Monday, April 17, 2006

Black Tax Avoidance

If a majority of african-americans could be convinced to not pay taxes they could affect real change within the public policy framework. There are numerous justifications for this. Why should we pay taxes to a government that uses that money to build prisons, ghettoes, and ineffective public schools?
An organized campaign of tax avoidance would put an end to the reparations question as well as fit neatly into our culture of nonviolent peaceful movements. It could also work.

4 comments:

Anonymous said...

CF -- Interesting proposal.

I would typically question whether this is the most direct approach. Perhaps we would be better off saving more and disrupting the chips/cola/burger/sneakers cycle of wasteful consumption. But, that requires too many day-to-day sacrifices, whereas this could require a single day of civil disobedience.

But, it would only work if people changed their estimated withholding(otherwise, Tax Day is only the reconciliation of taxes owed against taxes paid). And if people do change their withholding to minimize taxes paid, there is a strong possibility that the additional cash would become part of our cycle of wasteful consumption. I'm smart enough to avoid the paternalistic trap of suggesting that the extra cash would go into lottery tickets or other such items. Instead, I'd argue that (1) the government would come for its money at some point, and even if it doesn't, (2) the money not paid (or not withheld) may not be available to correct the problems that you mentioned earlier (underperforming schools).

The automatic nature of tax payment (in that, it's deducted from payroll before you even see it) is a powerful tool. Many of us are able to take advantage of that same automatic system by putting pre-tax money into a 401k account or other pre-tax fund. We need to figure out a way to divert that "automatic money" into a more productive account.

But, as I ramble on, I'm reminded of a more fundamental issue... we rebelled against the British for "Taxation without Equal Representation." DC has turned it into a motto. Yet, we pay our income taxes blindly without having a real seat at the table. Don't even get me started on our sales taxes.

theBlackEconomist said...

I agree. My thinking is, "first do no harm." While nonviolent protest does engender extreme responses, in general it doesn't stimulate the type of hostility that armed struggle does. It often provokes a reasoned response with amnesty granted to the masses of protesters (China doesn't count, I am thinking of America).
I also agree that we need a seat at the table but I fear that we are sabatoged(sp?) by our inability to trust one another and reach consensus.
It would be ideal to have well funded policy, lobbying, and media groups but we don't seem to have the cohesiveness necessary to guarantee support.
So a "black tax" is a good idea but how to make it happen?

Anonymous said...

That's a good question. As I indicated before, I'm a big fan of "automatic savings accounts." Most banks (I use ING Direct) will allow you to automatically transfer money from your checking account into an interest-bearing savings account. Ideally, we could convince people to reduce their withholding to the absolute minimum (we don't want to incur penalties), while depositing the additional funds into an interest-bearing account. At the end of the year, they'll still have tax due, but they'll also have a savings account available with the funds (plus interest) AND the option of paying. Right now, we don't even have the option of paying for the most part -- the government takes its amount out of each and every paycheck.

That, at a minimum, would put us in a collective position to direct our monies. If we own the bank, we also get the carry, which creates more funds to invest in worthwhile goals).

In fact, you could probably set this sort of system up for ANY charity, provided you keep the transfer costs to a minimum and you educate enough people. It's automatic and it only requires three actions from the individual:

* First, setting up the account (easy)
* Second, setting up the automatic withdrawal from checking
* Third, minimizing your witholding.

-- db

theBlackEconomist said...

You make a powerful argument. I particulary enjoy the part where the funds are diverted into interest bearing accounts. I can envision a scenario wherein the original militant goal of tax avoision falls by the wayside. Participants would gain interest on the previously withheld income, pay their taxes (including capital gains on the invested monies) and contribute a small percentage of the gains to a foundation. To make it really work the process and goal would have to be simple enough for a child to understand.
What then is a policy objective vanilla enough to garner mass support, scandal proof, and that actually effects real change?