NOTE TO SELF, BASED ON QUAKER TESTIMONIES OF INTEGRITY, SIMPLICITY, PEACE, EQUALITY, AND COMMUNITY:

1. Love the Lord your God with all your heart, mind and soul, and your neighbor as yourself.
2. Do what you say, say what you think, think what is true.
3. Subtract superfluities from your life, speech, desires and thoughts.
4. Don't initiate aggression against the persons or property of others, nor support people who do, including the people who "constitute" the government.
5. Respect life and natural law.
6. All people are endowed by their Creator with equal and inalienable rights to the earth and to the fruits of their own labor, and a "Citizen's Dividend" funded by a "Single Tax" on the unimproved value of land and other natural resources would be the fairest way to protect these rights.

For supporting materials, see the Archive and the Recommended Reading and Videos section at the bottom of this page.

Thursday, November 29, 2007

Becker and Posner on Tax Evasion

The Becker-Posner Blog has an interesting post on tax evasion. I found this particularly interesting from Becker's comment: "To some extent, people obey many laws, including tax laws, because most other persons are doing the same. If so, their behavior might change radically if they lost confidence that others would pay their taxes and obey other laws."

And I found this particularly interesting from Posner's comment: "Thus far I have focused only on punishment costs. But a neglected point in the economics of crime is the information costs of committing a crime. Evading taxes requires more knowledge than stealing a bike. Most taxpayers probably don't have a clue as to how to evade taxes without being caught. It might seem awfully simple--just list your cat as one of your dependents. But to know whether this would work, you would have to know whether the government has any independent source of information about the number of a person's dependents. You can't just go to a lawyer and ask him what the best way of evading taxes is." A better source of information might be the practical resources available at the website of the National War Tax Resistance Coordinating Committee.

Posner also says: "Every dollar spent by the Internal Revenue Service on enforcement brings in several dollars in additional tax revenue, suggesting that an expansion in the IRS’s budget would be necessary to equate the marginal benefits of tax enforcement to its marginal costs. But this suggestion ignores the fact that the benefits are, as a first approximation, merely income transfers, whereas the marginal costs of tax enforcement are social costs. If taxes are evaded, the resulting shortfall in tax revenues is made up by increasing the tax rate, and there is no social loss unless the increase has worse misallocative effects than the evaded taxes would have had, had they not been evaded. One reason, therefore, that tax evasion is widespread is that it may be cheaper from an overall social standpoint to have slightly higher tax rates than to devote additional resources to law enforcement, though the first-best solution might be stiffer penalties, especially monetary penalties." These observations point to one of the classic rationales for and advantages of a land value tax: You can't hide land, and therefore the social costs of land value tax enforcement are dramatically less than those for income tax enforcement.

This also is an interesting comment from Posner: "I would be inclined to search as hard as possible for nonmoral costs before concluding that morality is a major motivator of behavior, especially with regard to crimes, like tax evasion, that do not have an identifiable victim." Posner-the-economist-and-federal-judge appears to find the solution in maintaining or stiffening the legal sanctions for tax evasion, without ever questioning the propriety of punishing people criminally for violating "laws" that Posner himself believes most people do not feel a moral duty to comply with. A "law" with criminal penalties attached that the majority does not feel morally obligated to obey? Sounds like the very definition of an immoral and tyrannical "law" to me.