Friday, April 16, 2010

10 Arguments Against Paying Taxes (that will not work)

In honor of Tax Day, I saw a list on JD Supra of “10 arguments against paying taxes” (as seen on the IRS website and written in the blog, Mental Floss). “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.” Enjoy!

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. 

Read the rest of the arguments by clicking here.

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