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Tax Resistances: Legal Approaches

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Article 66: Tax Resistances: Legal Approaches

The Tax Question

Every paycheck, money disappears. Every purchase, money disappears. Every property you own, money disappears.

Taxes fund the state. The state enforces the system you are trying to exit. The state wages wars you oppose. The state funds police who harm your community. The state bails out corporations that destroy the planet.

Why should you fund this?

This article covers legal approaches to tax resistance. Not evasion. Not illegal avoidance. Legal resistance. Legal reduction. Legal redirection.

You have more options than you think.

Understanding Your Tax Obligations

Before you resist, understand what you owe.

Federal Income Tax

Who owes: Anyone with taxable income above the standard deduction.

How it works:

  • Employers withhold from wages
  • Self-employed pay quarterly estimated taxes
  • Filed annually (April 15)
  • Progressive rates (10 to 37 percent)

What funds:

  • Military (over 50 percent of discretionary spending)
  • Corporate subsidies
  • Police and prisons
  • Government operations

State Income Tax

Who owes: Depends on state. Some states have no income tax.

How it works:

  • Withheld from wages or paid quarterly
  • Filed annually
  • Rates vary by state

Payroll Taxes

Who owes: Employees and employers.

How it works:

  • Social Security: 6.2 percent from employee, 6.2 percent from employer
  • Medicare: 1.45 percent from employee, 1.45 percent from employer
  • Self-employed pay both portions (15.3 percent total)

What funds:

  • Social Security benefits
  • Medicare for elderly
  • Note: These are regressive (cap on Social Security, none on Medicare)

Sales Tax

Who owes: Consumers at point of purchase.

How it works:

  • Added to purchase price
  • Varies by state and locality (0 to 10+ percent)
  • Some items exempt (varies by state)

What funds:

  • State and local operations

Property Tax

Who owes: Property owners.

How it works:

  • Based on assessed property value
  • Paid annually or through mortgage escrow
  • Funds local schools and services

Note: Renters indirectly pay property tax through rent.

Legal Tax Reduction

Reduce Taxable Income

The simplest resistance is reducing what is taxed.

Lower your income:

  • Work less
  • Live on less
  • Exit the monetary economy where possible

Grow your own food:

  • Not taxed
  • Reduces grocery spending (which requires taxed income)

Build your own shelter:

  • Not taxed
  • Reduces housing costs

Share resources:

  • Gift economy is not taxed
  • Skill sharing is not taxed
  • Mutual aid is not taxed

Maximize Deductions

Standard deduction:

  • Single: $13,850 (2023)
  • Married filing jointly: $27,700 (2023)
  • Head of household: $20,800 (2023)

Itemized deductions (if greater than standard):

  • Mortgage interest
  • State and local taxes (capped at $10,000)
  • Charitable contributions
  • Medical expenses over 7.5 percent of income

Above-the-line deductions:

  • Student loan interest
  • Educator expenses
  • HSA contributions
  • Traditional IRA contributions
  • Self-employed health insurance
  • Self-employment tax deduction

Tax-Advantaged Accounts

Traditional IRA:

  • Contributions may be deductible
  • Grows tax-deferred
  • Taxed on withdrawal

Roth IRA:

  • Contributions not deductible
  • Grows tax-free
  • Not taxed on withdrawal (if rules followed)

Health Savings Account (HSA):

  • Contributions deductible
  • Grows tax-free
  • Not taxed if used for medical expenses

529 College Savings:

  • Contributions may be state-deductible
  • Grows tax-free
  • Not taxed if used for education

Business Deductions

If you are self-employed, you can deduct business expenses:

Home office:

  • Portion of rent/mortgage
  • Portion of utilities
  • Portion of insurance
  • Must be exclusive and regular use

Vehicle:

  • Mileage deduction (standard rate per mile)
  • Or actual expenses
  • Must be business use

Equipment:

  • Computers
  • Tools
  • Furniture
  • Deduct or depreciate

Supplies:

  • Office supplies
  • Materials
  • Consumables

Professional services:

  • Legal
  • Accounting
  • Consulting

Marketing:

  • Website
  • Advertising
  • Business cards

Travel:

  • Business trips
  • Conferences
  • Client meetings

Meals:

  • 50 percent deductible for business meals
  • Must have business purpose

Health insurance:

  • Self-employed can deduct premiums
  • Above-the-line deduction

Retirement contributions:

  • SEP IRA
  • Solo 401(k)
  • Reduces taxable income

Legal Structures

LLC (Limited Liability Company):

  • Pass-through taxation
  • Liability protection
  • Flexible management

S-Corp:

  • Pass-through taxation
  • Can reduce self-employment tax
  • More formal requirements

C-Corp:

  • Corporate tax rate
  • Double taxation (corporate and dividend)
  • Can retain earnings

Cooperative:

  • Patronage dividends may be deductible
  • Democratic governance
  • Aligned with values

Consult a tax professional for your situation.

War Tax Resistance

Some people refuse to fund war. This is conscience-based resistance.

Legal War Tax Resistance

Redirect portion to peace organizations:

  • Calculate military portion of your tax (approximately 50 percent of discretionary spending, about 25 percent of total)
  • Donate that amount to peace organizations
  • Still file and pay full tax
  • Use donation as deduction if itemizing

File with letter of conscience:

  • File your return
  • Pay what you believe is non-military portion
  • Include letter explaining your position
  • IRS will bill for remainder plus penalties

Note: This is technically illegal. You will face penalties. Some people accept this as witness.

National War Tax Resistance Coordinating Committee

What they do:

  • Support war tax resisters
  • Provide legal resources
  • Organize collective resistance
  • Advocate for Peace Tax Fund legislation

Website: nwtrcc.org

Peace Tax Fund:

  • Proposed legislation would allow conscientious objectors to redirect taxes to non-military purposes
  • Not yet law
  • Advocacy continues

Living Below Filing Requirements

Federal Filing Thresholds

You are not required to file if your income is below the threshold:

2023 thresholds (for most people):

  • Single under 65: $13,850
  • Single 65 or older: $15,700
  • Married under 65: $27,700
  • Married 65 or older: $29,450
  • Head of household: $20,800

Self-employment:

  • Must file if net earnings are $400 or more
  • This is for self-employment tax, not income tax

Strategies for Staying Below Thresholds

Reduce cash income:

  • Live on less
  • Share resources
  • Grow food

Increase non-taxable income:

  • Gifts (not taxable to recipient)
  • Inheritances (generally not taxable)
  • Roth IRA withdrawals (not taxable)
  • Municipal bond interest (not federally taxable)

Use deductions:

  • Business deductions if self-employed
  • Above-the-line deductions
  • Standard deduction

Note: Intentionally staying below filing requirements is legal. Hiding income is not.

Off-Grid and Cash Economy Considerations

Cash Transactions

Legal:

  • Cash transactions are legal
  • No limit on cash spending
  • Must report income regardless of form

Reporting requirements:

  • Businesses must report cash transactions over $10,000
  • Structuring (breaking into smaller transactions to avoid reporting) is illegal

Best practices:

  • Keep records of income and expenses
  • Report accurately
  • Pay what you owe
  • Do not hide income

Barter

Tax treatment:

  • Barter is taxable
  • Fair market value of goods/services received is income
  • Must report on tax return

Example:

  • You fix a plumber's computer
  • Plumber fixes your pipes
  • Both transactions have taxable value
  • Both should be reported

Reality:

  • Small-scale barter is rarely tracked
  • Large-scale barter should be reported
  • Community skill-sharing often goes unreported

Gift Economy

Gifts received:

  • Not taxable income to recipient
  • Giver may owe gift tax if over annual exclusion ($17,000 per recipient in 2023)

Gifts given:

  • Not deductible (unless to qualified charity)
  • May trigger gift tax if over exclusion

Mutual aid:

  • Generally considered gifts
  • Not taxable
  • Community support is not income

State and Local Tax Considerations

No Income Tax States

Nine states have no state income tax:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire (only on interest and dividends)
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Consider:

  • Sales tax may be higher
  • Property tax may be higher
  • Other fees may replace income tax
  • Overall tax burden may be similar

Property Tax Reduction

Homestead exemptions:

  • Reduce assessed value for primary residence
  • Varies by state and locality
  • Apply through local assessor

Senior exemptions:

  • Additional reductions for seniors
  • Income limits may apply
  • Apply through local assessor

Appeal assessments:

  • If assessment seems high, appeal
  • Compare to similar properties
  • Can reduce tax burden

Tax deferral:

  • Some states allow deferral for seniors or disabled
  • Tax paid when property is sold
  • Interest may accrue

Consequences of Non-Payment

IRS Collection Process

Notice:

  • You will receive notices
  • Respond to notices
  • Ignoring makes it worse

Lien:

  • Claim on your property
  • Affects credit
  • Does not mean immediate loss

Levy:

  • Actual seizure of property
  • Wage garnishment
  • Bank account levy
  • Property seizure (rare for individuals)

Penalty and Interest

Failure to file penalty:

  • 5 percent per month of unpaid tax
  • Maximum 25 percent

Failure to pay penalty:

  • 0.5 percent per month
  • Maximum 25 percent

Interest:

  • Accrues on unpaid tax and penalties
  • Rate adjusts quarterly
  • Compounds daily

Offer in Compromise

What it is:

  • Settle for less than full amount
  • IRS accepts if doubt about collectibility
  • Must show inability to pay

Requirements:

  • All returns filed
  • Current on estimated taxes
  • Fee required (may be waived)
  • Financial disclosure

Success rate:

  • Approximately 40 percent accepted
  • Many applications incomplete or ineligible

Currently Not Collectible

What it is:

  • IRS temporarily stops collection
  • You cannot pay and meet basic needs
  • Status reviewed periodically

Requirements:

  • Financial disclosure
  • Income below necessary living expenses
  • No significant assets

Impact:

  • Collection stops temporarily
  • Penalties and interest continue
  • Tax liens may still be filed

Ethical Considerations

Paying Your Share

Some argue that taxes fund essential services:

  • Roads
  • Schools
  • Emergency services
  • Safety nets

If you use these services, should you contribute?

Redirecting vs. Resisting

Redirecting:

  • Pay taxes
  • Also donate to mutual aid
  • Build alternatives
  • Work for systemic change

Resisting:

  • Refuse to fund what you oppose
  • Accept consequences
  • Witness to injustice

Both are valid. Choose what aligns with your conscience.

Community Impact

Tax resistance can affect community:

  • Local services may be underfunded
  • Schools may suffer
  • Vulnerable people may lose support

Consider:

  • Building alternatives that serve community
  • Supporting community directly through mutual aid
  • Advocating for better use of tax dollars

Get Started: Your Tax Resistance Plan

This week:

  • Gather last year's tax return
  • Calculate your effective tax rate
  • Research deductions you may have missed

This month:

  • Meet with a tax professional (look for progressive or cooperative practitioners)
  • Identify legal reduction strategies for your situation
  • Consider business structure if self-employed

This quarter:

  • Implement reduction strategies
  • Set up record-keeping system
  • Make estimated payments if required

This year:

  • File accurately with all legal deductions
  • Consider war tax resistance if aligned
  • Support tax justice advocacy

Ongoing:

  • Build alternatives that reduce tax burden naturally
  • Support community directly through mutual aid
  • Advocate for tax system change

Resources for Further Learning

  • National War Tax Resistance Coordinating Committee (nwtrcc.org)
  • IRS Publication 17 (Your Federal Income Tax)
  • IRS Publication 334 (Tax Guide for Small Business)
  • Local tax professionals (seek progressive or cooperative practitioners)
  • Tax protesters and resistance history (for context, not advice)
  • Center on Budget and Policy Priorities (tax policy analysis)

Closing: Taxes Are Political

Taxes are not just financial. Taxes are political. Taxes are moral.

Every dollar you pay funds something. Every deduction you take is a choice. Every structure you use has implications.

You cannot opt out entirely. But you can reduce. You can redirect. You can resist.

Pay what you owe. Reduce what you can. Resist what violates your conscience.

Build alternatives that make the state less necessary.

Your money is your life. Spend it consciously.