Hullabaloo

Friday, February 19, 2010

 
Anti-taxation Representation

by digby

Here's an interesting piece speculating about Joseph Stack's issues with the IRS:

"The IRS is toughest on people who reject the whole concept and authority of the system, who are not accepting that we do have income tax laws that we are all subject to," said Philip J. Holthouse, partner at the Santa Monica tax law and accounting firm of Holthouse, Carlin & Van Trigt. "If the anger expressed in this posting is consistent with how he interacted with the government representatives, it would not have enhanced their compassion."

Stack's note refers to meeting with "a group" in the early 1980s who were holding "tax readings and discussions" that zeroed in on tax exemptions that make "the vulgar, corrupt Catholic Church so incredibly wealthy." He said in the post that he then began to do "exactly what the 'big boys' were doing."

"We took a great deal of care to make it all visible, following all of the rules, exactly the way the law said it was to be done."

Since Stack wasn't a church, this is like waving a red flag at a bull. The IRS apparently considered this foray into tax avoidance the real corruption. Stack's letter says: "That little lesson in patriotism cost me $40,000."

Incidentally, the notion that anyone (other than a legitimate charity) doesn't need to pay income taxes is one that's well familiar–and refuted–by not only the IRS but every legitimate tax preparer in the country. So-called tax protestors or "tax defiers" take bits and pieces of the law, string them together in incomprehensible ways to come up with arguments that they say exempt them from tax. They can sound convincing, so the IRS publishes a long list of "frivolous" tax arguments on its web site, explaining when and where each argument was refuted, in an effort to keep innocent taxpayers from drinking the tax protest KoolAid.

But that wasn't all. Stack also says in his letter that he drained a retirement account and didn't pay tax on any of that money–didn’t even file a return. The penalties for not filing a tax return are roughly 10 times worse than for not paying your taxes. That's one of the reasons that accountants tell their clients to file returns, even when they don't have the money to pay, said Holthouse.

Finally, Stack rails about independent contractor rules.

Experts said the only way this rant could make sense is if Stack started a company that employed other people, who he maintained were independent contractors rather than employees. If an employer maintains he's hired only independent contractors, he doesn't need to pay Social Security and Medicare taxes on their wages. But the IRS audits these claims carefully. When an employee is improperly classified as an independent contractor so that the employer can avoid these taxes, the IRS prosecutes aggressively because it considers it tantamount to stealing from workers Social Security and Medicare accounts.

And then these anti-tax zealots are reinforced in their belief that the IRS is a bunch of illegitimate jackbooted thugs who are out to get them.

This particular belief system is fairly common on the wingnut fringe here in California, where Stack's radicalism was spawned. I've known a few of these guys and they are, simply, far right extremists who object to government with the same fervor as any gun nut or militia member. (It sometimes couches itself in "libertarianism," which may be how this soft wear engineer got into it.) But these guys really just believe that government is illegitimate, period, and they target taxation as their tool to prove it.


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digby 2/19/2010 03:00:00 PM |