Thank you for inviting me to speak to "The Abundance League" tonight about how I found an abundant life — how I started living more by working less, earning less, and spending less.
My story starts about five and a half years ago when I went in to the human resources department where I worked and asked if it would be possible for me to get a significant pay cut. As you can imagine, this was not the sort of request they were accustomed to handle, but they gave it their best shot.
I should back up a bit and explain how I came to make such a strange request. You probably remember that five and a half years ago — early 2003 — was when the war on Iraq had become more-or-less inevitable. Along with many other people, I was horrified by the thought of the magnitude of the suffering the United States was about to inflict with its “shock and awe” campaign and the increasingly blind, ignorant, and bloodthirsty thrashing about that our country was engaged in. But I was also painfully aware that as a taxpayer I was one small but vital part of the machine we were unleashing — that no matter how much I complained or voiced my moral opposition, as long as I continued to pay taxes, I was — in a practical sense — supporting the war.
Because of this, I had a hard time getting to sleep at night, and a hard time looking myself in the mirror in the morning.
I knew I would have to stop supporting the war, if only for my own peace of mind.
The question was: how could I go about it? My major financial contribution to the military and the war came from paying the personal federal income tax. This tax was automatically withheld from each paycheck before I even saw it.
If I tried to stop this withholding, for instance by filing a new W-4 form with more exemptions, this seemed like it would just be delaying the inevitable. Come April, the IRS would realize they’d been underfed and would come after me to seize the difference.
So I decided to see if I could get “under the tax line.” And that’s why I went in to my H.R. department. As it turns out, they said they couldn’t help me — that such a move would look suspicious, like they were trying to get away with something — and could cause problems of some sort for the company.
But as it turns out, I’m glad. I don’t think I would have wanted to continue to work full-time, year-round, for an under-the-tax-line income if I could just keep my hourly wage high and work fewer hours instead.
So I quit my job, where I’d been earning about $100,000 per year, and determined to get under the tax line. Now I’m self-employed, doing contract work and writing books.
At the time I started this experiment, I didn’t know where this “tax line” was. I assumed it was somewhere in the vicinity of the “poverty line,” which didn’t sound very encouraging.
When I did some initial research, I found some writings about war tax resisters who used this method, and these seemed to suggest that the “tax line” was somewhere around $3,000 to $8,000 of income per year.
So I started thinking “hmmm… I could buy bulk rice and pick dandelions for vitamins” … “you can do a lot with top ramen“ … ”maybe I could work as a fire-spotter and live in a tower in the woods to avoid paying rent” … that sort of thing. I’d started to resign myself to the idea that the path I was on was going to be one of sacrifice and renunciation. — There are things to be said for sacrifice and renunciation in the service of worthy ideals, but if that’s how things turned out, I’d probably be somewhere else, addressing the League of Renunciates tonight.
But instead I decided that first, I’d research tax law a little more closely, so as to find out more precisely where that “tax line” was. What I found was a great relief.
Today in the United States, about one-third of households that file tax returns are already under the federal income tax line — that is to say, one-third of American households pay no federal income tax. If you take into account that those households tend to be larger on average (with more children, thus more deductions & credits), and if you take into account that some Americans earn so little income that they don’t file returns at all, that makes about 40% of Americans who are under the tax line. So all I had to do was become one of those two-in-five.
As it turns out, there really is no one “tax line.” It’s different for everyone, based on things like their family structure, their age, how they make their income, and what they do with their money.
For me, the tax line is about $30,000 per year. By using deductions for tax-deferred retirement accounts, health savings accounts, in some years tuition, and legitimate business expenses, I’m able to — legally and by-the-book — pay no federal income tax.
To do this, I have to put about $14,000 into my retirement and health savings accounts. That leaves me about $16,000 to live on during the year. That seems like very little to many people, especially here in San Francisco where I live, but it’s more than enough for me. For one thing, it’s a real $16,000, not a $16,000 salary that then gets whittled down by income tax.
But my yearly expenses — rent, food, transportation, and the like — come to only about $12,000. What’s left over is a rainy-day, emergency, or vacation fund. I usually use it on a south-of-the-border vacation. And note that I’m also saving about $14,000 per year for retirement and for health expenses.
Here are some of the techniques I’ve adopted to lower my budget:
- I cook my own meals rather than eating out or eating expensive packaged food.
- I brew my own beer, because I like the good stuff (and I want to avoid the federal excise tax on alcoholic beverages)
- I trade English tutoring for Spanish tutoring
- I use the public library for research & recreation
- I don’t own a car, but use City Car Share, public transit, Greyhound, and such
- I try to find used stuff on freecycle / craigslist rather than buying new — for instance, in my home, a pot rack, a foreman grill, our vacuum cleaner, a back door that I could cut a cat door in without risking our security deposit, a bread machine, speakers for our DVD player, our living room couch, some lectures on video tape, our food processor and blender, and a carboy I use for brewing.
So how do I feel about my life now that I’ve gone from earning $100,000 per year to living on $12,000? Money Magazine profiled me briefly a few months ago for an article they put out on how to avoid paying taxes. But they concluded that their readers probably wouldn’t enjoy the “ascetic lifestyle” that comes along with my technique.
If this is “asceticism,” asceticism is very underrated. The life I’m leading now is fuller and more enjoyable than ever, I have less anxiety and feel more integrity, and I’m genuinely living a life of abundance.
By being willing to take in less income, I am able to work fewer hours. It turns out that, to me, those free hours are much more valuable than the money I’d been trading them for.
It seems that many of the things we give up, in order to pursue careers and more money, are more valuable than the money we gain in the trade. Not only are they more valuable, but many are not for sale at any price! Our health, our youth, and the time we need to pursue our dreams, learn new skills, strengthen relationships with our family and friends and communities, or just read those books we’ve been meaning to get around to.
Money, unless you collect it as examples of the art of engraving, is at best a means to various ends. It is these ends, and not the money itself, that define abundance. And while money can be useful as a means to some of these ends, it is hopeless for others, and inefficient for many. And not only that, but the pursuit of money can take up so much time and energy that it makes it more difficult to pursue some of those ends.
How does it make sense to spend extra hours at work to earn enough money to pay for a gym membership so you can lose the pounds you’ve put on from sitting in your desk chair all those extra hours at work?
How does it make sense to work extra hours so you can afford a meal in a nice restaurant once in a while because you don’t have time after all those extra hours at work to shop and cook and do the dishes if you want to do it yourself?
I love good food. When I was making the big bucks I used to go out to eat all the time, because there are so many great restaurants in San Francisco. But for the cost of one restaurant meal, I could eat fantastic food all week — if only I had the time to shop for the ingredients, look up the recipes, prepare the food, and clean up the kitchen afterwards. Now I have that time, and so I eat great food every day for a fraction of what I used to spend.
One measure of abundance is this: what percentage of your time and energy — what percentage of your life — are you spending on your own priorities and passions, and what percentage do you have to spend on priorities that contradict and oppose them. Now, by “your priorities” I don’t just mean “your own selfish interests” but your values, the things you think are worthwhile and important.
If a percentage of your paycheck is being sucked up by Uncle Sam, you’re spending that percent of every working day using your energy and your time — spending your life — to promote the Pentagon’s priorities and political pork projects.
What worked for me won’t necessarily work for everyone. Some people, for very good reasons, have higher expenses than I do — for instance, children, though they are good tax deductions, I understand can be something of an expensive hobby. Not everyone has skills that translate well to a part-time, contract, work-from-home style job. Many people have to work full-time jobs, year-round to earn what I earn.
I haven’t come here tonight with a one-size-fits-all strategy for abundance and fulfillment. But, there are some lessons I learned along the way that many of us can use to make our lives better, whatever our situation.
I urge you to take stock of your own vision of an abundant life, and look closely at what parts of it are best-served by earning money and what parts of it are best-served in more direct ways. Look also for ways in which your career may be interfering with a more abundant life. And look especially at how the government, by means of the tax system, is forcing you to expend your time and energy on priorities that contradict your own.
And consider the possibility that the most abundant life you could be living may be one in which you are earning and spending less but living more.
Causes David Gross Supports
The National War Tax Resistance Coordinating Committee