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THE TAX CHEATS

    Every spring we are subjected to a ritual relating to the ‘income’ tax. The typical program involves sappy, good-natured moans and groans about the pain and complexity by ‘good-government’ newspaper editors; a few noises in Congress-- maybe a hearing or two-- about IRS heavy-handedness; and prominent coverage of a couple of threatened indictments or prosecutions of citizens for "cheating" on their taxes.

    That "cheating" will sometimes amount to evasion, (the filing of a signed affidavit (tax return) attesting to certain things alleged by the prosecution to be untrue), but more and more in recent years the stories concern citizens who have simply refused to comply with the tax code. These persons want neither the costs or the benefits associated with the ‘income’ tax for a variety of reasons, none of which involve taking anything from anybody. They do not necessarily oppose taxes per se, but they recognize one or more of the numerous legal problems associated with the ‘income’ tax alone, such as the illegal ratification of the Sixteenth Amendment; the Fourth and Fifth Amendment problems with enforcement; the legal definition of income; and others. To characterize such persons, who quietly and cooperatively pay large amounts of money in other types of taxes every year, as "cheats" requires a ludicrous stretching of definitions, particularly considering the promiscuous excesses of tax collection and expenditure.

    The essence of the charge is that such a protestor is guilty of making some other poor taxpayer pony up more than his share of this years federal subsidy to the Coca-Cola company’s overseas sales efforts, or the latest NEA performance-art grant (and only to the extent that those boondoggles are funded by ‘income’ taxes, as distinct from other types of taxes). It’s pretty tough to get cheating out of that, since that other poor taxpayers rates did not in fact go up in response to such a protestor’s actions. If one examines the stats, one finds that tax rate increases are related to spending increases, either before or after the fact, and not to collection shortfalls. I suppose a desperate partisan could say that Coke is being cheated, because they’re having to do more lobbying to get the same snout time out of a slightly smaller trough. Cry me a river.

    I define cheating as acquiring something that you have not earned, primarily through fraud or trickery (Webster does, too). By this standard, the cheating going on with regard to the ‘income’ tax is on the part of everybody associated with the system except the hapless protestors being singled out for attention. A few examples:

The "Progressive" Cheats

    The most numerous type of tax cheat is the progressive cheat, the one who pays less than some of his (or her) neighbors (or even collects a "refund" of more than he paid) while demanding and using the benefits thus financed, arguing that those neighbors can afford to carry the progressive on their backs better than the progressive can afford to pay his own way. This type, we must assume, also shoplifts and steals from his employer, using the same logic to compare his resources with those of his victims. He seeks moral cover with vague arguments about "the lottery of life", or that the well-off benefit more from government. The fact is that the better-off a citizen is, the less they use government services, which are almost always inferior to those available in the private market. It is the "progressive" that uses the services, and smugly too, believing them to be a bargain at the rates he is being charged for them, and himself a pretty clever fellow, indeed.

    As for the lottery of life thing (leaving aside the fact that the lottery seems to strangely favor those who work hard, take productive risks, and defer gratification), it is the argument of two-year-olds-- "It’s not faiiiirrrr!!" Not exactly the kind of scrupulously careful and philosophically solid argument by which one would like to imagine the forced disposition of an innocent citizens private property will be decided.

    Both rationalizations bear a strong whiff of a paranoid suspicion that the better-off have somehow colluded with corrupt officials or acquired their resources by other foul means and the progressive has been left out of the game. If this is true, (and in a lot of cases it is), the aggrieved progressive should be clamoring for prosecution of those involved, rather than trying to set up shop in the same line of work. These arguments are bankrupt, of course, but that doesn’t matter and won’t stop the progressive cheats from mumbling them. They serve to keep the stunted consciences of the smarter ones quiet, and provide the dumb ones a sense of self-righteousness while both varieties belly up to the trough. Most importantly, they serve to confuse the victims of the scheme (as well as the general intellectual climate) regarding it’s inherent conflict with the U.S. Constitution and all of America’s founding principles.

    The simple fact, unadorned with sophomoric social theory and juvenile emotionalism, is that the progressive, by dint of superior numbers, forces his neighbors to pay for benefits that they don’t want or use but that he does, or to subsidize his enjoyment of those benefits by being overcharged for their own. In deploying dishonest arguments the progressive seeks to mask that simple reality and to further swell the ranks of his allies, thereby securing more power by which more of the same can be done. He is engaging in fraud to claim benefits unearned and unpaid for. He is cheating.

The Professional Cheats

    For more than ten years, Money Magazine has annually submitted identical tax information to as many as 50 top professional CPA’s and tax specialists and every year they have received back different tax returns from each. At best, all but one of them are wrong, and it is reasonable to extend that status to virtually every tax return submitted every year. Despite this, even in years in which "tax enforcement" is vigorous only a tiny percentage of returns are challenged and changed.

    We can conclude several things from this massive inaccuracy and institutional acceptance of the same: First, that nonetheless enough swag pours in to sate the appetite of the state, or at least to approach the threshold beyond which improvement (and the risk of increased resistance) is more trouble than it’s worth. Second, that it is either not possible to deliberately achieve accurate compliance with tax law, or the IRS doesn’t care if you do; and third, the ‘pros’ that take money in exchange for their expert guidance through the thickets of tax compliance are each and every one of them swindling their customers, taking their money and delivering nothing of real value, professing to an expertise that is a lie.

    Some do so in the rather pitiful fashion of one who would sincerely do a good job if it was both within their abilities and technically possible, but, faced with the failure of those requirements still takes the customer’s money and muddles along telling themselves that they’re doing their best. Privately, in the back of their minds they are thanking their stars to have not yet been caught out as an incompetent. This type is almost a victim themselves, for they mistakenly believe that it is possible to do their job properly, if only they could figure out how.

    More common are those so deeply cynical and morally corrupt that despite knowing that a proper job cannot and need not be done by themselves, their clients, or anyone else, they are able and willing to make that deal, pocket that fee, and carry on. They know that at least 9 out of ten times the work for which they will take their client’s money will either fall short of minimizing the alleged tax liability or cross the line into ‘unallowable’ territory, yet they are untroubled. Hey, it’s the way the game is played. Some number of their clients are not victims, of course, but rather equally cynical co-conspirators who understand that the ‘expertise’ for which they are paying is that of knowing what flights of deductive fancy enjoy acceptable odds of being unremarked upon, or at least explainable, at an audit.

    The best that can be said for either variety of parasite is that what they are really selling to their clients is stress-relief and a sort of talking-point indemnification against criminal charges for certain categories of tax ‘crime’. Should the ordeal of scrutiny fall to one such in any given year, that client can point the finger at the ‘professional’ for certain types of ‘errors’, and thus provide themselves a little cover.

    In other words, like snake-oil salesmen or protection-racket fixers, the ‘pros’ are mostly selling peace-of-mind against the dangers of bureaucratic abuse. In claiming or implying that they are actually providing compliance with the tax laws, they are cheats. They have no expertise with the tax code, they only have expertise (and/or a relationship) with the tax enforcers.

     (NOTE: In March 2002, Jerry Padway of the American Institute of Certified Public Accountants called for more tax audits of the American people, claiming to seek thereby increased public confidence in the tax system. He did not trouble himself to mention that more audits means more pre- and post- filing customers for the CPA industry).

    There is also, of course, the "secretarial" type of tax-preparer, catering to clients who basically just want to send in the form without being screwed too badly. (Advertising copy using terms like ‘accurate’ and ‘guaranteed’ notwithstanding, no one but the supremely gullible would imagine that for $100 they would get an accurate, maximized tax return taking full advantage of every clause and quirk in that 29,000 page code). Their cheating is of the work-a-day, "this is the way the world goes around" kind-- participating in, and getting a paycheck from, the corrupt system. As in the case of the higher priced types cited above, they are like someone who stumbles across a mugging and promptly sets up a concession stand; they are simply more modest in their claims.

The Bureaucratic Cheats

    The corruption here is down to the root. The IRS admits to a 50% error rate in its own advice to taxpayers, suggesting inescapably that if the 2 + 2 = 4 type questions are disregarded, the real error rate approaches 100%, a conclusion completely consistent with the Money Magazine tests. Even using the 50% figure, it is inescapable that, however well-meaning they might be, any IRS employee answering any question at all is lying unless they add to their answer the qualifier: "Of course, there’s a fifty per cent chance that my answer is wrong!" This sounds comical, but it’s as serious as losing the roof over your head and the bread off your table. When you fill out a tax return, you’re exposing yourself to criminal and civil liability if that return contains any errors, unless you wisely refuse to sign it.

    Think for a moment about the rank cynicism, arrogance, and depravity necessary to impose or even threaten sanctions against someone over their compliance with a law, the details of which baffle even its own full time administrators. To do so is to pretend to be serving the public interest, while actually perpetuating a fraud through which you collect your weekly pay. To do so is to cheat. While it may be that extraordinary virtue would be required for a person to give up a relatively cushy position as a government employee over an honest admission that since they can’t understand their responsibilities, they cannot perform them and shouldn’t be paid for doing so, it is unconscionable that such a flounderer should presume to oversee the behavior and performance of anyone else regarding the same subject.

    Here is what Shirley Peterson, who has held office as both head of the IRS Tax Crimes Division at the Department of Justice and Commissioner of the IRS, said in 1993: "...Eight decades of amendments and accretions to the Code have produced a virtually impenetrable maze. The rules are unintelligible to most citizens - including those who hold advanced degrees and including many who specialize in tax law. The rules are equally mysterious to many government employees who are charged with administering and enforcing the law."   Ms. Peterson was soft-pedaling, of course,… the rules are deliberately unintelligible to virtually ALL citizens, including ‘experts’, bureaucrats, judges, etc.. The tax code is not a law, it is a scheme.

    Those who participate in this bureaucratic shake-down are the epitome of Hannah Arendt’s banal perpetrators of evil. They sullenly shuffle their papers, act in accordance with the scheme’s script when dealing with the marks and splutter with indignation at those who inconveniently refuse to play along. They consume their attention with the insignificant details of their positions so as to have no time for the big picture, lest they be obliged to resign in disgust. Like all bureaucrats everywhere, they offer up the Nuremberg defense if pressed: "Hey, I don’t make policy, I just impose it on you and collect my check!"

The Judicial Cheats

    The same offenses for which the bureaucrats who administer the tax code can be condemned also apply to the other "official" actors associated with the subject, especially including judges, who bear particular responsibility for the institutional character of the corruption.

    For decades countless judges refused to allow even an effort by the defense to argue the more complicated (though no less legitimate and absolute) issues of the illegal ratification of the 16^th Amendment, the incompatibility of filing requirements with the 5^th Amendment, the conflict of tax administrative procedures with the 4^th Amendment, the actual words of the law, and other similar problems with the ‘income’ tax during the prosecution of many tax ‘crimes’ or civil actions. It took a wildly belated U.S. Supreme Court ruling in 1993 (Cheek v. United States) to force these halls of justice to let the defense present its defense. But even prior to that ruling and without regard to the presentations of the defense, those slothful, ill-educated, or colluding judges were routinely failing to do their duty regarding the simple and unavoidable legal issue of clarity.

    The legal concept of ‘void for vagueness’ holds that if a law fails to make clear to a reasonable person what is required in order to be in compliance, as well as the consequences of non-compliance, then it is void, has no force, and must be ignored by a court. (Sadly, this principle seems to have been entirely ignored lately except in striking down various efforts at restricting abortion on demand). The tax code, inarguably meeting this definition, has been granted a pass with a wink, a nod, and a smirk because hey, IT BRINGS IN A LOT OF MONEY! It is understandable that the political hacks who will use the money to buy votes for themselves look the other way, but it is a most egregious violation of trust for a judge to do the same. Judges (on the federal level, at least) enjoy special stature as public officials both insulated from the political process and specifically charged with responsibility for counterbalancing the systemic disregard for the law that is natural to their official counterparts.

    There are two simple reasons for the principle of void for vagueness: 1. Vague laws leave the citizenry in a state of uncertainty and unable to plan and act; and 2. The legislative power is transferred from the people (acting through their elected representatives) to the administration functionaries who are obliged to interpret the vague law. There is a sophomoric argument routinely presented in answer to the transfer of power issue to the effect that Congress is simply delegating its authority to supervised subordinates-- legislative aides, you might say-- and retains the final authority to repeal or modify their work product. This is utter nonsense,… the bureaucrats thus empowered to creatively apply the "law" work for another branch of the government, don’t answer to the people, and, in my lifetime, have yet to have any of their work product repealed.

    The first sentence of the first article of the U.S. Constitution is: "All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and a House of Representatives". What part of this is hard to understand? Congress is not granted the power to transfer even one small part of its legislative authority for even one short minute to another branch of government. Article VI makes the Constitution the supreme law of the land. Congress cannot, exercising authority granted to it by the Constitution, make law that supercedes or contradicts the Constitution. Congress cannot say: "The Constitution grants us the power to make laws, so we are making a law granting that same power to the IRS, or the EPA, etc.".

    Frankly, even if this area were fuzzy, the tax code would fail, because no congressperson has ever actually read it, and therefore Congress has not in fact exercised any supervisory or oversight role in its production. I make this claim with some confidence, as even were the code written in as readable a fashion as the average novel and could be read as quickly (and it’s not), it would take the average reader so long to get through it that by the time they reached the middle, much less the end, they would have completely forgotten the beginning, eliminating any possibility of the comprehension that is presumptively inherent in having "read" something.

    (Clearly, on this basis alone, a judge doing his duty would routinely dismiss any action brought by the government against a citizen concerning the tax code, being obliged to point out that he personally has not read and does not understand the code; he knows as a matter of simple common sense that the prosecuting agents similarly have not and do not; therefore it is impossible for them to have knowledgably alleged an actual violation of law-- or for he himself to adjudicate the matter).

    In succumbing to the fear of bad press and the social penalties attendant upon acting outside the fashionable box, or by simply being too lazy to retain and apply the objectivity that is their unique responsibility, judges fail to do their duty and violate their oaths of office. Thus they enjoy the privileges and esteem of high office, (and draw their paychecks), under false pretenses. In other words, they cheat. They are tax cheats, firmly in the company of the other varieties already identified, and deserving of particular scorn for their consequent offense against the higher calling that is part of their job description. Many of the others are mere crooks, but the judges are oath-breakers as well.

    Cheating on taxes certainly is a big problem, and it deserves the special attention it gets once a year. Frankly, the subject deserves special attention a lot more often than that. Let’s just be sure that when we’re bringing all that special attention to bear we’ve got the right targets in the crosshairs.

© Peter E. Hendrickson 2001