Is tax avoidance prudent or criminal?
As I prepare my weekly contribution to The Daily Caller, I’m almost invariably seeking an angle on precious metals to explore. Sometimes it’s direct, while at other times it’s tangential. However, this week the link is rather obscure.
Listening to the debates, hearing the pundits extrapolate and reading the commentary about the candidates can lead to a lot of rabbit trails, if one cares to dig. And one of the topics that comes up often is Mitt Romney’s tax practices.
How does this relate to metals? There are many forms of taxation including income, sales, upline, property and even inflation. As the IRS has become more intrusive and tax laws more complex, one of the simplest means of preserving wealth without all the headaches is precious metals. However, that’s really not the point today.
Before continuing, let’s consider definitions. Often writers/commentators/spinsters swap the terms “evade” and “avoid” as though they mean the same thing. That’s simply not true. Tax evasion is illegal. When someone evades taxes they are looking for ways to hide what they legitimately and lawfully should pay. However, tax avoidance is simply prudent. It’s the pursuit of legal means by which to retain as much of your cash as possible.
As I read commentary on Mitt Romney’s tax “dodging,” “evasion” and “avoidance,” it becomes quite apparent that many writers simply don’t understand, or purposely obscure, the distinction. All of these are lumped together as though there’s some moral obligation to pay more taxes than the law requires. Perhaps it could be spun from a different angle: Some seem to think that, especially when it comes to the wealthy or presidential candidates, any effort, legal or otherwise, that keeps them from paying the maximum amount of taxes, and thereby contributing their “fair share” to paying off our debt bubble, is an action of gross and perhaps even treasonous immorality, whether it’s legal or not.
Consider this Rolling Stone article by Tim Dickinson, for instance. It’s really a great article, when it comes to disseminating information on Romney’s financial dealings. But, whether he intends to or not, he goes from reporting the facts to judge and jury as the article progresses. Consider this comment, for instance:
“Are Romney’s tax dodges legal? It’s impossible to say for sure, given how little he has disclosed.”
That pretty much makes the point, doesn’t it? A couple of paragraphs lower the revelation becomes more pointed, but still quite responsible:
“Romney has buried an unknown, and perhaps significant, chunk of his wealth in what SEC filings describe as ‘a Bermuda corporation wholly owned by W. Mitt Romney’ — driving speculation that the candidate is worth far more than he has disclosed publicly.”
After pointing out the possible avenues that Romney could be using to cheat on his taxes, Dickinson lowers the boom:
“Romney is profiting from one form of tax evasion in the Caymans: equity swaps. Under this racket run by top Wall Street banks, American firms pay out their profits — tax-free — to investment funds based in the Caymans.”
Now, I don’t know if Romney is doing anything illegal here. It’s quite possible that he is. It’s also possible that loopholes that once existed are being closed, requiring him to readjust accordingly. And I’d consider it quite likely that, regardless of whether he’s transgressed from avoidance to evasion, he’s doing all he can to push the line and still keep things above board.
Simply put, if I had Romney’s bucks I’d be doing as much as I could to keep as much for myself as possible too. And this is really what capitalism is all about. It’s not about funding an elite ruling class’ desire to win votes through porcine projects as though they play some sort of twisted Robin Hood role. It’s about building wealth, which builds jobs, which builds wealth. I’d far rather trust my resources to the resourcefulness of Romney than to the irresponsible authorities who have proven that they are utterly incapable of handling it in an equitable manner.
To be clear, this is not an endorsement of Romney. Rather, it’s an attempt to point out how inconsistent, hypocritical and biased the media can be when it comes to reporting on the morality or ethics of those in the public eye. Romney has proven to be a shrewd businessman. As long as he’s done so honestly, my hat’s off to him. We could use shrewd businessmen in politics, rather than lawyers who spend more time figuring out how to control and tax the citizenry than how to serve them for the good of the nation as a whole.
J. Keith Johnson’s Austrian and libertarian perspectives on current socioeconomic and geopolitical affairs are fueled by his insatiable desire to both discover and share the truth. A Goldco Direct affiliate, you’ll find his commentary on The Gold Informant website, as well as various Internet financial and news sites.