Tax evasion, tax resistance and tax rebellion

Thursday, April 02, 2009 - 05:00 AM

Gandhi broke the law to oppose the salt tax. The early Americans railed against the tax on tea. From the first instance that taxes were levied, people have found ways to not pay, for reasons honorable, ideological, greedy and selfish.

Today, a new crop of people find new ways to oppose paying taxes. We talked on Friday with The New Republic's Jason Zengerle about "the tax honesty movement": people who creatively interpret the internal revenue code in various ways so they (argue they) don't have to pay taxes.

But those "tax honesty" folks are one small slice of tax scofflaws. The following aren't part of the "tax honesty movement" (for more on that, listen to the March 27 segment with Zengerle), but are some of my favorite people in the world of tax evasion, tax resistance and tax rebellion. Warning: With a few exceptions, most don't cut as sympathetic a figure as Gandhi.

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THE FIRST RESISTERS

There are a few different accounts of who the very first U.S. tax resisters were. Some cite Algonquin resistance to paying taxes imposed by Dutch settlers in 1637. But the first time American citizens resisted paying taxes was when they were first imposed — in 1862 by Congress, as an emergency measure to pay for the Union cause in the Civil War. (The Sixteenth Amendment was passed about 50 years later, on February 25, 1913, and gave Congress the power to tax incomes "from whatever source derived.")

REBELLION

War Resisters: A number of people each year don't pay some or all of their income tax to protest how the government spends their money. The War Resisters League estimates that more than 50 percent of income tax is used on military spending. Many war resisters pay some taxes, but omit a percentage that they've determined the government will spend on defense, even though they can't control where their money goes once it's submitted to the federal government.

Famous war tax resisters: "Walden" author Henry David Thoreau, linguist-philospher Noam Chomsky and women's rights activist Gloria Steinem.

Melissa Etheridge: The musician says she won't pay state taxes this year to protest California's Prop. 8. Her reason: If the state won't grant her — Etheridge came out in the early 90's — the same rights as it does other citizens, then she has no obligation to pay its taxes. Will she or won't she? She says she'll make the final decision by April 15.

EVASION

O.J. Simpson: Last year, Mr. White Minivan was listed as one of California's most delinquent taxpayers. O.J. currently owes the state of California more than $1.4 million dollars in tax debt. California can't pay its bills, so that cash would come in handy. But it's not likely to collect, as O.J. is now in a Nevada prison, serving time for a kidnapping and armed robbery.

Martha Stewart: The woman who built her entire career around the home was charged with not paying $220,000 in taxes on her New York home. Ankle bracelet followed (Okay, okay... That was for insider trading. Tax evasion is a gateway drug).

Wesley Snipes: The "Blade" actor was accused in 2006 of failing to pay more than $15 million in taxes from 1999 to 2004. He was sentenced last year to three years in prison, but is free on bail while appealing the conviction. Sounds like a lucky man — except, in the meantime, he's banned from traveling unless approved for work-related reasons. (Florida prosecutors this month filed to revoke his bond after Snipes allegedly attended a $20 million party in Dubai last November in violation of his travel restrictions).

Timothy Geithner: Vice President Joe Biden says paying taxes is patriotic. But Geithner owed at least $42,000 in taxes and interest when he was nominated for Treasury Secretary. At least we can hope that his people will be kind when they find that us regular folks inadvertently screwed up our own taxes. Geithner said his tax issues were "careless" and "unintentional." Will the "Geithner defense" work when you're called up by the IRS? Fingers crossed.

Other Obama Cabinet nominees: Then, of course, there's Tom Daschle (former Health and Human Services nominee), Ron Kirk (U.S. Trade Representative), Nancy Killefer (former budget czar nominee), Hilda Solis (Labor Secretary), and the latest, Kathleen Sebelius (the current Health and Human Services nominee). All somehow failed to pay a chunk of money owed to the government.

TAXES AS A WEAPON

Martin Luther King Jr.: MLK was charged with tax evasion in 1960 by Alabama Governor John Patterson. Patterson alleged that MLK pocketed cash when he was moving one of his churches — a charge used as a tactic to derail the civil rights movement. MLK's case went to trial, but he was acquitted by an all-white jury after a few hours. MLK said, "I am frank to confess that on this occasion I learned that truth and conviction in the hands of a skillful advocate could make what started out as a bigoted, prejudiced jury, choose the path of justice."

TAX EVASION AND THE RECESSION

The government generally doesn't look too kindly on tax resisters. Obviously, they want the cash — and they could use it now. Is it possible that fiercer tax collection could help lead us out of this recession? There's $300 billion of unpaid taxes in pockets somewhere, though the IRS think only about a third of it is collectible.

Maybe April 15 will become a referendum on President Obama's recovery spending plans. As Gandhi said, "Withholding payment of taxes is one of the quickest methods of overthrowing a government."

YOUR LIST

This is, of course, by no means a comprehensive list of tax scofflaws and resisters. Who's on your list?

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Comments [1]

Dwight Looi

Let's put it this way...

Tax resistance works only when a large number of people suddenly rebel. Individual resisters accomplish nothing but bring hardships upon themselves. If 10 percent of Americans suddenly and resolutely send the IRS a letter indicating that they are refusing to file tax returns and that they want to go to jail rather than participate in the social collective there is NOTHING government can do really. There isn't enough jail cells accommodate them. The only alternative is armed repression which the government is ill equipped to win -- half the military will probably defect, and with an armed citizenry they are more likely to lose the civil war than win it.

However, having said that, it is unlikely that such a scenario will play out. The reason being that in a country like the USA, the governing powers will lose their elections big time way before sentiments got that mutinuous.

Jan. 05 2010 09:34 PM

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