10 Arguments Against Paying Taxes (That Won't Work)
By Greg Sabin
No one can accuse the IRS of not being thorough. On their website, they've addressed some of the more common arguments that folks have made to avoid paying taxes. Most of these arguments have gone to the courts numerous times and found to be without merit. So if you don't want to pay your taxes, you'll have to dream up something more creative than these 10 examples.
1. Taxes are "voluntary"
This argument comes from a misunderstanding of the word "voluntary," which appears in a few tax-related sources, including the instructions that come with your 1040 tax form. Unfortunately, the legal definition of the word "voluntary" in this case refers to the process by which taxpayers report and pay taxes on voluntarily reported income, as opposed to a system where the government just tells you what to pay and you fork it over. And don't think that you can be tricky and say that filing a tax return might be mandatory but paying the taxes is voluntary. They've already thought of that one, too.
2. Compensation is not income
Here's the argument: If I work for compensation, then I'm not actually profiting. I'm just bartering my time for money, which is a zero-sum transaction, and, consequently, I have no gain or profit that can be legally taxed. This can be misconstrued as an "exchange" and not actually income. The IRS rebuttal: Clever, but not convincing.
3. Taxes in America aren't for Americans
Apparently there's a sentence or two in the tax code (which is over 50,000 pages, by the way) that discriminates between U.S. and non-U.S. source income. It's just a small point explained so that folks don't pay double taxes if they happen to have income from multiple countries. A few individuals have plucked this one little idea and claimed that no taxes are due on income earned in America by Americans. Only aliens have to pay. The IRS rebuttal: Read the other 49,999 pages and get back to us.
4. Money isn't legal tender
Some folks are a little peeved that they can't take a couple of Benjamins into their local banks and exchange them for equal amounts of silver or gold. They therefore claim that the income they earn paid in such "worthless" tender cannot be taxed, as it inherently has no value. Truth is, they've got nothing to be peeved about. Article I, Section 10 of the Constitution says that the states cannot declare anything as legal tender other than gold and silver, but imposes no such limits on the Congress. So if you're paid in "worthless" Federal Reserve notes, you're welcome to donate them to the mental_floss Christmas party fund, but you still have to pay your taxes on them.
5. I am not a citizen
Some creative former accountants and militia members got together and figured out that if they rejected their U.S. citizenship in favor of their state citizenship, they'd be outside of the tax-levying powers of the IRS. Or, put more succinctly, "I am a free-born citizen of (insert Mountain West state here), and you have no right to my money, Mr. Tax Man." The IRS rebuttal: Creative? Probably. Creepy and unconvincing? Definitely.
6. "The U.S." only includes federal land
Another state's rights argument claims that states are sovereign and only federal lands such as the District of Columbia, Guam, Puerto Rico, and federal enclaves like reservations and military bases are subject to federal taxation. The IRS rebuttal: Seriously? We've got a baby shower in the third floor break room to go to and you're taking up our time with this?
7. Individuals aren't people
I'm just going to quote the IRS on this one since it's pretty priceless: "Some maintain that they are not a 'person' as defined by the Internal Revenue Code, and thus not subject to the federal income tax laws. This argument is based on a tortured misreading of the Code."
What misreading you might ask? Well, the code defines a person as "an individual, trust, estate, partnership, or corporation." I can state without much reservation that I personally am not a trust, or even a partnership, but I'd have a hard time arguing that I am not an individual. This sounds like a claim for rhetoric or philosophy majors only.
8. My religion doesn't believe in taxes
Whether your religion doesn't like taxes or doesn't like the programs those taxes fund, the courts have held that "necessities of revenue collection through a sound tax system raise governmental interests sufficiently compelling to outweigh the free exercise rights of those who find the tax objectionable on bona fide religious grounds." Nice try, though.
9. I plead the Fifth
This is a beautiful legal argument. If I have income from illegal sources, then the reporting of such income forces me to incriminate myself in direct opposition to the rights granted me by the Fifth Amendment. However, the Supreme Court has established "that the self-incrimination privilege can be employed to protect the taxpayer from revealing the information as to an illegal source of income, but does not protect him from disclosing the amount of his income." Basically, you don't have tell us your income came from illegal iguana smuggling, but you still have report the income.
10. Taxes are slavery
This argument asserts that the compelled compliance with federal tax laws is a form of servitude in violation of the Thirteenth Amendment. The short rebuttal: It isn't. The long rebuttal: It isn't, and that's insulting to millions of people descended from the people the Thirteenth Amendment was meant to protect.