Tax Avoidance
By Kerby Anderson
Lots of people lately have been giving their opinion about tax avoidance. The president criticized corporate “inversions” and told these companies to stop “gaming the system.” Lynn Woolley says that the recent Panama Papers scandal proves that tax avoidance is the American Way. Merrill Matthews says tax avoidance is patriotic.
First, let‘s start with some definitions. The IRS says that avoidance of taxes is not a criminal offense. It is what anyone tries to do to avoid paying more taxes than he or she might owe. That is different from tax evasion, which is a deliberate attempt to evade paying taxes you owe by the use of “deceit, subterfuge, camouflage, concealment” or other means.
People spend lots of time and money each year trying to avoid paying more taxes. The scandal of the Panama Papers is that we found out that many of the leaders of other countries who demand high taxes from their citizens used other means to keep from paying those same taxes by setting up offshore accounts.
Corporations try to limit the amount of taxes they pay by going offshore. Individuals also try to avoid taxes by using various creative strategies. Daniel Henninger writing in the Wall Street Journal reports that most Europeans spend a significant amount of time on tax avoidance by using cash-only transactions, bartering, and using off-the-books accounting. Some are legal. Others are not. But the goal is to keep from paying high personal taxes in Europe.
Merrill Matthews argues that tax avoidance should be considered patriotic. The federal government is limited to those powers enumerated in the Constitution. Tax avoidance is one way to stop feeding the problem of the overgrown government. Also, tax avoidance might actually force Washington to make the 74,000-page tax code simpler. That is why you can consider tax avoidance a patriotic act.
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