In the litany of evils perpetrated by polygamists, one evil stands out above the rest: tax evasion. Feel the chill? Yes, tax evasion.
The crimes perpetrated by [polygamous] organizations include child abuse, domestic violence, welfare fraud, tax evasion, public corruption, witness tampering, and transporting victims across State lines.
[Emphasis added, of course.]
This assertion leads to two questions: First, do polygamists evade paying the taxes they owe more than your average American? And second, if they do, does that derive somehow from their practice of polygamy?
Do Polygamists Evade Taxes More Than the Average American?
Probably. I mean, we can’t know for sure, because (a) individual tax returns aren’t public, and (b) there’s nothing to distinguish the tax return of a polygamist from any other taxpayer’s tax return.
Still, it’s pretty likely that polygamists evade taxes. But not for the reasons that have generally been articulated.
Stephen Singular testified before Congress that “The FLDS openly despises the American Government while taking its money, a tactic they call `bleeding the beast.’”[fn1] Carolyn Jessop testified that “bleeding the beast” meant that “F.L.D.S. members should avoid paying taxes at all costs and should also apply for every possible type of government assistance that is available, whether they are eligible or not.”
How? Among other things, Daniel Fisher testified[fn2] that plural wives file as “heads of household,” which provides for lower tax rates than filing as unmarried.
And that is almost certainly true. But that almost certainly doesn’t constitute tax evasion. As I explain (and appropriately footnote) in Taxing Polygamy,[fn3] they aren’t cheating by filing as heads of household. They almost certainly qualify (as long as they’re unmarried, their children live with them, and they provide at least half the support of their children).
So How Do Polygamists Evade Taxes?
Look, the U.S. has a pretty strong tax compliance rate: we pay roughly 83% of the taxes we owe when we owe them.
But that compliance rate is uneven among different groups. Specifically, people pay 99% of the taxes due on wage and salary income. The compliance rate falls to somewhere around 28% on farm income.
Why the difference? When I get paid my wages, my employer withholds some portion and sends it to the I.R.S. At the end of the year, my employer sends a W-2 to me and a to the I.R.S. If I claim a different amount of wages than the W-2 says, I run a very real, very significant chance of being audited.
But farm income–and, generally, self-employment income—doesn’t come with those same W-2s. To the extent a person is self-employed, or works in the less-formal economy, the lack of information reporting and withholding reduce the costs of underpaying taxes.
And, according to my research, a significant percentage of Mormon fundamentalist polygamists work in the less-formal economy.
To the extent polygamists cheat on their taxes more than the average American, then, I suspect it is less a result of their polygamy and more a result of the types of jobs they do. If, then, we’re really concerned about polygamous tax evasion,[fn4] it seems to me the most effective way to attack it would be to transition polygamists into the formal economy, where their income will be subject to withholding and information reporting.[fn5]
[fn1] Note that the rhetoric of “bleeding the beast,” though more graphically violent, sounds a lot like the Republican goal of “starving the beast.” There are clearly differences—one appears to involve fraud, while the other involves making decisions about the level of taxation to impose. Still, both refer to the federal government as a “beast,” and both think the appropriate way to deal with it is by restricting its funding.
[fn2] (on p. 52)
[fn3] (p. 33)
[fn4] Which we’re not, really. (Note that, by “we,” I mean the various people at the Senate hearings.) Even at the high end estimate of 100,000 fundamentalist Mormon polygamists, that’s not a lot of dollars at stake. Honestly, this argument is largely pretext for further demonizing polygamists. Still, I’m invested in a fair tax system, and I would prefer that all taxpayers–polygamous, monogamous, and single alike–actually pay their taxes.
[fn5] One last thing: this isn’t a brief for returning to polygamy. I’m personally a big fan of the 1890 Manifesto, and accept it as a revelatory end to modern polygamy. But, for these purposes, that’s neither here nor there–in this post, my sole concern is with polygamous tax evasion.