Monday, May 23, 2016

When taxes become illegitimate.

On the Panama Papers:
Why can’t tax evasion be a legitimate form of self defense? In some countries and circumstances, it is.

Despite what politicians want us to believe, tax havens exist because some countries have been turned into tax hellholes by officials bent on “social justice” and “income redistribution.” Sometimes, those same politicians top the list of “offshore” account holders trying to evade taxes. [1]

Durden list three principles of taxation identified by Adam Smith, namely that rates ought not to be so high as to stimulate evasion, taxes ought to be for purposes that taxpayers agree on, and politicians should handle tax receipts without corruption. Polities that ignore these principles will generate evasion and rebellion. (He refers to a fourth Smith principle but I missed it if he specified what it is in this article. Stay away from ancient methods of enforcement through murder and torture?)

Of course, the people exposed in the Panama Papers could just as easily have been seeking to conceal the fruits of their corruption. Some people may have been seeking to escape high rates but not all.

Notes
[1] "Guess What Occupation Is Most Frequently Cited In The Panama Papers?" By Tyler Durden, Zero Hedge, 5/22/16 (emphasis in original removed).

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