No Taxation Without Representation — Is it a good idea to withhold your Taxes from the Federal Government until Donald Trump is out of office?
I was asked what I think about conducting a strike against the federal government by having individuals collectively withhold their income tax from the federal government as a protest to the current administration’s disastrous policies. One concept that is making its way around the inter-web is to have individuals place their tax liability into an escrow that is held by a City or State entity. Ultimately the goal seems to be two-fold, starve the beast and make a symbolic statement of no taxation without representation.
- It is risky for an individual to withhold funds from the IRS. The IRS has steep interest and penalties for not filing or paying your taxes From the IRS: The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date
- The IRS can just take your money. “If you do not pay your taxes (or make arrangements to settle your debt), and the IRS determines that a levy is the next appropriate action, the IRS may levy any property or right to property you own or have an interest in. For instance, the IRS could levy property that is yours, but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions). Or, the IRS could seize and sell property that you hold (such as your car, boat or house).”
- But that is why we are putting the money into an escrow with the City or State, right? Sorry the City or State does not have legal authority to hold that money without you risking the same penalties. You would probably need the federal government to pass a law that would give them the authority.
- It is really hard to starve the beast. First off there is a distribution of income issue. Remember the top 1 percent pays around 40 the total tax liability in this nation. In NYS the figure is 41 percent. So to really starve the beast, it is going to either require you to get the ultra rich on board or else you need a huge share of the population to join the efforts. Also remember part of why the republicans got into office was “lower taxes”. The current tax proposals put out by Trump and the GOP already are reducing the revenue stream of the federal government for the well off, so I imagine there are quite a few rich people in favor of the administration because of their self-interest.
- I don’t actually think the right/tea baggers, would give a shit if you stripped the Federal government of revenues. In fact, they might actually join you in this endeavor. Remember they are called the Tea Baggers because they feel that the federal government has overstepped its authority. They want you to weaken the federal government. In my opinion that is the point of the horrible cabinet picks for federal agencies oversight. Why else would you have Ben Carson as the head of HUD, Rick Perry, the head of the Energy, Scott Pruitt the head of the EPA and Betsy DeVos the head of education. Remember it is the liberal elites who want to have a strong federal government, because they believe that federal governments help people. In my opinion weakening the Federal Government reach in providing SOME, NOT ALL public goods and instead relying on local/ state government might be preferable in some cases. (But that is a completely different essay, which I have lots of thoughts about.) In addition States have taxing authority on their own to offset any reduction in federal funding.
Now as you probably can tell, I don’t particularly think it is wise to advance this movement. But I do have an idea though that is both legal, symbolic and might actually help people. One way of reducing tax liability is to donate to charity. There are lots of great charities out there, but one close to my heart is the Bowling Green Massacre Victims Fund. If you itemize your deductions, each dollar you donate reduces your taxable income on a one-to-one basis, which lowers your liability. I believe you can deduct up to 50 percent of your taxable income through this process. This would limit the federal tax revenue and help people in need, of course this ironically follows the small government, privatization people, which I am not sure is the goal.
An alternative method of financial protest is to boycott everything associated with Trump. Already there appears to be a few success stories around UBER and the placement of Ivanka’s fashion line. It seems like there will be plenty of opportunities to assert your political/financial muscle with this group as the private/public line is quite blurred and the conflicts are so obvious.
One other thought while I have your eyeballs is that it might be a good idea to promote better tax education and free tax prep so that people can understand more about the system and minimize their tax liability legally.
In conclusion, I am going to pay my taxes this year.
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