A Moral Case for Tax Evasion

[LPC]

There is a report published in Tax Notes Today on a conference entitled "Defending Tax Competition, Fiscal Sovereignty, and Financial Privacy," that was held on October 20 with participation from several very (very) conservative "think tanks," namely the Cato Institute, the Center for Freedom and Prosperity (CF&P), the Mercatus Center, the American Enterprise Institute, and the Competitive Enterprise Institute.

The panelists were critical of attempts to block the use of "tax havens" and advocated "tax competition" between jurisdictions, and went so far as to defend tax evasion as a response to tax rates that are "too high" (which I guess is what the evader gets to decide).

From the article:

In response to a questioner who spoke favorably of information exchange, Veronique de Rugy, a senior research fellow at the Mercatus Center and a CF&P board member, set out to make what she called the "moral case for tax evasion."

De Rugy said that although "evading taxes when taxes are low" is "questionable," tax evasion when rates are high is defensible. "Who is to say that those tax laws are actually legitimate?" she asked.

I'm not going to comment on the morality of living in a country and enjoying the benefits of citizenship in that country while evading the taxes of that country, but I do want to say that the legal status of this kind of "moral case" was nicely summed up in the 7th Circuit:

“The government may not prohibit the holding of these beliefs, but it may penalize people who act on them.” Coleman v. Commissioner, 791 F.2d 68, 69 (7th Cir. 1986).

[Number Six]

Thanks for the topic, Mr. Evans.

"Life isn't fair", is my simplest response to those who think that evading taxes is morally justified, and who suffer for their firmly held position monetarily.

I'm glad that the topic has surfaced with these organizations, now at the 11th hour with our economy transparently in trouble, with much of the blame to be laid at the feet of the political propagandists who, on one hand create cynicism and apathy, and on the other hand feed on them to justify civil disobedience and other forms of rebellion. In writing his civil disobedience article Henry Thoreau differentiated between those, like him, who living a subsistence Indian lifestyle, were apparently creating no real debts to society; and what he called the "king's man" who owed tribute to the government. If someone is substantially dishonest with a government that is under law, where you have all sorts of remedies at law to a problematic tax situation--what is to then prevent said government from also acting arbitrarily, seizing assets, raiding houses and businesses, and making a public example of those who flagrantly flaunt its laws?

[Judge Roy Bean]

Avoidance + (Moral Relativism x Rationalization) = Evasion.

[bmielke]

I evading taxes ever justified. For instance is a war protester who is regliously against the actions our government taking justified in refusing to pay his taxes?

I say no, regardless who whether or nor you agree with an individual policy of our goverenment you still owe the taxes. If it makes you feel better take a red crayon and scrawl on your 1040 "NOT TO BE USED FOR WAR" or whatever, but pay your taxes. If you don't in my opinion you have no right to critize current policy. There is a fee to participate in our way of life, they are called taxes.

[Pottapaug1938]

Is evading taxes ever justified? For instance, is a war protester who is religiously against the actions our government taking justified in refusing to pay his taxes?

I say no, regardless who whether or nor you agree with an individual policy of our goverenment you still owe the taxes. If it makes you feel better take a red crayon and scrawl on your 1040 "NOT TO BE USED FOR WAR" or whatever, but pay your taxes. If you don't in my opinion you have no right to criticize current policy. There is a fee to participate in our way of life, they are called taxes.

I agree. From time to time, I've had arguments with fellow lefties about this issue; and I've always felt that their actions amount to, essentially.... political self-pleasuring. They are full of fantasies about "but if EVERYONE does this, we can stop the war", and so on, and "I refuse to make myself morally complicit in the war." Well, my history books tell me that no war within my lifetime was slowed down one bit by such protests; all that happened, at most, is that someone else suffered because their funding got cut so that the war effort could be fully funded. Both lefties and righties have their share of tax zealots, so neither side is clean on this issue.

I specifically agree with bmielke's last statement. One may feel that taxes are too high, too low, or that they are improperly used; but taxes are the cost of maintaining our civilization and our democracy. There is a way to fight on this issue -- and that's why we have elected officials and the ability to organize as civic activists. Picking a fight that is a guaranteed loser is sheer stupidity.

[Judge Roy Bean]

... If it makes you feel better take a red crayon and scrawl on your 1040 "NOT TO BE USED FOR WAR" or whatever, ...

I would STRONGLY suggest you not do that.

[bmielke]

... If it makes you feel better take a red crayon and scrawl on your 1040 "NOT TO BE USED FOR WAR" or whatever, ...

I would STRONGLY suggest you not do that.

I don't intend to, I don't even know if it is a bad idea or not. Really I don't care as long as you pay your taxes. The IRS might care, but I don't work for them, and I pay my taxes.

Besides Red Crayons are the fundamental tool of th taxe protest movement. (I think thats because they are still at the Kindergarten level.

[Number Six]

There are benefits to respectfully playing by the rules especially if you have assets.

In the natural world there are raptors who feed on smaller birds, carrion, and others like mice and rats.

In the governmental-economic sphere, we have various levels of law enforcement that attempts to counter various law breakers, from the fabulously corrupt, like Al Capone and Madoff to minor offenders who are unlucky enough to find themselves a target of law enforcement for conscientious opposition to what they see as an unjust system: http://www.enotes.com/night-thoreau

It is better to be on the right side of the law, to not be mistaken as food by leviathan, so that those who have a strictly mechanical and business-like response to provocateurs and criminals, go after the true criminals who leave large numbers of people broken and broke.

I have met "Constitutionalists" and War Tax Resisters who have been wiped out financially, stripped of professional businesses and other valuable things by getting mixed-up in these movements. Generally their positions requires a lot of enablers to keep operating. The really unscrupulous predators play ball with the feds before they get nailed....

[Judge Roy Bean]

There are benefits to respectfully playing by the rules especially if you have assets.
....

You don't tug on Superman's cape
You don't spit into the wind
You don't pull the mask off the ol' Lone Ranger
And don't mess with the IRS

[Brandybuck]

I have to respectfully disagree. In terms of the morality, I am of the firm conviction that all taxes are immoral. They may be necessary, but they're still immoral. Except for size and a reputation of legitimacy, governments are little different from Mafia collection rackets. I see no moral difference between government taxing online gambling, and the mafia taking its cut from backroom card games.

But the real world is rarely moral. Reality doesn't care one whit what I think. The morality has to be set aside and pragmatic issues examined. A 1% tax can be seen as legitimate, but a 99% tax is outrageous. Where is the dividing line? How much taxation is too much? For me anything beyond the bare minimum needed to fund the legitimate functions of government is too much. I get angry when the government (fed or local) starts using my tax moneys for illegitimate functions or for "social engineering".

We have too much taxation levied on it as it is. I don't know where best moral/pragmatic tax balance should be, but I do know it's a much lower rate than we have now. I will fault no one for avoiding taxes because of this. Evasion (as in breaking the law) is a different matter. I won't evade taxes, but if someone else wants to do it, fully aware of the risks involved, more power to them. My issue isn't with the tax evaders, it's with the tax deniers and tax cranks who live in a fantasy world.

[Number Six]

The Social Contract: http://www.iep.utm.edu/soc-cont/

But the national debt is not my problem because I never entered into the contract which is implied by it: http://www.iep.utm.edu/soc-cont/

The latter contract is founded on fraud and fraudulent contracts are non-binding....

[Noah]

Taxes are exactions. One of the essentials of a tax is that it is not a debt. They are nothing more or less than a taking. They are neither fair or unfair, neither moral or imoral, they are not voluntary contributions nor are they ever owed. They are exacted pursuant to the legislative authority granted by the United States Constitution as amended. They are for the use of government however they see fit.

[bmielke]

Taxes are exactions. One of the essentials of a tax is that it is not a debt. They are nothing more or less than a taking. They are neither fair or unfair, neither moral or imoral, they are not voluntary contributions nor are they ever owed. They are exacted pursuant to the legislative authority granted by the United States Constitution as amended. They are for the use of government however they see fit.

But they can become a debt real fast if you don;t pay them.

[cynicalflyer]

For instance is a war protester who is regliously against the actions our government taking justified in refusing to pay his taxes?

I think there is a massive, massive difference between refusal to pay taxes and tax evasion.

There is a moral case for refusal to pay taxes to a government you feel should not obtain them for purposes for which you disagree. I am thinking Henry David Thoreau here. But if you opt to do so, there is an corresponding duty to do so publicly and not to hide it. King, in Letter from a Birmingham Jail, put it bluntly: "One who breaks an unjust law must do so openly, lovingly, and with a willingness to accept the penalty."

Thus while I can easily accept that some may conjure up a moral case for refusing to obey an unjust law or pay a tax they feel is unjust or being used for an unjust cause (we can quibble whether the law truly is unjust or the cause unjust), I cannot see the morality behind "evading" a tax, no matter what the supposed case or cause for doing so.

[cynicalflyer]

It's up to society as a whole to decide when and where the line is drawn.

Correct, to a point, Steve. The right of society as a whole, however, does not mean (as I have seen you argue over and over) that an individual has the right to decide when they can refuse to pay taxes and then have that be the end of the conversation as to that person.

[SteveSy]

It's up to society as a whole to decide when and where the line is drawn.

Correct, to a point, Steve. The right of society as a whole, however, does not mean (as I have seen you argue over and over) that an individual has the right to decide when they can refuse to pay taxes and then have that be the end of the conversation as to that person.

I never said you have to agree on where the line is drawn. In the end its up to the individual, but nothing is going to happen until society in general is on the same page.

When many in government are caught avoiding the same taxes they've agreed upon and in some cases they have a direct committee over...I think it's time to take another look at the premise of "It's not the message that's important, it's obedience to the message".

[Pottapaug1938]

SteveSy said: "I'm sure there were many back in time that said that picking a guaranteed losing fight with England is sheer stupidity."

Not to bring this thread too far off topic, but I'm not at all sure (from the safety of almost 250 years later) that this was a "guaranteed losing fight". Trying to subdue a distant, rebellious, hostile armed force which has strong support among the population, and powerful external allies, is not an easy task, as a moment's reflection on 20th century history will show.

[Number Six]

It's up to society as a whole to decide when and where the line is drawn. There is no doubt you will be punished if you are caught not paying the government. It's up to the individual to decide where the line is and when the individual is willing to face the consequences.

http://www.nytimes.com/1997/03/09/us/sc ... wanted=all

And on the quote by Cynical Flyer from Martin Luther King, that if you break an unjust law you "must" do so "openly" and "lovingly" and willing to face the penalty, I can think of a lot of exceptions to this, most successful insurgent battle campaigns have been fought through covert cunning, and without affection for the law enforcer. There are unjust laws and then there are really corrupt, lawless, and criminal governments enforcing such laws. I don't regard any U.S. government agency that has thorough ethical review and transparency as falling into that category. Gandhi sought to maintain the utmost respect and regard for the governments of South Africa and the British in their control of India. I don't think his non-violent resistence to the salt tax, etc. involved real tax-cheating as has been practiced in the U.S. by those who invoke his example. His rebellion was about survival, not personal enrichment.

[cynicalflyer]

SteveSy said: "I'm sure there were many back in time that said that picking a guaranteed losing fight with England is sheer stupidity."

Not to bring this thread too far off topic, but I'm not at all sure (from the safety of almost 250 years later) that this was a "guaranteed losing fight". Trying to subdue a distant, rebellious, hostile armed force which has strong support among the population, and powerful external allies, is not an easy task, as a moment's reflection on 20th century history will show.

Steve assumes that independence from England was the desired end goal. While that was certainly true by 1776/1777 (even after the Battle of Bunker Hill in 1775, there was a continued effort at trying to cut a deal with Parliament), it was not the case when the tea party occurred. One need only look to the Olive Branch Petition of 1775, signed by the same Continental Congress that would write the Declaration of Independence a year later, to see that they did not "pick a guaranteed losing fight" and that had England simply conceded on a (relatively) few points the Revolution would not have occurred. Few wanted independence or to pick a fight, revisionist history notwithstanding.

Finally, the actual acts of Parliament that triggered Bunker Hill and actual open warfare (i.e. the Intolerable Acts or the Coercive Acts) had nothing to do with taxation.

[SteveSy]

Steve assumes that independence from England was the desired end goal. While that was certainly true by 1776/1777 (even after the Battle of Bunker Hill in 1775, there was a continued effort at trying to cut a deal with Parliament), it was not the case when the tea party occurred. One need only look to the Olive Branch Petition of 1775, signed by the same Continental Congress that would write the Declaration of Independence a year later, to see that they did not "pick a guaranteed losing fight" and that had England simply conceded on a (relatively) few points the Revolution would not have occurred. Few wanted independence or to pick a fight, revisionist history notwithstanding.

I'm pretty sure many thought is was an act of suicide to fight the British. As far as relatively few points, that may be true but the points requested were massive. It appears you're doing revisionism yourself. Try reading the "The Declaration of Rights and Grievances", they make it pretty clear they were demanding far more than England would or even could have given without severe political consequences both home and abroad. The colonists involved knew it and they knew what the final result was going to be.The colonists didn't have French allies until later in the game. The colonists caused a lot of havoc and outright treason over some very minor taxation and basically had no intention of letting England rule over them....however, they demanded the British defend them against the Indian's, at its own cost of course. Tax protesters and evaders of today are kittens compared to the colonists and their demands.

What the colonists considered absolutely intolerable and tyrannical is now accepted as everyday government operation today. Actually we far surpassed that long ago....
btw, please don't proclaim the "we have representative government" nonsense. When the government spends more than it can possibly collect for those who elected it, there is absolutely no representation for those who end up paying the bill. And we're not talking about a petty 1% tax on molasses here, we're talking about pillaging 30-60%+ of the revenue of those who had no say whatsoever in the matter for their entire earning life. btw, what's civilized about borrowing against our kids future earnings so someone can get a new car to day through the cash for clunkers program?