Income Tax Withholding: Involuntary Servitude and Self Incrimination

“The income tax has made more liars out of men than golf.”- Will Rogers

Tax filings or appeals for extensions are due today. Hopefully last year you filled out (and by filled out I mean totally guessed) a W4 correctly with your employer for the proper amount. The income tax system with its refund is really brilliant the way it makes people think they made money. However big your tax return is (aside from deductions) it only means you loaned money to the government at 0.00% interest by overpaying your taxes. Either way there is a good chance you spent a great deal of unwanted time filling out forms, finding tax services, searching for lost receipts and papers, and generally just staring confusedly at government forms. According to the IRS itself the average person who fills out a 1040 tax form (68% of us) spent 13-22 hours trying to comply with, file, and pay taxes. Here’s the labor hour breakdown:

Record keeping (10 hours)

Tax planning and calculation (3 hours)

Completion of forms (4 hours)

form submission (1 hour)

“Other” (3 hours). [1]

The IRS has even calculated the average cost of all this: $290-$480 per person. Of course if you own a business these numbers and the cost double. In a 2012 report Taxpayer Advocate estimated that 6.1 billion hours went towards filing taxes the prior year. Imagine the missed opportunity cost! Imagine what these people could have been producing, saving, investing, building, inventing, or researching! Imagine the valuable contributions to society these people could have made and we now lack! To turn a phrase on its head, taxes are what we pay for an impoverished society.

Certainly if any words could be opposite and exclusive realities it is liberty and slavery. The Thirteenth Amendment of the Constitution states that “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.” As Murray Rothbard said “if there is anything a libertarian must be squarely and totally against, it is involuntary servitude—forced labor—an act which denies the most elemental right of self-ownership.” But what is slavery? Aren’t we rid of it? Rothbard defined slavery as

(a) forcing people to work at tasks the slave-master wishes

(b) paying them either pure subsistence or, at any rate, less than the slave would have accepted voluntarily. In short, forced labor at below free-market wages.

In one sense, and as I argued in the previous post, the entire income tax system itself implies  a form of involuntary servitude. Tax Freedom day is next Friday in which we will have, on average, payed our tax “bill” for the year. In a very real way, we worked 114 days this year for free for people we don’t like to give us things we don’t want. Or for the christian things that violates his conscience. Even at the most generous statement of the case they provide a genuinely needed service at an absurd price in a poor quality that could have been done on the market more efficiently, cheap, and in good quality.

But the withholding feature itself is an even clearer and more dastardly form of involuntary servitude. Employers and workers alike are forced at no pay to be the governments tax collectors, against themselves no less. “To add insult to injury,” said Rothbard “the individual taxpayer, in filling out his tax form, is also forced by the government to work at no pay on the laborious and thankless task of reckoning how much he owes the government…Here again, he cannot charge the government for the cost and labor expended in making out his return.” I suppose for many of you it is too late but a worthwhile endeavor may be including with your fillings a bill for the labor hours at the market wage for an accountant to the IRS, be sure to put a return address.

There is one more problem with the income tax, withholding, and filing system. Not only are you being forced to work as the government’s tax collector and accountant with no compensation, but it requires one to incriminate himself, a clear violation of the 5th amendment. Yet, as Rothbard notes:

“…the courts, often zealous in protecting Fifth Amendment rights in less sensitive areas, have done nothing here, in a case where the entire existence of the swollen federal government structure is at stake. The repeal of either the income tax or the withholding or self incriminating provisions would force the government back to the relatively minor levels of power that the country enjoyed before the twentieth century….The withholding principle, of course, is the linchpin of the whole federal income tax system. Without the steady and relatively painless process of deducting the tax from the worker’s paycheck, the government could never hope to raise the high levels of tax from the workers in one lump sum. Few people remember that the withholding system was only instituted during World War II and was supposed to be a wartime expedient. Like so many other features of State despotism, however, the wartime emergency measure soon became a hallowed part of the American system.”

So maybe next year you can just write on all your forms “I plead the fifth!” (I don’t recommend that), but it may be interesting to include a bill for your labor to the IRS, you might at least get a chuckle at the most a convert, you never know.


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