Americans are dodging income taxes at a growing pace. They have good reason to do just that.
Taxes are, as per a handy Internal Revenue Service (IRS) guide for students, "required payments of money to governments that are used to provide public goods and services for the benefit of the community as a whole." Yet our politically divided countrymen find little agreement over what constitutes "benefit" or "appropriate payments" and often act as if government is better used to punish enemies than to help anybody. That has, in turn, fueled an understandable reluctance to cough up cash for what's offered.
In the latest IRS figures, voluntary tax compliance for 2008–10 is 81.7 percent of the revenue the federal government believes it's entitled to collect. That's down from 83.1 percent in 2006. The slide "does not support concluding that noncompliance has increased," say the tax men. But that's pretty much what they said when disappointing numbers prompted then–Sen. Max Baucus (D–Mont.) to call, in 2004, for 90 percent compliance by 2010—a deadline he later extended to 2017. That's not the direction things moved.
We should hope those numbers head over the cliff's edge in the years to come.
Good government types like to justify taxes by citing Oliver Wendell Holmes, who called them "the price we pay for a civilized society." But they'd be well-advised to remember the words of Thomas Aquinas, who believed governments were entitled to impose taxes for "the common good" but that "if they extort something unduly by means of violence, it is robbery even as burglary is."
In his classic 1993 book, For Good and Evil: The Impact of Taxes on the Course of Civilization, the late tax historian Charles Adams pointed out that "people instinctively, in all ages, have called tax men robbers because they operate by threats and intimidations and don't pay for what they take." Resentment brews, too, because taxes do not fit any traditional definition of a voluntarily incurred debt. "A tax is owed because a government orders it to be paid," Adams added. "Nothing else is required."
Maybe that's all right if what you're ordered to pay for benefits you in an obvious and desirable way. But if you deeply resent the forced extraction of your income so that it can be spent on wars of aggression, corporate subsidies, welfare payments, punitive law enforcement, or other purposes you find abhorrent, any budding appreciation is likely to die on the vine. War tax resisters have a long and proud history of trying to deny fuel to the military machine. After years of public life, libertarian icon Karl Hess lived a life of barter to deny the state any undeserved pound of flesh.
It's even worse if you live in a fractured society in which the factions have turned against one another—21st century America, say—and the instruments of the state are used as bludgeons with which to harm a temporary ruling clique's perceived enemies.
The Obama administration's Operation Choke Point used regulatory power to intimidate banks into denying financial services to legal businesses, such as payday lenders and gun retailers, that had lost the support of the rulers of the moment. Likewise, the current president threatens burdensome taxes and antitrust investigations on disfavored companies and media operations. Nobody pretends these moves are anything other than punishment for those who have rubbed the ruling class the wrong way.
Funding for these abusive government efforts comes courtesy of the IRS. The tax agency itself has a long history of politicization in high-profile cases, including the recent targeting of Tea Party groups and President Richard Nixon's harassment of political enemies through the "Special Services Staff."
"It never occurred to me at the time that the IRS could be used as a political tool," former Revenue Officer Richard M. Schickel wrote of tips about alleged tax evasion in his self-published 2015 memoir, IRS Whistleblower. "Every case in the IRS is coded as to the source of information. As you can imagine if you got a code that said the case was from the White House or Congress that got top priority."
Adams, the tax historian, agreed. "The executive branch of the government has used the IRS to harass, punish, and even destroy businesses, prominent individuals, unpopular political organizations, senators, congressmen—just about anybody," he wrote. "Even more threatening and dangerous to the nation is the abuse of power by the IRS itself against those people it doesn't like.…Senators Edward Long and Joseph Montoya were both toppled from power when they sought to have the Senate hold hearings on IRS misdeeds."
"To some employees, the taxpayer is the enemy," Schickel said.
Given that, it's no wonder tax collectors are so easy to weaponize. One need merely turn them loose against a population they already despise.
"A system that allows billionaires to exist" is immoral, insists Rep. Alexandria Ocasio-Cortez (D–N.Y.), who plays to her hipster-socialist base with vows to slap punitive taxes on the prosperous.
"A small group of families has raked in a massive amount of the wealth American workers have produced," agrees Sen. Elizabeth Warren (D–Mass.), who wants to confiscate part of their accumulated assets.
"I can't wait to tax Howard Schultz back into the middle class," tweeted progressive columnist Ian Millhiser after the former Starbucks CEO floated a possible independent presidential run.
"They will be taxed like never before," President Donald Trump threatened after motorcycle manufacturer Harley-Davidson announced plans to move some production overseas in defiance of the president's nationalistic economic policies. That echoes his vows to punish Amazon for criticism of his administration published in The Washington Post, owned by the retail giant's founder and CEO, Jeff Bezos.
Forget the idea of forced payments for undesired benefits. Here we have malicious political actors threatening to inflict punitive taxes enforced by historically abusive collectors against people they dislike. It's a weaponized tax system funded by what it extracts from its victims.
A voluntary compliance rate of 81.7 percent and dropping? For a government that has seen a decadeslong decline in measures of public trust, that level of compliance is surprisingly high.
And why are people so willing to turn over their hard-earned income to the tax man? "The power of the IRS is the power of FEAR," Schickel explained in his book. And fear can go a long way toward propping up unpopular regimes.
But fear will only take you so far.
"A government that shackles its people with grossly inequitable tax laws and despotic enforcement practices loses all moral persuasion with respect to compliance and can hardly complain if its taxpayers resort to all kinds of schemes to protect themselves, including illegal ones," Adams warned in his book.
So far, taxpayers have chosen to protect themselves in quietly growing numbers, with minimal drama. Unless they're given reason to reconsider, we should expect—and hope—that their rebellious ranks will grow.