How you can resist funding the government →
about the IRS and U.S. tax law/policy →
how is tax law/policy/administration changing? →
“tax reform” →
“simplification”
Whatever the real reasons were why the Dubya Squad wanted to send the troops into Iraq, the publicreason they settled on as being the most simple, compelling, and effective storyline was “Saddam’s got lots of hidden weapons of mass destruction that he’ll give to terrorists who will spring another 9/11 on us.”
The Dubya Squad are using the same sort of marketing technique with tax reform.
Whatever the real reasons are for their wanting to monkey with the tax code, and whatever they hope to accomplish, the storyline they’ve decided has the best play goes like this: “Everyone agrees that taxes are too complicated.
People shouldn’t have to spend hours or go to expensive experts just to fill out their tax forms. We need to radically simplify the tax code so that it’s fair and anyone can understand it.”
But of course the Dubya Squad don’t really give a damn if you’re struggling with your tax form.
They’ve got another agenda, and this is just the populist gift wrap on it.
Today, the “National Taxpayer Advocate” Nina Olson gave us a hint of how the wrapping paper works and what it covers:
“Without a doubt, the largest source of compliance burdens for taxpayers and the IRS alike is the overwhelming complexity of the tax code, and without a doubt, the only meaningful way to reduce these compliance burdens is to simplify the tax code enormously,” Olson writes.
The report cites the alternative minimum tax (AMT), the earned income tax credit (EITC), and the large number of provisions designed to encourage taxpayers to save for education and for retirement as key illustrations of the problems of complexity wrought by the 1.4 million-plus word tax code.
The cynic in me notices that Olson seems to be suggesting that the problem with the tax code is that it has a credit for the poor, an extra tax for the rich, and education and retirement savings credits for just about everyone (including, very helpfully, for tax resisters like myself).
These things are so complex!
If we got rid of them, we could tax the rich less, the poor more, and take more money from people we used to take less from… maybe enough to pay for some more of the Dubya Squad’s agenda!
And if we’re crafty, we can call it tax “simplification” instead of a tax hike.
The House Joint Committee on Taxation has noticed the tax gap (the difference between what the IRS thinks people owe and what people actually give ’em) and the upcoming tax “simplification” initiative, and wants to kill two birds with one stone — “simplifying” the tax code in such a way as that people end up paying more.
Oh, it’s not a tax hike, heavens no, it’s Options to Improve Tax Compliance and Reform Tax Expenditures.
Almost 70 options, I think, although I lost count somewhere after “Eliminate Private Payment Test for Stadium Bonds.”
All of them, I believe, are revenue enhancing options, meaning that they pull more money from us to give to them (without actually having to “raise taxes” in a “my opponent voted to raise taxes” sort of way).
People trying to stay below the tax line legally take note!
Some of the proposals involve tweaks to things like the tuition deduction, the earned income tax credit, and the refundable child tax credit.
And if you’re evading taxes by working as a contractor rather than earning wages subject to withholding, note that one option would require governments to withhold federal income taxes from payments to contractors just like they do for employees.
The next time a tax bill comes out of Congress, you may want to have this list nearby to cross-reference.
While I was busy going through Friends Journal back issues, I didn’t attend much to American tax resistance news in the here-and-now, so I’ll try to give a recap today of some of the interesting items that caught my notice:
Some Christian war tax resisters in Michigan held a small “Independence from
War Tax Day” demo that included symbolic burnings of tax forms.
“The common citizen is not being listened to,” wrote participant Michael J. McCarthy.
“We must learn to vote with our money, as the powerful do. April
15th becomes the new
second
Tuesday in November. This tax redirection is one of a number of lifestyle
changes that people can make to better participate in a real
community-responsible democracy.”
McCarthy also wrote up his thoughts for USCatholic.org.
Excerpts:
In , facing the probability that the Iraq
War was unjust, a group of Catholics in my community in Port Huron, Michigan,
openly informed
IRS
that we would redirect hundreds of dollars from our federal taxes, donating
this “Iraq Peace Bond” instead to our local library. Our donation was merely
a drop in the bucket of the trillions wasted in this war, but a small step in
a new direction. Most of the money was eventually recovered by
IRS,
but the donation still helps the community and serve as an inspiration to
find further methods to invest in the works of peace, not war.
The problem for us in the United States is non-cooperation with evil — a
difficult feat when so much of our tax money (more than 50 percent of all
federal income tax, or 25 percent of total income tax) is spent on war. There
are, however, alternative ways to turn away from it towards peacemaking. It
is possible to take some of the money you would have offered to the troubled
war economy and homeland security and spend it instead on the works of mercy,
from feed the hungry to investing in creative work opportunities for our
young people to donating to your local Christian pregnancy care centers.
You must inform the
IRS of
your intentions, and your wish to be a responsible citizen while also
divesting from this war economy. The dialogue that follows with them can be
kept cordial. For the practical measures, contact the National War Tax
Resistance Coordinating Committee. My wife and I have tried war tax
resistance/redirection for 17 of the 35 years of our marriage, with varied
results — some trial and tribulation, a lot of good done within our faith and
larger communities.
For years now, because I knew the
IRS was
out to get me at some point, I’ve kept the balance in my PayPal account very,
very low. Whenever I made pitches for donations, I withdrew the funds almost
immediately. But because my health has now gotten so much worse, I wasn’t
able to make as many trips as I wanted to the closest
ATM. It’s only a block and a half away,
but given my enormous difficulties in getting around, it might as well be a
couple of miles. The heat in
L.A. didn’t help,
either. That’s the reason there were still funds left for the
IRS to
get. My apologies and regrets again, both for all the kind donors and for my
sorry ass.
However, I’m not content to let the matter stand there. That is, I’m not
ready to lie down and die, which is what I’m certain they’d prefer. I
obviously have no money to pay an attorney or tax specialist, but if there is
anyone out there who would consider volunteering their expertise, I would
like to find out if there are any options with the
IRS at
this point. I should tell you that I don’t want to pay them a single damned
cent — I don’t choose to give funds to murderers and torturers, thank you
(which is why the IRS was after me in the first place) — and I’d also like to
get back at least some of the funds they’ve taken.
As I say, I suspected this might happen at some point, especially after
PayPal began filing tax forms starting with . I had thought about providing a warning to donors that the
IRS
might suddenly swoop down, so that you kind people would be forewarned. I’m
terribly sorry I didn’t do that. But since the IRS and I hadn’t communicated
at all for years now, I thought (hoped) they might have forgotten about me. I
mean, Jesus Christ, I have almost no money at all. And I didn’t
receive any warning at all before this levy was imposed.
And that’s another aspect of this that absolutely enrages me. I know, we all
know, that there are multibillion dollar companies (and individuals) who,
with the aid of their fleet of top line attorneys and financial experts, pay
next to no taxes at all — and in many cases, none, period. And yet these
bastards come after me.
Well, to hell with them. This has made me so angry that I feel I have a new
lease on life. With your help, I hope we can figure out a way around these
difficulties. And just to show them, I’ll live for another ten goddamned
years, and write another ten books’ worth of essays.
During the day, I tried to remember the last time I had any communication
from the
IRS.
I’m almost certain it was close to ten years ago. Ten years, during which I
had heard nothing at all. So I had thought that perhaps, mercifully, I’d
fallen off their radar. I guess that’s a lesson for all of us: they never
forget. If there is any way at all, they’ll get you in the end.
Before “sequestration” took effect, the Obama administration issued
specific — and alarming — predictions about what it would bring. There would
be one-hour waits at airport security. Four-hour waits at border crossings.
Prison guards would be furloughed for 12 days. FBI agents, up to 14.
At the Pentagon, the military health program would be unable to pay its bills
for service members. The mayhem would extend even into the pantries of the
neediest Americans: Around the country, 600,000 low-income women and children
would be denied federal food aid.
But none of those things happened.
Partially this is because Congress quietly made exceptions to the sequester in
some cases, but a lot of it is because all of the alarm was bluff, and when
agencies finally did have to cut their budgets, they found that there
was plenty of stuff they could cut fairly painlessly.
The act of screaming bloody murder while engaging in mostly-symbolic
belt-tightening seems to be a global phenomenon. In an article for
Negocios.com, Jorge Valín says, of the Spanish
version of budget cuts, “ ‘austerity’ doesn’t work (because it doesn’t exist).” Excerpts (my translation):
There is much debate on the issue of Government austerity. Those with a
leftist mindset accuse it of generating poverty, reducing welfare, and even
killing people when it comes to health. The rightists insist that government
spending has to be checked, and in this sense austerity is good.
, the
government has created three new bodies per month, whether commissions,
committees, councils, centers, or agencies of some type. The government
propaganda agencies receive more than a billion euros in additional subsidies
to what they had at the beginning of the economic crisis. In fact, government
spending grows year after year even without mentioning the exponential growth
of the debt. Austerity doesn’t work because it does not exist.
…It simply does not happen; it’s propaganda and a stalling measure. And the
big problem with austerity is that it is just another government program.…
The government, any government, is simply incapable of reducing its drag on
the economy or to eliminate its debt.
Unfortunately, the politicians are incapable of doing anything. They would
lose their power. So the other option is to force austerity on the state. The
politicians live on our work and there’s no moral or technical reason why
they have to plunder us with taxes this way. Tax resistance is not only a
moral position, it’s a necessity before a corrupt status quo in which
criminals prosper.
Tax reform
Some of our feckless legislators are trying to come up with some sort of
radical tax reform plan. Of course it’s unlikely that this Congress will ever
agree on much of anything, but some future Congress is likely to try to pass
something that they’ll call radical tax reform, so it’s worth at least keeping
an eye on things like this.
Of course, whatever they come up with will be awful. And the motivations of
the politicians will have a lot less to do with trying to make the tax system
better or more efficient (even by government standards), and more to do with
the fact that radical tax reform is an incredible shakedown opportunity, where
every deep-pocketed son of a bitch with a stake in tax subsidies will have to
pony up if they want to keep their cash cow alive.
But keep in mind that tax simplification, even when it’s accomplished
in such an ugly way, and even if it doesn’t shrink the budget by a
nickel, can still shrink government somewhat.
So there may yet be reasons to smile.
Taxpatriates
I didn’t make much noise about it last quarter, when the Treasury Department
announced its highest quarterly total number of people who had renounced their
U.S. citizenship
(679), as there was some indication that this had been an accounting fluke
caused by names being shifted from one quarter to another.
The educated guesses about why this recent surge of citizenship renunciations
has taken place say that it has less to do with people becoming increasingly
ashamed at having to call themselves Americans, or with eagerness to avoid
U.S. taxes, and more
to do with the onerous paperwork requirements that the
U.S. government
requires from its citizens — even of those who live overseas and who conduct
little activity back in the “land of the free.”
A more do-it-yourself approach to taxpatriatism was tried by the Gastonguay family, who fled the United States in part because they were upset at being “forced to pay these taxes that pay for abortions we don’t agree with.”
They boarded a small boat and sailed for Kiribati, a remote set of islands with a total population of a little over a hundred thousand people, where they hoped their religious practices and beliefs would be better-tolerated.
But they never made it there, instead getting storm-tossed and lost at sea for three months before getting rescued and taken instead to Chile, from which, they said, they planned to return to the United States, at least for now.
Jerry Kirk of Searcy County, Arkansas, one of that odd crop of American tax
protesters who adhere to incredibly baroque legal systems of their own
devising, refused to pay his county taxes whereupon the government seized and
sold some of his property.
He responded by doing something I haven’t seen a tax protester of that ilk do
before: he redirected his unpaid taxes by handing out envelopes of money to
people in front of the county courthouse. Here’s a video of the event:
Let’s face it: As a marketing strategy, a 6.25 percent sale is embarrassing.
What car dealer has ever run ads saying “Today Only — Save Just Over A Nickel
On The Dollar!” When does Macy’s ever post “6.25 Percent Off!” over their
junior miss selection?
And yet, the sales tax holiday weekend is huge. The stores are packed. It’s
like a mini-Christmas in the dog days of August.
, when you see
Massachusetts shoppers waiting in long lines to buy stuff they could have
bought two days earlier without any hassles, they’re showing you just how
hard they will work to stick it to the state.
Congress is wrapping up its tax legislation.
Here is some of what I’ve learned about it — particularly those parts that might be important to people trying to eliminate their income tax as I do, by keeping our incomes low:
This is expected to be costly to the U.S. Government.
It is projected to lead to the government collecting $1 trillion dollars fewer in taxes over the next decade.
This will likely show up as increased government debt, as the Republicans had a hard enough time doing the easy part (lowering taxes) and are unlikely to be able to muster enough courage to do the hard part (reducing spending).
Republican optimists hope that by keeping this $1 trillion out of government hands and in the private sector, the economy will boom, leading to higher tax receipts after all, and so things will all balance out in the end.
People who know how to run the numbers, though, don’t seem to be taking that scenario seriously.
The bill reduces both corporate and individual tax rates.
But for a lot of people, what really controls how much they’ll pay is not their rate, but how much of their income is subject to the income tax and how much is safely deducted out of harm’s reach.
In any case, the lowest of the rates (10%) remains the same as before and covers just about the same amount of taxable income, so from the point of view of a low-income tax resister like myself, nothing much has changed here.
Next year, the standard deduction had been scheduled to go up to $6,500, and the personal exemption to $4,150 — shielding $10,650 of a single person’s income from income tax.
The new legislation eliminates the personal exemption, but boosts the standard deduction to $12,000 — thereby adding $1,350 to the amount that’s shielded in this way (people filing as married-joint, married-separate, or head-of-household also see rises to their standard deductions).
Modifications to the child tax credit and credits for non-child dependents are meant to make up for the absent personal exemption for people with dependents.
The bill eliminates some itemized deductions, but also eliminates the limitation on how much of such deductions you can take if you’re well-off.
You will also be able to take a slightly higher proportion of your Adjusted Gross Income (60%, up from 50%) as a deduction for charitable contributions, and the law will become somewhat more generous about allowing you to take a deduction for medical expenses.
I haven’t looked into this very closely, but it’s possible that this holds out some hope to high-rollers that they might eliminate their federal income tax through zealously pursuing itemized deductions.
The bill would allow you to use tax-advantaged education savings accounts to pay for a child’s tuition at a private elementary/secondary school (in the past, these accounts could only be used for post-secondary education).
This could be a useful tax shelter for people who would prefer not to inflict government-run schooling on their children.
It’s surprising to me just how little actual change there is from the status quo.
Everybody complains about the complexity of filing their income taxes, and politicians get lots of mileage about promising to let people file on the back of a postcard and the like.
But after all of the wrangling, this new bill keeps the individual Alternative Minimum Tax and doesn’t even reduce the number of tax brackets — the cheapest trick in the “simplification” bag.
It even introduces a lot of new complexity by means of its new method of taxing “pass-through” income — something that may cause some new headaches (or, may we hope, offer new tax-saving opportunities) to those of us with Schedule C income from sole proprietorships, gig economy work, or small businesses.
I was also a little surprised to see neither the House nor Senate try to boost Health Savings Accounts.
These are a more Republican-identified health care policy reform measure, and I would have thought that as they try to sabotage Obamacare that they would have put some effort into bolstering some of their own alternative ideas.
No such luck.
It makes me wonder if maybe Health Savings Accounts are a craze that has come and gone and that we might expect the program to atrophy at some point.
