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Scientific American

Sovereign Insanity

published November 2013 | comments (34)
How weird beliefs can land you in jail
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When I was in college, my friend and I attended a tax seminar in which we were told that paying taxes was unnecessary because the Sixteenth Amendment—empowering Congress to levy an income tax—was never legally ratified. After a long and detailed history of the IRS, we were advised not to file a tax return and given instructions on what to do and say when the feds come a-knockin’. The slick presentation seemed internally coherent and logically plausible in the room, but later, after some reflection, I figured it couldn’t possibly be true because no one would pay taxes if it were. In contrast, my friend went for it and got away tax-free for years, until the IRS caught up with him and he got his comeuppance.

I was thinking about this incident in August, when I appeared as an expert witness on the psychology of why people fall for such schemes in a Portland, Ore., court in the case of USA v. Miles J. Julison, a house flipper who neared financial ruin after the housing-market meltdown. That year he reported $583,151 in “other income” to the IRS on his tax return, claiming that the entire amount was withheld as income taxes. Submitting eight IRS 1099–OID (Original Issue Discount) forms, Julison requested a refund of $411,773. (According to the IRS, an “OID is a form of interest. It is the excess of a debt instrument’s stated redemption price at maturity over its issue price.”) The IRS sent him a check in that amount, which he spent on a home loan, personal debts, a car and a boat. Emboldened by his success, the next year he demanded a refund of more than $1.5 million. This time, however, instead of a refund check he got a trip to court and, after a guilty verdict, jail.

This particular tax scam is popular among tax resisters with a conspiratorial bent, especially those who call themselves sovereign citizens, who hold that the U.S. government is actually a corporation, not a country, and that there is a secret account bearing, say, $1 million for every child born in the U.S. Sovereign citizens believe that this money should be “redeemed” to them and that the 1099-OID is one tool among several to get it. Sovereign citizens believe that they are not subject to federal jurisdiction, do not recognize government currency (gold is popular among such far-right groups) and, of course, that taxation is illegitimate. The FBI labels them a domestic terrorist threat, and the Southern Poverty Law Center estimates there are about 100,000 “hard-core sovereign believers.”

As a self-proclaimed sovereign citizen, Julison did not recognize the court’s right to try him and refused to work with his court-appointed lawyer, who urged him repeatedly to plead guilty for a reduced sentence in the face of overwhelming evidence against him. Instead, as it shows in court records, he kept repeating variants on “I, Miles Joseph, a bond servant of Jesus Christ, can only take an oath to Jesus Christ, as he has bought and paid for me by the blood of the lamb. And anything else, any other oath would violate the religious dictates of my conscience. And I continue to reserve all of my rights without prejudice.”

During a lunch break, when we were alone, I asked Julison if he really believes all these sovereign citizen claims or if he was just in it for the money. “The United States is a corporation in the state of Delaware. I have their registration papers printed right off their Web site. Before anything can be argued, there has to be a jurisdiction established,” he responded. “So my description of you as a true believer is true?” I queried. “I believe in the blood of the lamb,” he responded biblically.

A number of social and psychological factors are at work in the creation of a true believer, most notably the authority of a leader, the influence of others engaged in the scheme and especially the reinforcement by the government itself in the form of a refund check. The take-home lesson is that if it sounds too good to be true … leave it off your tax return.

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34 Comments to “Sovereign Insanity”

  1. Joe Says:

    This article makes absolutely no sense. It is culture and the idea of government, aka coercive force and control that is in the wrong. Humans want to be free, so basically you are against freedom. It is society that is sick, not these individuals.

  2. Robert Says:

    Joe, I don’t believe that Dr. Shermer is stating that these individuals are “sick” as much as he is pointing out how “weird beliefs” (which we all have to some degree) can have negative consequences when the belief is used to rationalize away factual evidence. The belief that the courts held no jurisdiction over him and that he had not violated the law led to Julison’s conviction and jail sentence.

    While your argument for freedom is true (we all want a certain level of freedom) the ultimate freedom of anarchy has rather significant problems when it comes to providing healthcare, safety, infrastructure (roads, communications, utilities) and wealth distribution. The system of government that we have in the United States acts to provide a stable system for its citizenry.

    Yes, you can make the argument that the Federal, or even state, government is a coercive force of control, but that isn’t the only thing the government is. Most people (even with the approval rating of congress as low as it is right now) would state that the benefits from living under the current governmental makeup are better than living without it. Today, for instance, I did not have to find a source of water, boil it, then become ill because the water was tainted with chemical runoff from an unregulated industrial company. I merely walked over to my faucet and turned it on. This is a concrete positive effect of the system of government we have. It may seem small, but I’ve also been to Tanzania and seen the effect of a lack of potable water. It isn’t small.

    A note to Dr. Shermer: I wonder if belief in the weird, and denial of reality can ever be classified as a benefit. There are numerous behaviors that may be considered an asset in a certain situation and a detriment in others. Can beliefs be classified similarly? I am aware of the example of our ancestors believing that a rustle in the grass was a predator instead of the wind, but I’m thinking of more contemporary examples.

  3. Joe Says:

    How is wanting to be a free human a “weird” belief. I guess hundreds of years ago it was a “weird” belief to think the earth was round, because authority says it was flat

    Society and the government are the ones with the “weird” beliefs. They look down upon us like we look down upon animals and feel as though they own us. A sovereign citizen is just someone who can see through the propaganda and mind control. Clearly, Shermer can’t…

  4. Joe Says:

    The government is not there FOR you. Roads, bridges, healthcare could all be provided in the free market for a fraction of the cost. The government, aka a small group of sociopaths who dominate millions of people are there to CONTROL you, not protect you

  5. Joe Says:

    “Yes, you can make the argument that the Federal, or even state, government is a coercive force of control, but that isn’t the only thing the government is. Most people (even with the approval rating of congress as low as it is right now) would state that the benefits from living under the current governmental makeup are better than living without it.”

    Is this a joke?

  6. kirk Says:

    there is no talking to guys like Joe…critical thinking within a bigger picture and extremist libertarian principles rarely go hand in hand. But it’s been my observance that the “sovereign citizen’ types are generally hypocritical at best, and criminals at worst…

    they are more than happy to drive on the roads, cross the bridges, flush their toilets, buy safe food and drugs, have clean water come out of the taps, and avail themselves of myriad other things big and small, subsidized or paid for by taxpayers which make for a comfortable, relatively safe existence..but who think they should be wholly exempt from either the associated costs, or free of the government which provides them..

    when and if Joe goes and lives in a cave without benefit of the standard of civilized living he now enjoys, then maybe my first thought when i read his “i outta be free” drivel…won’t be..”stfu, joe”

  7. Gary Says:

    People like Joe should read Rousseau’s “The Social Contract”. You live in a country and enjoy its benefits, you pay your dues (taxes). Don’t try to free-load and call it “freedom”. You’re an adult, not a child, so don’t expect anything of value for free.

  8. Joe Says:

    You government apologists really are something else. Roads have pretty much destroyed civilization and wrecked society. Plus you act as if anything the government does can’t be done in the free market. Is this a joke? The free market would do ANYTHING better than the government, other than start wars, slaughter millions, steal from people aka taxation and lock people in cages

    Why do you statists love government so much?

  9. Joe Says:

    A “social contract” is just another term invested by collectivist, liberal authoritarians who want to rule over people and control them. It’s the biggest bunch of nonsense I have ever heard. It’s the same thinking that said that blacks were 4/5th human (Your taxes don’t even go to pay for these things by the way, your taxes go to pay off the interest on the debt)

    In a truly free market with no state, the cost of all of these things like roads, healthcare, education, etc. would not only be 1/100th the cost but it would be 1000 times better in terms of quality. Wherever government gets involved, you can be sure the price increases and quality decreases. See college tuitions, roads, houses, healthcare, etc. Statism is the problem, not “sovereign citizens” who want to be left alone and don’t want a slave master ruling over them.

  10. Joe Says:

    * The term “social contract” was invented by collectivist, authoritarian liberals as a way to keep the masses enslaved. Of course any and all rules they impose upon their livestock aka “citizens”, they are completely exempt from. They can lie, cheat, steal, kill, imprison as they want by the millions but if a slave does that then he is to be punished via the ruling elite’s laws.

    You’re not looking at society through the correct perspective. There are slaves (the vast majority of people) and there are rulers (a small minority with all the power in the world). Why would YOU, a slave, team up with a ruler when you clearly are just a slave? Makes no sense to me

  11. kirk Says:

    *L*..like i said….there just ain’t no talking to people like Joe…

    “Roads have pretty much destroyed civilization and wrecked society”…should that ridiculous statement even be dignified with a response?..i can only assume that Joe’s mother was airlifted to the hospital for Joe’s birth, and all goods and services, from then, till now…including the computer he uses to type such tripe, would have just magically appeared on his roadless doorstep…

    the incapacity for critical thinking is no end of amazement for me…

    “In a truly free market with no state, the cost of all of these things like roads, healthcare, education, etc. would not only be 1/100th the cost but it would be 1000 times better in terms of quality. “…a wild exaggeration unsupported by any facts…or just made up shit….you decide…*L*

    yes..we’ve seen the unregulated free market in action..hello Bear Stearns and AIG…howdy, sweat shops…how’s it all going, uninspected chemical facilities…whatup, pimps and drug dealers…

    this’ll be my last comment…cuz in case i haven’t made it clear..there just ain’t no talking to guys like Joe…*L*

  12. k Says:

    Statism = religion

    How people can’t see this is beyond me. Amazing that as a slave you defend the master. Mind control is a wonderful thing

    Saying the roads can’t be built without the government is like saying babies can’t be made without rape…or no one will get married without arranged marriages. Complete ignorance

  13. kirk Says:

    well there’s your problem right there…you’re a closet anarchist…oh..and wait..another problem..not bein able to discern the difference between governance and ownership…

    who said roads can’t be built without government?..roads are often built without government..bridges too…but if you want to live in a place where every residential street has a toll on it…you’re welcome to it…and what would you do about roads that do not have the traffic to justify the costs?..tell 1/2 the country they must live in high density suburbs?

  14. Joe Says:

    Without a government, who decides where the roads go? And who co-ordinates the hospitals and education? And what happens if you can’t afford a hospital? Death is the final leveller, but I’d prefer to delay it as much as possible and not be dependent on my earning ability to live a long and fruitful life.

    I would say that the problem with governments is when they stop serving the people they supposedly represent, but that is also clearly true of private companies who put their shareholders and profit over their customers.

    I’d also argue that private is better than public. I live in the UK and I certainly wouldn’t swap my National Health Service for an American model, despite our current government’s attempts to do so . I can’t see much of benefit or to be proud of in the way the USA runs it’s health service. I am currently alive because of surgery that I couldn’t possibly afford, thanks to smaller contributions overall by my fellow citizens. And none of use really know when we will need it until we actually do.

  15. Bill Morgan Says:

    Let’s change the subject. In 2013, Tax freedom day was April 18. The American worker labors till April 18 to pay ALL his or her Federal and State taxes. That comes to 29.4% of income. Of course some people pay more or less than this amount depending on income level. When I was working full time (now retired) my tax burden was 45% of income. Federal Income Tax, SS Tax, Medicare Tax, State Income Tax, Real Estate Tax, etc. Why should government be allowed to take this much of a man’s labor?? My personal tolerance level would be 25% of income. Why should the government take more than that? I’m a Libertarian and vote Libertarian because Libertarians would reduce taxes significantly if elected to political office. We don’t need all the government we get! Let’s start my not fighting any more wars that cost Trillions of dollars like Vietnam, Iraq and Afghanistan all of which accomplished absolutely nothing.

  16. Chris Says:

    Joe lives in a world of delusion. He takes his beliefs to the rediculious extreme. On the other hand, I am in the corner of Bill Morgan that is basically saying that I want to live in a society where private and public sectors work together to better our world, but at some point, the coercive nature of taxation beyond say 25% (I’m just using bill’s threshold level) becomes overly heavy. What is it about government in general that seems to keep them from living within some means as the rest of us do?

  17. Colinski Says:

    Go spend some time in sub-Saharan Africa if you want to see what it’s like to live in a free market utopia without government regulation. I’ll see you when you come rushing back.

  18. Bad Boy Scientist Says:

    Wow. Thank you, Dr. Mike for the morning entertainment!

    I have a question for all you anti-government folks out there – if you were to get your wish and have a government that is weak and “small enough to drown in a bathtub” what will stop some big, powerful foreign government from coming in an subjugating you?

    Every time I encounter an anti-government / Libertarian screed I start hearing the song “Loaded” by Primal Scream …

  19. don anon Says:

    In a true democracy, which we do not as yet have in the USA, government presides at the will of the people; for the benefit of the whole of society, who should have, but don’t, a humanitarian attitude toward others, a sense of universal brotherhood and altruism toward all.Instead of a true democracy, we have more of an oligarchy sitting in our Congress and a mass psychology based on self-serving at the price of harming others. What the great majority fails to understand is that we are ONE HUMANITY; a part of the ONE LIFE of which we are all only a small part; words of truth but given no real consideration because of our own personal and selfish interests based on a mechanistic and positivism philosophy adopted by most of us due to our lack of clear thinking and an educational system that does not teach us how to think, but what to think. Christianity itself is based on authority and devotion to a small group of would-be arbiters between God and man. It teaches separateness of the individual which is the great illusion of western society. Until most of humanity wakes up and realizes its real true nature; a Soul, and part of the ONE OVERSOUL, the “God within” and act accordingly toward self and others we will never have a true democracy in this country on in this world. We are all in this together. Individualism, nationalism need to give way to a true sense of Internationalism for the benefit of all humanity.

  20. don anon Says:

    There is a Cosmic Plan governing human evolution whether we are aware of it or not. There is an inner government of the world, the Hierarchy, or The Masters of the Wisdom, those who have graduated from the human kingdom into the kingdom of Souls and have completed their earthly evolution, which our Christ is the Head. These highly spiritual entities have dedicated their lives to the spiritual advancement of humanity, selflessly and out of pure love, but cannot do it without our knowledge, support and understanding. One of these Masters has said: There does exist a TRUTH and within humanity lies the potential for its discovery.

  21. Gesundheit Says:

    For you anti-government reactionaries, here is what a true conservative, Thomas Hobbes, has to say about life without government in his best known work, “Leviathan”:

    Hobbes describes human psychology without any reference to the summum bonum, or greatest good, as previous thought had done. Not only is the concept of a summum bonum superfluous, but given the variability of human desires, there could be no such thing. Consequently, any political community that sought to provide the greatest good to its members would find itself driven by competing conceptions of that good with no way to decide among them. The result would be civil war.

    There is, however, Hobbes states, a summum malum, or greatest evil. This is the fear of violent death. A political community can be oriented around this fear.

    Since there is no summum bonum, the natural state of man is not to be found in a political community that pursues the greatest good. But to be outside of a political community is to be in an anarchic condition. Given human nature, the variability of human desires, and need for scarce resources to fulfill those desires, the state of nature, as Hobbes calls this anarchic condition, must be a war of all against all. Even when two men are not fighting, there is no guarantee that the other will not try to kill him for his property or just out of an aggrieved sense of honour, and so they must constantly be on guard against one another. It is even reasonable to preemptively attack one’s neighbour.

    “In such condition there is no place for industry, because the fruit thereof is uncertain, and consequently, not culture of the earth, no navigation, nor the use of commodities that may be imported by sea, no commodious building, no instruments of moving and removing such things as require much force, no knowledge of the face of the earth, no account of time, no arts, no letters, no society, and which is worst of all, continual fear and danger of violent death, and the life of man, solitary, poor, nasty, brutish, and short.”

  22. T Paine Says:

    It appears to me that the progressives among you seem to confuse Anarchy and chaos.
    Africa may be the most regulated continent on the planet.
    Believe it or not.

  23. Condor13 Says:

    The truth is , the moon is made of cheese and only intense lobbying by the dairy industry has kept this from us.

    The a Mayo Clinic has located the gullibility centre in the brain, and if you believe this, you should ask to have it removed.

  24. Joe S Says:

    As a side note, I’m glad to see that Skeptic articles are not just “preaching to the choir”… maybe there’s hope?!

  25. kirk Says:

    “Colinksi” nailed it…you want unfettered free markets and capitalism without interference from any governing body….Somalia outta do nicely for you….

    “Bill Morgan” has it right…

    “UK Joe” is a dude after my own canadian heart…

    and i don’t know wtf “T Paine” is talking about

  26. Terry Boykie Says:

    Joe, do you ever get laid? Of course not. But I do respect your having the freedom not to. I realize that my opinion of you is trite, even mean. Yet that is just the way you feel about federalists. I am proud to pay taxes, in fact, in many governmental efforts, I gladly pay more. That may sound nuts to you, but at least I get laid.

  27. Markus Says:

    I too investigated many of these weird tax claims in the past and found them all to be based on misunderstandings or contortions of the tax laws. While I’m opposed to the Federal Income Tax, I can’t give any credence to these crackpot schemes.
    One of the best articles I’ve seen on this topic is:
    http://www.fee.org/the_freeman/detail/is-the-income-tax-unconstitutional#axzz2kAW3d4n6

  28. Phil Says:

    Have any of you guys ever been involved in a FREE market of ANY kind? It is 10000 times better and WAY more efficient than using force. Why are there so many government sympathizers here?

  29. Phil Says:

    “Without a government, who decides where the roads go? And who co-ordinates the hospitals and education? And what happens if you can’t afford a hospital? Death is the final leveller, but I’d prefer to delay it as much as possible and not be dependent on my earning ability to live a long and fruitful life.”

    The roads are already built. In a free society, it would not look anything like we have now. People can get together and have discussions about these things. Businesses would have an incentive to build roads to get more customers. Not rocket science.

    Education now is nothing more than indoctrination. This is downright laughable and the same thing with healthcare. Government involvement in education and healthcare is destroying both of it. Price goes up and quality goes down. In a free society, education would actually educate and people would have an INCENTIVE to educate children. Same thing with healthcare. Prices would reduce dramatically and quality would increase.

    What world do you live in?

  30. Phil Says:

    “Joe lives in a world of delusion. He takes his beliefs to the rediculious extreme. On the other hand, I am in the corner of Bill Morgan that is basically saying that I want to live in a society where private and public sectors work together to better our world, but at some point, the coercive nature of taxation beyond say 25% (I’m just using bill’s threshold level) becomes overly heavy. What is it about government in general that seems to keep them from living within some means as the rest of us do?”

    Any amount of tax is the amount by which you are owned by your masters. Slavery used to be 100% ownership, now it’s around 50%. Taxation is theft. Just because you invent a new word doesn’t mean anything. Wisdom begins by calling things by their right names

  31. Phil Says:

    “Joe lives in a world of delusion. He takes his beliefs to the rediculious extreme.”

    No, it would be statists who take their beliefs to ridiculous extremes through wars, imprisonment, indoctrination of the young, liberalism, and taxation aka theft

  32. Phil Says:

    “Joe, do you ever get laid? Of course not. But I do respect your having the freedom not to. I realize that my opinion of you is trite, even mean. Yet that is just the way you feel about federalists. I am proud to pay taxes, in fact, in many governmental efforts, I gladly pay more. That may sound nuts to you, but at least I get laid.”

    You have every right to pay taxes to your masters. But why should you FORCE me to do the same?

  33. Phil Says:

    “I too investigated many of these weird tax claims in the past and found them all to be based on misunderstandings or contortions of the tax laws. While I’m opposed to the Federal Income Tax, I can’t give any credence to these crackpot schemes.
    One of the best articles I’ve seen on this topic is:”

    The real crackpot sceme is tax “laws” themselves. All a “law” is is someone’s opinion with the use of force behind it. Pretty simple.

  34. Swami Says:

    I wouldn’t use Somalia as an example of a place without government.

    Government is People With Guns Making Rules and Collecting Taxes.

    Somalia has lots and lots of this. Sure, they don’t provide the same services as ours, but the core concept is the same. Al Shabbab will gladly tell you about the important things they do for Somalians, between robbing and killing them.
    Somalia’s problem is not a lack of government, it is an excess of small, competing, and very violent governments.

    The problem is, historically, this is what pops up when you dismiss a big central government. Yes, it’s counter-intuitive. But it appears to be that if a government gets too powerful, or too weak, the end results are very similar. Anarchists and Marxists have the same fantasy- the strange belief that somehow, people will act as they imagine they will, and not how they have throughout history.

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