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That's FijiAirways.com. You deserve this. Go from here to happiness. Flying direct with Fiji Airways. Radical Personal Finance, Episode 17. Welcome to the Radical Personal Finance Podcast. I'm your host Joshua Sheets for today, Thursday, July 10, 2014. Today's show is going to be fun. Today we're going to talk again about taxes, only unlike last week or earlier this week or whenever it was that we were talking about avoiding taxes.

Today we're going to talk about just simply not paying them. Should be fun. Yes, you heard it right. Today we're going to talk not about tax avoidance. We are going to talk about tax evasion. We're going to cross over the line. And today's show is going to be an interview with a man named David Gross, who runs a site and has written a book.

He runs a site called The Picket Line. This is about the war tax protest movement. I first ran across this a year or two ago, and I was fascinated by some of the things that he was writing and some of the information that he had to share. It's going to be a properly radical subject.

It's going to be a properly edgy subject. It's very comfortable a lot of times for us to talk about choosing not to pay the taxes through legal means. But then you get to the point of saying, "When do you say enough is enough?" And I'm going to choose not to pay them because of moral reasons.

And that's what this episode is going to be about. Before we get started, just to be clear, I find this subject really interesting. But since I'm clearly on the record here, I'm not a war tax protester. Although I'm sympathetic to his position, that's not me. At this point in time, I choose to pay every dollar that I owe.

Not a penny more, but I choose to pay every dollar that I owe. What you do with the information is up to you. I do think David makes some good points, and I think you'll enjoy some of the information. I think that even if you are sympathetic to paying high taxes, then I think there are still some things that are worth listening to and some tactics and tools that could be used to be applied to other financial situations.

This is really, in essence, what I want the show to be about. What could you learn from those radical elements of society? What can you learn from somebody who's taking a very non-mainstream approach to their personal finance? I believe there's a lot that we can learn. So stick with us for the interview.

I thank you for listening. Tomorrow's show is going to be a Q&A. I put some information out on Twitter, so tomorrow's show is going to be a Q&A. If you are interested in asking me a question, shoot me a tweet. My Twitter address is @radicalpf, or send me an email, joshua@radicalpersonalfinance.

Thank you so much to those of you who are listening and sharing the show. I appreciate every single one of you. And now, let's go to the interview. Mr. David Gross, welcome to the Radical Personal Finance Podcast. I'm glad you're here. Thanks for having me on. So I'm pretty interested in our conversation today, and I'll set a little bit of a background for the audience.

We've never spoken prior to about three minutes ago when I just started the recorder. We chatted for a moment before I fired up the recorder. But I first found your website, which is sniggle.net. I guess you call it the picket line website. I first found your website, I think, about a year or two ago.

And I was researching some things on taxes, and I stumbled across your site. And it opened up a world to me that I never--frankly, I never knew existed. I knew it existed kind of intellectually, anecdotally, but I never knew it existed, the world of tax resistance. I never knew that it existed in reality with people coming together and working together and actively avoiding and evading and resisting taxes based upon their moral quandary.

So what I thought maybe we could start with is would you be willing to take a few minutes and kind of just share your story and share some of the things that have happened in your life over the years that have led you through your own moral decisions to take some of the steps that you've taken?

Share that with us. Sure. In 2003, when the Iraq War or the American invasion of Iraq was about to start, I was feeling really torn up about it in that I was convinced that what we were about to do as a nation was really reprehensible. And yet I felt like I was not really opposed to it in a meaningful way.

I was opposed to it in a way a lot of people were. Rhetorically, I was out on the street with signs and writing letters to the editor and angry blog posts and emails and the like. So I felt like, you know, as a sort of mood, I was very much opposed to it.

But when I looked at the way I was living my life, I was going to work every day and a certain amount of my income was being taken away and given to the government to allow this war to happen. I felt like if somebody were to look at me objectively, they would say that really I'm a war supporter because of the financial support, the practical support that I was giving to the U.S.

military. And I decided I couldn't live with that anymore. And it was reading Henry David Thoreau's essay on civil disobedience that finally put me over the line and said I really have to put my money where my mouth is and make a practical effort to live the way my values demand.

And so what this meant for me was tax resistance. I had to stop paying for the war that I hated. I didn't know much about tax resistance at the time. I was familiar in a vague sort of way that there might be a movement of people out there who were doing this sort of thing, but I hadn't been in contact with them.

I was just sort of responding to a moral imperative. So I went into my employer and asked if there was a way to perhaps lower my income or lower my hours in such a way that I would get below the tax line. I didn't know where this tax line was.

I assumed it was probably somewhere around the poverty line. So I was imagining that I was going to be engaging in a really radical change in my lifestyle, a lot of sacrifice, a lot of trouble. My employer, as it turns out, was not willing to do that. They thought it would look really suspicious to their accountants or to their tax attorney or what have you.

So instead I ended up quitting my job and turning into a contractor and doing consulting work for the same company I'd been working for as an employee before. That enabled me to regulate my income. The next task was to figure out where this darn tax line was. It turns out there isn't one.

There is a tax line for everybody depending on their own circumstances. So depending on what you do with your money, depending on how old you are, depending on whether you have kids or not, depending on whether you own a home or not. There are all these different variables that go into figuring out where your tax line was.

So I had to learn a lot about the tax law and try to figure out with spreadsheets and the like what my personal tax line was. I was very happy to find out that it wasn't going to be the poverty line, that I was going to be able to live a fairly comfortable life.

I was going to have to be a little bit more frugal than I had been, but it wasn't going to plunge me into some sort of desperate straits. At the same time I was also finding out that there was a community of people who were doing war tax resistance.

So I could draw on a lot of the experience and traditions of this group. In fact, war tax resistance in the United States or in America actually predates the United States. There were Quakers doing war tax resistance to Queen Anne's War back in the 16th century. So there was a long tradition and lineage of war tax resistance that I was walking into and I could take advantage of that collective experience.

Did this come from a religious background or just a strong political repulsion of the idea behind the Iraq War? Or was it some kind of overarching religious background? What prompted it? For me it was not a religious thing. I just don't like the idea of causing suffering and killing and the like.

I saw the Iraq War as being something that was going to be a whole lot of that and not very much positive results from it. People were claiming that there were going to be all sorts of wonderful things that were going to come out of it. Those wonderful things seemed very speculative to me.

The suffering that we were going to cause seemed very concrete and obvious. As history has churned out, I think that's turned out to be a good hunch. The speculative good results of the Iraq War have not really come to pass and the suffering certainly has. I definitely am sympathetic towards that.

I wish I could say that I had joined you at that time. I'm 29 years old so when the Iraq War was declared in 2003 I was just graduating from high school. At that point in time I think I was much more caught up with the political rhetoric. I had just become eligible to vote and I voted for George Bush.

I was very excited about the mission on Iraq as it were. But I tell you over the last 11 years there have been some dramatic changes. I didn't quite have the prescience that you evidently had. But now looking back at it I can't even imagine how I didn't see through it.

When you look at the lives that are lost. These days I certainly prefer to reject a lot of the political affiliations. Because it seems like if it's an R or a D, that was my problem at that time. For me I'm thinking it's a Republican thing so the Republicans are good and I'm not a Democrat.

So then you jump on board the bandwagon. But as the time goes forward and it flips around and you have a Democrat in the White House. Then you look at something like should we go to war in Syria and you say no of course not. Since then I've learned a lot, I've changed a lot and I'm right there with you.

I don't see any good at all that's come out of it. I get pretty embarrassed at the fact that I didn't see it earlier. Hopefully I get a little bit of a, not a pass, but a little bit of understanding due to my age. Hopefully I won't repeat the same mistakes but I respect you for that.

I think partisanship also puts a lot of blinders on people. I certainly notice that in folks. That they don't see the world quite as clearly if they have a strong identification. Either with the Democratic Party or the Republican Party. They tend to see things through a filter. Leaving that behind is a great way of opening your eyes, seeing the world in a better way.

It really is because these days I feel like I'm kind of out on, I don't empathize well with either of the parties. I have some things more in common with communists and I have some things more in common with anarchists. I have some things in common with people across the way.

To me I've found that really freeing to give up all of the politics of the political ideology of one side. Because then it allows you to kind of look at each issue and you still can have a philosophy that guides you on it. That guides you but without just adhering to well this is what the party says so this is right.

You certainly learn a lot more about the issues if you approach them with an attitude of I have to decide for myself. Rather than what does my party think is the right thing on here and I'll just adhere to that. Yeah, absolutely. So you started off, we'll get off of the politics and back to the taxes.

Which I guess it's inextricably tied together. But I'm not scared to talk about politics. I've always rejected that old saying, two things you're not supposed to talk about money and politics. I say what matters more in life everyday except money and politics. We should be able to talk about those things.

Not talking causes problems. So you started by trying to get your income below the line and you started researching the behemoth that is the US tax code. Where did things go from there? Well I learned that I could get under the income tax line anyway fairly easily and that a lot of people do.

It's become kind of notorious now but at the time it was just sort of an emerging fact that a lot of Americans are living under the tax line right now. I think currently it's around 40% of households do not pay any income tax. So I realized I wasn't going to have to go live in a cave.

I wasn't going to have to eat grubs and berries. I was just going to have to join this large group of Americans who are already not paying income tax. So I just needed to figure out how. So in my case I don't have any children. I don't own a home.

So things like mortgage interest deductions are out for me. Child tax credit, earned income tax credit are kind of lost to me. But I could do things like put money into a health savings account and use that as a tax deduction. Put money into an IRA and use that as a tax deduction.

Spend money on tuition. And some of these things have tax credits associated with them too. And so I set up a spreadsheet and started running some numbers to try to figure out what I could do with my money in such a way that I could earn enough money to live comfortably and yet not have to pay any of it in income tax.

And by jiggling the numbers around and figuring out what that value was, I could then try to hit that target. And some years are more successful than others depending on which contracts I can bring in. There have been years that have been really thin when the economic crisis hit.

I had a hard time finding any clients. And so that year I didn't come near my number. But I had enough savings that I could glide through that year. So by hitting this number pretty consistently from year after year since 2003, I haven't had to pay any federal income tax at all legally and by the book.

Now there's another tax that self-employed people are hit with and that's the Self-Employed Contributions Act. That's the self-employment version of FICA or the Medicare Social Security tax. And because that applies to pretty much the very first dollar you earn, there's no line you can get under for that. So the government still is hitting me with the self-employment tax.

And so I resist that by simply not writing the check. So I have a sort of hybrid way of doing tax resistance. I get below the line so I don't owe any income tax and I don't write the check as a way of not paying the self-employment tax. So the obvious question then comes, aren't you a little bit concerned about the fact that you're on a publicly released podcast and it's going to go online and you're simply saying I'm choosing not to pay the tax?

Aren't you a little bit concerned about the consequences? Well, I think the consequences are more or less the same whether I'm out here making a lot of noise on a podcast or not. I file my returns every year so the IRS knows how much they'd like to get from me.

And they know that I don't write them the check and they write me letters with increasing amounts of boldface type and exclamation marks on them saying, could you please pay up now? So I'm not trying to hide from them. And that's one of the things I kind of like about this form of activism is that it is honest and it's out in the open.

I'm not being secretive about it. I don't feel like I'm living a double life. I'm simply telling them no, I don't want to pay for your awards. I don't want to pay for the actions of the government. I've got better things I can do with my money. If you feel like you need to come after me, come after me, but I'm not going to volunteer.

I'm not going to participate in what you're doing. >> So that would be kind of where I'm interested in you just talking about some of that difference a little bit because I think where I came from in my background and probably a lot of listeners would also come from is, you know, I would trumpet loudly from the rooftops as a financial planner, you know, that there's a major difference between tax avoidance and tax evasion.

With tax avoidance just being simply doing, you know, lowering your income below the line and tax evasion illegally choosing not to pay those Social Security and Medicare taxes, choosing not to pay the self-employment taxes. And so the tax avoidance is entirely legal. I did an entire show on that.

I believe it was earlier this week and talked about all of the details of it. I included a statistic, which by the way, I'm sure you haven't listened to it, but if you're interested, there's some statistics. I'm really fascinated by tax planning and there's a statistic that I read on the show from a book called How to Pay Zero Taxes.

I'm not sure if you've read it. It's kind of a CPA book type of thing. >> I don't think so. >> So if you go in the financial planning community, I'm fascinated. There's a lot of good books and one of the things that I want to do with the show is disseminate a lot of really good information on the topic.

But there's a book called How to Pay Zero Taxes. And in the preface to the book, the author relates the history of people who -- relates the history of various incomes and the number of people that owed no federal income taxes. And off the top of my head, in 2009 were the last numbers that he cited.

And in 2009, there were almost -- either almost or over, just about 20,000 people in the United States of America who made over $200,000 of income and paid zero federal income taxes. And there were -- I believe it was almost or just about 2,000 people who -- in the United States of America who made over a million dollars and paid zero federal income taxes.

And there are various advanced techniques that can be put together. And the author is a tax attorney. He went on to write a 500-page book on it. And it's really, really interesting. But that's all what turns -- if you want to make a financial planner's heart grow warm and fuzzy, just start talking about figuring out how to make a million dollars of income and avoid 100% of the federal income taxes.

I still can't figure out how to do it completely well. But I really enjoy the conversation. But you cross over then into the line of evasion and of choosing to make a moral stand. And to most Americans, I would imagine, at least it would be to me, that's kind of that how on earth can you not support your government?

How on earth can you not be patriotic? But what I found interesting was if you get out of that and you kind of get out of the modern era, I looked through the book that you recently wrote, which was 99 Tactics of Successful Tax Resistance Campaigns. And I started seeing history all over the place that I'd never known about.

And like you said, this is not a new thing. This has been happening for hundreds of years. Yeah, people have used tax resistance for a number of reasons. They've used it to enforce civil rights. For instance, the women's suffrage movement in Great Britain used tax resistance to great effect to try to win the vote for women.

Gandhi in South Africa trying to get civil rights for Indian immigrants in South Africa was using tax resistance there. And his first examples of satyagraha that he used in South Africa were as part of the tax resistance campaign. It's been used in campaigns for independence. The American Revolution started as a lot of tax resistance campaign.

The campaigns of Gandhi in India to gain independence for India were in large part tax resistance. There have been tax resistance campaigns in modern Palestine to try to win independence for Palestine. In Catalonia right now trying to win independence from Spain, they're using tax resistance in that struggle. Tax resistance can be used simply to avoid the theft of taxation.

So, for instance, there's a group in Italy called Adiopiso which is trying to get people to resist paying taxes to the mafia. And they're doing this by getting businesses to sign up and say, "We will refuse to pay taxes," and come out and be very open about it. But signs in their window as a way of saying, "I'm not afraid of the mafia.

I'm not paying taxes to the mafia." And by doing this, they're also getting citizens to support them to come and – to say that they will only shop at stores that display this sign. So this is tax resistance being used against a group that you wouldn't even necessarily think of being taxing, a mafia that is sort of a quasi-state, not really a government.

Tax resistance can be used to combat corruption. In Chicago during the depression, a lot of the property in Chicago was not on the tax rolls because the people who owned it had bought off politicians and sort of gotten their property exempted. And so the people who were paying taxes rose up in revolt and said, "We're not going to pay anymore because we think the tax rolls are rotten," and they won.

They went to court. They were able to prove that this was the case and the tax rolls were invalidated for two years. And so anybody who is a resister – their resistance had suddenly become legalized. So there's a lot of reasons why people have used tax resistance in a variety of struggles.

War tax resisters, which is sort of a – more of a chronic thing and has been going on throughout American history, is another variety. It's people who just say, "I might want to support government if it were involved in doing things for the good of society, but it's gone over the line.

It's starting to do things that are involving me in reprehensible activity. I feel that I have blood on my hands when I give money to the government, so I can't do it anymore." I guess that's where the question is, "Where is the line?" And obviously that's a question that each person has to answer individually, but it's so easy to look at a place like Italy and if you hear about – I'm not familiar with Italian politics.

But if you say, "Well, these taxes are supporting the mafia," or the leaders – what was it, Berlusconi? Here's this guy that seems from many stories like a total crook. Then it's so easy to say, "Good for them for resisting this total crook and choosing not to support it." But if you look at the United States and if you grow up in the United States of America and you think, "Well, it's apple pie and it's freedom and it's patriotism and all these things," then the question becomes, "Where do you draw that line?" And at what point in time do you say, "I'm willing to make a stand for my beliefs even to the point where it costs me?" Yeah, it's tough.

Everybody does have to draw that line in their own way. But I think what history shows is that a lot of people have and have done it successfully. It's a rewarding thing to do and it's an empowering thing to do. People think of taxes as being sort of an inevitability, something that they don't have any choice over, that they don't have to make a decision.

It doesn't have any sort of personal moral import. And when you decide that, "Well, yes, it does. I do have to make a decision. It isn't just sort of a default thing," then it increases the amount of presence that you have in the world, the amount of your life that you're actually living as opposed to having been lived for you increases.

And I think that increases your life. It just makes you a bigger part of the world. In your book, you outline the four different categories of protesters, of resistors in the current American war tax resistance movement and then also in, I guess, I don't know if this is just American war tax resistance or in general.

Would you walk through and explain those four categories because that helped me a lot to recognize that there are people and there are different ways of protesting and there are people that are using all of these ways. Would you walk through those four categories and explain what they mean and maybe give some examples like you do in the book?

Sure, yeah. One example is a conscientious objector. So the classic example of this would be somebody who, for instance, is a Quaker pacifist and will not pay for war because they don't think that they would – they wouldn't go to war. They wouldn't shoot a weapon in war and they don't think that therefore it is right to pay somebody else to do so and they feel the taxes would be making them do that.

So as a conscientious objector, they refuse to pay taxes. Another example would be a protester and the idea behind this is that money talks and that the politicians will listen to you if you withhold funds from them a lot more than if you just complain to them. So for instance, the women's suffrage movement was using this a lot.

They would refuse to pay taxes and they would do it in a very confrontational way and then when the government would come and seize their property or auction off their property to pay for the taxes, they would use that as another opportunity to protest. So they would gather people together.

They would turn it into a big rally. And so they were using tax resistance as a way of sort of amplifying their protest. Another variety of tax resistance is nonviolent resistance. So this would be a case for instance like Gandhi's campaigns in India where he was actually trying to withhold enough money from the British Empire that it no longer became profitable for them to occupy India.

The idea being that once they got to the point where it was costing the British Empire to stick around, that they would be more likely to leave. Another example would be somebody who's doing tax resistance as part of a legal challenge. So the example I gave earlier about the property tax resistors in Chicago were resisting as a way of kind of prompting the government to take them to court whereupon they could go to court and prove that the tax rolls were completely ruinous and win in court that way.

Now when I was giving this – giving a talk on this to some war tax resistors in the United States, one of them came up to me afterwards and said that he didn't really fit into any of these categories, that for him the reason why he was resisting is that he wanted to spend all of his resources, his time, his money, everything philanthropically.

He wanted to make society a better place with his money and resources and he thought that giving money to the government was a bad way of doing that. And so the money that the government wanted to get from him, he was instead giving to charities that he thought were being better stewards of his money.

I've also heard people who are doing tax resistance more in my way say that by reducing their income below the tax line, that gave them a lot more time and that was time that they could then put into philanthropy and into charitable activities and so that became a primary motivation for why they were doing tax resistance the way they were.

What would you say has been probably the most successful – because you've cited a lot of examples and the one that I was particularly fascinated with was – in the book was the British women's suffrage movement, which you've mentioned I think twice now. And the reason is because it seems to me like the tax resistance had a major part in changing the law.

And I was never around during the suffrage protests and the suffrage movements here in the U.S. but that's one of those things where I think in the modern society we would say, well, duh. But why would anybody even argue about women having the right to vote? But yet the tax resistance was part of that and it seems like it was effective.

Would you cite that as one of the more effective examples or what are some of the most effective examples where tax resistance has really made a difference? I think that was a good example of one where tax resistance worked well as a protest, in part because it really had a way of making the contrast in the way that the government treated women very clear and out in the open.

So when a woman would come and say, look, it says here that people can vote if they own property. I'm a person. The government would come back to them and say, well, you're not really a person. You're a woman. And then the woman would go back and say, well, it says here that people have to pay taxes.

If I'm not a person, do I not have to pay taxes? And they would say, well, in this case, actually people includes women. And so this sort of hypocrisy on the part of the government where women were people when it was convenient to tax them but not when it was convenient to ask the consent of the governed was something that was excellent propaganda.

Everybody could see that that didn't make any sense. And so tax resistance was a wonderful way of pointing that out. The tax resistance that went on. Well, here's here's an example that's going on right now is that in Brittany, this is in western France, the government put up eco tax portals.

These are sort of gantries that cover the highway that we're going to be scanning the license plates of trucks as they went by and taxing the trucks based on how many gantries they went through. They were building this as an eco tax, something that was going to reduce the amount of trucks on the road and reduce the amount of pollution in the air and so on and so forth.

But there are a lot of reasons to think that the government wasn't really didn't really have ecology in mind when it invented this tax that really it was just a revenue raiser. Really shocking. The effect that it had on Brittany, though, was that it made the price of agricultural goods that they were exporting go up because this tax was being added to them.

And it made it very difficult for them to find markets for their goods in other parts of the eurozone. And so this caused a great deal of problems in Brittany. And they decided to solve these problems by burning these portals down one after the other. As a group called the Bonnet's Rouges or red caps.

And they've been doing this extremely successfully throughout Brittany to the point where the government pretty much had to give up on the eco tax. They will burn these things to the ground and then the ones that are damaged, the government has to haul away. I think there have been dozens of these things all throughout Brittany that have been burned down.

And reading about this as it's currently ongoing, I'm reminded of what was going on in Wales in the mid 19th century. There was a group there called the Rebeccaites who were a fascinating group. And there was a similar thing where the government had installed or allowed tax farmers basically to install toll roads, toll gates on all the roads throughout Wales.

To the point where people would have to go through several of these gates just to get to market and back. And infuriated by this, they formed these bands of people, men who would go off to the countryside in the middle of the night dressed in women's clothes. Following a woman that they called Rebecca who was just one of the crowd who would be wearing a bonnet and some feathers in her hair.

And would be on a horse and leading the crowd to the toll gates. And they would tear them apart, axe them to bits and throw them into the river. And they destroyed hundreds of toll gates all across Wales around 1843. Extraordinarily successful campaign. The government was completely flummoxed. Didn't know what to do.

Had a great deal of popular support. And of course it's very picturesque. You have these weird sort of transvestite toll booth destroyers running around Wales in the middle of the night on horseback. It's a wonderful and strange event. But it's being repeated now in a strange way in Brittany where people are dressing up in their red hats and running off to the countryside in the middle of the night and burning down these toll booths.

Wow. Isn't it interesting? Isn't there a phrase from history that the victors get to write the history story? True enough. That's what I found so interesting about your book. And I haven't read the whole thing. I've skimmed through it and read some parts that were interesting to me. But the things that the United States did in the late 1700s we celebrate as being incredible acts of patriotism.

And yet were we to have some reason to do the same thing today, we would find that that would be... what's the word that's the opposite of patriotism? Seditious. Seditious and traitorous. I blanked on the vocabulary for a moment. So these things that we celebrate now of the story you just told of how great it was as far as releasing the people from tyranny, we celebrate that now.

But yet to the government that was in charge at that time, that was treason. And it makes you really just think. And this is where I wish we thought about it as kids, as adults and had more of these conversations. How does the government, where does the government get its moral authority from and why do we choose to submit versus not?

And that's why I admire people like you who have thought through it. And I'm certainly not ready to run the risk of jail time and run the risk of my assets being frozen. I'm not ready to do that. But I certainly admire people who are and it kind of makes you think sometimes.

One thing I should probably mention is that for the sort of tax resistance that I'm involved in and that most people in the war tax resistance movement are involved in, the risk of jail time is really very, very low. And people have this impression that the IRS is all powerful and they'll come down on you like a ton of bricks if you don't pay up what you want.

And in fact, that's really not true. There are people who have gone to jail. I looked it up and since 1990, so over the last 25 years or so, I think there have been eight people, eight war tax resistors in the United States, and this is out of thousands, who have done any sort of jail time.

And for those, many of them are not doing jail time for their tax resistance, it's stealth, but for carrying their resistance on into the courtroom. So for instance, the IRS asks them to produce financial documents. They refuse. The IRS takes them to court. A judge orders them to produce financial documents.

They refuse again and they end up going to jail for contempt of court. So these are people who are really pushing things. They're really – resistance is very much a part of what they want to be doing and they want to carry it to that ultimate point. For most people who are war tax resistors, that's not really going to be an issue.

They resist. They resist. The government sends them letters. That's where I'm at. I've been resisting for over a decade and that's pretty much all the IRS has done is send me letters and they've tried to seize money from bank accounts a couple of times. I was just going to say, isn't it at least inconvenient?

Don't they then try to take your – take money from your bank accounts? I mean if you were employed, wouldn't they try to garnish your wages? Is that why you're self-employed? I mean at least make life very inconvenient, right? I think they've got more power than they tend to use and this is in part because currently they're underfunded and they're under a lot of pressure from congress and the like.

And so they're kind of scrambling to do their job and folks like me who are just not paying what they owe, we're not really enough of a priority for them to really send out the hounds for. In my case, they've found bank accounts on a couple of occasions and cleared them out.

So out of maybe $36,000 that I've refused to pay over the years, I think they've managed to pull in about six. They've never threatened me with any sort of a criminal or civil court action. Interesting. So talk about – I mean do you consider this a form of nonviolent protest?

Because I mean the examples you cited of the gantries in France, that sounds a bit violent. Like do you consider this one to be violent, one to be nonviolent? Do you consider tax protesting to be a nonviolent form of protest and where does it cross the line? Tax resistance is a good classic example of a form of nonviolent resistance.

However, it has also been used by people in the course of violent resistance campaigns. In my book, 99 Tactics of Successful Tax Resistance Campaigns, I cover both examples. So there are people who have used tax resistance as part of campaigns that were very deliberately nonviolent, for instance Gandhi's campaigns in India.

And there have also been people who've used it in campaigns that happened to be nonviolent, but they weren't really making a special effort to use nonviolent discipline. And they've also been used in campaigns like the French Revolution, which was very violent and tax collectors were attacked and murdered and their homes burned down and things like that.

So in my book I cover all of those different cases, but it is a great example of a nonviolent resistance tactic. I read an interesting quote in your book about Charles Merrill. And the quote I have in front of me was about his issue, which was same-sex marriage. And the quote here from your book says, "For example, Charles Merrill, who resisted his taxes as a way of protesting for the legal recognition of same-sex marriage in the United States, said that he had buried a hoard of $2 million in gold coins in the desert." "My partner doesn't even know where it is at," he said.

"If the IRS allows me to file a joint federal income tax form like any other married couple, the money is there to pay." Is this something -- that's obviously a social issue that's heavily in the news. Are people using tax protests to advance that agenda that you're aware of?

Yeah, I know of a few cases in which people have resisted taxes for that reason. And I'm not sure -- I haven't done follow-up on it, so I don't know if that's still going on. Now that same-sex marriage is becoming much more legalized in the United States, some of the urgency for that kind of protest I think has died away.

So I ought to do some follow-up and see if those gold coins are still buried out in the desert. Interesting. Exactly. You would hope that somebody knew, even though the rhetoric says that he doesn't. But you would hope that somebody knew. But then again, maybe if he was willing to press the issue that far, maybe he was content to stay true to what he said.

So I'm interested in some of the tactics that you have found to be useful for yourself, and then also some of the things that you have found to be useful for other tax protesters. Because I think they could be applicable to people who aren't not paying taxes, just people who are choosing to pursue the ideas of frugal living and kind of control their lifestyle, and just even to save money.

Would you share some of the things you've learned personally as far as the things you've learned that have helped you, and some of the specific tactics? You write a lot about those on your website. I'm interested if you could just share some of those tactics with us. Yeah, sure.

I'll go over what my personal income situation is and what kind of things I do to get below the tax line to start off with. And then that will let you know what amount of income I'm living on over the course of the year. And I can talk about some of the measures I've used to make it easier to live on that amount of money.

So my income in a typical year will be something around $35,000, $36,000. Of that, I'm going to put about this year, let's see, it's about $3,300 I can put into a health savings account. And that's taken as a tax deduction, and it's money that I could then spend on my insurance deductible or any sort of health expenses, buying prescription drugs, that sort of thing.

I'm going to put about $6,700 into a self-employed pension plan, and that's something that's kind of like a 401(k) for self-employed people. I put about $5,500 into an IRA, a traditional IRA, so that's tax deferred. When I add those up, and then I add -- well, here I have to go off on a little tangent.

There's a deduction that self-employed people can take for half of their SACA or self-employment taxes. And I did a little bit of research into this, and I found that you qualify for that deduction whether or not you actually pay the taxes, which seems kind of strange to me. But there's some good indications that that's the case.

So I take this deduction for half of the taxes that I'm refusing to pay but that the IRS is still tallying somewhere as being an amount that I owe. So once I start with the $36,000, I take out the $3,300 for the HSA, the $6,700 for the SEP, the $5,500 for the IRA, and about $2,500 for half of the SACA.

That leaves me about $18,000 in adjusted gross income, and that's more or less what I get to live on over the course of the year to pay for food and rent and the rest. From that, I take out my standard deduction and personal exemption to get my taxable income, which is $7,800.

And that means that I owe about $780 in income tax. And the way I get rid of that is there's something called the self-employed or it's the – I remember the name of the form. It's the Form 8880 that you fill out to take – I think it's the retirement savings tax credit.

And what that means is if your adjusted gross income is low enough and you put money into a retirement account like an SEP or an IRA, you get a tax credit for having done that. It's not a refundable tax credit, but it's enough of a tax credit that it eliminates that $780 in tax that I would have owed.

So that's what gets me below the tax line. At that point, my income tax is zero at that point. So if you're – but if you're not paying your self-employment tax and you're choosing to go through the hassle of dealing with the IRS trying to collect that money, why do you go through all the hassle of trying to lower your income and not pay your income tax?

Why don't you just allow your income to go up and when they say, "Hey, you owe us $10,000 of income tax because you don't have enough deductions," then why not just say, "Well, forget it. I don't want to pay it." Why not just do the same thing you're doing there?

That's a good question. I think there is some tension between the different methods I'm using for this. When I started resisting in 2003, I was only resisting the income tax. So at the time, I thought that that was the tax that was paying for war and the FICA or SICA tax was more or less going into Social Security and Medicare and I didn't feel so bad about paying that.

It was only a few years later as I looked into it a little bit more that I came to realize that that's really not much of a distinction, that the money more or less goes into one big pot and Congress decides how to divvy it up and there isn't really like a Social Security lockbox that the politicians like to talk about.

There's not. Really? Are you sure? I was actually naive about finance when I went into this. I've been learning a lot because I've had to. I had to learn a lot over time and so I picked up these little things from time to time and become a little less naive about how the government spends money.

That one drives me nuts. They say, "Well, the Social Security lockbox, there is no Social Security lockbox, period." Never was. It's not intended to be that. The system is never designed to work that way. There is no trust fund sitting out there with unknown trillions of dollars just sitting there and that's why the Social Security faces such a challenge as the number of workers per retiree decreases over the coming decades.

That's why the formulas will have to be adjusted under some manner. But that one drives me nuts. I mean there are technically funds that are allocated but they're empty bank accounts and IOUs. Yeah, yeah. It's frustrating. A lot of that money has already been spent and it's been spent in the general fund.

So as much of that money has been going towards the Pentagon and various pork projects and bridges to nowhere and the like as all of the other taxes. So I realized I didn't really want to be spending that either but there isn't a tax line for that. So I had to come up with this sort of hybrid method of not paying that tax.

I still like the fact that I just plain don't owe any income tax to begin with. So that becomes less of a struggle. It gives you more of a moral credibility too when you're doing something like this and you're talking on a show like this. I mean general I think you probably face pretty high resistance.

Probably you would say, "Well how on earth are you doing that?" But if you're saying, "I'm simply choosing to lower my income and I'm doing this legally," I think it gives you a stronger, at least for a public facing person like you've become or are becoming, it gives you a stronger moral foundation.

Yeah, I think people are more impressed with somebody who's actually willing to change their lifestyle and change their life to align it with their values as opposed to somebody who's doing something rhetorically or doing something a little more symbolically. But the fact that I do have this hybrid method kind of clouds that waters a little bit.

But I haven't found a way around that dilemma. I like the fact that I just plain don't owe the income tax to begin with. I expect that the IRS will continue to try to get the money that I owe them in various ways by trying to seize bank accounts or going to the clients that I work for and asking them to try to seize or levy the payments that they give to me.

They have various tricks in their bag of tricks and they'll keep trying. And for all I know, they'll eventually be successful. And if they're successful in seizing that tax, I can still at least say, "Well, okay, I successfully resisted the federal income tax by just simply not owing it in the first place." And so that makes me feel a little bit more reassured about the sustainability of the way that I'm doing things.

Well, I guess the way around the way -- what I would say is the way around the dilemma is if you were really concerned with it, the only way that I can think of a way around the dilemma is that the self-employment tax is imposed on profits from your business.

Or on -- just like Medicare and Social Security taxes, the FICA taxes are imposed on wages that you earn. So the only way to avoid it is not to earn wages. And so there probably are some ways to do it. I have to think this through. I'm kind of just doing this on the spot.

So, for example, if you did something like -- I build houses and you somehow could figure out how to build houses that you owned and those houses then you just simply then rent them out and you have a housing business but you're not taking any wages from your business and you're profiting based upon the capital appreciation, then that would be -- there would be no taxes due -- no Social Security taxes, no self-employment taxes.

If you could avoid those. And so theoretically I think -- theoretically you could do something like that. But you really got to -- you got to really think it through and figure out what skills you would have that would even make that happen. Yeah, if I could live off capital gains, which would be nice.

That would be a wonderful way of doing this. But I'm not in that sort of position. Nobody left you a trust fund? I know some people have converted their self-employment jobs into S-corps and managed to get out of some of their self-employment tax that way. But that's only a partial solution and it's -- I don't know.

It doesn't seem to have enough return on investment for me to go that route. No, no, it wouldn't. And because the reality is that the rules on S-corporation is that you have to pay a reasonable salary. So you can't just -- the thing you see, I think this is probably the most abused -- I'm not an IRS agent.

I just have read. I think this is probably the most abused line in the tax code is that the rules are very clear. You have to pay yourself an appropriate salary. And so if you're going to follow the rules and you're going to make sure that you want to have a good base under you, you need to research what's an appropriate salary for your industry.

And if you're making $100,000 from profit from your business or $100,000 net profit from your business and the average salary in your business is $70,000, it is absolutely 100% against the rules to pay yourself $5,000 of wages and $95,000 of dividend profit. So people play that game and they play it all the time.

But I think it's probably the most abused line in the tax code. I'd have to ask an accountant to see what the IRS actually -- what do they actually come after. But it's not as simple as just setting up an S corp is what I was trying to say.

>> Yeah, I hear people talk about it all the time. And so I had to research it and see what it was. I didn't see any percentage in it. It didn't seem like it was going to work. >> Yeah. What would you say -- and I apologize. I cut you off earlier when you were talking about tactics.

So you've lowered your income and you went through your income. Then what have you had to learn beyond that? I mean how on earth do you live in California on $18,000 a year? >> It's not very hard. Partly, as I said earlier, I don't have kids. I don't have dependents that require me to have a steady income that's going to be able to support them through crises and things like that.

So I'm fairly self-sufficient. I don't have debts that I'm worried about. I'm not trying to pay off credit cards or student loans or a mortgage or anything like that. The biggest issue for me is I don't have a car, and that is such an expensive thing. In California or anywhere else, between buying the car itself, gassing it up at today's gas prices, the maintenance on it, your insurance, the parking tickets and traffic tickets you inevitably get, all of these different things from owning a car are just extremely expensive.

And to me, not worth it. I'm in good enough shape and I'm living in a bike-friendly enough town that it's easy for me to get around and do everything I need to do on my bicycle. Weather's nice out here in California. So for me, that's a wonderful way of reducing expenses.

I'm sure that wouldn't work for everybody, but for me, that's turned out to be a really good thing. By reducing my hours that I work, I've got a lot more time on my hands, which means I can indulge in things like home cooking a lot more. So I've become a good cook.

I enjoy cooking. And I have the time to go out to the farmer's markets and shop for produce and come home and prepare something good and look up good recipes and do the dishes afterwards. I don't feel stressed out at the end of my day and feel like, "I don't want to do anything but just order some pizza from somebody and sit down and eat it and watch TV." I've got more energy.

So it allows me to do things like that. By cooking my own food, doing my own shopping and all that, I'm paying much, much less and eating much better than when I was living as an urban playboy and working all day and coming home and saying, "I'll just go to a restaurant." So it sounds like you're basically living the retired lifestyle without being retired.

Yeah, I'm more or less semi-retired. I work part-time, which gives me a lot of time to do other things, to take on other hobbies, to live the life. I don't want to wait until retirement time to do that. And this is one of my things. The title of my show is called "Radical Personal Finance" is that it seems sometimes when you describe what you've just described, that seems to be what many people -- I wouldn't necessarily say most, but I would just say many people -- would desire that kind of lifestyle.

Now, I think that you get into the world, you've got to fight on your hands if you talk with Americans about not having a car. But you have time to read, you have time to write, you have some work that keeps you engaged. What type of work do you do and what were you doing before you started this whole thing?

Before I started, I was working in the software field as a technical writer and working as an employee for a software company in the Bay Area. And since then, I've been doing consulting work more or less in the same field. So right now, I'm working for one major client and doing technical writing for software engineers.

So teaching software engineers how to use software tools and libraries and things of that sort. Yeah. And so I would imagine that you find some enjoyment in the work and that it keeps your brain going. And you just simply do as much as you need to provide your living expenses and then go from there.

And it's sometimes – I don't know if it's a conspiracy or not, but I certainly sometimes wonder, "Why do we spend all this time just on the treadmill, the treadmill, the treadmill?" And when you look at the amount of taxes that get pulled from it, I sometimes wonder if it's not all a plan, again, intentional or unintentional, if it doesn't have the effect of just keeping the tax machine going.

I think that's certainly part of it. I know that I work more productively now than I did when I was working a full eight-hour day five days a week. When I'm working now, I'm sitting down at the computer and starting things and I'm fresh and I've got something to work on and I start doing it and I just power through.

And when I start lagging, when I start slacking, when my brain starts to seize up or when I get to a point where I'm waiting on somebody else to do something that I need to do to go further, I just stand up and go do something else and clock out.

And so it means that when I am on the job, I'm doing work 100%. And I think probably I'm as productive now as I was when I was working eight-hour days and sometimes feeling a little bit sluggish towards the end of the day or after lunch or sitting in meetings a lot, not really getting a lot out of it.

So I think this is the way to work. I don't know that everybody could do it, but it's sure working well for me. It would seem to me that in the world that we have today, just given the ability to do work from many places and then even given the ability to have a mobile lifestyle, you could live wherever.

And living in a bikeable city has its advantages, but it would seem like even if the IRS were after you, you certainly could live in an RV and travel across the country. And with some of the advents of technology, I hope that more and more of the tax protesters are able to have an effect and maybe change some of the ways of the government.

I'd love to see that. Hopefully it's probably a little easier now than it was in the past. Yeah, I think so. And the fact that there's a group of people who are doing this that we can draw on. There's a group called the National War Tax Resistance Coordinating Committee at Nutrik.org, and they've got a lot of information for people who are interested in getting started.

There are lots of different ways of doing tax resistance. The way that I'm doing it is just one of them. And so that's one of the strengths of the movement is that anybody can find a method that works well for them, that meets the goals that they want to meet, that takes risks that they find are acceptable, that has effects that they want to have.

So, yeah, I encourage anybody who's interested in trying this, both trying a lifestyle of frugality. I think you had the people from Early Retirement Extreme on your show at one point. They've got some wonderful ideas as well about how to reorganize your life so you can step off the treadmill now and again.

And also for people who are interested in war tax resistance, yeah, just do some research. Look it up. It's not as hard as it seems, and the consequences are not as dire as people can sometimes make them out to be. Yeah. You see this. I see this all over our society.

And so what I see is the constant theme. I see the theme from retirees that I've worked with. They're looking for meaning. They're looking to get off the treadmill. I did a show, I think it was last week, about the history of retirement. And the thing that I never knew until I researched it is that we're raised in this country with an idea that retirement is the golden ticket and it's your just reward and the value of life is to spend time working until 65 and then quitting so that you can enjoy the good years and the good time.

But if you actually research it, you find that retirement has always been much more of a political tool, especially a political tool of reducing the unemployment numbers by taking a massive number of workers out of the denominator of the equation. And that was what it was designed for. And if you go back and study that, and it was only in the mid to late 20th century when the marketing around retirement became effective enough and successful enough to overcome people's dislike of the idea of not working and not being productive.

And it seems like there's this refrain, whether it's some of the things you're sharing from the tax resistance side, whether it's the early retirement extreme folks, whether it's the lifestyle design folks. It seems like we all have these common desires for how we want life to look and the solutions tend to be similar in a lot of ways.

Simplicity, figuring out what's important to you and not sacrificing the things that are important to you, cutting back on everything else. And then with the advent of technology and the fact of how cheap things have become, then you can live a really great life on not much money. And when you get rid of the need to earn a lot of money, then it really opens up the number of things that you can do to support yourself.

So I see it everywhere. I see it through every aspect of life. I see it everywhere. Yeah, there seems to be a lot of innovation going on right now in the way that people are making their living, the way people are living their lives, the way communities are coming together and mutually supporting one another.

So they're no longer – people are no longer quite so reliant on having that job, that position with a company. They're more able to take more chances and to try things on their own and to be entrepreneurial or to take risks with their life in various ways. So I expect that we'll be seeing in the coming years a lot of new and innovative experiments on this line, and I'm looking forward to it.

Yeah, me too. I have two questions and then we're done. And so the first question is just whenever you get into the world of tax protesting, the thing that I often hear is just about the legality of income taxes. And I know you've written some pretty extensively about that.

Could you talk for just a moment about the constitutionalist argument about the idea that income taxes are illegal because they're not authorized and just kind of point out that – just talk quickly about your opinion about that whole argument and that line of protest? Yeah, so it's a really attractive line of argument that a lot of people have expressed interest in.

It's the idea that either the income tax law was not enacted correctly and so it's just not a valid law at all or that the way it has been interpreted is incorrect and that if you interpret it correctly, it doesn't apply to most people. Or that even if the law itself was enacted correctly and even if it were to apply to most people, that it's unconstitutional in some way.

And so it's not a valid law for that reason. And it's a perpetually attractive argument and people love it and will devote a lot of time and attention to it. I don't see a whole lot of merit in it as a legal argument. The courts don't seem to have any truck for it at all and it doesn't make a whole lot of sense to me that way.

I wouldn't certainly recommend that anybody arrange their tax resistance using these arguments. I don't think it's likely to work in the long run and I think you're probably kind of fooling yourself in the short run. But if you're going to do tax resistance, you should probably do it with your eyes open as to what the courts really believe the law is and what law they will apply.

That said, a lot of people who have been using this have caused a lot of trouble for the government and a lot of trouble for the IRS. And so I kind of smile when I read about it. I don't have a whole lot of sympathy for the arguments but I have a little bit of sympathy for the people who are practicing it.

Certainly. So the last question is this. Do you actually expect to make a difference or are you kind of just falling on your sword to make a statement and follow your ethics? Well, here's the way I look at it. I think that I was making a difference all along.

Every year that I was earning my salary and paying 25 percent of it or whatever to the federal government, I was making that much difference. I could count the difference I was making in dollar bills and I didn't like that difference that I was making in the world. And so by withholding that, I feel like I am also making that much of a difference.

Now, I'm just one person in a nation of millions and so I have to be humble about just how much of an effect my life is going to have on the world around me. But I also have to realize that I do have an effect. The government wouldn't be asking all of us for money if it wasn't important to it to have that money.

It means something. It has a real-world effect. It's practical. And so by doing what I'm doing, I don't think I'm going to convince Washington to change its policies because some guy out in California isn't paying his taxes. But I do know what I am doing, what I am participating in, what I'm giving my practical material to support to.

And to me, that is making a difference. Yeah. Well, I respect you for following your conscience and doing it. Like I said, I'm not ready to join you. I guess I would consider – and it probably comes in stages. Just like you started with the idea of just simply reducing your income and continuing to pay your self-employment taxes.

That's a little bit easier to swallow for me than not paying the taxes. And I would have to do some thinking about it. And the hang-up for guys like me from a Christian perspective is always that "pay your taxes" scripture in the Bible. And I respect that. I'll have to research the Quaker perspective because it seems like they've got a long history of believing that very seriously.

But I've never researched it much. But it's always kind of a challenge. But I respect you for doing it. And I hope that today's show can be of some help to some people and at least make us think each day. I would like to plug your book for you and compliment you on it.

And David's book – I will link to it in the show notes – is entitled "99 Tactics of Successful Tax Resistance Campaigns." And you can buy the Kindle version or he has a paperback on Amazon. And what I especially liked about it is it seems very thorough. And it's usually when I have run across the war tax resistance or tax resistance arguments, it seems like the constitutionalist arguments dominate.

And when I read them, I just think, "I respect the person's beliefs and I'd like to agree with them, but I just can't make this work." But when you go through some of the historical examples, the ones you've done, I feel like – and you have lots of them in the book – that really helps you to think about it where you're not talking about the modern day 2014 U.S.

American government. You're talking about the 1914 British government or whatever year it was. And it's a lot easier to think through the morals of it in that situation. So I'd recommend people, if they're interested in this, get your book. I really enjoyed it. And I will write a review for you on Amazon saying so.

I'd like to see you get some more reviews on your book. Well, thank you very much. And thanks for having me on your show. Anything else you want to say before we go? I also have a blog that I use to discuss tax resistance information. If people are interested in checking that out, it's got a good subject matter index.

You can find out about a lot of the things I've been talking about today. It's at sniggle.net/tpl. So, s-n-i-g-g-l-e.net/tpl. It's called the Picket Line. I'll make sure to include a link in the show notes. David, thanks for being with us. Thank you. That's our interview for today's show. I hope you enjoyed it.

I certainly find some of the content that David and I discussed very challenging and very interesting. A lot to think about. It's not often that you roll over into the moral ground where you're kind of considering the whole fabric of society and government systems and taxes and all those things.

I find it extremely challenging to think about, but I certainly think it's a worthy conversation. I have to fight hard to keep from feeling like I'm out in territory where I shouldn't be. But then again, that just shows you how deep a hold all this stuff has on us.

I wish David well, and I again encourage you to read his book. It is well worth reading. I think that we can all learn something from it, especially the history. It's fascinating. I never had any idea about any of this history until I read his book. I hope that you'll check it out, and I hope that you'll support David and what he's doing.

I hope that you'll join us tomorrow for another episode of the Radical Personal Finance Podcast. Clearly, today is an excellent day to have a disclaimer. I am not giving personal financial advice. You shouldn't do what you're going to do based upon some guy that you hear on the Internet.

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