Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety. – Benjamin Franklin

Do not take advantage of each other, but fear your God. I am the LORD your God. – Leviticus 25:17

Part I: Laying the Groundwork
Part II: Principles and Strategic Choices

[Again realize, this is all exploratory in nature, and that I am not necessarily advocating this course of action at this point in time. My hope is to gain the wisdom of other voices to see if this avenue is a) fruitful; b) possible; and c) a better way forward than passivity. Some folks may not wish to comment, but can send me feedback via my Facebook mail account.]

The Laffer Curve

As I noted in Part II, the key principle in “going Galt” (or, in the modified manner I’m sugesting – differing from Rand’s philosophy – in which the individual and the church have compassionate roles, while the government should not) is rooted in the Laffer Curve:

The KEY concept to “Going Galt” is to ruthlessly and quickly drive the Laffer Curve down on anything that is taxed.

What this means, practically, is eliminating the activities in your life which add taxes to the public coffers – AND, in deference to our guiding principles, to do so within the confines of the letter of the law.

Most of the taxes collected in America come from one of two sources: Individual Income Tax and Consumption Taxes (Direct an Indirect). The largest source of tax revenue is from individual income tax, and the second and third largest sources are Payroll Taxes and Corporate Income Taxes (which are both passed along to the consumer as increased prices of goods and services). Aside from these, the largest source of individual State taxes is Sales & Excise Taxes (paid directly by consumers at the point of sale).

In examining how to ’starve the beast’, let us first tackle reduction of Consumption Taxes:

Dave Ramsey on Steroids

Everyone, regardless of income level, can help starve the beast by drastically cutting consumption. This hits both Federal and State tax collection (see state-by-state tax chart).

For those of you familiar with Dave Ramsey or Larry Burkett, the basic formula is this: Stop buying stuff and get rid of your debt.

Expounding on this a bit, the basic premise is this: Limit your purchases to only the essentials (food, functional housing, functional clothing, basic utilities) and plow the rest of your money into eliminating consumer debt (first) and long-term debt (second) to become debt-free. Then, invest wisely.

To put this in a “Galt Frame”, consumption might work in some of these ways:

• Stop eating out! Eat only what you’ve prepared at home, preferably around the table with your family (when you’re in), or with a carried meal (when away). Most groceries are not taxed, so they don’t add to the government coffers, whereas when you eat out, state and local taxes are often added to the total bill.
• Stop going to the movies! Wait four or five months and pay $1 at the nearest Red Box (or a subscription to Blockbuster or Hollywood Video or $5-10 subscription to NetFlix) vs. $10/ticket (plus snacks) at the theater. If you want a movie on DVD, get it used on eBay. Hollywood is financially-shaky these days, but unlikely to “Go Galt” (without help), so give them the “help” they need. Even a 5-10% drop in box office receipts will create a panic in Tinseltown.
• Barter- shop Farmer’s Markets or shop via BarterQuest or look for other opportunities for ‘cashless’ transactions
• Go with Hand-me-downs – do your shopping at Goodwill, flea markets, garage-sales, yard-sales, or on eBay.
• Follow Rick Frueh’s advice and “Go Amish!” as much as possible – Do without the newest, prettiest, shiniest technologies. If you sit out upgrading a few years, you’ll likely skip a generation or two of technology and both save money and get more value for your dollar in the end.
• Go Green – Follow the advice of Matt Sleeth (who spoke last year at Mars Hill Bible Church) and Serve God, Save the Planet by minimizing both your purchases and your waste.
• Go Green by Gardening – Plant your own vegetable garden. It is one of the most subversive things that can be done at most any income level. Fresh vegetables, healthy eating, no taxes.
• If it’s double-taxed, multiply it by ten. If something is subject to additional taxes (cigarettes, alcohol, gasoline, sugary soft drinks, etc.) don’t buy any of it – or, if you can’t go cold turkey, imagine it costs 10 times more than it does, and treat it as you would if it were that expensive.
• Don’t Buy a New Car – especially one built by Government Motors. Instead, buy a used car and drive it until its dust. Cars lose most of their value the fastest within their first year, so buying a used car is the best deal. You’re also better off buying your car in a private transaction. If you insist on buying new, get a Ford.
• Don’t Buy a New House – One of the key leading indicators of economic health watched by analysts and reported by the news is “new housing starts”. If you move, chose an already-built home (even if you decide you need to add on to it). The current market has a good number of deals, with the depressed real estate values and foreclosures. Pick something that’s waiting to be moved into.
• Make it a game! Challenge your family to find little ways of both a) identifying ‘hidden’ consumption taxes; and/or b) legally avoiding ways of paying them.
• Buy Clearance – Out of season and ‘clearance’ items have often already been written off, tax-wise, and may include good deals (or alternative ideas for gifts). Woot! (my favorite), Overstock.Com, and clearance tables at the back of stores are good places to check.
• Hunting – If you can hunt, replace all or most of your meat intake with what you kill. Deer & Elk season is currently going on in a number of states – go bag one and freeze it.
• Storage Space - If you have extra freezer space, look into getting a side of beef or a hog or a sheep, and freeze it. Depending on your space, you might need to go in with a friend.

There are hundreds more examples I’m sure we could find. By cutting consumption – or consuming ’smartly’, we actually do three things – we often save money, we avoid paying both direct and indirect taxes, and we create a downstream loss in revenue, which results in lower collection of corporate income taxes (and a loss of jobs, which is also a loss in government revenue and an increase in government social program spending and one step closer to ‘breaking’ the system).

Investing

Before you even think of investing, it is time to eliminate your debt (see the previous section). If you’ve paid off all of your debt, find a good investment counselor who will help you invest, looking toward an environment that will quite possibly be hyper-inflationary (though hopefully not for an extended period, if the breakdown of social spending can occur in a quick, massive collapse, rather than in a slow death-spiral). They will likely steer your toward commodities like precious metals which are typically safer than bonds (and somewhat moreso than stocks – especially if the government were to institute price controls).

For the Rich

For the Top 5% of American households (those making $175K+ per year), which pay 37% of US Income Tax, the key question is how to eliminate your income tax bill. This can be done in a number of ways (best with a financial counselor – who should be told that your short-term goal in 2010-2012 is to minimize income tax), which might include (depending on your current situation):

• Retirement – if you can afford to retire, now is the time. Why push yourself harder, when the beast wants to just consume a higher percentage, if you can afford to stop now?
• A Sabbatical – if you can afford it (particularly by decreasing your consumption level), take a sabbatical and do something you enjoy that doesn’t add to the government’s coffers (see the section on ‘Idle Time’, below)
• Cutting back – cut back your output to just what you need to live from day-to-day (which may free up time for other non-revenue-producing productive, fulfilling activity)
• Restructuring – restructure your investments and work so as to defer earnings out past 2012. If we can get a short-term free-fall in government revenue, it is much more likely that tax rates will plummet after 2012.
• Increased Charitable Giving – increasing your charitable giving will both reduce your tax bill (possibly dropping you into a lower tax-bracket) and help the organizations to which you donate to alleviate some of the (hopefully) short-term discomforts resulting from the collapse of the government’s ever-increasing ’safety net’.
• Changing the Environment – With the internet, physical location is no longer such a key to surviving in the market-place. If you can afford to (as many “rich” folks have already started to do), it is likely time to move yourself to a state (or country) with low (or no) individual income taxes – and/or to move your business headquarters there

The Middle Class

For those who make between $80K and $175K – you pay about 48% of income taxes. Cutting back on your income tax is a bit more difficult, but not impossible. In addition to the suggestions above (if you can afford them), you might consider:

• Adding children – the tax breaks (and programs) available for children take money from the government coffers in the short term (17 years or more), and help the long-term demographic problem in the US set up by the currently lowered birthrate.
• Moving In Together – prior to the Twentieth Century, it was quite common for multi-generational families to all live together under a single roof. There are all sorts of social benefits to the arrangements (assuming there is no insurmountable dysfunction), and a number of living costs can be greatly reduced and taxes avoided.
• Fully Utilize Retirement Plans - Put the maximum-allowed withholding in your 401K or tax-free retirement plan. Even if you need to borrow back from it and pay the tax penalty in the future, the taxes won’t be available in 2010-2012.
• Leveraging Tax Breaks – Look for other tax breaks you might be able to leverage (often suggested by TurboTax and other tax-preparing software) that would decrease your tax bill. Exploit every legal avenue to do so.
• Delay – If you are a small business owner (or thinking about becoming one), follow the current winds – do not expand, do not hire or do not start up, if it is at all feasible. Only do what you need to get by, and look for any tax write-offs you can claim.

The Jobless, Poor and Lower-Middle Class

If you’re making less than $50K/year, you pay about 3% of the Income Taxes collected in the US. There’s not much you can do to impact the tax side of the equation.

However, you can impact the Revenue side of the equation by:

• Exploiting the System – Using any and every government-supplied form of aid available to you – whether you need it or not. [If you can avoid it, leave private aid organizations alone, so that they can be seen as the best providers of social services.] Do not be too proud to do this, and ease your conscience by knowing that it is for a higher cause. The sooner the programs have to be killed off for their expense and unwieldiness, the better.
• Gumming Up the System – If you’ve got a reason to be eligible for government aid, you’ve got the reason and right to meet with government aid workers. The more of their time you can eat up with your myriad of questions, complaints and/or suggestions, the less efficient they will be.

Idle Time and the Church

If, by any of your “Galt-ish” measures, you end up freeing time in your life where you would normally be ‘producing’ – keep your edge (and your sanity) by volunteering to do work in your field of expertise in churches and other aid organizations. If the economy continues to slide (and with the knuckleheads currently running the show in DC, there’s not much hope or change in the near term on the economic front), more and more people will need assistance.

It is vitally important that the best, most efficient sources of assistance NOT be funded by, or created by, the government. This is the time for the Christian Church in the US to put up or shut up. It is not the time to ask the government for assistance in caring for the poor. It is time to do it ourselves. It is not the time to look to the welfare system to feed and house and clothe the unfortunate – it is time for us to do it.

When the social spending system collapses, the church needs to be the source of relief.

“When I shut up the heavens so that there is no rain, or command locusts to devour the land or send a plague among my people, if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then will I hear from heaven and will forgive their sin and will heal their land. Now my eyes will be open and my ears attentive to the prayers offered in this place. I have chosen and consecrated this temple so that my Name may be there forever. My eyes and my heart will always be there.”

The Temple still exists, though it has moved from a fixed location in Jerusalem into the living stones that build the New Temple. Maybe it is time now, and it may well be even more ripe soon, for the New Temple to step forward and fulfill its function and to let Caesar and his nanny state fall into the ash-heap of history…

[In the next article, I will most likely address the specific issue of "Galt-ing" healthcare...]