The Tax Protesters' Refrain Works for Once
By Albert B. Crenshaw
Sunday, August 17, 2003; Page F05
Last week a jury in Memphis acquitted a woman of criminal charges arising from her refusal to pay federal income taxes on $920,000 she earned from 1996 to 2001. The basis for her refusal, which the jury apparently found sufficient, was that the Internal Revenue Service hadn't showed her where in the law it says she had to pay.
She wrote the IRS a letter in 1995, she said, demanding an answer to her question, and when none was forthcoming, she filed W-4 forms indicating she didn't owe tax. The IRS eventually brought criminal charges of tax evasion and filing false W-4s. If she had been convicted by the federal court jury, she would have faced up to 30 years in prison and $1.5 million in fines.
The defense employed by Vernice Kuglin, a 58-year-old FedEx pilot, was a variation on a longtime theme of tax protesters, which in essence says that Congress somehow neglected to put the trigger in the tax gun -- all this tax law but no provision saying you actually have to pay.
Other courts have been giving this argument short shrift. The U.S. Tax Court, which specializes in handling civil tax cases and has grown thoroughly impatient with tax protesters, is increasingly willing to hand out penalties of thousands of dollars in such cases. And the IRS has persuaded a federal court in Nevada to bar protester Irwin Schiff from selling a book that contends taxes are voluntary.
Nonetheless, a jury was persuaded by Kuglin's argument -- that because IRS forms say the agency is required to cite various code sections before asking for taxpayer information, it is required to respond to her demands that she be shown where it says she has to pay.
"I've been asking the IRS that question for 10 years," she said in a television interview after the verdict. "What section of the Internal Revenue Code makes me liable for the individual income tax? And what law requires me to file the Form 1040 form? And for 10 years I have not gotten a response to that particular question."
It's doubtful that many Americans truly believe that taxes are voluntary -- that would at the least be an oxymoron, according to most dictionary definitions of the word "tax" -- but this verdict and other developments make it clear that there is a growing disconnect between many of the people and their governments -- federal, state and local.
These folks either don't see the connection between the taxes they pay and the services they want -- the price we pay for a civilized society, in Oliver Wendell Holmes's famous phrase -- or they don't feel the services are worth the money.
California seems to be an example of the former. The state's voters have repeatedly approved vast government spending initiatives while clinging to anti-tax Proposition 13, which severely restricts property tax increases. Soaking the rich worked for a while, but the tech downturn undid that. So, given the choice of raising taxes or cutting services, Californians are . . . throwing out the governor.
And while many Californians may be hoping the Terminator will pull off a stunt even more improbable than those he has performed on the screen, up in Oregon they've said to heck with it. Voters there said earlier this year that they'd sooner close schools and free prisoners than raise taxes.
So what's going on?
Looking back, it seems that where once taxes were viewed as a communal effort -- we'll all chip in and pay for things we couldn't afford individually, with the rich paying more and the poor paying less, but with wide agreement on what we need -- they are now seen as a feeding trough for interest groups. Combine that with the growing cynicism about who actually pays taxes, and you have a recipe for systemic breakdown.
Every time a jury lets a Vernice Kuglin go free, it encourages others to try the same thing.
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