The Free Market
Taxes and Criminality
The Free Market 26, no. 4 (April 2005)
The concept of taxation well deserves its partnership with death. Death and taxes, you know. Two vultures. Both, to say the least, deadly.
Why do we let them shear us like sheep every spring? I’m talking about taxes and their incremental, inexorable growth. The analogy of the farmer’s son who hefts the newborn calf comes to mind. It’s so easy that first day. And every morning thereafter he walks to the barn and picks up that animal.
The growth per day is only a matter of ounces, so for a lot of mornings he can hoist the calf. But one day—like our government—it’s a Fat Cow. The boy will heave and grunt and finally turn his back on the barn. The only question is when.
Like the farmer’s son we grunt and lift as long as we can, even though we know our burden is growing. Unfairly, our pocket has been turned inside out—the contents given to another at the whim of the state.
But even worse is the inability of the tax code to speak clearly. It’s as though your home was invaded by a mute midnight marauder. You understand his evil intentions. You suspect that theft and/or pain is his objective, but you can’t comply with his incoherent demands.
The millions of words that frame the government’s requirements are non-decipherable; not just to Joe and Jane Taxpayer, but to CPAs and IRS agents who carved this hieroglyphic Rosetta Stone we call the tax code.
Every year the Wall Street Journal constructs a theoretical, economically mainstream family—puts numbers beside their income, investment, and deductions. Then gives the data—not only to America’s leading tax consultants, but to the authors of the carvings in the IRS Rosetta Stone. You can guess the results—eight authorities? Eight tax liability totals. No two are alike.
Even more painful than plundering our saving is the moral penalty we pay. As plain as the deep black 1040 on the form, we taxpayers break the law. Nobody, including H. Block and R. Block and all the Blocks’ accounting kin, are free of guilt. The code is as uninterpretable as that mute marauder—who we couldn’t obey if we wanted to.
So, everybody is a lawbreaker. Therefore, the state, within the bounds of legality, can prosecute any of us. The only consoling thought—the only reason there’s not a Gulag in North Dakota instead of Siberia, is the benevolence (or incompetence, depending on your viewpoint) of our government. Consequently, the letter of the law—the salt and pepper size print—is frequently ignored. But still, we are all hostages, vulnerable to the charge of tax evasion, anytime the system deigns us dangerous.
It’s like our traffic laws. Everybody is a criminal at least once a day. The only innocents are pedestrians and peddlers of bicycles. The jails aren’t roomy enough to include all violators. It’s a flawed law akin to the statutes that control alcohol and taxes. Everybody breaks this law. As the Bard put it: it is more honored in the breach than in the observance. Since enforcement is highly selective, it takes control out of the hands of legislators and puts it in the hands of the enforcer, the Highway Patrolman.
We laugh. Put us all in jail? Put us in jail for exceeding the speed limit by 3 miles an hour? Or lock us up for a tax code violation because the expensed computer is 10 percent used for non-business purposes? It’s more comic than cosmic. But don’t mock such malevolent possibilities outside of the borders of the USA.
Russia, too, has a tax law. It is their current substitute for the knout of Czarist days. It’s almost as complicated as ours and even more painful. The government’s take is heavier than the ancient Boyar’s loot of the Czarist peasant. So as you would expect, nobody obeys this law, like nobody goes 65 miles per hour on our six-lane interstate speedways.
The modern day rulers of this lawless land, like the nobility of old, prosecute the juiciest targets. Like Yuganskneftegas (or YUKOS), a name purposely designed for misspelling and confusion of western readers, also an oil producer of immense profitability. The company was charged with tax evasion and presented with a bill for $28 billion in back taxes. Sure they’re guilty. So are 100,000 other companies and a hundred million individuals. The only innocents are the dead and the bankrupt.
Well, Vladimir Putin—the current Russian plunderer, a man that Al Capone would look up to—locked up the majority stockholder, Mikhail Khodorkovsky, grabbed his company and then conducted an auction. Several internationally qualified companies responded. Strangely, this unspellable money-maker was sold to an equally unspellable organization, Baikalfinensgroup. (More confusion for Western political analysts!)
Baikalfinensgroup is a syndicate unknown to the world, but obviously well known to the oily bureaucrats in charge of the auction. It turns out that the government that indicted and seized YUKOS and conducted the auction, awarded the contract to ITSELF! That winning seventeen letter company was only a front for Rosneft, Mother Russia herself in a different dress.
The "government" (an inaccurate expression for the Mafia who control Russia) awarded the loot from their robbery to a syndicate led by the same Mafia who "legally" grabbed YUKOS. The State was plaintiff, prosecutor, and purchaser of the criminal corporation. All this is perfectly legal, granting the legality of confiscatory tax policy; a policy designed to create criminals, who can be profitably punished by the State.
All this happened within 24 hours of Christmas Eve, proving that ex-KGB agents, like Vladimir Putin, do have a sense of humor— as well as fine political timing.
Even Putin’s senior economic advisor screamed of the injustice. But he complains about "a lack of rules." He’s got it wrong. There are too many rules. And all benefit the Midnight Marauder.
The moral? Beware of encrypted laws that only the State can unlock, to your disadvantage.
Ted Roberts writes from Huntsville, Alabama (ted@ HiWAAY.net).
Cite This Article
Roberts, Ted. "Taxes and Criminality." The Free Market 26, no. 4 (April 2005).