Tax Q&A: I heard there isn’t actually a law that says we have to pay taxes. Is this true?
by Byrne Hobart
Is it true that there’s no law saying I have to pay income taxes? This is a common question on tax forums and discussion boards. Many websites and publications argue that paying taxes is illegal, immoral, unconstitutional, dishonest — basically every synonym for evil except “fattening”. The famous tax protestor Irwin Schiff calls income taxes “The Biggest Con.” The rise of popular libertarian candidates like Ron Paul has caused many people to scrutinize the Constitution and reconsider current tax rates.
So what’s the big deal? Is it true that we don’t owe taxes? Can we do anything about it?
There are several common conversational gambits among tax protestors, but the most common is: “What law, specifically, requires us to pay income taxes?” That’s as good an introduction as any to the subject. So we can deal with it quickly: the law is Title 26 of the United States code, Subtitle A, Chapter 1, Subchapter A, part I. It starts with “There is hereby imposed on the taxable income … a tax determined in accordance with the following table.”
The Code goes into an excruciating amount of detail about what is taxable, what is not, who must pay, what doesn’t count, etc. etc. etc. Many tax protestors will read this over and argue that even though it says what the taxes are, how they’re calculated, and the like, it never actually says you have to pay them.
But just try that argument with something outside the tax code. If you’re given a fifteen-page description of the duties of a professional mold removing gell salesman, and are offered and accept the salary of a mold removing gell salesman, but then argue that all these duties never specified that you had to perform them (but you’ll cash the checks, thank-you-very-much) you wouldn’t get too far.
Tax protestors are like the mythical mold removing gell salesman. Even if the tax code is not written so that, for every possible reading, the intended payers are the actual payers, the courts have ruled that, essentially, the document means what its writers meant it to, and grammar be damned you have to pay what the code says you owe.
Some people still refuse to pay. Often, they end up in court. Sometimes, they even win their cases. The problem is this: even if some people win their cases, the average result is that a tax protestor ends up paying the taxes owed. Plus fines. Plus, his lawyers will have some extra income from defending him, and they’ll pay taxes on that.
In other words, it’s not practically effective. But let’s suspend our disbelief for a bit, and ask what would happen if people started winning these cases — if the jury agreed that the government had accidentally omitted a crucial clause from a critical sentence, and nobody legally owed income taxes. What would happen is that Congress would hastily meet, add back the offending clause, and be done with it. After all, they passed the Sixteenth Amendment specifically to authorize income taxes. If they hadn’t meant to make income taxes the law, they wouldn’t have rewritten the constitution.
If Congress acts like paying taxes is the law, and taxpayers act like it’s the law, and only a few law-parsers say otherwise — the law will change, not the country. If you want to pay lower taxes, there are three things you can do that will get you good results: you can structure your spending and saving to take advantage of tax breaks; you can get involved in politics and try to make the government more responsible and less spendthrift; or you can make less money. If none of that sounds appetizing, you may just have to move.