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TAX EVASION KILLS?

May 12, 2008

Illegal tax evasion by companies is depriving the developing world of $160bn (£82bn) a year, which could be used to prevent the deaths of 1,000 children every day, Christian Aid says today.
In a new report, Death and taxes: the true cost of tax dodging, the charity says the sums being lost to tax evasion globally are equivalent to almost one and a half times the amount of foreign aid given to poor countries each year. If legal tax avoidance were added in, the sums would be several times greater.

If the money lost to illegal evasion were allocated according to current spending patterns to prevent poverty and disease, it says, the lives of 350,000 children, 250,000 of them infants, could be saved each year.

I don't buy it. In much of the developing world governments are merely lawless gangster regimes. Millions of people trying to scratch out a living in countries without the rule of law survive only because they, or their employers, hide enough to eat from their parasitical overlords. In such places tax evasion saves lives by letting people feed their children, rather than their dictators' Swiss bank accounts. It's hard to see where the people of Burma, for example, or companies that operate there, have a moral obligation to feed a government that won't even let outsiders in to help feed their subjects after a humanitarian disaster.

It's wrong to apply the same kind of ethical standards to tax evasion in a despotic land that applies in the U.S. While our tax system has flaws (heaven knows it does), at least you have some predictability as to what is taxable, and you have a reasonably fair system to turn to if you disagree with the IRS. Try telling, say, the Cuban or Russian government that you disagree with their tax assessment and see how far you get.

UPDATE: The Tax Prof has more.

Tags: tax policy.