Is Tax Avoidance Morally Reprehensible?

Is tax avoidance morally reprehensible?

Tax evasion is outright refusing to pay taxes or falsifying your reports so you pay less than you legally have to; tax avoidance is taking advantage of deductions and whatnot to reduce the tax burden, but is perfectly legal.

This topic came up in the Questions thread and I spun it off to avoid spamming it:

Me said:

So my Dad posed a question the other day. I turn 18 before the end of the year, so my custodial account will become mine on the 24th of December.

He was curious if that means that if we quickly switch the account, I could tax my capital gains at my rate of 10% rather than his rate of 25%.

It sounds possible at first, but other sources say that if I'm not 18 when appreciated stocks are sold, it's taxed at his rate. So even when I file my taxes, all capital gains before I turned 18 will be 25%.

So which is it, if anyone knows? Could I possibly be able to cut my taxes, or will I still have to pay 25%? Either way I'm happy, though who complains about lower taxes?

Click to expand...

Arakhor said:

And people wonder why the economies are in such a state when the wealthy are always looking for ways to avoid paying as much taxation as possible. I'm not blaming you, TF, but this happens in the UK as well.

Click to expand...

Taniciusfox said:

I hardly think it's exclusive to the UK and USA; while some people are happy to pay taxes(fair share belief and all that), that doesn't change the fact many people would like to cut their tax burden. Especially if they disagree with progressive taxation, as my parents(and myself, sort of) do.

And we're hardly wealthy. Not poor by any measure of the word, but we have yet to own a private yacht or even a limo(only time we had a limo was for my sister's birthday party years ago).

Click to expand...

ParadigmShifter said:

Tax evasion is as bad as (if not worse than) benefit scroungers.

Click to expand...

Taniciusfox said:

Tax evasion is illegal; tax avoidance is not. No moral issue with me with cutting the tax burden; outright evading it by not reporting income or otherwise falsifying your reports is.

Click to expand...

ParadigmShifter said:

Spitting on the armed forces is probably legal too - why don't you try doing that? Because that's exactly what you are doing...

Click to expand...

My mother and father are very patriotic and my mother very pro-soldier due to her family's experiences. Supporting lower taxes =/= spitting on the troops.

That not even touching the issue of how there'd be no need for "spitting" if our government pulled its head out from its behind and cut spending.

Xanikk999 said:

Wow thats a ton of taxes that have not been collected. I don't know if its that high or higher here in the states but i do know we could save our government tons of money if we fix all the errors in the tax system here. I would also stop making all charitable contributions tax deductable. Or at least curb the amount that is deducted because its ridiculous how much a wealthy person can deduct if he tries.

Click to expand...

Better idea to hunt down charities that aren't charitable; for example: no churches should be allowed to sponsor political activities and still hold tax-exempt status. The Mormon Church helped pass the gay marriage ban in California did it not? Time for some revisions of the tax code...

---

So, is it morally reprehensible to cut your own tax burden provided it is legal?

Since I believe in a flat tax with standard deductions anyway, being able to get legally closer to it is just fine. Not to mention, it gives me more money to use. And given my limited resources, that extra 10 or 20 bucks is a lot to me.

It's as bad as claiming a state handout you aren't entitled to.

ParadigmShifter said:

It's as bad as claiming a state handout you aren't entitled to.

Click to expand...

Not really; I earned my money with my own money. They just filed out paperwork and the state gave them a check. And while there's nothing wrong with helping out people in need, the people who genuinely don't need the assistance are the worst: they don't earn their way AND game the system.

At least with tax avoidance, the cash was yours to begin with. Falsifying need for welfare is theft since you take that money out of people's pockets without a genuine reason.

Is Tax Avoidance Morally Reprehensible?

Click to expand...

Nope.

I don't even consider using legal deductions to be "tax avoidance".

Maybe, but I'm not going to say much against it until I'm financially independent; right now my dad is still paying the bills, and as a CPA his income comes largely from helping to facilitate legal tax avoidance.

Taniciusfox said:

Not really; I earned my money with my own money.

Click to expand...

Incorrect. You earned it by driving to work on roads created and maintained by the government; or by taking government run public transportation. If you belong to a union, you earned your wages in part because of legislation putting labor and business on a more equal ground. If you're a business owner, you almost certainly took advantage of various government handouts directed your way. You then to took it to a bank which is alive today because of federal help, and never worried about being attacked by bandits because the government spends a lot of money to maintain law and order. You then called up your friends and loved ones on a cell-phone, which works as well as it does in part because of government regulations on the airwaves. You were able to go work because you didn't get sick from drinking some bad milk, because the government inspects and regulates that.

When you enjoy all the benefits of civilized society but refuse to pay to help upkeep them, your stealing from the government and society at large, just as much as if you filed a false claim for federal assistance.

For the record, taking advantage of legal tax breaks is perfectly moral. But making claims like what I've quoted isn't moral, and is frankly rather stupid.

When you enjoy all the benefits of civilized society but refuse to pay to help upkeep them, your stealing from the government and society at large, just as much as if you filed a false claim for federal assistance.

Click to expand...

He's not 'refusing to pay to help upkeep them', he's refusing to pay any more than he is legally required to. What's wrong with that?

Integral said:

He's not 'refusing to pay to help upkeep them', he's refusing to pay any more than he is legally required to. What's wrong with that?

Click to expand...

I'm not arguing that tax avoidance is a bad thing. If the government wants to put loopholes and tax exemptions into it's code, that's fine and people should take advantage of that.

I'm just saying that the logic I quoted is really, really poor.

Taniciusfox said:

Not really; I earned my money with my own money. They just filed out paperwork and the state gave them a check. And while there's nothing wrong with helping out people in need, the people who genuinely don't need the assistance are the worst: they don't earn their way AND game the system.

At least with tax avoidance, the cash was yours to begin with. Falsifying need for welfare is theft since you take that money out of people's pockets without a genuine reason.

Click to expand...

Please don't try and act all high and mighty. You don't have a job. You haven't "earned" anything...what you have was given to you. You are a child.

As for tax avoidance, I don't think is anything wrong with wanting to (legally) keep your expenses down.

Miles Teg said:

I'm not arguing that tax avoidance is a bad thing. If the government wants to put loopholes and tax exemptions into it's code, that's fine and people should take advantage of that.

I'm just saying that the logic I quoted is really, really poor.

Click to expand...

Sure, granted. I'd quibble around the margins but you're right on average.

Miles Teg said:

Incorrect. You earned it by driving to work on roads created and maintained by the government; or by taking government run public transportation. If you belong to a union, you earned your wages in part because of legislation putting labor and business on a more equal ground. If you're a business owner, you almost certainly took advantage of various government handouts directed your way. You then to took it to a bank which is alive today because of federal help, and never worried about being attacked by bandits because the government spends a lot of money to maintain law and order. You then called up your friends and loved ones on a cell-phone, which works as well as it does in part because of government regulations on the airwaves. You were able to go work because you didn't get sick from drinking some bad milk, because the government inspects and regulates that.

Click to expand...

I know that's a favorite thing to say around here, but...

It's not that easy in regards to me.

My parents have covered pretty much all the benefits I've indulged in since I've never been employed. Indeed, they covered the benefits countless more indulged in.

I'm all too happy to pay taxes, but only if it's the same rate as everyone else. Otherwise, I'm going to do the damnedest to cut every penny to get as close to that rate as possible.

Never mind the annoyance that while it's my cash, I have to be taxed at his rate; it should at least be taxed at mine - 10%. I'd be happy with that since it's the bottom rate and therefore the closest to a flat rate at this juncture.

When you enjoy all the benefits of civilized society but refuse to pay to help upkeep them, your stealing from the government and society at large, just as much as if you filed a false claim for federal assistance.

Click to expand...

Ah but I'm not, since I'm still paying taxes and am willing to pay them. I just don't want to have to pay more than anyone else, and I especially don't want to be taxed at someone else's rate.

Integral said:

He's not 'refusing to pay to help upkeep them', he's refusing to pay any more than he is legally required to. What's wrong with that?

Click to expand...

This.

It's only acceptable for me. I support the rest of you paying your taxes.

Incidentally, I don't file with the IRS despite a legal requirement. I don't live in the US; I find that expectation ridiculous.

downtown said:

Please don't try and act all high and mighty.

Click to expand...

I'm not. I'm saying I earned my capital gains by investing in them when they were low. It may be negligible compared to a normal job, but I still earned it.

You haven't "earned" anything...what you have was given to you. You are a child.

Click to expand...

Correction: The principle was given to me; the capital gains was earned by me. I've run the account since day one.

The principle was given, and is too small to qualify for gift tax so it's irrelevant in the tax discussion. The only thing I owe on that is taking care of my family if the situation is reversed.

I earned the capital gains... I took it upon myself to enter the order. Therefore, I earned whatever reward - or loss - was incurred. And since I don't want to pay anymore than anyone else, I'll do my best to cut the tax burden as low as possible.

Integral said:

Sure, granted. I'd quibble around the margins but you're right on average.

Click to expand...

It's a very good point to make, yes, but my parents have covered the services I've indulged in. And they would've done so even without taxes. I owe nothing for services I took part in before my own cash flow, since my parents paid for it all.

That's different from services that I now take part in, given that I have cash flow; I'm willing to pay. It's not that I don't want to pay "no taxes" - great as that'd be - merely the same rate as anybody else.

contre said:

It's only acceptable for me. I support the rest of you paying your taxes.

Click to expand...

Deep down I'm this way too; I'm sure we all are.

Incidentally, I don't file with the IRS despite a legal requirement. I don't live in the US; I find that expectation ridiculous.

Click to expand...

Agreed. The US government is either insane, incompetent, or malevolent.

.Shane. said:

I don't even consider using legal deductions to be "tax avoidance".

Click to expand...

But then by far the largest amount of tax lost by these "legal deductions" amount to very rich people and companies dumping their money in countries like Monaco or the Caymans or Switzerland and claiming that the country where the money was made is not entitled to tax the money due to oligarch friendly tax rules. And forget about politicians claiming that they're clamping down on such tax havens. They have all the reason in the world not to (they and they're backers gain from these places).

Tax avoidance is morally reprehensible and should be illegal.

Taniciusfox said:

I'm not. I'm saying I earned my capital gains by investing in them when they were low. It may be negligible compared to a normal job, but I still earned it.

Click to expand...

Is that legal for a minor?

Taniciusfox said:

Agreed. The US government is either insane, incompetent, or malevolent.

Click to expand...

Just for the record, lest anyone be confused, the US taxes based on nationality as well as residence. Hence, as an American living abroad, I'm still taxed (though with something like a $90,000 personal exemption)

Brian Shanahan said:

Tax avoidance is morally reprehensible and should be illegal.

Click to expand...

So even for the poor and middle class? Well gee, that would suck.

ParadigmShifter said:

Is that legal for a minor?

Click to expand...

Custodial account. He enters the orders for me. It's just a formality.

Though it should be perfectly legal for him to give me freedom to invest my own damned money. He can give me the right to run off and get killed... but not save up for my future? What?

contre said:

Just for the record, lest anyone be confused, the US taxes based on nationality as well as residence. Hence, as an American living abroad, I'm still taxed (though with something like a $90,000 personal exemption)

Click to expand...

So if you ever visited the US, would they be able to jail you for tax evasion(provided you didn't claim the exemption)? Or, right now, can they demand you be extradited?

Sad laws... very sad laws. I'd just be happy it's probably impossible for it to be enforced in any way.

Just to make sure, everyone in the room's clear on the difference between tax avoidance and tax evasion, right? The former is legal, using the various deductions &c in the tax code to your advantage. The latter is illegal.

If so, carry on, I'll bring the popcorn.

The OP sounds like it is about tax evasion though.