Taxation

The Libertarian Party is asking for your help in pushing a repeal of the death tax through the Senate.  It's a good cause, because who wants to be forced to break up the family business to pay the government's cut of wealth accumulation that they have already taxed many, many times?  They have a form letter (reproduced below) and suggest contacting your senators.

Dear Senator,

 

I am writing as your constituent to express my concern for the pending vote on the permanent repeal of the death tax.  As a taxpaying citizen, I want to inform you in writing that I oppose this confiscatory, unethical, and unfair tax, and I support its permanent repeal as soon as possible. 

 

I would like a response from you or a member of your staff as soon as possible alerting me as to where you stand on the permanent repeal of the death tax.  Thank you in advance for your response, and your consideration of my views.

 

Sincerely,

As soon as Congress passed the legislation, the president praised it, saying, "By leaving American families with more to spend, more to save and more to invest, these reforms will help boost the nation's economy and create jobs." Then he says, "When people have extra take-home pay, there's greater demand for goods and services. And employers will need more workers to meet that demand." The truth of the matter is - the "big" tax cut that Bush and his ilk have touted is nothing more than a scam aimed directly at the American people. How is this so? Here's a simple explanation.

Congress passed a new child tax credit bill last week amid partisan controversy, clashes between the House and Senate chambers, and the usual class-warfare rhetoric. The debate raised uncomfortable questions about which Americans "deserve" a tax break, but the larger question - whether government deserves so much of our money - went unaddressed.

If you own a cable modem, expect a substantial increase in your monthly rates if a proposal currently before the Federal Communications Commission goes forward.

A tax protester may not sell his book that contends paying income tax is voluntary, a federal judge ruled Monday. U.S. District Judge Lloyd D. George wrote in an order banning the book that Irwin Schiff is not protected by the First Amendment because he has encouraged people not to pay taxes. "There is no protection ... for speech or advocacy that is directed toward producing imminent lawless action,"George wrote in support of the preliminary injunction on the book,"The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes."

I can't say that I buy Schiff's tax theories -- even if he is correct, it's in the nature of a loophole rather than a super-secret way for people in the know to avoid paying taxes -- but banning his book is a free speech issue. This is the United States. We don't ban books.

During the tax season many Americans are under a lot of stress. When you stop and think about, what better way is there to describe a process that forces supposedly free citizens to bear witness against themselves, which is in direct violation of our 5th Amendment right. And then there's that pesky little rumor/fact floating around and perpetuated by talk radio and others in the know that the 16th Amendment wasn't actually ratified. And as anyone who has ever heard the name Irwin Schiff can attest, there is no need to pay income taxes because income, as defined for years by the courts, is nothing more than corporate profits, not the wages that an individual makes each year. So if all of this is true - the 16th Amendment was never ratified, income isn't what you've always been told it is, and the biggie, that there is no law on the books that forces Americans to pay income taxes - then why do we continue this charade? Why not simply stand up and proclaim, in the words of Twisted Sister, "We're not gonna take it, anymore!"?

Are conservatives in both Houses of the Congress so desperate to pass President Bush's $350 billion tax cut package that they're just willing to chuck their principles, just so that they can claim that they are "cutting taxes" to score points with their constituency?

Fines, fees, surcharges, taxes: Whatever you call it, the bottom line is that cash-strapped states are seeking billions of new dollars from their citizens, enough to potentially double the load of new taxes this year and erase much of the windfall American taxpayers enjoyed in the 1990s.

There will probably come a time in the next few weeks when you'll look at your paycheck, notice that the take-home dollar amount is a little bit higher and the "federal withholding" amount is a little lower, and you'll experience a feeling of contentment. It's been a hard year. The economy stinks, your property taxes have gone way up, as have your state and local taxes, and your kids' college tuition ... no, let's not talk about your kids' tuition. But, hey, the President and Congress have pushed through that tax cut--the largest since the Reagan tax cut of 1981, no less--and you're seeing the happy result already right there on your paycheck. You may even be moved to say, Thank you, Uncle Sam, for cutting me a little slack.

I don't claim to have the answers, and I certainly don't want to dampen anyone's spirit. A definition of insanity is doing what you have always done and expecting different results. Doing what we have always done ain't gonna cut it anymore. We have 4 theories and 3 paths, which will we choose?

Few Americans under 65 realize the withholding box on their pay stubs is a relatively recent addition. Federal withholding of income taxes was a ıtemporaryı measure enacted during the Second World War as a means to ensure that the government received desperately needed revenue to fund the war effort. With the very real, terrifying possibility of the fascists taking over the world, most Americans of that age accepted the measure as necessary to defeat the Axis powers centered in Tokyo and Berlin.

The watered-down tax cut passed in the House of Representatives last week, while predictably small, is better than nothing. It does reduce taxes on dividends slightly, lowers marginal income tax rates by very small percentages, and increases some deductions available to businesses. Still, the speeches on the House floor showed the current tax cut debate is strictly about politics and not serious economics. Both sides use demagoguery but donıt propose truly significant tax reductions. Both sides use the outrageous expression ıcost to governmentı when talking about the impact of tax legislation on revenues. This implies that government owns everything, and that any tax rate less than 100% costs government some of its rightful bounty.

One recent fine spring morning as I started to leave for work, I found that the police had left little presents on both my husband's car and my car. Apparently, we missed ı by two days ı the deadline to renew the state license plates. Two days. As it turns out, my car was also ticketed a second time before I could obtain the blasted sticker. The final sum owed the government was now a whopping $180 dollars, plus the cost of the two sticker fees.

The world's longest yard sale had some unexpected and unwanted visitors Thursday when more than a dozen agents from the state's revenue department distributed notices and permits to several vendors. The actions of the agents, the first such attempt to collect taxes on the huge yard sale in its 17-year history, did not go over well with merchants or supporters of the weeklong event, scheduled to end Sunday.

The higher taxes go, the more people want to avoid them. This is merely a symptom.

A new law forces workers to have a higher percentage of state taxes withheld from their paychecks, even though many of those workers already overpay and get refunds.

Don't panic; no one's taxes were raised. The total you owe at the end of the year will be the same, but the amount you pay on each paycheck could change.

The change is aimed at keeping cash flowing into state coffers after federal taxes were cut. If lawmakers didn't bump up the state rates, which are based on federal ones, Arizona would have lost an estimated $14 million in cash flow in 2003, although that would have meant more money in your pocket in the short term.

So, in other words, because the state can't manage it's cash flow properly without continuous cash infusions from your taxed paychecks, they are going to force additional withholding from that paycheck -- money that they have no right to in the first place! -- merely to ease their cash flow problems.

Only a government has the option to do this with force. What would you say if some individual came up to you and demanded part of your paycheck each month, even though he admitted that you did not owe him the money? What if he promised he would pay it all back come next tax refund day -- would that make you feel any better about it?

But the state of Arizona can do it, and no one is supposed to complain. Because it's the government.

Recently, Oprah made headlines by giving a "free" car to every member of the audience on one of her talk shows.

Of course, there's no such thing as a "free" car, notes Paul Caron, the blog's publisher and a University of Cincinnati law professor. And even if Pontiac were to pay not only the sales tax but all the various income taxes that the recipients will owe on the value of their new cars, there would be taxes due on the value of any "free" tax payments too, a calculation known as a gross up.

But they're not really free. They have value, and for something that large, they have enough value to impose income tax liabilities.

Brenda Schafer, a manager for tax analysis and advice support at H&R Block, has heard stunned prizewinners wailing before. The company's clients include former participants on reality shows. Whether they got a "free" new face on "Miami Slice" or a new wardrobe on "Queer Eye for the Straight Guy" or had their $50,000 ranch house turned into a $300,000 mansion--they'll have to pony up to the IRS.

And it's the recipients who have to pay the taxes. The giver can probably manage to write off the cost of the gift as a charitable contribution somehow. But the value of the gift is still taxed.

What's the overall effect of this? The taxation of charitable contributions is shifted from the rich to the poor. And don't forget there are a lot of other "progressive" policies that are designed to shift costs the other way. The entire tax code is an exercise in cost shifting. That doesn't benefit anyone other than the IRS.

As for Oprah, Ms. Schafer says, "she's thinking she's giving gifts, but there's no getting around the fact that it's a prize for being in the audience." And according to her rough, unofficial calculation, someone in the 15% federal bracket (making, say, $28,000 as an individual, or $56,000 if filing jointly) and a 5% state bracket who gets a $30,000 car (the figure for the G6 is about $28,500) will owe an extra $6,000 in taxes. For a single earner in the 33% bracket kicking in at $143,500, the car adds $12,000 in tax.

Imposing that amount of additional tax will severely damage the financial planning of most recipients.

A domestic centerpiece of the Bush/GOP agenda for a second Bush term is getting rid of the Internal Revenue Service, the DRUDGE REPORT has learned.

The Speaker of the House will push for replacing the nation's current tax system with a national sales tax or a value added tax, Hill sources tell DRUDGE.

"People ask me if I?m really calling for the elimination of the IRS, and I say I think that?s a great thing to do for future generations of Americans," Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.

Well, this is from the Drudge Report, so it should be classified as rumor rather than solid news. But it's an interesting rumor. Constitutionally, the proposal to replace the income tax with a sales tax would be on fairly solid ground (a sale is certainly an "income, from whatever source derived"). Philosophically, Bush is likely to propose something that's revenue-neutral, so it doesn't actually win him points -- except points concerning eliminating the IRS, if that's part of the plan. (I find it unlikely. Rename? Sure. Repurpose? Sure. Eliminate? Probably not -- too many people out of a job.)

The only real benefit to changing the system is to shift the recordkeeping and administrative burden to businesses rather than individuals. That's good because it's less work, and the work can be handled by experts. That's bad because the tax becomes less visible to citizens, and thus, less likely to inspire protest.

UPDATE: Michael Badnarik has responded.

• Federal spending: 86 days
• State and local spending: 42.9 days
• Federal regulations: 36.7 days
• State regulations: 22.9 days

What, did you think that the welfare checks and the social security checks and the shiny military were all free?

In embracing John Edwards, John Kerry has also endorsed his populist "two Americas" rhetoric and has put tax increases at the center of the election campaign. So it's fair to ask the two Democrats: How much of those tax increases will actually hit the super-rich like yourselves, and how much will end up on the backs of upper middle-class wage earners?

For an answer, let's look at what the two Senators have themselves been paying in taxes. It turns out that the Kerrys and Edwards have exploited plenty of tax loopholes over the years. Of course, nobody is obligated to pay more than what the letter of the law requires. But the complex tax code benefits the wealthy, who can afford tax attorneys and complicated schemes to skirt the law. And high marginal rates give them plenty of incentive to do so.

Yep, it's us "rich folk" with incomes over the poverty line who are going to be bearing the brunt of Kerry's tax increases. People who don't have time to pay an accountant to find the right loopholes, and people who don't have the money to exploit "loopholes" like getting millions of dollars in income from investments. Yeah, Ketchup Man, campaign on higher taxes. You can afford it. The rest of us are busy making the economy work again.

Any tax system creates a threat to individual liberty because "the power to tax involves the power to destroy," as Chief Justice John Marshall observed.[1] But the federal income tax and its enforcement harm civil liberties much more than necessary to raise needed funds for the government. Certainly, the IRS performs poorly and too easily abuses the rights of citizens. But ultimately Congress is to blame for creating an excessively complex and high-rate tax system. New laws to increase taxpayer protections and replacement of the income tax with a simpler, flatter consumption-based tax could greatly reduce the following 10 areas of civil liberties abuse.

"You people," he once hissed to a delinquent taxpayer. "You have this idea that you can bluster and bully your way through every problem and somehow that will make the problem go away. Well, let me tell you something, buddy, this is one problem that's never going away . . . We are relentless, implacable, indefatigable. We will show you no mercy."

If you're still thinking he wouldn't bother with slim pickings like you, think again. As his co-worker once said: "The law gives us H-bombs to take out anthills."

You, my friend, would be the ant.

Yes, it's tax time once again. And once again it's time for my annual rant about taxes. Now, I'm not going to tell you that taxation is theft; you knew that. I'm not going to tell you that taxation is also extortion, because you knew that too. I'm not going to tell you not to pay your taxes, because the IRS doesn't recognize the First Amendment. Instead, I'm going to tell you about withholding.

Withholding is the concept of your employer holding back a certain amount of your paycheck, each time he issues a paycheck, and sending it to the government instead. It's technically voluntary, but there are reports that if you try to opt-out, you get in trouble. But the basic idea is that the taxes you "owe", according to the IRS, are removed from your wages before you even seen them, and given directly to the government.

To be sure, this tactic makes it easier for people to manage their taxes -- ie, letting their employer manage their taxes for them, with only a small balance left over at the end of the year, depending on whether the estimates were correct or not. But making taxes easier also makes them less noticable. When you don't have the money in your hands, it feels a lot less like stealing when the government takes it away. The implications of the practice are that the money wasn't yours to start with; it belonged to the government all along..

The only problem with this idea? It's a pack of lies designed to make it easier to tax the people. You worked for the money; you earned it. It's being paid on your behalf by your employer, and if the IRS would stop intimidating employers, you could tell your employer to give you the money instead and he would do so. But the government isn't interested in options that don't promote it's goal of ever-increasing tax revenues.

So if you don't like paying taxes, it's worthwhile thinking about withholding -- and whether you can find a way to get it repealed, or at least made optional again. The more people that come up on April 15th and a tax bill of thousands of dollars, the more people who will come to understand that taxation is theft.

So, if you want to eliminate the income tax, start by eliminating withholding.

Operating -- apparently -- on the proposition that taxes are too low, the Republican chairman of the Senate Foreign Relations Committee recently moved out of his committee a long-stalled treaty which would allow international bureaucrats to tax the American people. That treaty is now positioned for a vote by the Senate; likely by a voice vote which means senators can avoid taking a recorded position on the issue.

Four U.S. senators will introduce a bill to extend a now-expired Internet tax moratorium by two years, instead of a permanent ban on Internet-only taxes that passed through the U.S. House of Representatives in September.

Senators opposed to the permanent ban in the House-passed Internet Tax Non-discrimination Act said the definition of Internet access in the bill could result in a ban on taxing many telecommunications services as carriers of traditional telephone service move more of their traffic to the Internet. Sens. Thomas Carper (D-Del.) and Lamar Alexander (R-Tenn.) said their two-year extension of a five-year moratorium would continue the ban but define Internet access as not including telecommunications services.

This is a perfect example of the massive social divide between legislators and subjec--err, normal citizens. It can be summed up in three words: Legislators like taxes.

The Internet tax moratorium does two things. First, it encourages the growth of a new marketplace that is capable of moving certain kinds of goods (ie, information) much more efficiently than anything else. Second, it provides the closest thing we have these days to a free market, by explicitly protecting the marketplace from the stifling and regulatory impulses of taxation.

With over 75,000 pages of federal regulations governing the conduct of businesses, in the physical world the United States is no longer a free market. We've devolved to a kinda-sorta-maybe free market, and we have regulations hemming us in as much as the government can get away with. The sole shining virtue of the United States is that we're still closer to a "free market" than most other first-world nations.

Since its birth, the Internet has been two or three steps beyond that. It's an informational and economic engine that has powered tremendous growth in many areas, growth that persists even after the first big crash knocked down so many of the gee-whiz dot-coms. The dot-coms were part of the market; the market learns and adjusts, but we are all better off than we were before -- with the possible exception of those who bought too much of the wrong stock.

But the most wonderful thing about the Internet, and especially about the tax-free internet, is that it lowered the regulatory barriers to commerce. To reach a nationwide market for your product, whatever your product might be, all you needed was a website. You did not need an expensive team of lawyers and accountants to analyze your business and make it comply with the tax codes of 50 states and the federal government. Maybe you needed those for the product itself, but for the internet part of your business, you had tax-free status for a while.

State governments didn't like that much, but they didn't take the message of reasonable economic actors (ie, "Your price is too high"). Instead they took the action of a government with a monopoly on force: "Pay up or else." They started looking for ways to tax and regulate the internet, piece by piece. Already, they have made some inroads -- and already the internet is feeling the regulatory squeeze, losing some of that vibrant bustle that made it a favorite for libertarians.

The constitution gives only the federal government the authority to regulate interstate commerce. Nearly all commerce on the Internet is interstate. So long as the federal tax moratorium persists, the states can only nibble around the edges. We can't stop them from nibbling, but we can stop the federal government from imposing those 75,000 pages of business regulation upon us. We can preserve the heart and the soul of the greatest free market ever created. We can, and we must -- because the Internet, and the voice of the people, is the last great hope of freedom, both economic and political.

As always, articles about the IRS and the inner details of the tax code come with great big labels: "I am not a lawyer" and "I am not a CPA". I think some of the stuff in this article makes sense and is accurate; some of it might be technically true but in practice matters little; and some of it may be completely off base. But I'm not sure which parts fit into which category.

Teach your kids about taxes with this fun new method! This one's straight from the Libertarian Party, and damn! Sock it to 'em! Teach the next generation!