Monday, April 18, 2016

Vivien Kellems

Said my name is called disturbance
--The Rolling Stones

Vivien Kellems was a Connecticut entrepreneur who, in 1948, refused to collect withholding taxes from her employees on behalf of the government. "If they wanted me to be their agent, they'd have to pay me, and I want a badge."

In her memoir Toil, taxes, and trouble (1952), Kellems described withholding taxes as a clear cut case of involuntary servitude, as an employer is forced to expend resources to collect taxes from employees without being compensated by the government. She demanded that the federal government indict her for refusing to collect withholding taxes so that the constitutionality of the practice could be put before the courts. The Truman administration refused to do so. Instead, the government confiscated the amount due from her bank account.

Kellems subsequently sued and, in 1951, a jury ordered the return of her funds. But the test of constitutionality never came. Sadly, Kellems subsequently surrendered her case when her continued pursuit of the issue threated to bankrupt her company.

Nevertheless, Vivien Kellems continued to challenge aspects of income tax law for the rest of her life. In an interview before her death in 1975 she said, "Our tax law is a 1,598 [now 10,000] page hyrda-headed monster and I'm going to attack and attack and attack until I have ironed out every fault in it." It is reported that for the last ten years of her life she sent only blank returns to the IRS.

Kellems advised that people carefully examine their paystubs and observe how much of their incomes are removed via the withholding function. Kellems, recently joined by Jim Grant, suggested that people minimize the amount withheld and, instead, hold the whole of their untaxed earnings in their hands. Then let the government pluck its taxes on tax day.

"Such a payroll policy," suggested Kellems, "is entirely legal and if it were universally adopted, in six months we would either have a tax revolution or a startling contraction of the budget!"

Thoughtful idea from a true tax revolutionary.

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