Taxes: Mum's the Word


By now everyone knows that nothing's going to be done about today's favorite bogeyman, "the deficit," until after the November elections. This gigantic problem, recently discovered as a campaign issue by the same people who've been causing the problem for the last 25 years, will serve as a perfect excuse once again to screw the American taxpayer but royally. But please, not until after the elections.

After all, everyone knows that "the budget can't be cut"—at least not meaningfully: there are too many "entitlement" programs in place with automatic increases already mandated. Can't be touched. Never mind that Congress passed laws that mandate such spending and can very well pass laws ending it. Nope. Not feasible. Some coward might lose his congressional seat.

The result: taxes are going to be increased in 1985 more than any living person has ever seen them explode. They will go up possibly higher and faster than ever in American history. The taxpayer is going to pay, and pay, and pay, and pay. And, to make sure there isn't too much inconvenient complaining by the shirkers and fat-cats (you know, the ones making $15,000 or $20,000 a year), the IRS is going to be given powers that spit on the Constitution.

Therefore, it isn't too early for each and every taxpayer to start thinking about how to react. Here are some rules to start living by:

• Keep your mouth shut. Many IRS audits are instituted as a result of overheard comments, or "confidential" tips (for which the spy is paid money, should any be squeezed out of the hapless taxpayer informed upon). You should become very private and very close-mouthed about your financial affairs, whether you are collecting money "under the table" or not. That includes friends, family members, and lovers.

• Consider rearranging your financial affairs so as to increase your privacy. There are many ways to do this, but don't take it from me: go get a couple of books that are very good indeed on the subject. Mark Skousen's Complete Guide to Financial Privacy is very good (Caroline House Books, 236 Forest Park Place, Ottawa, IL 61350). Skousen gives you an overview of why you should want more privacy (independent of the storm that will soon sweep down upon all of us), and tells you a number of ways to achieve it. A second, more recent book on financial privacy deals specifically with foreign bank accounts, which you may want to consider. Bank Accounts: A World Guide to Confidentiality, by Edouard Chambost, is pricey ($31.95, put out by Wiley Press) but worth it if you want seriously to consider a foreign bank account (and there are many reasons why you might want to do this).

• Understand the government's confiscation apparatus. Read, for a start, All You Need to Know About the IRS, by Paul Strassels, a former IRS agent. This book tells how the government is able to keep most of us scared and cowed, while extracting amounts of wealth that dictators and despots of the past would not dare attempt to seize. Armed with the kind of knowledge garnered from this book, you will be in a better position to withstand the government's techniques, both subtle and not-so-subtle.

• Don't fall for the propaganda barrage that will inevitably materialize. Sometime between 1985 and 1987 the federal government is going to make a big show of an "amnesty program for taxpayers." All of us will be allowed to confess our sins to the government and turn over large amounts of money, in return for a general amnesty. Several points leap to mind: One, if they could catch you and prosecute, they most certainly would; an amnesty is an admission that they can't catch the vast number of people who exploit every possible interpretation of the tax code to hold on to their money. (Moreover, if those people could be caught, where would they all be housed after conviction? The state of Montana?) Second, there is no doubt in my mind that if you take advantage of such an "amnesty," your name will go on a computer tape somewhere, and you will be marked for special scrutiny in the future should you ever come to the government's attention again. Third, such a program will rely heavily on unspoken intimidation, and it will be coupled with a much-publicized increase in IRS powers (which would have occurred anyway); if you know how the government intimidates you in the first place (see the books above), then you won't be so fearful that you'll rush to give your money to the IRS.

• Don't fall for a flat-tax scheme unless it guarantees the government will receive less of the people's wealth. Government lovers of all stripes hate the idea of a "flat tax"; but you're going to see some of them jumping on the bandwagon. Why? Normally, a graduated income tax enables a politician to play off one segment of society against another: "We're not going to tax you; we're only going after the rich fat-cats," they say (you know this is a lie, but it's worked quite well for governments in the 20th century). With a flat tax, this cannot be done. But if it means politicians can extract even more wealth from the people, then they'll go along with it.

Friends, there comes a time when everyone has to make a very fundamental decision. Even today, many people feel that "cheating" on income taxes is wrong. But at some point even those people will have to say, "No more," and begin fighting the government by joining the subterranean economy. In fact, a strong argument can be made right now that a majority of Americans have already made that decision. But the conflagration about to descend upon each and every taxpayer is going to make millions more converts.

Under the guise of "reducing the deficit," terrible things are going to happen to anyone who works for a living and pays taxes. Each of us will have to make a decision about how to fight the seemingly unstoppable march of government as it causes ever more economic dislocation, as our standard of living begins another long slide downward. I don't preach to anyone about how far to go, how strong a stand to take, and whether that stand should be public or private.

The only absolute is this: somehow, sometime, a stand must be taken, by all of us. If we fail, then we take our places beside those throughout history who have been exploited by government. And we then cease to be free men and women.

Tim Condon is an attorney and tax specialist practicing in Florida.