Government & Taxation

Owning Your Productivity: Stop Paying Taxes

Graphic by Duncan Dovico.

Turns out the IRS has spent almost $50 million over the past couple years on conferences, including $17,000 to a keynote speaker who specializes in unique paintings, including one of Michael Jordan.  If you don’t see its relevance to the IRS or even to government in general, you’re not alone.

Should this surprise us?  In a previous post, I noted that the only endeavor at which the U.S. government is especially apt is surviving, although it’s also doing a pretty damn good job of growing.  Evolutionary selection of governments depends on power, in the same way that selection of gazelles depends on speed.  And government power results from its ability to control resources, most notably money.

At one time, the Federal Government was limited in scope by its so-called enumerated powers under Article 1, Section 8 of the U.S. Constitution, but a pesky set of clauses, namely the Taxing and Spending clauses, has been interpreted so broadly by the U.S. Supreme Court as to render the enumerated powers more or less irrelevant.  Where, for example, does the Constitution give Washington the power to regulate education, an historically state issue?  It doesn’t.  But since the Feds have the power to tax Americans and then selectively spend (or withhold) those funds, the Department of Education has de facto control of American schools simply by dangling the carrot of federal subsidy in front of state lawmakers.

Government doesn’t spend wisely because, to be blunt, it doesn’t need to.  A government that foolishly spends $1 billion wields more power than a government that efficiently spends a million, and since power is the currency of government, the heavy spender wins the battle of survival of the fittest.  Accordingly, the IRS is just another government bureaucracy that will spend recklessly until it does something so outlandishly stupid that people simply can’t ignore it.  Angry letters will be written, IRS managers will get fired, the House will propose new tax legislation, Fox News will have multiple orgasms, and so forth.  Then, once the media attention is over and people get back to watching The Bachelorette, the IRS can once again resume business-as-usual.

Calls for overhauling the nation’s income tax collection agency are often heard, but even a “success” is nothing more than a temporary Band-Aid.  The solution to the ills of the IRS is not firing a few hacks or rewriting a few lines of code; rather, it’s elimination.

What can we do as citizens?  High school teaches kids that in a democracy, we can make changes by writing letters to our elected officials and voting for sympathetic candidates.  High school teaches lots of other incorrect and irrelevant lessons, too.  Dismantling the IRS won’t happen from the top down; it will only happen from the bottom up.  Since the IRS is a political creature whose survival requires feeding on the productivity of Americans, the easiest (only?) way to kill it is to stop feeding it.

Wesley Snipes Mugshot

But tax evasion is a very, very bad idea.  Lying under penalty of perjury – which is what happens when someone signs a falsified income tax return – is a no-no.  Also, I don’t buy any of the traditional tax protestor arguments, such as that the income tax is “voluntary” or the 16th Amendment to the U.S. Constitution was never ratified.  Actor Wesley Snipes, a tax protestor, got released from federal prison two months ago.  The courts didn’t buy his arguments either.

What I’m proposing is understanding the tax code and engineering one’s life to pay as few taxes as possible.  In other words: lawfully avoiding income taxation by following the letter of the law.  One example is “imputed income.”  If you grow a tomato instead of buying one at the store, you pay no income tax on the self-produced food while the store-bought food is paid for with after-tax dollars.

What other strategies can we use to lawfully avoid paying income taxes?

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