Free Markets, Free People

The American W-4 Party

Brad Warbiany at The Liberty Papers took note of my post about the “tea parties” and “going Galt”, specifically this passage:

I’d be more impressed if they fired a shot across the bow and coordinated a national day for cranking up their withholding allowances, just as high as they can.  They’re planning their next party on Tax Day, right?  One might think they’d be interested in ceasing to lend their earnings interest-free to the government.  They might take some satisfaction in doing something that actually shows up on the government’s ledger.

Not knowing any accountants or tax professionals, I didn’t know just how far you could take that.  But Brad decided it was worthwhile to find out.  He did the legwork, consulted a tax preparer, and wrote up simple instructions for pushing it as far as you can without having to worry about incurring fees or other penalties.

And he has some suggestions for Tax Day:

So here’s my suggestion. April 15th, go to your HR department and change your W-4 claimed exemptions. Go with the maximum exemptions that you calculate will keep you from over-withholding, but small enough to avoid penalties. Budget (save or invest) the difference, so that you can pay the necessary tax next April, and don’t dare postmark the check to them before April 14, 2010.

It’s not a big difference. But if enough people do this, it will be big enough to be noticed. The federal government is expecting to spend your money as soon as it comes in; they’re not expecting to wait until next April to get your money. In fact, if they have to wait, they’re likely to get angry. That’s more money they have to borrow today. That’s more of a functional deficit on their books. In short, if you want to get noticed, a far more effective way than getting some friends together for a group protest is to hit them where it hurts: the balance sheet.

Fellow Americans, it’s time to stop being doormats. If you really want to show the government that you’re angry, it’s far better to show them than to tell them.

Tell your family, tell your friends, tell your blog readers, tell your coworkers. April 15th is the American W-4 Party.

For the full instructions, read the whole thing.

I like it.  I especially like it because of the clarity of the message.  If you email this around to all your relatives and peers, or post it on your blog for your readers, you’re not asking them to embrace the prisons or fire anyone that they employ.  They don’t even have to take the day off of work, which should be a relief to anyone who needs the work to support themselves and their families.

For the price of filling out a W-4 form and turning it in on a Wednesday, they can keep more of their money out of the government’s hands for the next year.  They can invest or save it, saying effectively, “I trust that I can handle my money better than the government would.”

It’s not a revolt.  It’s just telling the government in terms they understand that we’re paying attention and we don’t want to lend them our wealth if they’re going to treat it like they have been lately.  It’s a reminder of where their power comes from.  And the more people who participate, the clearer the message.

36 days ’til April 15.  In the age of social networking, I wonder how many people could get involved in this?

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29 Responses to The American W-4 Party

  • Last time I checked, the rule was that, to avoid a penalty, the total of withholding, quarterly payments and any additional payments you choose to make must equal 100% of the previous year’s tax liability or 90% of the current year’s.  So if your total taxes for 2008 were $12,000, you’d be covered if by withholdings of $12,000 during 2009.  That works out great if you make more money in 2009, because any taxes above $12,000 don’t have to be paid until April 15, 2010.  But if your 2009 income will be less than 2008’s, that $12,000 will likely be more than our 2009 tax bill, resulting in a refund, which, as we know, is an interest-free loan to the goverment.

    Also, you can’t get around this by paying in nothing throughout the year and loading up with a payment on December 31.  The IRS will assess a penalty if you haven’t made at least quarterly payments during the year.

  • When the current adminstration has no qualms about writing checks with no money, I don’t see how this does anything but cause the US government to borrow a little more and pay a little more interest.

    • OTOH, so does any attempt y an individual or a group of individuals to express their displeasure with the government’s spending plans by “going John Galt” or otherwise trying to minimize the amount of taxes they pay.

    • jpm,

      You’re right.  It doesn’t change the amount you legally owe.  But as the government isn’t funded in advance, but rather as-they-go, this might be enough of a change to their revenue stream to get noticed.  This isn’t tax evasion, it’s a tax protest.

      BUT — look at it another way.  Come next March, when you realize you’ve got a $800 tax bill, you might be a bit more incentivized to look for more deductions than if you’ve got a $1000 refund coming your way.  That incentive probably won’t make a huge difference, but it might cause you to search harder and find more ways to reduce that tax burden.

    • jpm,

      That gives me an idea — take the extra money you’re saving and lend it back to the government at interest in short-term T-bills.

      Make them pay you interest for the use of your money!  Even better!

  • Bryan,

    Thanks for the link.

    Diffus,

    The IRS has a calculator, and I think as long as you are within the 90% of 2009’s withholding, you’ll be okay.  From here:

    ““Most taxpayers will have paid enough tax to avoid this penalty if they have paid at least 90% of the tax shown on the return for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.”

    So if you set it to 90% of your expected 2009 tax burden, you should be okay.

    • Yeah, but my problem is and has been that I have no flippin’ idea from year to year what my eventual tax liability will be.  In the last two years, for example, my family has had two layoffs, with accompanying periods of unemployment; that’s always a possibility.  My wife is now an independent contractor and is responsible for the full 15.3% Social Security and Medicare burden — but what if she becomes and employee later in the year?  I don’t know how my investments will do, and whether I’ll have capital gains or losses to report.  What if I decide to sell my house later this year and rent — I’ll lose the mortgage interest deduction, and, with it, all the other deductions that I have, because without mortgage interest, the other deductions won’t exceed the standard deduction.  I understand that Obama wants to limit the deductibility of certain costs associated with oil and gas production, and end the depletion deduction — if that happens, my income goes up by several thousand dollars.

      Unless you can predict your income with a reasonable degree of accuracy and don’t have any taxable investments, coming close to figuring out your prospective tax burden can be very, er, taxing.

      • Diffus,

        You’re right — it becomes MUCH harder for non-salaried folks who are expecting big changes in their taxable income (through job changes, deductions, etc).

        But then there’s another interesting question — how do you know your current withholding is correct?  Are you just withholding based on 100% of 2008 numbers, or are you actively attempting to set it correctly from the start?

        • I’m the accountant/payroll clerk/HR director in my company.  My wife works here, too, as an independent contractor.  Rather than fill out quarterly payments for her, I just withhold on her behalf from my earnings.  I don’t mess with the W-4; I’m just withholding a certain amount from each check.  When I figure my 2008 liability, I’ll adjust that fixed amount so that the end-of-year result is about 100% of the 2008 liability.  I’ll revisit in the fourth quarter based on what I know at the time and see what I can come up with.

  • Man, I’ve been doing both for years already.

  • This is silly. A protest within the narrow confines of the law is not much of a protest. Our forefathers are now laughing in their graves.

    If you want to send a message that you’re PISSED OFF, don’t withhold ANYTHING.  If millions of taxpayers do this, it will be worthwhile.

    • If you want to go straight for the “lives and sacred honor” route, I’m not stopping you.  I mentioned the civil disobedience option in my original “going Galt” post.  This is something more timid souls, who don’t want to flood the prisons, can do.  Right now, the timid are much greater in number, and they’re not used to flexing that protest muscle.

      • Bryan, don’t take too much offense here, but I’ll ask bluntly: are you, or are you not, still going to “catch up” by April 15th on what the feds say you “owe”?

        If you are, then your “protest” amounts to nothing. Just what do you think you’ll accomplish by “postponing” anything? Lack of tax revenue has never stopped the federal government from its real spending. The several so-called “shutdowns” were about budget disagreements on how much to tax and how much to borrow, not an actual lack of revenue.

        Regardless of which party controls what branch, the Fed will simply create more money and buy as many U.S. Treasury securities as needed for the feds to keep spending. This means we all will pay via inflation, on top of taxpayers still catching up at the end. So your efforts amount to little children trying to hold their breath at the dinner table. (Not to say the feds are our rightful parents or guardians, but my point is about the efficacy of your method.) You can “protest” until your faces turn blue, but you’ll still be all paid up by April 15th.

        What difference does it make if your Uncle Sam molests you at 11 p.m. or 4 a.m.? He’s patient. He knows you’ll eventually submit, and he knows that every applicable November, your siblings will always agree with your parents that Uncle Sam can keep coming over with the specific intent of molesting you (if you follow the analogy, I’m saying Americans just keep voting for the representatives and their bureaucrats who will keep taxing us and spending our money).

        Grimshaw is correct. If you want a real protest, then millions indeed must start withholding. This requires a wee bit more resistance than most people are willing to put forth, but that’s what it’s going to take to change the system.

        “We must all hang together, or assuredly we shall all hang separately.” The few, like Wesley Snipes and Richard Hatch, are easily taken out.

      • Let me put it this way, saying nothing more.

        Was the Boston Tea Party at all about postponing buying the tea? How did it get the attention desired?

        • I’m not standing in your way, Perry.  You want a world-historical, revolutionary direct action?  Make it your business to bring it about.

          In the meantime, this just denies them the interest-free loan.  If you take interest and inflation into account, you’re not really “catching up” — you’re actually denying them real wealth.  If withholding didn’t help the government to finance itself, they wouldn’t penalize you for not withholding enough. 

          That’s all.  I’m not expecting it to change everything all by itself.  It’s a protest that goes a step beyond waving signs and sending tea bags to representatives.  It’s something most people can take part in easily, and if enough of them did it, it would show up on the government’s ledger.

          Complaining that the country’s not revolutionary enough yet to bring about sweeping change accomplishes nothing.  Meanwhile, I think this form of protest is likely to do more good than harm.

          Edit - Sorry if any of this sounds snide. I don’t mean to cause offense.

          • No offense taken. The problem begins with your notion that government has any money or wealth of its own. It doesn’t. Government is merely your neighbors deciding how much of your wealth to spend and what to spend it on.

            Government by its very nature couldn’t care about any inflation or interest payments. It’s rarely a political one (only when candidates thump their chests) and never an economic issue. You pay any interest and any higher prices from inflation. GWB, Obama, Chuck Schumer et al have no reason to care a whit about what government spends, because eventually it comes out of other people’s pockets.

            There will come a time when those who believe in real liberty will take a stand, a real stand. Until then, pick your battles carefully. It makes no sense to expend effort to run in place.

          • Perry,

            The problem begins with your notion that government has any money or wealth of its own. It doesn’t. Government is merely your neighbors deciding how much of your wealth to spend and what to spend it on.

            First, a point of correction: government is not my neighbors.  It’s representatives of my neighbors, and a thousand bureaucracies, whose ignorance of my neighbors’ values and beliefs is extensive.  In turn, my neighbors know very little about those representatives and bureaucracies.  Their ignorance of government, and what it costs them, plays very heavily in the course of events.

            And whatever you say about the government, it expressly does have money of its own, and the question of whether it has wealth of its own has no force as an objection to my argument.  Government’s range of action is restrained by how it finances itself.  Those running the government are not indifferent to whether they get a nominal amount of money now or next April.

            Government by its very nature couldn’t care about any inflation or interest payments. It’s rarely a political one (only when candidates thump their chests) and never an economic issue. You pay any interest and any higher prices from inflation. GWB, Obama, Chuck Schumer et al have no reason to care a whit about what government spends, because eventually it comes out of other people’s pockets.

            First, it’s strange that you just got done telling me that government is my neighbors, and then turn around and say that government doesn’t care about inflation or interest. Do my neighbors not pay these costs, too?

            After painful bouts of inflation (see: unanticipated inflation due to LBJ trying to pay for the Great Society and Vietnam at the same time, or 1973-1982), the government made clear efforts to keep inflation low and stable for the last few decades.  They did this despite the fact that inflation yields them seignorage.  I’m open to explanations for that behavior, aside from the political costs visited on officeholders.

            There will come a time when those who believe in real liberty will take a stand, a real stand. Until then, pick your battles carefully. It makes no sense to expend effort to run in place.

            I appreciate you trying to save me the effort.  You can keep waiting for that time to come, although from the way you’re talking about it, I wonder when you expect that to happen.  In the meantime, I’m going to see what I can do.

          • I think I already answered these in a reply before today, and I already answered several of your points in my last reply. Ever since the switch to the new site, there’s something about posts’ individual pages that is making IE work very slowly. However, I did want to bring up a few more things:

            “First, a point of correction: government is not my neighbors.  It’s representatives of my neighbors,”

            They’re the very same thing. Thus a certain number of your neighbors believe they have the right to redistribute your wealth, and from them come the “representatives” who are voted in.

            Put mathematically: A is comprised of the whole people, B is state-worshippers who derive greater economic benefit from government than they pay in taxes, C is the ultra-rich like Soros who don’t mind wealth redistribution, D is elected officials who redistribute wealth, and you and I (economic producers who do mind our wealth being redistributed) are E.

            B, C, D and E are all subsets of A; none of the subsets are equal to the whole.

            B and D do not overlap each other, but C overlaps them. None of them overlap E. Thus B+D+E=A, with C being part of B+D.

            “and a thousand bureaucracies, whose ignorance of my neighbors’ values and beliefs is extensive.  In turn, my neighbors know very little about those representatives and bureaucracies.  Their ignorance of government, and what it costs them, plays very heavily in the course of events.”

            Voters, that is the majority who support the government, don’t need to know what specific bureaucracies exist. That is, not in order to keep voting in the “representatives” who will continue the bureaucracies. Whenever there’s an election, they need only know that the government is taking care of them with “Part D,” “No Child Left Behind” or some other name that’s easy to swallow. So government will institute “programs” and “agencies” (i.e. redistribute wealth) that will keep a majority of people happy, so long as it’s only the minority who grumbles about the cost.

            Example: my neighbors are the same ones who complained on the news about $4.50/gallon gas (it peaked at $4.64 in my area) yet at the very same time last year “approved” $109 million for the local school district’s budget — that’s just for this year.

            “Government’s range of action is restrained by how it finances itself.  Those running the government are not indifferent to whether they get a nominal amount of money now or next April.”

            As I explained above, the federal government has no need to worry. Even state governments don’t have to worry now. They’re just getting money from the feds! But where does the money come from in the first place? YOU and ME.

            Government is our neighbors coming to us and saying, “Give us of your substance, for we have desire to spend it on what we want. Give us, or else.”
            Imagine this: everyone (ha) ceases ALL withholdings, with the idea of paying taxes only on April 15th. What would happen?

            Fiscal emergency, oh no! But wait, right? So the Federal Reserve will print as much money as the Treasury needs to spend. The Treasury could create a special one-year note (or however many months remain until April 15th), payable once the taxes are in. That would be HUGELY inflationary, of course. Yet that never stopped Western governments before, particularly Great Britain and Spain, when they needed war financing.

            Withholding was not invented until 1862, and even in very limited form (federal employees only). Withholding for nearly everyone didn’t start until 1943. How did the federal government cope before then? It had to make do, that’s all, and that’s why the federal government’s greatest expansion didn’t come until after the introduction of automatic withheld taxes.

            In fact, the very reason withholding was introduced was the fear that with Roosevelt’s tax hikes, Americans wouldn’t put enough aside to pay taxes when due. That’s how it should work, though. Paying taxes ought to hurt so much, like a finger being lopped off, instead of slight pinpricks that you stop noticing.

            Remember when you got your first job and noticed how much was taken out? Now how do you react when an even greater percentage is stolen from you? Most Americans don’t even know how much is withheld to say, “Oh well.”

        • Perry,

          There was a long time and a lot of work by folks like Samuel Adams in between the days of the Stamp Act in 1765 and the Boston Tea Party in 1773.

          We’re at step 4.  You’re looking for the roadmap from this to step 1264.  Frankly, I don’t have that roadmap worked out yet.  But isn’t this a potentially good start?  This is a way to get ordinary Americans — the sort who don’t have the same leanings you or I do — to start acting in meaningful ways in order to work against the government.

          In the grand scheme of things, it’s not going to reduce the amount of money owed to the feds.  But come April 15, 2010, do you not think that anyone who takes part in this will think long and hard when the time comes to write that check?  That’s the point.

          • Things did simmer for several years, Brad, but over a much lower tax. Thus the colonists could be outraged over the principle of paying three pence per pound of tea (I can’t remember if it’s $2 or $3 that it’s been compared to today), all so the Crown could collect revenue to repay its debts incurred by fighting a war the colonists neither wanted nor needed.

            For us in modern times, it’s been a hell of a lot longer than eight years, and the issue is a hell of a lot bigger than a few bucks per pound of some common grocery item. Withholding taxes is an empty threat and will not accomplish anything meaningful. It gets attention, as I said, as well as a child holding his breath at the table.

  • “That’s more money they have to borrow today. That’s more of a functional deficit”

    Doesn’t this mean in the end its going to cost us more anyway. A finance charge so to speak. You know Obama is going bold, so I don’t see this bothering him one bit.

    I agree with this in principle, but in the end it has a liberal feel about it. That they he’s talking about is us. It makes me feel good now, it will cost me later.

    • If you save or wisely invest the money, you can earn a return on it. (If you know what you’re doing, you can pay down any debts you may have to earn an economic return.)  You might even help create or preserve a private-sector job.  If you give it to the government, they’ll blow it on the usual garbage.

      Yes, if we assume that the government will spend the same exact amount no matter how much we protest and no matter the interest rate at which it borrows, then we will indeed have to pay the extra borrowed money back with interest eventually.
      But if that’s what you’re thinking, then logically we should be sending as much money to the government as possible, right now, to avoid paying the piper later.

      • “If you save or wisely invest the money, you can earn a return on it. (If you know what you’re doing, you can pay down any debts you may have to earn an economic return.)  You might even help create or preserve a private-sector job.  If you give it to the government, they’ll blow it on the usual garbage.”

        The same could and should be said about any tax money that the government so “graciously” lets you keep.

        “But if that’s what you’re thinking, then logically we should be sending as much money to the government as possible, right now, to avoid paying the piper later.”

        Actually, that is correct — provided you’re looking to satiate the beast with the most efficiency. I am looking to destroy it completely, as the evil overlord of our lives that does not have my consent to rule me. You, well, I hope you realize that you’re trying to starve the beast by making it skip a meal, except that its next meal will be doubled (or more) to make up for it.

        • The beast analogy is obscuring more than it’s revealing, so let’s be plain.  Americans hate tax hikes.  Those who wish to hike taxes in this country make every effort to delay, cloak, and selectively target their tax hikes to minimize the backlash, but when financing their activities requires big adjustments, they have to go after a broader group of people, a little bit harder.  That comes with political costs.

          I want to incur costs on those who work to expand the government, and I believe the long-term danger is much greater from the Left than the Right.  I don’t want to stand aside while they make extensive, entrenched policy gains.  I want to maximize the opportunity for structural change, which I believe is possible.  I recognize that this work can start without waiting for everyone to share my ethics or my politics.  And so I actually get involved in the messy politics.

          I understand those who won’t get out of bed for anything less than a revolution, but I don’t sympathize.  Do you have more constructive advice for those who don’t believe in lasting anarchy?

          • “The beast analogy is obscuring more than it’s revealing,”

            Why not? It in fact is a perfectly accurate analogy, insofar as taxation and every other case. OK, so let me put it plainly for you, as I already have. You’re thinking that you’ll deny a bit of money to the government for now to get some attention, but one more time, it won’t do a thing. The feds will simply borrow, so in the end you’re paying the same amount anyway, plus any interest.

            You’re aware, I’m sure, about the occasional “Don’t buy gasoline on this day” protests? Don’t buy gas on some Monday or whenever, supposedly to sock it to the oil companies. Same thing: the oil companies, refineries and stations aren’t affected in the end, because their sales are still the same. The protest about not buying gas doesn’t include anything about “And don’t drive your car.”

            So, do you really think that Obama and Congress care how much money is actually coming in? They don’t. Certainly they’ll look at the numbers when doing the budget, but in the end the only numbers that matter are how much they want to spend. Even Geithner, in charge of the whole collecting operation, cares only to the extent of selling enough bonds to cover the deficit. It’s easy for them to do. It isn’t their money to worry about.

            Now here’s something else for you to consider. Look at what’s happening in NYC, New York state, and especially California: the recession has hit tax receipts, but the politicians largely want to continue spending at the same level anyway.

            “so let’s be plain.  Americans hate tax hikes.”

            Well, only those who don’t pay them, for the most part. Half of the eligible voters have little or no tax liability whatsoever, and the vast majority of tax revenue comes from the top quintile.

            Most of that half that pays noticeable taxes might say they don’t like high taxes, but talk is cheap. It’s their actions in the voting booth that tell us what they really believe. How did Obama get elected? How does Nancy Pelosi keep getting sent back?

            “Those who wish to hike taxes in this country make every effort to delay, cloak, and selectively target their tax hikes to minimize the backlash, but when financing their activities requires big adjustments, they have to go after a broader group of people, a little bit harder.  That comes with political costs.”

            Sure, this is true.

            “I want to incur costs on those who work to expand the government,”

            But reducing your withheld taxes isn’t going to make tax-hikers and their supporters incur any significant costs at all.

            “and I believe the long-term danger is much greater from the Left than the Right.  I don’t want to stand aside while they make extensive, entrenched policy gains.”

            Agreed.

            ” I want to maximize the opportunity for structural change, which I believe is possible.  I recognize that this work can start without waiting for everyone to share my ethics or my politics.  And so I actually get involved in the messy politics.”

            You can’t defeat this system by working within it. To be successful in politics, you’ll end up compromising and going backward as much as going forward. That’s why liberals love compromise.

            You might find this just semantics, but I don’t want to maximize opportunity. I want to maximize success. And I see no opportunity for success by working within the system.

            “I understand those who won’t get out of bed for anything less than a revolution, but I don’t sympathize.  Do you have more constructive advice for those who don’t believe in lasting anarchy?”

            Sure, the same as I gave before. Don’t keep expending effort to run in place. Whatever you do must be meaningful and cost the enemy more than it costs you.

            When a few resist by not paying taxes, the greater cost is to them. When so many resist by not paying taxes that they cannot all be punished, the greater cost is to government. The colonists won because they refused to submit at all, not because they postponed paying taxes.

  • “First, a point of correction: government is not my neighbors.  It’s representatives of my neighbors, and a thousand bureaucracies, whose ignorance of my neighbors’ values and beliefs is extensive.  In turn, my neighbors know very little about those representatives and bureaucracies.  Their ignorance of government, and what it costs them, plays very heavily in the course of events.”

    Mmm, this is coming down to semantics. Government is your neighbors, at least some of them, in that they band together and declare themselves a “government” so they have a basis of authority to seize your property. You may have other neighbors who share your ideals about limited government, but ultimately any “government” is a social construct of some people to rule others.

    “And whatever you say about the government, it expressly does have money of its own,”

    Cough, no. Where, then, did this money come from? Money no more belongs to the government than stolen goods belong to a thief.

    “and the question of whether it has wealth of its own has no force as an objection to my argument.”

    You state this but offer no reasoning for it, and the fact that government has no wealth of its own is not separate from the fact that government has no money of its own.

    “Government’s range of action is restrained by how it finances itself.  Those running the government are not indifferent to whether they get a nominal amount of money now or next April.”

    You haven’t been paying attention to the last year, have you? If the feds were so “not indifferent” as you think, they wouldn’t have passed the bailouts or stimulus or the new omnibus spending bill. There isn’t enough money in the world to borrow (there isn’t enough that lenders are willing to lend, to be more specific), so the Federal Reserve has been buying U.S. Treasury securities like mad. The overt reason has been so it can drive down mortgage rates, including 30-year rates. It’s a cover story so the common American voter won’t realize how much new money is being created.

    “First, it’s strange that you just got done telling me that government is my neighbors, and then turn around and say that government doesn’t care about inflation or interest. Do my neighbors not pay these costs, too?”

    Only you and others who pay taxes. You have plenty of neighbors who do not. Roughly half of them have little or no tax liability, and they are the ones who most enjoy what government has to offer. They have the same voting power you do: the same ability to walk into a booth and anonymously wield a sword over you, unless you hand over a certain amount of your property at a certain time.

    “After painful bouts of inflation (see: unanticipated inflation due to LBJ trying to pay for the Great Society and Vietnam at the same time, or 1973-1982), the government made clear efforts to keep inflation low and stable for the last few decades.  They did this despite the fact that inflation yields them seignorage.  I’m open to explanations for that behavior, aside from the political costs visited on officeholders.”

    Inflation and the resulting malaise turned out to be the political football of the 1970s, culminating with the 1980 election. Whichever candidate was believed more would win, but of course Reagan hardly slowed the growth of federal spending.

    Then after the U.S. economy came out of the 1981-1982 recession so strong that it began to attract sufficient foreign investment for Congress to borrow, rather than turning to the Fed. Similarly, while China’s cheap exports have helped keep U.S. pseudo-inflation low, what’s more important is that China’s massive purchase of our Treasury securities has helped keep true inflation low. That’s no longer the case.

    “I appreciate you trying to save me the effort.  You can keep waiting for that time to come, although from the way you’re talking about it, I wonder when you expect that to happen.  In the meantime, I’m going to see what I can do.”

    I’m merely engaging in dialogue with you and am not trying to save you from anything. You are your own person; feel free to take action as you see fit, so long as you don’t harm me. I’m just saying to save your strength for when the time is right.

    There’s a movie line I like to quote on this subject: “Storm’s coming.” (And for those who don’t know me and are wondering, despite my surname of German origin, I’m no neo-Nazi and have nothing to do with Stormfront.)

    • Mmm, this is coming down to semantics. Government is your neighbors, at least some of them, in that they band together and declare themselves a “government” so they have a basis of authority to seize your property. You may have other neighbors who share your ideals about limited government, but ultimately any “government” is a social construct of some people to rule others.

      Yes, it’s coming down to semantics.  You’re oversimplifying to tell a nice story.
      I tolerate government insofar as I have to to achieve other ends.  I accept government roughly insofar as it minimizes force and fraud, including that perpetrated by the government.  That seems to me like a fair basis of authority regardless of what they call themselves.  If that’s still “ruling”, then that takes the sting out of your statement.

      “And whatever you say about the government, it expressly does have money of its own,”

      Cough, no. Where, then, did this money come from? Money no more belongs to the government than stolen goods belong to a thief.

      Then none of your dollars belong to you, either.  After all, the Bureau of Engraving and Printing had to use wealth seized from others to produce that money.  Just because you traded your wealth/labor/whatever for those dollars, doesn’t mean you own them.

      “and the question of whether it has wealth of its own has no force as an objection to my argument.”

      You state this but offer no reasoning for it, and the fact that government has no wealth of its own is not separate from the fact that government has no money of its own.

      I did offer reasoning for it, right after I said it.  Read for comprehension.  Whether or not the government has wealth of its own has no bearing on my argument that government cares about inflation or interest payments; my argument is that their range of action is restricted by how they finance their activities.  If they were totally indifferent to borrowing vs. getting paid now, the deficit would have been a much bigger issue long before now.  (This also applies to your next point.)  And again, the government does have money of its own.

      “Government’s range of action is restrained by how it finances itself.  Those running the government are not indifferent to whether they get a nominal amount of money now or next April.”

      You haven’t been paying attention to the last year, have you? If the feds were so “not indifferent” as you think, they wouldn’t have passed the bailouts or stimulus or the new omnibus spending bill. There isn’t enough money in the world to borrow (there isn’t enough that lenders are willing to lend, to be more specific), so the Federal Reserve has been buying U.S. Treasury securities like mad. The overt reason has been so it can drive down mortgage rates, including 30-year rates. It’s a cover story so the common American voter won’t realize how much new money is being created.

      And you still don’t think they’re restrained by how they finance themselves?  Look, what the federal government is doing now is going to come with political costs.  The more tricks they pull trying to finance themselves without revenue, the more damage they cause, the more people they anger.  We could be on the verge of a sovereign debt crisis.  Ask yourself why the feds only now started spending quite those massive sums of money, if it’s all upside for them.

      “First, it’s strange that you just got done telling me that government is my neighbors, and then turn around and say that government doesn’t care about inflation or interest. Do my neighbors not pay these costs, too?”

      Only you and others who pay taxes. You have plenty of neighbors who do not. Roughly half of them have little or no tax liability, and they are the ones who most enjoy what government has to offer. They have the same voting power you do: the same ability to walk into a booth and anonymously wield a sword over you, unless you hand over a certain amount of your property at a certain time.

      First, you’ve conceded the point that I have neighbors who do pay those costs.  Let’s reflect on what that means for your original statement that “Government is merely your neighbors deciding how much of your wealth to spend and what to spend it on.”

      Second, everyone pays taxes of some kind, even if their income tax liability is zero — or negative, thanks to refundable credits.  Whether it’s payroll taxes (including those paid by their employers that essentially come right out of their checks), sales taxes, taxes on their phone bills, seignorage, or taxes baked into the costs of the goods and services they buy, everyone pays.  Nobody’s fully aware of the costs, so they’re not as price-sensitive to government as they would otherwise be.

      And let’s be spare with metaphors, shall we?

      Government by its very nature couldn’t care about any inflation or interest payments. It’s rarely a political one (only when candidates thump their chests) and never an economic issue. You pay any interest and any higher prices from inflation. GWB, Obama, Chuck Schumer et al have no reason to care a whit about what government spends, because eventually it comes out of other people’s pockets.

      “After painful bouts of inflation (see: unanticipated inflation due to LBJ trying to pay for the Great Society and Vietnam at the same time, or 1973-1982), the government made clear efforts to keep inflation low and stable for the last few decades.  They did this despite the fact that inflation yields them seignorage.  I’m open to explanations for that behavior, aside from the political costs visited on officeholders.”

      Inflation and the resulting malaise turned out to be the political football of the 1970s, culminating with the 1980 election. Whichever candidate was believed more would win, but of course Reagan hardly slowed the growth of federal spending.

      Then after the U.S. economy came out of the 1981-1982 recession so strong that it began to attract sufficient foreign investment for Congress to borrow, rather than turning to the Fed. Similarly, while China’s cheap exports have helped keep U.S. pseudo-inflation low, what’s more important is that China’s massive purchase of our Treasury securities has helped keep true inflation low. That’s no longer the case.

      Is this a roundabout way of conceding that inflation comes with political costs?  Because even if the government can borrow to keep inflation low, why didn’t they print a bunch of money anyway to collect the seignorage?

      “I appreciate you trying to save me the effort.  You can keep waiting for that time to come, although from the way you’re talking about it, I wonder when you expect that to happen.  In the meantime, I’m going to see what I can do.”

      I’m merely engaging in dialogue with you and am not trying to save you from anything. You are your own person; feel free to take action as you see fit, so long as you don’t harm me. I’m just saying to save your strength for when the time is right.

      If I cared to wait for a revolution, I’d be more worried about atrophy than exhaustion.

      • “Yes, it’s coming down to semantics.  You’re oversimplifying to tell a nice story.”
        Hardly. If you can’t understand my parable, then you don’t understand the basic concept: government is all about your neighbors, at least some of them, banding together and seizing your property by force, because you won’t give it up voluntarily.
        If anything, your advocation of this “resistance” makes things overly complicated by having people figure out their estimated liability, comparing it to last year’s, filing a new W4, etc. So I’m telling you that what you’re doing will have no beneficial consequence for you. Go ahead and do it, but don’t say I didn’t warn you.
        Actually, I should care. Your efforts are more likely to backfire than succeed, which means I could well be paying for the consequences of your failure. The government reaction will probably be to close what it deems a “loophole,” and require more to be withheld than estimated liability.
        “I tolerate government insofar as I have to to achieve other ends.  I accept government roughly insofar as it minimizes force and fraud, including that perpetrated by the government.  That seems to me like a fair basis of authority regardless of what they call themselves.  If that’s still “ruling”, then that takes the sting out of your statement.”
        Go ahead, show me a government that does no more than “minimize force and fraud.”
        It’s fine when a community of people come together in a purely voluntary association, where a man doesn’t have to “contribute” into the common pot any more than he wants. But that isn’t what happens. The successful producers don’t want to participate in something that doesn’t benefit them sufficiently for what they put in. So the rest of their neighbors use whatever force is
        “Then none of your dollars belong to you, either.  After all, the Bureau of Engraving and Printing had to use wealth seized from others to produce that money.  Just because you traded your wealth/labor/whatever for those dollars, doesn’t mean you own them.”
        Which in fact is one more way that government makes criminals of us all, although you ignore the point that the government seized MY wealth in the first place to create dollars that I use. If I had no tax liability, I’d be committing the immoral act. But I personally am being sinned against, not sinning.
        Furthermore, you’re confusing printed dollars with the underlying property, which is what money represents. Any form of money, that is, whether it’s paper, gold or large rocks.
        “I did offer reasoning for it, right after I said it.  Read for comprehension.  Whether or not the government has wealth of its own has no bearing on my argument that government cares about inflation or interest payments; my argument is that their range of action is restricted by how they finance their activities.”
        You’re ignoring my point and accusing me of ignoring yours. Don’t be such a hypocrite — try reading MY points for comprehension, bub, instead of separating them.
        My point (all long, no less) is that because government has no money or wealth of its own, it doesn’t have to be restricted by what you’re paying in taxes. That’s why your argument is true in an absolute sense, but it isn’t what happens.
        Because of central banking, whether here or Zimbabwe, government doesn’t need to worry about how it finances anything. How can Obama present $4 trillion in spending and not bat an eye? How can Bernanke and Bill Dudley sleep at night after how much they inflate the money supply?
        “If they were totally indifferent to borrowing vs. getting paid now, the deficit would have been a much bigger issue long before now.  (This also applies to your next point.) 
        Come on, deficits have been an issue for decades. Even Franklin Roosevelt campaigned in 1932 on the need for .
        “And again, the government does have money of its own.”
        And again, that’s claptrap. Government can print whatever it calls “money,” but it has no REAL MONEY except what it takes from people.
        So answer this: what money is the federal government spending right now? Where did it come from? It’s no more “its money” than what a thief is caught stealing belongs to the thief.
        “And you still don’t think they’re restrained by how they finance themselves?”
        As I’ve been saying over and over, there are NO RESTRICTIONS in a country that operates under central banking.
        “Look, what the federal government is doing now is going to come with political costs.  The more tricks they pull trying to finance themselves without revenue, the more damage they cause, the more people they anger.
        That’s a lot of assumptions there. But what do these “angry people” do? They’ll still pay up by April 15th.
        So keep protesting, but in the end you’ll still pay your taxes. Keep holding your breath at the dinner table, but government knows you’ll still eat your vegetables. Can you really not see this?
        “We could be on the verge of a sovereign debt crisis.  Ask yourself why the feds only now started spending quite those massive sums of money, if it’s all upside for them.”
        We already have been in a debt crisis from Social Security and Medicare, remember. The bailouts have merely hastened things along.
        The feds are spending all this money because most of the American people don’t care. They didn’t care during the New Deal and kept re-electing that SOB Roosevelt, why should they care now?
        One of my old college buddies, good Christian fellow and all that, told me just the other night that he was surprised I oppose the stimulus, because “it means jobs.” He’s about the last person I expected to be on the side of big government (Protestant work ethic and all that).
        You might think it’s bad now, but there was a lot more hubbub during the Bush years about the deficits he approved — ironically by the liberals who are silent now. A perfect example is Paul “We’re headed for a fiscal crisis” Krugman.
        “First, you’ve conceded the point that I have neighbors who do pay those costs.”
        Uh, I never argued otherwise. But you, I and our neighbors who pay the costs of this thing called “government” are among the relative few.
        I guess what confused you was when I said “neighbors,” you took it to mean “everyone else but me.” And I never meant it that way.
        “Let’s reflect on what that means for your original statement that “Government is merely your neighbors deciding how much of your wealth to spend and what to spend it on.””
        Or as Bastiat put it, “The state is that great fiction by which everyone tries to live at the expense of everyone else.”
        If government is not spending your money and mine on things that other people want, then what is it doing? Tell me how Milton Friedman was wrong.
        “Second, everyone pays taxes of some kind, even if their income tax liability is zero — or negative, thanks to refundable credits.  Whether it’s payroll taxes (including those paid by their employers that essentially come right out of their checks), sales taxes, taxes on their phone bills, seignorage, or taxes baked into the costs of the goods and services they buy, everyone pays.  Nobody’s fully aware of the costs, so they’re not as price-sensitive to government as they would otherwise be.”
        For the vast majority of the American people, their share of government spending is GREATER than the sum of all taxes they pay. That is the point.
        “And let’s be spare with metaphors, shall we?”
        Why? Mine are perfectly apt, and you seem to need some other way to comprehend things.
        “Is this a roundabout way of conceding that inflation comes with political costs?”
        Not “roundabout” by any means. I’m only showing you that your concern about “political costs” still did nothing to reduce the size of government. Different party, same crap.
        “Because even if the government can borrow to keep inflation low,”
        I think you’re confusing the two here. When the Federal Reserve (or any other central bank) creates money for the Treasury to borrow, that’s inflationary because it’s increasing the supply of dollars.
        When we sell U.S. Treasury notes or bonds to China, China’s government can’t print new dollars to buy our Treasury securities. But it can use dollars that it earned by selling us lots of Chinese-made products. This is NOT inflationary, because it didn’t increase the supply of dollars (it’s an economic law that the dollars must eventually come home anyway). We’ve borrowed so much from China, Japan, South Korea, the UK, et al, so the Treasury didn’t need the Fed to create more dollars. Therefore inflation didn’t go up as it otherwise would have.
        I said that China’s exports helped keep “pseudo-inflation” low, in that it kept overall prices low. Inflation is poorly defined as a general increases of prices; that’s not accurate. Inflation is a monetary phenomenon, no more. However, if the central bank is creating 5% inflation, and Americans buy an increasing percentage of cheaper foreign-made goods, then overall prices do not go up as much as true inflation.
        “why didn’t they print a bunch of money anyway to collect the seignorage?”
        That’s just the thing. The Federal Reserve, especially now, holds tremendous quantities of federal government debt. Ask yourself: where is all the interest going?
        Supposedly it’s remitted back to the Treasury, less the Fed’s operating costs, which is impossible. It would be reflected in our debt service payments, and it isn’t.
        Once you realize what’s really going on with the Fed, what has been going on for nearly a century, you will be enlightened.
        “If I cared to wait for a revolution, I’d be more worried about atrophy than exhaustion.”
        Simple: keep yourself strong, and vigilant. Every soldier, samurai, marksman, whoever, practices for the time that the skills will be needed. And pray that your flight is not in winter.