The tea parties in April were well-publicized events attempting to draw attention to the high tax rates in the United States and they sure didn’t do a very good job of it. Most people went, waived their signs around,applauded speakers and were very patriotic before returning to their real lives of going to work and paying taxes. In other words, they weren’t very serious when they said they were upset at the high levels of taxation and government spending in the U.S.
But what if you really are upset and are looking for a way to opt-out of mandatory taxes? Obviously, you can’t just stop paying them. I mean, you could, but since you’re not a high-ranking government official, you’d actually go to jail. But there are certain things you can do to avoid paying taxes and are perfectly legal.
1. Excise Taxes
Excise taxes are taxes levied on specific items; consequently, they are very easy to avoid. All you have to do is stop buying those items. Stop smoking. Barring that, grow your own tabacco for personal use. An advantage of doing so is that tabacco water is a natural pesticide. Stop drinking, or better yet, brew your own liquor. Quit driving so much and either carpool, walk or ride a bike. Remember 0-2 miles is walking distance, 2-10 miles is biking and anything above that is driving distance. This should dramatically cut down on the gasoline tax you pay.
2. Sales Tax. Obviously, no one can completely stop buying stuff, so this tax is harder to avoid. Most Americans can, however, decrease the amount of things they do buy. There’s an old saying that says “Use it up, wear it out, make it do or do without.” This is a great way to avoid sales tax. Instead of buying a new pair of shorts when one rips, sew it up or patch it. Buy used, at garage sales or thrift stores. While you might still pay some tax, it will be less than if you bought new items. Do your shopping in states with no sales tax or a lower sales tax. In New England, this means driving to New Hampshire. If you live in Wichita, KS, it means doing your shopping outside of Sedgwick County, which has a ridiculous sales tax to fund their stupid arena. Grow as much of your own food as possible. While some states have a lower sales tax on food, a tax is still a tax and most people have a bit of land they can use for food growing purposes. It also tastes better.
3. Income Tax. This one is still harder to avoid. Unlike a lot of people, I recommend always filing your income tax return, for several reasons. First off, while you’re not required to file it if you earn under $5,000 a year (or has it gone up now?), they still withhold income tax from that amount and you won’t get it back unless you file. When I was a poor college student earning very little, I filed and they sent me a check for around $13. If your goal is to impoverish the government, making them review your law-abiding income tax filing and then pay to mail you a check is definitely worth it because they lose money on the scheme. Other than that, maximize your deductions. Ever wonder why the rich don’t protest much when the government raises taxes on the wealthy? It’s because they deduct so much, they never pay close to the percentage the government pretends they are. I’ve heard forming a LLC is a great way to do this, but I’m not a tax accountant so don’t take my word for it. Other than that, seek to minimize your income. I know, most people want to maximize it so they can be rich, but what’s the point if earning more just means you have pay more of your income to the government? Ideally you should seek to earn at a point where your deductions are maximized and your taxes minimalized, but if you want to get really extreme, you can set up your expenses so that you can get by as little money as possible. This means having no debt, and in all likelihood followin the advice outlined in the first two sections: grow or make everything yourself as a sort of modern day Thoreau. It’s extreme, but I know people who do this and who pay no taxes. There are also other taxes, such as a capital gains tax, that are closely related to income taxes but are easier to avoid. If you don’t want to pay capital gains tax, don’t invest.
4. Property Taxes. The hardest to avoid, property taxes mean that you are rent to the government for the right to continue living on your private property. If you don’t believe me, stop paying them. Just like a landlord whose tenants have stopped paying rent, the government will evict you. There really is no way to get around it, but you can minimize it by owning minimal property, owning marginal property (say, property located next to an airport, railroad track and highway), and doing very little to improve your property. Unfortunately, this might hamper your ability to become self-sufficient and avoid paying other taxes. You could always rent, but then you just pay property taxes indirectly via rent to your landlord. I guess living in your car would be a reasonable solution, but you pay taxes on it, too, in order to register it. Several homeless camped on some islands in the middle of the Merrimack in tents, so I suppose that’s one solution.
Does all this seem a little crazy to you? A little extreme? I mean, come on, who would go to those lengths to just avoid paying taxes? And, what about all the good that comes from paying taxes? The gas tax pays for our roads, for example, the property tax is for education and the income tax does everything else!
Oh, I’m sorry…you mean, the gas tax we pay despite the fact our infrastructure is crumbling and government continuously uses that money to pay for other stuff? You mean the property taxes we pay so that we can spend $8,000 a year pretending to educate children, who still remain ignorant? And the income tax? Is used to pay interest on our national debt. As far as getting all the bang for our buck, American tax payers have been royally screwed.
Taxes we pay are not being used to provide valuable services for the people. They’re being used to invade other countries and to bailout Wall Street. What we don’t pay in taxes today, we’ll pay in taxes tomorrow in the form of money our government is borrowing from other countries. Governor Meldrim Thompson of New Hampshire was fond of reminding everyone that low taxes are the result of low spending. Remember that the next time you’re at a Tea Party or the next your government insists that all they have to do is spend a few billion more dollars and the economy will be hunky dory again.
Filed under: finance
All the good Depression related distractions have already been invented:
1) Rocky Road ice cream. “Hard Times” and “Breadline” flavor ice creams don’t sound nearly as good.
2) Monopoly. What game are we going to invent this time around? Naitionalization?
During the last Depression, they ended prohibition on alcohol, which helped increase state revenues through the taxation and sale of liquor. Maybe this time they’ll end prohibition on marijuana?
For those of you reading this blog who are not in the US and might be wondering what the average American feels about the Wall Street bailout because you’ve only read news stories about it, let me tell you: they’re against it. I haven’t heard a single person come out in favor of it and a lot of people are talking about it. I was in a kitsch store last week and over heard three women in their 50s or 60s discussing it. They sounded skeptical at best and disgusted at worst.
The one thing that amazes me more than anything about this whole situation is how Americans are still clinging to partisan lines even though both candidates are for a bailout and neither one of them seems to have the faintest clue what’s causing it. Obama supporters all claim that Bush caused it (he didn’t, but he didn’t help matters, either) and that a President McCain would only make matters worse. McCain supporters claim that……yea, no idea what they’re blaming. I know that Bush blamed foreigners for putting too much money into the country and thus pushing interest rates too low, which conveniently ignores the fact that the Federal Reserve sets interest rates. At any rate, an Obama presidency would be absolutely disastrous for the country if you listen to the McCain supporters.
Guys, listen up: either one of those morons is going to be disastrous for the counrty, but why concentrate soley on them? Why not look at their partners in crime: the other members of Congress who are also going along with this plan to bankrupt the US and royally screw the US taxpayer. I sincerely hope that the voters remember this come election day and vote out all the ones that went along with the bailout, despite their constituents’ clear stance against it.
If you want to read up on what caused this crises in the first place, the Mises Institute has compiled a Bailout Reader. Daniel has also posted a very good video explaining it on his blog.
On the plus side, gold should go up in value, the federal government may weaken and pro-secessionist New Hampshire residents may see their day come.
In a nod to the recent fad, I’ve decided to use cloth diapers on our baby when he’s born. I say “I” mainly because Lasse didn’t really have much input in it at all–if it were up to him, he wouldn’t be changing diapers at all. His main concern when I brought it up was that it would involve playing with poop a lot more. Unfortunately, from what I remember of my nephew’s diaper days, any kind of diaper involves playing with poop. Sometimes enough poop to where the kid needs a bath afterwards, as do the sheets and you. As far as I’m concerned, cloth would have to be really bad in order of it to be worse than disposibles.
Besides, it has a lot of other stuff going for it. I’m mainly thinking about how cheap it is compared to disposibles.According to the babycenter baby cost calculator, Disposibles cost $72 a month, making one year of disposibles $864. Cloth diapers, on the otherhand, are estimated to cost $19 a month, for a total of $228.
In addition to that, you don’t have to worry about running out of diapers at a very inconvenient time and having to run down to the store to buy more. As long as you keep up on the laundry, you shouldn’t run out (unless your kid comes down with horrible, no good, very bad diarrhea. In that case, I would screw the diapers and just put the kid in the bathtub. Right?)
They also look cuter. I got a free disposible diaper from huggies in the mail the other day and despite their attempts at making it look cute on the outside, I’m almost astounded at how ugly it is. On the other hand, it’s just going to be peed/pooped in and thrown away. Beauty is irrelevent.
I suppose I should mention that it’s better for the environment. Sigh. This is the reason a lot of people use cloth diapers, such as my sister’s friend, who gave me a lot of good information on cloth diapering to help me decide whether or not I wanted to do it. She’s so green, she should be running as the Green Party presidential candidate, not Cynnthia McKinney. However, it’s not really my big motivating factor. I’m mainly concentrating on the cheap aspect of it all.
Another benefit is that babies will feel the wetness in cloth diapers (as will you!)–something they miss out on with disposibles, making disposibles a very cool place for them to hang out until they’re 3…4…and sometimes 5 years old. Sorry, I’m not going to deal with a kid in diapers for the next 5 years of my life. Not happening. No friggin’ way.
So, cloth it is. My first forays into cloth diapering were extremely confusing, mainly because of the terminology and diapering “technology” that exists today. Found on the lowest level of cloth diapering are flats, which are large flat pieces of cloth you have to fold to make absorbant and then pin (or snappi, the technologically advanced version of pins) onto your baby. If you don’t want them to leak, you need a waterproof diaper cover or wool soaker for them to wear. Slightly more complicated than that are the prefolds. They’re like flats in that you have to pin (or snappi) them, but actually have a section of absorbant think material in the middle, which cuts down on the folding trimendously. These are the two “cheap” cloth diapering methods out there.
Next up are fitteds. Fitteds are like disposible diapers in that they already look like a diaper, don’t need to be folded, and close with velcro or snaps. However, they are not waterproof and still require a cover of somesort to hold in the wetness. At the top of the scale come All-in-Ones, which are fitted cloth diapers with a waterproof outer lining. You put the diaper on and forget about it until the baby pees or poops in it, at which point you change them, exactly as you would a disposible, only you put it in the wash instead of the trash.
Easy enough, right? I guess, unless you’re trying to decide what you should get. For diapering on a budget, prefolds are touted as the best. They’re about $1.25 each for high quality ones, but you also need covers to go with them. All-in-Ones are the most expensive, but most convenient. BumGenius offers them at $17.95 each, but you can get ones that are one size and “grow” with your baby. If you can get buy with just those, you can probably cloth diaper for $550 for the whole time you spend diapering (that’s for 30 diapers). Impressive, unless you account for the fact that the one-sized ones don’t always fit newborns well and may not fit 2 year olds too well, either.
It’s around this point that I should mention a lot of cloth diapering women lose track fo the fact that cloth diapering is supposed to be cheaper and go a bit crazy in their desire to build up the “perfect stash” of cloth diapers. One brand, in particular, suffers from this: goodmamas. These diapers are never in stock, but are apparently so gosh darn pretty and perfect that they sell for $35 each on the website, but have been known to be auctioned off for over $100 on other sites. And they have no waterproof outer layer, so you still need a cover.
As for me, I’ve been led astray by various finance blogs (Frugal Babe started it) and decided to make my own damn diapers. It’s touted as easy and a good way for you to learn how to sew. I’ve never sewn in my life, so I figured, hey, why not? I ordered a two patterns from Very Baby ($10.95 each), enlisted the help of expert seamstress Porcupine Kate (I mentioned it to her, and she immediately offered to help–a blessing since my first trip to the fabric store revealed how clueless I was), bought fabric ($26 at one store for a ton of fabric, $82 at another for a ton of diaper cotton, $100 for PUL–the waterproof outer lining), bought velcro to close the diapers with ($25), and off I went!
So far, I’ve cut out 20 newborn diapers: 10 regular cloth diapers, and 10 all-in-ones. I’ll probably make 18 small sized diapers (9 regular, 9 all-in-ones) and then 18 medium sized. I’m going to lay off the large diapers for now, unless I have a lot of extra time because they’re not a huge priority. I’ll show some pictures once we’ve started sewing some.
In addition to these diapers, I also have 3 BumGenius diapers ($35. Two I bought to serve as examples so we know what the final product should look like, one my host family gave me), 2 covers, 1 wool soaker, 6 newborn sized prefolds, 6 infant sized prefolds, and 3 snappis (bought from Green Mountain Diapers for $110). So, so far, cloth diapering has cost me $400. Not quite the savings Babycenter’s calculator was predicting, but I’m pretty sure I bought WAY too much fabric, especially the PUL. Maybe I’ll be able to sell off the rest of it once I’m done making the diapers I need, we’ll see.
My savings will also decrease due to the fact that I’m going to be using coin operated washers. Laundry here costs $1.75 a load, $1.50 to dry. We don’t bother with the dryers–we bought an IKEA drying rack instead. So assuming 2-3 loads of diapers a week, that’s maximum $5.25 a week I’ll be spending on cloth diapers. Maybe Babycenter didn’t count the start up costs of buying cloth diapers in their calculator and only included the washing costs, because it’s not looking that much cheaper at all now!
Perhaps I should become a rabid environmentalist. Then at least if the cost savings don’t add up, I’ll have another feather in my cap for saving Mother Earth, or something like that.
On the plus side, if these diapers hold up well, I can store them and use them on the next kid, which would increase the savings. And, if I decide that 20 newborn sized diapers isn’t enough (and the six additional prefolds aren’t, either), I can always sew more with the excess fabric.
So far, reactions to this have ranged from excited (green libertarian leaning girl at work) all the way down to my dad’s “Good luck.” My sister’s friend is pleased that I’m going ahead with it, but thinks I’m insane for sewing them myself. So does my sister. Hell, so do I. But here we are. Wish me luck, eh?
One of the pharmacy techs at work came up to me the other day to let me know that there was no more toilet paper in the women’s bathroom.
I told her that she should probably go get some old ads or some leaves or something else to use then and she just stared at me until she realized I was joking.
It did get me thinking, however. What with all the bad news we’re getting about the economy pretty much every day (Freddie Mac and Fannie Mae are going to go under, bank runs, etc.) and all the news articles about people cutting back, I started to wonder how poor I would have to get before I would stop using toilet paper and start using old newspaper as they did in the Good Ol’ Days.
Some people have already gone this far and use “family cloth,” which is a pseudonym for “cloth squares we cut up, wipe our nether-regions with, wash, and reuse.” They do it to save the environment, to save money, and because cloth is oh so cushiony. I wonder whether or not it really is cheaper: toilet paper itself is so extraordinarily inexpensive (especially if you buy it on sale) that it would take years for cost of the amount of cloth wipes you would have to buy to equal the cost of the amount of toilet paper. If you compare the cost of the ads you get in the mail ($0.00), it should be clear which way they should go if they really want to save money and the environment (it’s reusing, dammit).
Of course, it didn’t take long for me to hop from wondering when I would stop using toilet paper out of economic necessity to wondering if toilet paper would be deadlast on the list of things I would give up to save money. Which would go first, internet…or toilet paper?
Not to brag or anything, but while reading the personal finance blogs at the beginning of this month, I noticed a lot of them had very extreme dips in their net worth thanks to June being the worst month in stock market history since 1929 (or was it 1934? Eh, whatever), I couldn’t help but think our June was a great month for our net worth. Even though my retirement fund lost quite a bit of value, we more than made up for it in how much value gold gained. I suppose that’s the problem with most personal finance bloggers: they’re too mainstreamed into the idea that all you have to do to retire well is buy index funds and sit on them. Commodities help, too, guys. Besides, I like to think of the small amount of gold and silver we keep on hand as our emergency emergency fund–in the sense of “all of society and government is breaking down, anarchy is ruling the day (not a bad thing if you ask most the people I know) and the dollar is a nice, inexpensive alternative to Charmin.
