Starving the beast

[dpmorel]

I have a number of libertarian friends who are not exactly the most frugal folks around.
The quickest way for folks to "starve the beast" and shrink government would be to take away their revenue.
How would you do that?
1. Pay less income tax - short term, quit your job and start consulting/contracting business. Long term, retire early and not need a job.
2. Pay less sales tax - don't spend!
3. Don't own a monster home where you pay big property taxes
i.e. be financially responsible yourself. Aghast!

[RightClawSouth]

My real worry is that the beast will institute a large federal sales tax or VAT... Given the federal deficit woes many pundits have suggested that this is the case. This would really hammer us ERE folks because suddenly everything is more expensive by x% and unfortunately we do need to spend some money.
I guess the way around that would be more community living, sharing with neighbors, swapping and bartering to avoid generating a "sale".

[dpmorel]

The good news is that tax raises have HUGE political consequences (just ask the no longer existant, formerly dominant Progressive Conservative Party in Canada). Maybe it would actually bring the full scale politician swap out that is needed.

[George the original one]

Buy municipal bonds (or bond funds) that are free of income tax.
I have serious doubts that contracting or owning a business will result in less taxes paid. 2x the social security tax, sometimes a municipal self-employment tax, business license, etc. can easily offset any business-deductibles.

[AlexOliver]

"Buy municipal bonds (or bond funds) that are free of income tax."
But then aren't you feeding the beast by giving it directly to the government?

[George the original one]

AlexOliver - That's a good question, but there's a difference. One is lending the government money, not giving it, by buying bonds, whereas taxation is outright giving. [Technically that giving should be defined as taking <ahem>] It's not really feeding the beast, but it might cause the beast to someday take unintended actions (like printing money or taxing the interest).
Interestingly, by buying federal bonds, I'm not giving the federal government anything, but my state government (Oregon, where we have no sales tax) still takes its cut. If I buy Oregon municipal bonds (we issue a few and a couple of bond funds specialize in them), then even the state would get no share of the interest payments. Thus I can choose whether to cut the state in on my profits or not.
Since I'm currently employed as a local government employee, by buying into these bonds, you might say that I'm the biggest parasite ever created!

[dpmorel]

@george - the big value add for a business is delaying taking your income as salary. The greater your spread between cost & income the more valuable this is. In the ERE world its actually quite invaluable as you can leave the delta between cost & income in the corporation and never get taxed. You can then invest the money from within the corp, leave it in there permanently during your "salaried years" and then take the income out as dividends during your "retired years". I did the math on this in the forums and you could probably shave 1-1.5 years off of the 5 year typical retirement plan doing this.
There is about $1-$1.5k of cost per year plus roughly $500 to setup the corporation... so you are right, there are real costs to consider.

[Ralphy]

@ dpmorel - can you point me to that thread? Haven't found it yet.