Some bits and pieces from here and there:

• Some more tax day news is trickling in:
  • Here’s a nice interview with war tax resister David Waters on Birmingham, Alabama’s local CBS news station.
  • And take a gander at this photo of Juanita Nelson holding her “Haven’t Paid Taxes Since 1948” sign on tax day outside the downtown post office in Brattleboro, Vermont.
• Here’s a bit more about the tax resistance campaign that activists for Catalan independence are engaged in:

  

  • “Spain is robbing us,” a number of impatient Catalan municipalities are saying, and in response several have begun depositing their taxes with the regional Catalan tax agency rather than forwarding them to the federal government as the law demands. The tax resistance campaign is being organized by Catalunya Diu Prou (“Catalonia Says ‘Enough’”), which says that some freelancers and independent businesses, which are responsible for their own tax withholding, will follow suit.
  • About twenty resisters gathered in the Plaza de Catalunya in Barcelona to launch a symbolic tax resistance action in which they will withhold a token amount (such as €50) from their tax payments in protest against government corruption. They plan to pay this money into an escrow account and not turn it over to the government until their demands are met, which demands include legal changes that they hope would bring transparency to the actions of the government and of politicians.
• The IRS is reacting to budget cuts by sending its employees home without pay for at least five days this year. This is bound to reduce the effectiveness of the already struggling agency, and to make it difficult to retain and to recruit talented personnel.

  In addition to the furloughs, the IRS has frozen hiring, cut spending on travel, training and supplies, and directed managers to scrutinize contract and grant funding.

  Before sequestration became a reality, the IRS had already been dealing with tighter budgets, a shrinking workforce, and an increasing workload.

  [National Treasury Employees Union president Colleen M.] Kelley noted that because of those prior budget cuts, the IRS operated “this filing season with 5,000 fewer employees than just two years ago.”

• The “Google” brand has earned a lot of warm fuzzy associations in my heart, with all of the generous contributions the company has made to the project of expanding the availability of knowledge and information. But those who find its size, ubiquitousness, and growing intrusiveness somewhat ominous have a point, and that point got a lot more pointed to me recently when someone pointed me to a page touting a new book, due to be released tomorrow I think, by Google executive chairman (and former CEO Eric Schmidt and Google Ideas director Jared Cohen (“a former adviser to secretaries of state Condoleezza Rice and Hillary Clinton”).
  
  The description of the book’s content isn’t what caught my attention (it was pretty vague anyway). What grabbed me was the list of people who have provided blurbs, which includes:
  • Tony Blair
  • Bill Clinton
  • Henry Kissinger
  • Michael Hayden (former CIA director)
  • Madeleine Albright (former U.S. Secretary of State)
  • Robert Zoellick (former World Bank president and U.S. Deputy Secretary of State)
  • Michael Bloomberg (notoriously nanny-stateish New York City mayor)
  • Brent Scowcroft (former U.S. National Security Advisor and Foreign Intelligence Advisory Board chairman)
  This, apparently, is the audience Schmidt & Cohen feel like enthusing when they are talking about “the new digital age” to come, and that gives me a bit of a chill.

“Fr33 Aid” is a group of volunteers who organize free first aid and health services and who educate people about first aid skills (like CPR) and about the value of voluntary mutual aid at libertarian/anarchist-leaning events.

According to a press release on their site, dated tax day, 2013, they have given up on their frustrating quest to gain government-certified non-profit status. Instead they are going to try to withdraw from the state-monitored banking system and the use of state-controlled currency and instead do as much of their operations as possible with the newly-developed currency known as “bitcoin.”

“When we founded Fr33 Aid in early 2011, the banks all required a taxpayer ID number and government paperwork,” said Teresa Warmke, Fr33 Aid’s co-founder and treasurer. “Bitcoin changed everything. We can focus on our mission now that Fr33 Aid’s assets are safe in our Bitcoin wallet.”

In a follow-up Q&A, Warmke explained: “Now that there are ways for us to do banking without government involvement, we decided fulfilling [IRS requirements] would not be a responsible way for Fr33 Aid to spend its money nor for our volunteers to spend their time.”

The organization will continue to accept donations denominated in dollars from people who have not adopted bitcoins, but will convert such donations to bitcoins “in a timely manner.” This way, Warmke says, “If at some point either the bank or a government tries to confiscate our account for taxes they believe we owe or failure to file paperwork, they would only be able to find a few dollars for their trouble.”

Bitcoins are very interesting. They are a form of currency that is backed by the full faith & credit of its community of users and the sophisticated and clever algorithm they agree to use and that gives the currency value as a medium of exchange. It is composed of numbers, minted by mathematics, often never takes material form, is recognized by no government, and backed by no material goods… and yet it seems strikingly more secure and useful and dependable than the currencies we have grown used to (for which, on close inspection, many of these same frightening conclusions hold true).

I’ve been hearing about them for months, but only recently have I investigated them in earnest. I don’t feel economically or mathematically sophisticated enough to give them a full-throated endorsement, but I’ve learned enough to know that most of my initial skepticism about bitcoin was superficial and invalid. This may very well be the real thing: a currency that is not controlled by a central authority, but by the community of people who use it; and one that is relatively easy for people to safeguard from government attempts at confiscation or restriction of trade across national boundaries.

(This would be an example of the tax resistance tactic of abandoning government currency or of switching to alternative currencies, which I covered on earlier Picket Line posts, and is related to the tactics hide taxable or seizable assets, join cooperative business arrangements, manufacture & sell alternatives to taxed goods, and participate in barter and other off-the-books transactions.)

The IRS “Office of the Taxpayer Advocate” has released a preliminary report on its study of tax compliance and noncompliance among sole proprietors, who represent a large portion of the “tax gap” the agency hopes to close.

They want to know the factors that might cause such people to evade their taxes, and so do I, though with much different motives, and so I took a peek at the report. Here are some bits that stood out to me:

Most taxpayers believe tax laws are unfair.

Only 15 percent of both groups agreed or strongly agreed that the tax laws are fair. Rather, most taxpayers believe that:

• Large businesses have loopholes to reduce their taxes that smaller businesses do not have;
• The wealthy have ways of minimizing their taxes that are not available to the average taxpayer;
• Not everyone pays his or her fair share; and
• The federal tax laws are unfair

Those in the low-compliance group were more likely to participate in local organizations.

Among respondents who belong to local organizations, those in the low-compliance group were more likely to report that they usually participate. This was true for various organizations identified by the survey, including local business organizations (50 percent from the low-compliance group usually participate vs. 30 percent from the high-compliance group), local trade, labor, or occupational organizations (40 vs. 24 percent), and local civic, community, or fraternal organizations (67 vs. 47 percent). Thus, active participation in these groups appears to be negatively correlated with tax compliance, possibly promoting social noncompliance in terms of the typology. Perhaps those with a closer connection to local groups feel a weaker connection to the federal government, and a weaker obligation to comply with federal tax laws. They may also chose to associate with those who hold similarly negative views about the federal government and tax compliance, which reinforced their own views

Those in the low-compliance group were more likely to report that other members of local organizations view tax laws and the IRS negatively.

Those in the low-compliance group were more likely than those in the high-compliance group to report that other members of local business organizations believe tax laws are unfair (48 percent of the low-compliance group vs. 28 percent of the high-compliance group) or that the IRS treats taxpayers unfairly (37 vs. 21 percent). They were more likely to report that other members of local trade, labor and occupational organizations believe tax laws are unfair (42 vs. 38 percent) or that the IRS treats taxpayers unfairly (46 vs. 28 percent). They were also more likely to report that other members of local civic, community, and fraternal organizations believe the tax laws are unfair (50 vs. 23 percent) or that the IRS treats taxpayers unfairly (36 vs. 18 percent). Participation in these organizations may have allowed taxpayers to learn that noncompliance is an acceptable norm among other participants, or perhaps they assumed that other participants shared their negative views. In any event, the differences in the responses to these questions by members of the high- and low-compliance groups may suggest that a person’s perception about whether other participants in local organizations feel the tax law or the IRS is fair has an effect on their own compliance behavior (e.g., social and symbolic noncompliance), perhaps eroding tax morale.

Another thing they noted was that “Surprisingly, those in the low-compliance group were also more likely than those in the high-compliance group to believe that the IRS detects and penalizes noncompliance.” This is another data point that suggests that deterrence via tax enforcement is not particularly effective, and that fear of IRS reprisals is not the prime motivator keeping people from refusing to pay.

Also surprising is that people in the high-compliance group were more likely than those in the low-compliance group to report that they felt their business competitors were not tax compliant. This upsets the theory that people “flock” in their tax compliance behavior — tending to behave in the way they believe their peers are behaving.

[T]he results of both surveys [they also did a study that divided people up geographically into low- and high-compliance communities] associate distrust of the national government and the IRS with the low-compliance groups and communities. For example, respondents from the low-compliance group were more likely to report that the government is too big and wastes tax dollars, that tax laws are unfair, and that the IRS is unfair (e.g., often believing the IRS is more concerned with collecting as much as possible instead of the correct amount, and indicating less satisfaction with IRS services).

The results of both surveys suggest that norms and distrust of the national government, the law, and the IRS may promote noncompliance. Respondents from both the low-compliance groups and from low-compliance communities held negative views about government and the IRS and were more likely to participate in local organizations. They were also more likely to believe that other members of those organizations held similarly negative views, which appeared to reinforce their own views, though they generally professed that noncompliance was morally wrong. In other words, they affiliated with others who reinforced noncompliance norms at the local level, and probably feel a closer connection to a local collective than to the national collective. In terms of the typology discussed above [which divides non-compliant taxpayers into several categories based on the causes or motivations for their noncompliance], this tendency to affiliate where distrust of government is the norm may be a form of social and symbolic noncompliance.

The authors say that “social and symbolic” noncompliance are emerging as “the primary types of noncompliance among small businesses.” These are defined as:

Social

Acted in accordance with social norms and peer behavior

Symbolic

Perceived the law or the IRS as unfair

…and are in contrast to a motive they call “Asocial” (“motivated by economic gain”) and a variety of other motives that have to do with ignorance of the law, laziness, difficulty following complex tax laws, or acting on advice from crafty tax professionals. The “Symbolic” category amounts to tax resistance, and so it is interesting to see that the IRS is coming to believe that much of what it has traditionally categorized as selfish, “asocial” tax evasion, is really motivated by feelings of dislike for the government and how it spends tax money (only about 6–8% of respondents believe “the federal government spends tax dollars wisely”).

Interestingly, people in the low-compliance group were more likely to report that everyone should correctly report all of their income — 97%! (And they were just as likely to report that “I feel a moral obligation to correctly report all of my income” — 96%) That should give you some skepticism about the value of such survey questions. The report notes that “the low-compliance group may have answered these questions aspirationally (e.g., they may not be living up to their aspirations because tax morale does not drive their tax compliance behavior) or defensively, to avoid making an admission.”

One caveat: the people who conducted the survey divided the respondents into “high-compliance” and “low-compliance” categories, but they did so not by measuring actual compliance, but by using “IRS tax compliance estimates to identify sole proprietors most likely to have high or low levels of reporting compliance.” These estimates are based on the taxpayer’s “examination activity code,” their “total gross receipts” and their “total positive income.”

[I]t is difficult to measure actual compliance with perfect accuracy. Taxpayers are not likely to confess any noncompliance in response to a survey, and even detailed audits conducted by the IRS’s National Research Program (NRP) are likely to contain errors. Even assuming that NRP audit results, as adjusted by IRS researchers, reflect actual compliance, the audit itself has an effect on the taxpayer’s attitude about the tax system, potentially biasing the taxpayer’s response to any subsequent survey. Thus, TAS decided not to survey taxpayers who had been subject to an NRP audit. While surveying taxpayers immediately before they were subject to an NRP audit might have been more productive, TAS deemed it overly deceptive. Thus, TAS opted to rely on DIF scores as an imperfect, but acceptable, measure of actual compliance.

There’s a possibility that the way they divided people up has biased the results, making some of their conclusions logically circular. And also, you should keep in mind that the “low-compliance” group in this survey is not “a group of people all of whom are less tax compliant” but “a group of people in which the IRS believes you are more likely to find individuals who are less tax compliant.”

On this date in 1966, Joan Baez was interviewed on the Belgian television station RTBF and asked about her war tax resistance.

Q: Why don’t you pay your income tax?

JB: I pay 40%, which goes to highways and things like that, and I won’t pay…

Q: Medicare perhaps?

JB: I hope so [laughs]. And I won’t pay 60% because it goes to armaments and armaments are wrong.

Q: And you’ll not have any problem with not paying?

JB: Oh, I have plenty of problems with not paying.

Q: And… what’s going to happen?

JB: Well, every year the same thing happens: they… you see, the government has the power to take the money from me. What I’m saying is I won’t give it, I won’t offer it anymore. And they fine me and they do this and do that. But, um… it’s their problem.

Each year, the Tax Foundation divides the amount of taxes collected by American governments during the year by the amount of money earned in America over the course of a year.

The group then takes the resulting number and says this is the proportion of our income-earning activities that we must do just to pay for the cost of government. If you were to take that proportion and multiply it by the number of days in the year, you’d get the number of days the “average American” must work to support government spending.

The Tax Foundation then says: let’s pretend all those days come at the beginning of the year, so that when they’re over, we’re finally working for ourselves and our families again. They name the day of this liberation “Tax Freedom Day,” and, according to their calculations, today is that day this year.

Some bits and pieces from here and there:

• Tax Day has come and gone, and NWTRCC is collecting a list of war tax resistance actions that happened on or around that day. Here’s a photo of Juanita Nelson holding her “Haven’t Paid Taxes Since 1948” sign in front of the Brattleboro post office on Tax Day.
• The Chief Counsel of the IRS Criminal Tax Division issued something called a Search Warrant Handbook a few years back to give its Criminal Investigation personnel with guidance about when they need search warrants to do their investigations. The Handbook stated:

  [T]he Fourth Amendment [to the U.S. Constitution, governing searches and seizures] does not protect communications held in electronic storage, such as email messages stored on a server, because internet users do not have a reasonable expectation of privacy in such communications.

  and

  [E]mails and other transmissions generally lose their reasonable expectation of privacy and thus their Fourth Amendment protection once they have been sent from an individual’s computer.

  A copy of the Internal Revenue Manual issued that year also says that “the government may obtain the contents of electronic communication that has been in storage for more than 180 days” without going through the hassle of obtaining a search warrant. Other agency memos, dating as recently as October 2011 restate the position.
  
  When the ACLU exposed these policies, there was a bit of an uproar. The agency didn’t help matters much by issuing a non-denial denial:

  Respecting taxpayer rights and taxpayer privacy are cornerstone principles for the IRS. Our job is to administer the nation’s tax laws, and we do so in a way that follows the law and treats taxpayers with respect. Contrary to some suggestions, the IRS does not use emails to target taxpayers. Any suggestion to the contrary is wrong.

  But the acting head of the IRS appeared before a Senate committee yesterday and seemed to indicate that the agency would back down, at least somewhat, and at least until the fuss dies down.
• The IRS is also catching flak for its ineptitude in dealing with identity theft. The USA Today editorial board concluded that “the crooks appear to be one step ahead of the IRS” as the IRS has responded to the growing problem by expanding its bureaucracy in a way that made things more complicated without making it more effective. In one example, a study of 17 people who had filed identity theft complaints with the IRS showed that the agency had responded by opening 58 distinct and uncoordinated cases in its myriad subunits in response.
• None of this is coming at a convenient time for the tax agency. The acting Commissioner, Steven Miller, recently appeared before the House Appropriations Committee to beg them not to cut the IRS budget any more. Miller “explained that the budget cuts that the IRS must make on account of sequestration will reduce IRS enforcement levels. In the short-term, revenue will drop because the number of audits will drop and collection activity will decline. In the long-term, the diminishing presence of the IRS will cause the voluntary compliance rate to drop, further reducing revenue.”
• Harriet Bicksler wrote an interesting piece — “Gambling on the Rapture” — about her on-again/off-again experiments with war tax resistance.
• The Mesa de Enlace Agropecuaria (Agricultural Liaison Bureau) in Argentina met in Santa Fe to decry encroaching “Marxism and Chavezism” in the country, and to call for tax resistance: “pay no taxes until June so the government cannot pay the bonuses and treat itself to a good time.”
• The American Enterprise Institute has issued a new edition of their useful compendium of poll results: Public Opinion on Taxes: 1937 to Today.