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>Tax avoidance is not a negative externality, since it does not impose a cost on any party. If you don't pay the taxes you are supposed to pay, you use public

>Tax avoidance is not a negative externality, since it does not impose a cost on any party. If you don't pay the taxes you are supposed to pay, you use public goods without paying for them. This is stealing from society. Unless you live on a float in international waters without using GPS or satellites >Money laundering is also not an externality, though in some circumstances it could facilitate activity that generates negative externalities, like extortion, racketeering, etc. By this logic lead in the drinking water is not a negative externality, because it only in some circumstances generates negative externalities like reduced IQ, death etc >I also don't see how more demand for art could destroy the market. The supply is flexible and can grow to meet the extra demand. There isn't demand for art. There is demand for a vehicle for money laundering/tax evasion

CryptoPunk 9y ago
>>If you don't pay the taxes you are supposed to pay, you use public goods without paying for them. This is stealing from society. Of course, but it's not always the case that tax avoidance leads to someone paying less taxes than the cost of the public goods they consume. Also, as an aside, technically, consuming 'public goods' (defined in technical terms as non-rivalrous and non-excludable) does not generate negative externalities. What you're referring to is common and private goods, which are rivalrous, meaning one person's consumption reduces the amount available for others to consume. >>By this logic lead in the drinking water is not a negative externality, because it only in some circumstances generates negative externalities like reduced IQ, death etc Polluting public waters with lead is always a negative externality because the damage done to the water itself is a negative externality. The water can be seen as property of society, and damage to it as property damage. The increased risk posed to humans is also guaranteed, whether or not that risk materializes. With money laundering, with some sources of revenue, there is no risk imposed on society at large. It depends on what activity produced the money that is laundered. >>There isn't demand for art. There is demand for a vehicle for money laundering/tax evasion And that demand for a private store of wealth for tax evasion and money laundering translates to demand for art pieces. I'm arguing that this additional demand doesn't ruin the market for other art buyers, since economic theory would suggest that in the long run the supply expands to prevent increased scarcity and higher prices.

CryptoPunk 9y ago

>>If you don't pay the taxes you are supposed to pay, you use public goods without paying for them. This is stealing from society. Of course, but it's not always the case that tax avoidance leads to someone paying less taxes than the cost of the public goods they consume. Also, as an aside, technically, consuming 'public goods' (defined in technical terms as non-rivalrous and non-excludable) does not generate negative externalities. What you're referring to is common and private goods, which are rivalrous, meaning one person's consumption reduces the amount available for others to consume. >>By this logic lead in the drinking water is not a negative externality, because it only in some circumstances generates negative externalities like reduced IQ, death etc Polluting public waters with lead is always a negative externality because the damage done to the water itself is a negative externality. The water can be seen as property of society, and damage to it as property damage. The increased risk posed to humans is also guaranteed, whether or not that risk materializes. With money laundering, with some sources of revenue, there is no risk imposed on society at large. It depends on what activity produced the money that is laundered. >>There isn't demand for art. There is demand for a vehicle for money laundering/tax evasion And that demand for a private store of wealth for tax evasion and money laundering translates to demand for art pieces. I'm arguing that this additional demand doesn't ruin the market for other art buyers, since economic theory would suggest that in the long run the supply expands to prevent increased scarcity and higher prices.