4 ms·

In the US, they are very specific, distinct things. Tax Evasion[0] is not paying taxes you legally owe. Tax Avoidance[1] is finding ways to owe less tax. Evasi

by Sodman 6y ago

In the US, they are very specific, distinct things. Tax Evasion[0] is not paying taxes you legally owe. Tax Avoidance[1] is finding ways to owe less tax. Evasion is considered illegal, but Avoidance can practically be considered encouraged, as it's perfectly legal and rewards practitioners with lower tax bills. [0]https://www.investopedia.com/terms/t/taxevasion.asp https://www.investopedia.com/terms/t/taxevasion.asp [1]https://www.investopedia.com/terms/t/tax_avoidance.asp https://www.investopedia.com/terms/t/tax_avoidance.asp

sandworm101 6y ago
>> an practically be considered encouraged It is openly encouraged. All those little policies, those loopholes, are there to encourage certain behaviors and discourage others. Want to funnel profits into live insurance on your employees in order to avoid tax? (Walmart does this) Go right ahead. That bit of tax code is there specifically to encourage the use of life insurance. If it is in the code, it is there because the government wants you to use it.
LeifCarrotson 6y ago
Most people reading this are probably aware of the distinction in technical, legal terms. But it doesn't matter, because we're not prosecutors or the IRS. But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy. My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. Society, as represented by the government, wants charities to exist to assist with causes that society values, like, I suppose, architecture. They encourage this through the tax code. Society also want for-profit businesses to pay their fair share of taxes. This is blatantly a deceitful manipulation of the tax code, whether it's legal or not I don't care, they've abused the law to do things it wasn't intended to do
- dj_mc_merlin 6y ago
  The difference between avoidance and evasion is very important. One of them is legal and economically encouraged, the other one is an accusation of a crime. Also, most people learn this in high school. Calling it evasion when it is avoidance only confuses people as to what you mean, and makes people think you don't know what the terms mean. > My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. But objectively speaking, you are aware it's the exact opposite? It's like trying to defend a function in C that causes UB by claiming it works on your machine. Yes, ok, but it is still UB. Your opinion does not change that, or what other people assume you mean when you say things.
  - pegasus 6y ago
    The exact opposite of tax avoidance is tax evasion? I think not. Tax evasion is legally tax avoidance that has been proven to be illegal. What about tax avoidance that hasn't yet been proven so, or maybe the charge has been thrown out on a technicality, or maybe it rests on exploiting a loop-hole? To me, that might not be tax evasion legally, but surely it's tax evasion in spirit. And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words.
    - dj_mc_merlin 6y ago
      Small misunderstanding, he gave two scenarios, one which he claims is tax avoidance, one which he claims is evasion. My "opposite" referred to him swapping which one is by definition either avoidance or evasion. > And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words. Agreed that one should be charitable with their interpretations. That said, not caring (or knowing) about this important difference between the two terms is a signal that one only has a shallow understanding of these matters. What useful opinion could one hold about how companies should be taxed when one doesn't understand basic economic terms? edit: changed you->one so as not to seem accusatory
derefr 6y ago
The tax system is effectively an operant-conditioning system, functioning on both corporations and individuals, where the negative stimuli are taxes and the positive stimuli are tax credits. Seen under this lens, any individual or corporation who is not practicing optimal "tax avoidance" — i.e. doing the things required to qualify for tax credits, and avoiding the things that would cause taxes — is not putting themselves as fully under the thumb of the state's operant-conditioning apparatus as the state would like. The state wants you to min-max your taxes. The tax system is designed around the assumption that taxable entities will min-max their taxes. If you're not doing it, you're not just leaving free money on the table; you're also being sub-optimally pro-social in the state's (society's?) opinion. "Tax avoidance" is to Western states, as "social credit score" is to China: a score of how well you're living up to the government's expectations for you. Of course they want you to aim for the best score you can! (I can understand people refusing to minimize their tax burden for ideological reasons — i.e. refusing to be manipulated into certain behaviors by the state. But I don't think I've ever heard anyone espouse this stance. Most people don't even understand that taxes are the state attempting to manipulate you.)
IgorPartola 6y ago
That’s right. The US uses its tax system to incentivize behavior. Say the government wants its citizens to buy more electric cars than ICE cars. It can put a ban on selling ICE cars but because the US by and large detests regulation, that has a huge political cost. So instead the government gives you a tax credit for buying a Tesla. Or the government wants to encourage home ownership, so it makes mortgage interest tax deductible. Or it wants you to get married so it gives you a tax break for filing jointly. Or it wants you to live in Alaska so it gives you a tax credit to move there. Or it wants you to revive an economically insecure geographical area so it gives your business a tax break for operating there. Or it wants you to hire ex convicts so it gives you a tax credit for each one you hire. This is a mechanism that is used by the federal and state governments to drive behavior. Arguably churches being tax exempt then is the government encouraging its citizens to participate in church activities because we are only one nation “under god”.

by Sodman 6y ago

sandworm101 6y ago

>> an practically be considered encouraged It is openly encouraged. All those little policies, those loopholes, are there to encourage certain behaviors and discourage others. Want to funnel profits into live insurance on your employees in order to avoid tax? (Walmart does this) Go right ahead. That bit of tax code is there specifically to encourage the use of life insurance. If it is in the code, it is there because the government wants you to use it.

LeifCarrotson 6y ago

Most people reading this are probably aware of the distinction in technical, legal terms. But it doesn't matter, because we're not prosecutors or the IRS. But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy. My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. Society, as represented by the government, wants charities to exist to assist with causes that society values, like, I suppose, architecture. They encourage this through the tax code. Society also want for-profit businesses to pay their fair share of taxes. This is blatantly a deceitful manipulation of the tax code, whether it's legal or not I don't care, they've abused the law to do things it wasn't intended to do

dj_mc_merlin 6y ago
The difference between avoidance and evasion is very important. One of them is legal and economically encouraged, the other one is an accusation of a crime. Also, most people learn this in high school. Calling it evasion when it is avoidance only confuses people as to what you mean, and makes people think you don't know what the terms mean. > My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. But objectively speaking, you are aware it's the exact opposite? It's like trying to defend a function in C that causes UB by claiming it works on your machine. Yes, ok, but it is still UB. Your opinion does not change that, or what other people assume you mean when you say things.
- pegasus 6y ago
  The exact opposite of tax avoidance is tax evasion? I think not. Tax evasion is legally tax avoidance that has been proven to be illegal. What about tax avoidance that hasn't yet been proven so, or maybe the charge has been thrown out on a technicality, or maybe it rests on exploiting a loop-hole? To me, that might not be tax evasion legally, but surely it's tax evasion in spirit. And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words.
  - dj_mc_merlin 6y ago
    Small misunderstanding, he gave two scenarios, one which he claims is tax avoidance, one which he claims is evasion. My "opposite" referred to him swapping which one is by definition either avoidance or evasion. > And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words. Agreed that one should be charitable with their interpretations. That said, not caring (or knowing) about this important difference between the two terms is a signal that one only has a shallow understanding of these matters. What useful opinion could one hold about how companies should be taxed when one doesn't understand basic economic terms? edit: changed you->one so as not to seem accusatory

derefr 6y ago

The tax system is effectively an operant-conditioning system, functioning on both corporations and individuals, where the negative stimuli are taxes and the positive stimuli are tax credits. Seen under this lens, any individual or corporation who is not practicing optimal "tax avoidance" — i.e. doing the things required to qualify for tax credits, and avoiding the things that would cause taxes — is not putting themselves as fully under the thumb of the state's operant-conditioning apparatus as the state would like. The state wants you to min-max your taxes. The tax system is designed around the assumption that taxable entities will min-max their taxes. If you're not doing it, you're not just leaving free money on the table; you're also being sub-optimally pro-social in the state's (society's?) opinion. "Tax avoidance" is to Western states, as "social credit score" is to China: a score of how well you're living up to the government's expectations for you. Of course they want you to aim for the best score you can! (I can understand people refusing to minimize their tax burden for ideological reasons — i.e. refusing to be manipulated into certain behaviors by the state. But I don't think I've ever heard anyone espouse this stance. Most people don't even understand that taxes are the state attempting to manipulate you.)

IgorPartola 6y ago

That’s right. The US uses its tax system to incentivize behavior. Say the government wants its citizens to buy more electric cars than ICE cars. It can put a ban on selling ICE cars but because the US by and large detests regulation, that has a huge political cost. So instead the government gives you a tax credit for buying a Tesla. Or the government wants to encourage home ownership, so it makes mortgage interest tax deductible. Or it wants you to get married so it gives you a tax break for filing jointly. Or it wants you to live in Alaska so it gives you a tax credit to move there. Or it wants you to revive an economically insecure geographical area so it gives your business a tax break for operating there. Or it wants you to hire ex convicts so it gives you a tax credit for each one you hire. This is a mechanism that is used by the federal and state governments to drive behavior. Arguably churches being tax exempt then is the government encouraging its citizens to participate in church activities because we are only one nation “under god”.