20/20: Give Me A Break

Jan. 26 -- Tax protester Irwin Schiff gives seminars that teach people how to avoid paying taxes and not get in trouble with the IRS.

"There's nothing in the Internal Revenue code in the law that requires you to pay income taxes," he says. Schiff claims that when you trade your labor for a paycheck, it's an even trade, so you owe no taxes. Since 1993 he's filed a zero tax return and the government, he says, has left him alone. And he says he's taught thousands to do the same.

The IRS would not comment on Schiff's scheme, but tax specialists told us his theory is nonsense, and eventually these people may have to pay tax penalties. Some may go to jail.

I sure won't do what Schiff recommends. And it's not right that a tiny slice of the population should get away with not paying. I'm tempted to say, "Give me a break" to Schiff, except he didn't create this problem. The U.S. government did.

Government today runs trains, subways, schools, parks, public housing, welfare, Medicare, Social Security and a war on drugs. It subsidizes students, farmers, Indians, researchers, volunteers, small businessmen, rich businessmen, and even performance artists.

Schiff says he doesn't mind taxes in theory, but there is a limit to what he will pay for."The government is just gone outrageous, it's just grown like Topsy, like a huge hemorrhoid," Schiff says.

Today Americans, on average, do pay more in taxes than they pay for food, clothing, and shelter, combined. They are taxed on almost everything: income, property, airline tickets, the list goes on and on.

Adding insult to injury, just complying with the tax is a nightmare. The U.S. tax code and regulations are 46,000 pages of fine print. A former IRS commissioner admitted that the code is an "impenetrable maze…unintelligible to most citizens."

As a result, most of us have to pay someone to get help filing our tax returns. The Tax Foundation says each year Americans spend $125 billion dollars just to fill out the forms. That's a lot of lawyers and tax accountants struggling in dreary little cubicles. The IRS says Americans spend 6 billion hours a year doing this. Think of all the better things these people and you could do with your time if you weren't wasting so much time complying with the tax laws.