in flames in France. The latest was set aflame in Brech (about half-way between Lorient and Vannes in southern Brittany) and damaged enough that the government chose to dismantle and remove it.

Some tax resistance news from here and there:

• Kathleen DeLaney Thomas thinks the key to the government collecting more tax money is to devise new ways to make people feel guilty about evading their taxes. She calls this technique raising “The Psychic Cost of Tax Evasion” in order to reduce the expected gains of evasion. Papers like these can sometimes be read between-the-lines or at a bit of an angle to hint at techniques that dissidents can use to encourage tax resistance, either by reducing the psychic cost of tax evasion, or by increasing the psychic cost of tax compliance.
• The president of Veneto, Luca Zaia, and Roberto Maroni, president of Lombardy, both prominent Italian Northern League politicians, have continued that party’s tradition of big talk about tax resistance with a vow to resist taxes if the national government cuts health-care spending in the regions. The presidents claim that their regions have slimmer, more efficient governments and have reined in health-care costs more than those in the south of Italy, and that they shouldn’t be punished for this by having their health care subsidies reduced.
• Patrick Howley, a “political reporter” with a conservative bent, has reacted to the “IRS Scandal” that the American right-wing is all excited about by going on a one-man tax strike. “I did not pay my taxes this year. I just didn’t have the money,” he wrote. “Now I will not pay my taxes until every single Lois Lerner email is released and the people who planned and carried out this governmental travesty are held accountable.”
• Ruth Benn of NWTRCC writes about the war tax resister presence at the recent climate change march in New York City.

Congress has engaged in its traditional year-end brinkmanship, passing a set of retroactive extensions of popular tax breaks. These also included some changes that may be of interest to tax resisters. For example:

• Tax penalties for failure to file and failure to pay will now be indexed for inflation, as of next year.
• Congress has created a new variety of tax-advantaged savings accounts, designed to help people fund accounts for disabled people. If I’m interpreting what I’ve read about this correctly, the tax advantages are modest: deposits to these trust funds are not deducted from taxable income, but any investment gains on the amounts in the funds, as well as the principle, are not taxable to the disabled person they are given to if they are withdrawn for the purposes of paying the qualified expenses of that person.

Meanwhile, the IRS has begun pronouncing doom and gloom as a result of the latest cuts to its budget.

• Quick to appeal to American’s bottom-line, IRS Commissioner John Koskinen said that this year people may experience delays in getting their income tax refunds. With any luck this will encourage more people to reduce their withholding so they aren’t owed refunds at tax filing time.
• The agency has instituted a hiring freeze (with unspecified “mission-critical exceptions”) and overtime is similarly banned.
• Koskinen says the cuts will hurt the IRS enforcement arm: “In some ways,” he said, “these budget cuts are really a tax cut for tax cheats. Because to the extent we have fewer people to audit and enforce the tax code, that means some people cutting corners on their taxes or not complying are going to get away with it.”
• Washington Post opinion writer Catherine Rampell amplifies this: Over the long run, IRS budget cuts make tax evasion look not only easier but also more justifiable. Our tax system functions mostly through voluntary compliance. But as taxpayers get more disgusted by their interactions with the IRS — and by reports of rich companies not paying their fair share of taxes… — ‘tax morale’ will wane and tax cheating will likely rise.”
• Koskinen himself says “the cutbacks in IRS enforcement resources and casework will mean that billions more in taxes owed to the nation will remain uncollected.”
• Mike Causey at Federal News Radio puts it bluntly: “If you’ve ever been tempted to fiddle with your federal income taxes, this may be the year to go for it. There has never been a better time.”
• There are already indications that big companies are increasingly willing to play “the audit lottery” — taking far-out tax positions in the hopes that the IRS won’t have the manpower to audit them, or even if they do, the consequences won’t be that bad.
• The IRS is toying with the idea of a short-term, agency-specific shutdown with unpaid leave for employees as a way of saving money.
• The agency can probably forget about attempts to modernize its antediluvian information technology infrastructure.

A new research paper hit the wires a little while back: How Government Spending Impacts Tax Compliance. Excerpts:

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.

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^* 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).

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^* USA Today. 2006. National Tax War Resistance. Available at http://www.thepowerhour.com/news2/national_tax.htm, April 14.

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

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^* 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 international tax resistance news:

United States

• J.D. Tuccille, at Reason, takes a look at Americans who stay outside of the banking system and otherwise engage in the “underground economy.”
• The Pope came to visit, and gave a shout-out to Catholic Worker activist and war tax resister Dorothy Day in his address to Congress. It’s been amusing watching politicians and activists from just about every ideological niche try to claim the Pope as one of their own… it reminds me of the old saw about the blind men and the elephant. Or maybe it’s similar to how so many different ideologies, practices, and beliefs all claim to be interpretations of the real teachings of Jesus — nowadays we all get to interpret the Pope in our own way too… Is the Pope Catholic? Perhaps with a lower-case “c”.
• New York restaurants are using “sales suppression” software to underreport receipts for tax purposes, to the anguish of the local taxfeeders. This, according to the opponents of the practice, means the restaurants “can offer lower food and beverage prices, and afford higher rents, than honest restaurants can.” Perish the thought.

Catalonia

• A coalition of nationalist parties won the recent Catalan election, which they were billing as a referendum on independence. They have vowed to begin to separate from Spain within the next couple of years. Part of this independence campaign has already begun, with a number of municipalities, businesses, and individuals paying their federal taxes to the state government of Catalonia. “The key element that will permit us to exercise and maintain our independence will be the collection of all of the taxes by the government of Catalonia,” according to planning documents of the coalition. The state currently forwards those taxes on to the central government, so this form of tax resistance is largely a symbolic gesture. But the new government hopes to make this currently somewhat-illicit process official and then, eventually, to cut off the central government. In case of conflict with the central government over how taxes are to be paid, they may launch a blockade of the federal tax offices so as to encourage people to file with the Catalan tax authorities instead.

India

• The Patidar community in Gujarat, which has been agitating for some sort of government-protected minority status for several months now, is incorporating bank runs and tax resistance in an “economic non-cooperation” movement.

Ireland

• The Gardai in Dublin have forbidden the Anti-Austerity Alliance, which has been central to the anti-water tax protests and nonpayment campaign, from having a permit to conduct house-to-house fundraising, on the grounds that the funds raised might be used to further illegal activity. “The collection permit has been refused,” said Garda Chief Superintendent Orla McPartlin, “because I believe that the proceeds of the collection or a portion thereof would be used to facilitate protests sponsored by the Anti Austerity Alliance.”

Pakistan

• Merchants across Pakistan have been conducting strikes to protest a new withholding tax on bank transactions. “If the government does not accept our demands,” said Naeem Mir, one of the strike leaders, “we will observe a series of shutter-down strikes… in the four provinces and in each and every small and big city in protest against the cruel taxation measures of the so-called business-friendly government.” The new taxes are being blamed on IMF-required austerity and on the expenses of Pakistan’s version of the “war on terror.”

Greece

• The economic crisis in Greece has crushed what was already a pretty weak state of “taxpayer morale” — the “won’t pay” movement that practiced noncompliance with taxes and road tolls helped bring down the government and sweep a left-wing coalition into power. One of this new government’s officials, deputy finance minister Alexis Haritsis, was a “won’t pay” activist. Greeks are turning away in disgust from the official economy in general, increasingly turning to barter to get their needs met.

Italy

• Fifty condominium owners in Prino, Italy, have organized to stop paying the “IMU” municipal property tax in response to the city’s neglect of public spaces, including a filthy public square with a broken fountain that’s become a rubbish heap, poor upkeep of drainage that leads to flooding, and bad traffic management. A letter announcing the strike, signed by all fifty, was sent to the mayor and other city officials.

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

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.”

Just a week ago, last January 14^th, 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 2008, 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 1773 to the Salt March of Mahatma Gandhi in 1930.” Though there are also much more recent examples:

In 2015 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.

In a proposal similar to the “comprehensive disobedience” movement that was pioneered by Spanish activists, a group in the United Kingdom has inaugurated a “Golden Rule Tax Disobedience” campaign. In their words:

The latest tax scandal is bringing the erosion of our democracy into ever sharper focus. Britain suffers under an enormous democratic deficit due to state capture by “free”-market neoliberal fundamentalism and its associated corporate and financial interests, in aggressive ascendancy since the 1970s. Notwithstanding the 2008 financial crisis, this capture of the state has remained unaddressed, with successive governments shamefully complicit in it. Despite copious corroborative research and endless petitioning and protesting, all we’ve seen is disingenuous hand-wringing and political evasion.

Our collusion with this apology for a “democracy” must stop. We, the citizenry, are therefore taking matters into our own hands — with a “Golden Rule Tax Disobedience” whose intention is grassroots mobilisation against systemic injustice, favouring far greater equality, shared and stable prosperity, enhanced quality of life and, most importantly, an environmentally sustainable future.

The evidential rationale for this action is overwhelming. Not least, £93bn of “corporate welfare” is given as handouts annually to businesses operating in our allegedly “free” market; and the government spends £26bn subsidising harmful fossil fuels, yet a mere £3.5bn subsidising renewables. “Free”-market fundamentalism has been an astonishing failure for the vast majority.

Our Golden Rule Tax Disobedience initiative asks citizens to withhold a small amount of tax (through VAT or their tax return — everyone can join in), and then donate it to conducive campaigning groups. This principled modelling of a redistributive ethos intends to shame our politicians into taking effective action.

Principled tax activism has a long and distinguished history in circumstances where the state has shown itself incapable of defending the public interest. With no serious attempt by government to correct Britain’s massive democratic deficit, our initiative is an idea whose time has come. We ask you to join with us in taking back power in order to create a fairer and more sustainable society.

• Dr Gail Bradbrook — Director, Compassionate Revolution
• Richard Wilkinson and Kate Pickett — Co-authors of The Spirit Level
• George Barda — Social justice and Occupy campaigner, Compassionate Revolution
• Leon Rosselson — Writer/musician
• David Drew — Former Labour MP for Stroud
• Polly Higgins — Lawyer advocating for Ecocide Law
• Joel Benjamin — Debt Resistance UK and People vs PFI
• Professor Andrew Samuels — Analytical psychology, University of Essex
• Professor Karín Lesnik-Oberstein — Critical theorist
• Rev Paul Nicolson — Taxpayers Against Poverty
• Dr Richard House — Chartered psychologist, education campaigner, Stroud
• Liam Barrington-Bush — Co-founder, More Like People
• Max Graef — Broadcast engineer, company director
• Andrea Halewood — Chartered psychologist
• Ben Jarlett — Digital media consultant
• Martin Large — Publisher and author
• Jojo Mehta — Environmental campaigner
• Beatrice Millar — Steering group, Psychotherapists and Counsellors for Social Responsibility (PCSR)
• Gabriel Millar — Teacher, Stroud
• Alice Murray — Political activist and campaigner, Stroud
• Aliyah Norrish — Digital content associate
• Mark Nurse — NHS paramedic, Stroud
• Councillor Brian Oosthuysen — Gloucestershire
• Maja Passchier — Cellist and cello teacher
• Hazel Raee — Mobile digital champion, Isle of Skye
• Skeena Rathor — Movement therapist and teacher
• Dr Ilana Mira Sluckin — Paediatric doctor
• Richard Wilson — Director, OSCA
• Matt Wimpress — Company director

Here’s a video explanation of the campaign, its methods, and its goals. It plans to begin when 5,000 citizens of the United Kingdom have signed on to a “collective tax disobedience” pledge:

Some other tabs that have slid across my browser in times not long past:

• Here’s a short video promoting this year’s Spanish war tax resistance campaign:
• Aline Sitoe Diatta was, says Wikipedia, “a Senegalese heroine of the opposition to French colonialism, often called the Joan of Arc or the Marianne of Senegal.” When the French colonial administrators of the region where the Diola people lived began conscripting locals to fight in European wars and to engage in confiscatory taxation of rice and cattle, the Diola resisted. Aline Sitoe Diatta was one of the leaders of this resistance, and also a martyr: she was arrested and tortured, and died while imprisoned in exile. Emitai is a film about these uprisings from the Senegalese point of view.
• Glasgow Living looks back at the role of the people of Glasgow in the battle against Thatcher’s poll tax.
• Some mining companies in Romania are refusing to pay increased royalties on the grounds that the government raised the rates illegally after granting the initial mining concessions.
• A farmer from Lot-et-Garonne brought his farm animals along with him when paying his taxes and then got charged €230 for the manure clean-up afterwards — a fine the farmer plans to pay with 23,000 pennies.
• In the middle of tax filing season this year, the IRS headquarters in Washington, D.C. caught fire and had to shut down for repairs for a week.
• Truckers & farmers in Belgium have parked their vehicles on the highways, bringing traffic to a standstill to protest new trucking tolls.
• Sieglinde Baumert has spent two months in prison for her refusal to pay a €17½ monthly television tax to support the government-run station. The tax, which formerly was based on the number of televisions in a household, is now assessed on everyone in Germany whether or not they have a television.
• The attempt by Catalan nationalists to convince people there to pay their federal taxes to the regional government instead of to the Spanish central government is proceeding: this year more local governments will symbolically resist in this way, but fewer individuals are expected to do so.
• Taxi drivers in Quebec, upset at being outcompeted by upstarts like Uber, are threatening to stop paying taxes if the government doesn’t act to protect their industry against competition.
• Similarly, French hotels have threatened a tourist tax boycott in reaction to competition from Airbnb-like vacation rental facilitator Abritel-HomeAway.
• Have you caught the tax evasion bug? The recent leaks of the “Panama Papers,” with their details of how the 1% stash their money in shell companies in tax havens, have increased perceptions that the tax system is gamed by the rich and powerful — and have decreased the willingness of the average joe to continue getting fleeced.

  [IRS chief] Koskinen says the main factor that drives ordinary Americans to stop paying their taxes, or to try to cheat on their taxes, is the perception that others are doing the same. If you think that your neighbors are not paying their fair share, you’re just a little less likely to pay your own tax bill in full or in part.

  In other words, tax evasion is contagious.

• Lateef Mangum, a resident of Washington, D.C., stopped filing federal tax returns thirty years ago because residents of that district do not have voting congressional representatives and Mangum takes the “no taxation without representation” slogan seriously.

Some links of interest from here and there:

• I’m sure seeing a lot of Americans expressing their desire to stop paying taxes, now that Trump is going to be the one to spend them. Most of this is just blowing-off-steam, I expect, but some is in earnest.
  
  One example is this post from Rachel Murphy Azzara: Tax Resistance Is Our Last Recourse.
• In related news, Philly War Tax Resistance is presenting at a workshop on Escalating Political Resistance: Tactics for Racial Justice a week from Saturday in Philadelphia. War tax resisters will also be out in force at the inauguration protests in Washington.
• Erica Weiland at the NWTRCC blog answers one of the most frequently-asked-questions of war tax resisters: Will I go to jail if I refuse to pay war taxes?
• The (U.S.) National Taxpayer Advocate issued its annual report recently. The report includes a useful appendix summarizing the literature on Behavioral Science Lessons for Taxpayer Compliance. Most of this literature is written from the point of view of learning how to make subjects into more compliant taxpayers, but there are usually good lessons for those of us who are trying to do the opposite. Beware though of the social science replication crisis which may make many of these findings worthless.
• Nick Stafford paid his car tax by carting five wheelbarrows full of pennies to the Department of Motor Vehicles.
  • James Maule, at the MauledAgain blog, addresses the pay your taxes in pennies technique (and then does it again).
  • “Pay taxes in an inconvenient or symbolic way” is tactic #70 in the 99 Tactics of Successful Tax Resistance Campaigns.
• Westfälische Rundschau profiles war tax resister Gertrud Nehls (in German).
• Ny Tyd covers the Norwegian peace tax fund project. (See also ♇ 23 February 2013.)
• Mexico is also aflame with tax resistance sentiment, following the gasolinazo in which the process of somewhat privatizing the state-run gasoline monopoly led to a recent hike in gas prices. Here’s an example of coverage from Uruapan.

Today’s link dump:

• My local newsweekly, the New Times, covered my tax resistance today: Snubbing Uncle Sam: Local resident touts tax resistance as protest. They also did one of those we-ask-a-man-on-the-street sidebars where they asked four people: “What is your opinion on people who don’t pay taxes as a form of protest?” and got surprisingly positive answers. I expect the typical man-on-the-street to reach for the old familiar clichés about “who will fix the roads if we don’t pay our taxes” and so forth, but three out of four people who were asked supported tax resistance.
• Steve Ballmer, ex-Microsoft CEO, has launched a new project — USA Facts — that is meant to be a thorough, non-partisan, unbiased source of information about government spending. By non-partisan they mean “credulous and non-judgmental” and by unbiased they mean “exclusively relying on government sources,” so keep that in mind. It’s naively cheery about the federal government, by design:

  We soon discovered that dealing with something as big and complex as government — with its more than 90,000 jurisdictions and 23 million employees — required an organizing framework. What better place to look than the Constitution, and, more specifically, the preamble to the Constitution? It lays out four missions: “Establish justice, ensure domestic tranquility; provide for the common defense; promote the general welfare; and secure the blessings of liberty to ourselves and our posterity.” While we don’t make judgments about policy, we all agree on the broad purposes of government as laid out in the preamble to the Constitution.

  That said, it may end up being a useful source for some information about taxes and spending.
• NWTRCC has some follow-up on this year’s tax season:
  • Tax Day Reports, 2017
  • Tax Day Resistance, Redirection, and Planning Ahead
• The Satyagraha Foundation continues its series on tax resistance by reprinting my inaugural Picket Line post.
• Susan Lee Barton shares the letter she sent along with her tax return this year in lieu of a check.
• Peter and Mary Sprunger-Froese promoted war tax resistance in the letters-to-the-editor column of the Colorado Springs Independent.
• Erica Weiland discusses the decision of whether to be a public war tax resister, or to resist in a less-conspicuous way. (Read the comments, too.)
• Majorities of Americans are bothered that corporations and wealthy people don’t pay their fair share of taxes. And 56% of Americans describe the federal tax system as unfair — the highest percentage since the question was first asked 20 years ago.
• Here’s a new item in the pay-under-protest file: Scott Dion paid his property taxes with a check that said “sexual favors” in the “Memo” field. The government has been refusing to cash it.
• A restaurant patron paid the bill with a credit card, wrote “Taxation is theft — 0” in the “Tip” field, and left cash instead, with a note reading: “This is not a tip. This is a personal gift and not subject to federal or state income taxes.”
• Congressman John Lewis has again reintroduced the Religious Freedom Peace Tax Fund Act into the U.S. Congress.

Some links of interest that have flashed by my browser in recent days:

• The Satyagraha Foundation continues its series of articles on tax resistance, including a history of war tax resistance in the United States and Larry Rosenwald’s reflections on Thoreau and war tax resistance.
• In “I Gave My Waitress a ‘Libertarian Tip’: Taxation Is Theft!” Ed Krayewski considers the tactic of leaving cash “gifts” when paying for restaurant meals with your credit card, rather than adding a “tip” to the bill, as a way of trying to keep the tip from registering as anyone’s taxable income.
• NWTRCC organizer Sam Koplinka-Loehr writes about working with various groups in the Midwest.
• Patricia Williams writes about the prospects for tax resistance in South Africa: Lawful resistance an option for dejected taxpayers: Taxpayers are increasingly worried they may be financing a corrupt system through tax payments.

Some links that have crossed my browser tabs in recent days:

• Arcadi Oliveres was recently in Bilbao to speak at a conference on war tax resistance. He was interviewed for El Salto. Excerpts (translation mine):

  What is war tax resistance? What does it cover?

  In Spain, war tax resistance launched in 1983, following our incorporation into NATO the previous year. At that time it was said that in order to standardize all of the Spanish armed forces into NATO systems, it was necessary to increase spending a lot on the military tech budgets, arms manufacture budgets, etc. We realized that this was barbarous and began to practice tax resistance, following an analogous path with what had already been done with conscientious objection to military service.
  
  There were people who did not want to participate in the preparation for war with their bodies and their effort and who therefore declared themselves to be conscientious objectors. The same thing goes for those who do not want to participate with their money in the financing of war. That means that in your taxes, which is where you you can act, you stop paying the percentage that the Defense Department gets in the federal budget. If military spending is 2% of the budget, and I have to pay 100, I will pay 98 because I want to stop paying this amount to the state. The way to go about it is to choose an NGO or some social action, send those two resisted euros, and tell the Treasury: “I would be willing to pay 100 but as two are going for very bad spending, here are the other 98.”

  Is this treated as an act of civil disobedience?

  Obviously the act is not recognized by law, and if they catch you, which doesn’t always happen, they can demand that amount. For all that, things take their course. Up to now you stopped paying the two euros, they demanded them, and furthermore added a fine or costs and so you end up paying eight. Concerning this there is a judgment of the Catalan Superior Court of Justice in which an objector was told that he should only pay the delinquent tax but not the fine.
  
  With good sense, the judgment held that the Treasury can only impose a fine when the taxpayer has intended to be deceptive. It’s clear that the objector doesn’t have such an intent because from day one he turns up with a receipt from the NGO or group to which he has donated. A single judgment does not create jurisprudence but I realize that it is necessary to keep winning more so that, finally, this is so.

  What other alternatives do citizens have to oppose spending on the military and arms industry?

  There are some that form part of what we would call conscientious objection, and others that would be broader. I think that a basic way of fighting is in education for peace, which is already practiced but less than is needed. From television shows to schools, and especially from families, we have to try not to impose a violent response to conflicts. Certainly, we also have to work politically, with actions for disarmament.
  
  If we look at conscientious objection, until now we have discussed two actions: objection to military service and tax resistance, but there should be others, such as labor objection. Right here in Bilbao, there was the case of a firefighter who refused to work overseeing the exportation of military equipment. A few years ago in Catalonia, two sailors refused to participate in the transport of Spanish soldiers who were going to the Iraq War, and lost their jobs, but these are isolated cases.
  
  There is also another type of objection. Some 15 years ago, there was a conference in Zaragoza in which more than a thousand professors declared ourselves scientific objectors, which is to say, signed a manifesto to say none of our scientific investigations were to be used for military purposes. Or, also, there is financial objection. I refuse to put money in a bank so that it will wind up invested in weapons, starting with the one that invests the most money in that business, BBVA.

• Cincinnati.com looks at the long career in direct action of war tax resister DeCourcy Squire.
• The Greek “Won’t Pay” movement’s guerrilla electricians have reconnected the power at the home of another needy family cut off by the government utility monopoly for inability to pay new surcharges.
• Helen Thornley, at Tax Adviser magazine, looks back at The Women’s Tax Resistance League.
• FiveThirtyEight notes that “Everyone Tries To Dodge The Tax Man, And It Keeps Getting Easier.” Excerpt:

  Three foes in particular are enabling tax dodgers, making their ploys more common and more damaging: reduced support for the IRS, new incentives for people to become cheaters and widening partisan distrust.

Some links that have bobbed up in my browser in recent days:

• How does what was once seen as morally insignificant come to be seen as monstrous, and how does what was once seen as morally repulsive come to be just one of those things? Cass R. Sunstein has a theory. The spectrum of what behavior we observe becomes the “normal” against which we contrast outliers. As we become exposed to more aberrant behavior, that behavior shifts into the normal; as more conduct shifts into an unacceptable category, other things nearby to that category can get sucked into the objectionable void. This has implications for “outrage culture” and how we share on social media.
• The gilets jaunes movement in France has turned out to be more of a threat to the established order than anyone anticipated. It started as a protest against fuel tax increases, but when its increasingly threatening demonstrations finally forced the government to delay, then drop those increases, rather than stopping, they continued, more emboldened than before. I don’t have much to add to what is now being decently covered in the English-language press, but here are a few links I found interesting:
  • A sample English-language news article from last month as things were heating up, but when the government was still insisting the taxes would go through as planned.
  • A photo of some gilets jaunes bricking up the entrance to a regional government building.
  • Wikipedia articles about similar protests that took place in Sicily in 2012 and in the United Kingdom in 2000, 2005, and 2007.
  • Amnesty International issued a statement against police brutality towards gilets jaunes demonstrators, including “rubber bullets, sting-ball grenades and tear gas against largely peaceful protesters who did not threaten public order and… numerous instances of excessive use of force by police.”
• One of the ways to reduce voluntary tax compliance in a subject population is to increase resentment by pointing out how much the ruling class is cheating on their taxes. So the increasingly well-documented tax cheating of Donald Trump and his family ought not to go unmentioned.
• Of course there are those liberals who see the tax cheating of the ruling class as a good reason to feel sorry for the poor underfunded IRS instead.
• Consciousness of the cruelty and tyranny of the House of Saud is finally starting to enter the conversation in the United States. Who is paying for the barbaric war on Yemen? U.S. taxpayers are.
• In Luján, Argentina, a local tax on farmers went up 1200%. So an assembly of farmers voted to stop paying. The National Network of Independent Producers backed the tax strike. They are asking for a reduction in the rate and a guarantee that the proceeds will be used for rural road improvements.
• 335 Spanish war tax resisters documented their resistance for Antimilitarist Alternative / Conscientious Objectors’ Movement this year. Collectively they refused and redirected €35,882.34 (a little over €100 each, on average). The report lists dozens of organizations that received the redirected funds.

Some recent links from here and there:

• Brayton & Suzanne Belote Shanley of the Agape Community are interviewed at NWTRCC’s blog about their war tax resistance and the intentional community they cofounded with war tax resistance at its core.
• Vendors in Pakistan are ramping up their anti-tax protest after a brief shut-down strike last month with new street protests.
• Venetian separatists are again refusing to pay taxes to Italy, paying their federal taxes instead to “Veneto State”.
• Some 17,000 taxpayers in Catalonia also are paying their federal taxes to the Catalan tax agency rather than the Spanish one, in acts of civil disobedience.
• There’s a tax strike underway in Beni, North Kivu to protest the failure of the government of the Democratic Republic of the Congo to provide security in the region.
• More roadside traffic ticket generating speed cameras have been attacked in recent weeks, in South Arica and France. Spain has moved on to using drones instead.
• There’s not a lot of meat on the bones here, but Andrew Leahey connects the dots and shows how Trump’s contempt for paying his own taxes and his undermining of the prestige of government are likely to undermine “tax morale” in the United States with long-term consequences for how willing traditionally sheepish American taxpayers are to cough up their tribute.
• Researchers into the impact of the government “shutdown” last Winter found that it landed blows against IRS workers in the community they studied.

  Of the furloughed workers surveyed, more than 35% missed a rent or mortgage payment, 30% went to a food pantry, 72% experienced mental health issues, 42% wanted to make a career change and 65% were very or somewhat concerned about their finances post-shutdown.

  In the open-ended response portion of the survey, an employee wrote, “We are U.S.A. citizens that have families to support. Often we hear we deserve it, because we work for IRS. We are doing a job that is dictated by Congress. It is surprising how people seem to want others to hurt. It is sort of sickening.”

  Another employee described going back to work during tax season: “With a month of catch up at my busiest season, it is so stressful. This is the first time in 15 years I am exhausted after work and do not want to go in the mornings. That was never the case before.”

Some tabs that have slid through my browser in recent days:

• I recently noticed that The Sparrows’s Nest Library and Archive has made a lot of material from the poll tax rebellion in the U.K. — posters, pamphlets, newsletters, and such — available on-line. You can also find this collection at the Internet Archive if you prefer its interface.
• Some Boston homeowners are contemplating tax resistance — putting their property taxes in escrow — to protest the failure of the local government to address “safety and quality of life issues.”
• More traffic ticket robots have fallen to spray paint and fire in France in recent weeks.
• As you may have heard, The New York Times finally got ahold of Donald Trump’s tax returns. They show that he didn’t pay income taxes most years, and when he did in recent years it was token amounts ($750). This seems to be largely because of grandiose business losses combined with sketchy deductions for business expenses (like $70,000 in annual hair care, or “consulting fees” to his family). The upshot of this to us here at The Picket Line is that this contributes to the public impression that the rich evade taxes with impunity and that taxpaying is for suckers, thus degrading “taxpayer morale” and the willingness of taxpayers to cough up their tribute voluntarily. See ♇ 25 November 2012 for more about attacks on the pillars of taxpayer compliance.