This is a guest post from David Gross who blogs about tax resistance, frugality, ethics, and other such issues at his blog, The Picket Line. If you want to learn more about his tax resistance tactics, read the FAQ or check out his How-To Guide to learn how you can do it too. Regardless of whether you support the government, learning about the tax code, as demonstrated by the example below, can be much more remunerative than the standard comparative economics argument of “I earn $100/hour so I’m better off paying some $15/hour tax-clerk who took a two-week course to plug my numbers into his software.”

There’s a long history of frugality being used as a tactic by groups opposed to government policy including by the American Founding Fathers. During the first Continental Congress in , John Adams wrote home to his wife:

Frugality, my Dear, Frugality, Economy, Parsimony must be our Refuge. I hope the Ladies are every day diminishing their ornaments, and the Gentlemen too. Let us Eat Potatoes and drink Water. Let us wear Canvass, and undressed Sheepskins, rather than submit to the unrighteous, and ignominious Domination that is prepared for Us.

Even if it’s not time for another American Revolution just yet, it’s certainly time for more Americans to put their money where their values are. We can vote for politicians every couple of years with a pencil at the ballot box (and a lot of good that does us), but we vote for what kind of world we want to live in every day, by deciding what to do with our lives and with the dollars we earn.

As it says in Your Money Or Your Life, “when we go to our jobs we are trading our life energy for money.” When you pay taxes, the government is taking your life energy from you and using it for its own purposes, as much as if it had conscripted you and forced you to work for it directly.

I don’t know about you, but I don’t want to spend any of my life energy helping the government to commit aggressive war, torture prisoners, or threaten the world with weapons of mass destruction. I think I can be more useful to my neighbors (and better able to sleep at night) if I instead put all of my effort into more beneficial activities.

In order to make our country one we can be proud of, complaining and wishful thinking are not going to be enough. We have to put as much of our effort as we can on the side of our values, instead of allowing so much to be stolen by the tax collector and used to promote the values of politicians and the military/industrial complex.

If you have a lower income, the IRS takes less from you, and so you can dedicate more of your energy to your own values. Almost half of American households already live “under the tax line” and pay no federal income tax at all. People who know they can spend their money more wisely and justly than the government does ought to see if they can get under the line themselves.

When the “shock and awe” assault on Iraq started, I quit my job and deliberately reduced my income to the point where I no longer owe federal income tax. I transformed my life, concentrating on what really matters, so that I can live within my means without paying this tax — honestly, peacefully, and legally.

Now I’m self-employed and do consulting work in the technical writing and web programming fields. I work full time for a few months out of the year, or part-time for a few more than that, and use the rest of my time for pursuits that don’t include the pursuit of income — including developing DIY skills like homebrewing, as well as organizing, volunteering, and agitating for a better world. Now I have a richer, happier, more well-rounded life than when I was an urban playboy making $100K and throwing cash around recklessly (including $15–20K in federal income tax every year).

I’ve reduced my expenses so that I live on about $19,000 a year, which is enough to pay for my food, Berkeley rent, health insurance, and the rest. I earn upwards of $30,000, but put the rest of it into various tax-sheltered accounts, like IRAs, HSAs, and SEP plans (this way, I also end up putting about a third of my income away for retirement or for emergencies). As a self-employed person, my health insurance payments are also tax-deductible. In some years I have also taken advantage of tax breaks for higher education, taking Berkeley extension courses to expand my skills or pursue new interests.

Here, for example, is how I eliminated my federal income tax burden last year:

Income & Deductions Tax & credits
business income minus expenses $32,822
capital lossesa ($3,000)
HSA deduction ($3,050)
1/2 of self-employment taxb ($2,128)
SEP deduction ($813)
self-employed health insurance deduction ($2,697)
IRA deduction ($5,000)
standard deduction ($5,700)
personal exemption ($3,650)
Taxable Income $6,784
income tax at 10% bracket $678
retirement savings contributions creditc ($678)
making work pay creditd ($400)
Total Income Tax ($400)
  1. that’s what I get for trying to play the market
  2. for complicated reasons, self-employed people are charged twice the rate of social security/medicare tax as people who are employees (sort of); but we can also take this extra contribution as a deduction for income tax purposes
  3. a very useful credit, see this page for details
  4. a temporary, refundable credit that was part of the stimulus package

Originally posted 2011-09-14 13:05:57.