The following is an introduction to tax revolt and includes some how-to information. In publishing it, REASON is not advocating that any of these tactics be pursued by specific individuals; nor is REASON proffering legal advice. For an analysis of the legal problems of tax resistance, see the related article in this issue by David Bergland. For a picture of the awesome power of the IRS, see the article by Robert Martin.
Resentment of the inequitable nature of the U.S. tax system, and of the progressive income tax in particular, is increasing among every segment of the taxpaying population. In fact, it is rare these days to hear anyone say that he's happy to pay taxes. The hard evidence of this anti-tax-slave attitude was statistically expressed in late 1973 when a Harris Poll discovered that 74 percent of U.S. taxpayers "would support a tax revolt." If the accuracy of this poll were verified by other similar samplings, then certainly the tax-collecting bodies of this land ought to be living in fear of the day that Americans decide it's time for a repeat performance of the Boston Tea Party.
But what is the cause of this hostility? Why all this resentment of what the IRS describes as "the most efficient tax system in the world"? Perhaps it is the growing realization of a literate, productive citizenry that it is "paying the 'fiddler" to the tune of 42 percent of its average annual income in direct and indirect taxes. Add to this the inflation bite of 10 to I5 percent per year and the virtual certainty that tax increases are looming on the horizon, and there is a credible explanation for the whole phenomenon. Doubtless, Americans are tired of working over half their productive lives in order to pay for their semibenevolent welfare state. In short, the tax system is too efficient.
To compound the serious nature of the problem- serious from governments' point of view-it seems that Americans are not the only residents of the earth adopting the attitude that there is "too much taxation and ' too much representation." Overburdened taxpayers the world over are beginning to act. In Denmark, for example, a place of cradle-to-grave welfare statism, it is reported that 16 percent of the taxpaying citizenry is following tax-reform leader Wlogens Glistrup in refusing to pay income taxes, Clearly, at least 16 percent of the Danes feel that the price paid for their government security blanket is out of proportion to the real benefits.
The September 17, 1973, issue of US, News & World Report states that:
A tax-dodging spree, spreading rapidly, is costing the Government in Washington at least 6 billion dollars a year and threatening to get completely out of control. Tax experts outside the IRS... put the real losses as high as five times that much, around 30 billion a year.
This was shocking news in 1973, but today one simply has to purchase the latest edition of Tax Strike News, a monthly tabloid in the forefront of the tax battle, to discover that hundreds of organizations have been formed nationwide to help disseminate the "new religion" of the tax strikers, The size and scope of the movement to abolish taxes has grown to such an extent that virtually every Western State now has a "citizens posse" organized to apprehend and try tax collectors who abrogate the constitutional principle of due process.
Some adherents of lawful tax resistance identify themselves as followers of the early colonial tax protesters like Thomas Paine and Sam Adams, and there is a large and newly emerging segment in the movement which calls novelist/philosopher Ayn Rand its intellectual mentor. But in common they have been heard to tell IRS agents: "Go straight to hell, do not pass go, and do not collect $200."
There is little doubt that the movement is growing, and its leaders believe that the 16th amendment to the U.S. Constitution, which authorizes the income tax, will soon fall, as did the 18th amendment enacting Prohibition. It is historical fact that the 18th amendment was repealed because millions of Americans refused to comply and the enforcement machinery could not deal with this. We may even find that the same individualistic Americans who started drinking bootleg booze in order to thwart the revenuers will stop paying income taxes for the same reason.
HOW TO STOP PAYING
Active resistance is made possible chiefly through loopholes, and the prospects of any serious action to close them are pretty slim: lobbies and loopholes are in the self-interest of entrepreneurial Congressmen, who are quick to take advantage of the status quo of taxation. And don't mistake cosmetic tax reform for substantive change. It is simply not in the self-interest of most legislators to drastically curtail their own tax advantages, so it is likely that the game will be played in the future much as it is now.
"Well," you ask "which loophole should I use?"
The favorite one, reportedly used by some 3% million Americans at the present time, is the religious exemption whereby any religious leader, self-ordained or otherwise, may exempt himself and his household from Federal and State income taxes, property taxes, and sales taxes. Certificates of ordination can be purchased within the $1 to $10 range, and the first amendment and the courts have already told the IRS to keep its hands off. This approach also makes it possible to exempt oneself from social security using IRS Form 4029. The popularity of this loophole is growing by about 2,000 ministers per day-a great shot-in-the-arm for organized religion.
A lesser known but equally effective loophole, the "Equity Pure Trust," is available to the taxpayer who is willing to keep detailed records. It seems that this unique type of trust exempts one's estate from the ravages of inheritance, estate, and gift taxes and partially exempts it from the other big four taxes: income, social security, property, and sales. It is quite complicated, however, and its most loyal subscribers are those termed "the rich and the superrich."