Sunday, September 6, 2009

My Response to a Republican's e-mail about Tax Evasion

This is the response that I sent to the e-mail in the previous post. I messed up one of the facts, It was Daschle, not Geithner who failed to report a car - and it was a car with a driver, but I am posting it as written.

I'm right in more than just theory. The IRS got information on 4,450 accounts with $18 Billion in them - that averages just over $4 Million per account. Undoubtedly there are many more "small" accounts than large ones, so the big ones will be in the hundreds of millions. In any case the numbers are huge.

You go on to make a case that " The IRS lost the right to go after tax evaders" You base this on two facts (1) There are politicians that have failed to pay taxes (in what you admit are far smaller amounts than the ones we are talking about here) and (2) there are corrupt, immoral democratic politicians.

Since the second fact is more peripheral I'll deal with it first. Yes, there are corrupt politicians on both sides of the aisle. Sometimes the system works they are caught, tried, and convicted. Sometimes it fails. We'll get back to this point later.

No politician should be above the law. This includes Ollie North in Iran Contra, president Nixon in Watergate and Bush with his warrant-less wiretaps. Once you start exempting politicians from having to follow the law, from checks and balances, you begin the slide from the rule of law to the rule of man and those systems end up serving only the people at the top (think North Korea, Communist China, Nazi Germany, Imperial Japan).

So, you would think I'd be as outraged at Timothy Geithner as I am at the tax evaders with the accounts in Switzerland, but I'm not.

First, there is the question of scale. For Geithner the $43,000 (including penalties and interest) is rounding error -- it was a car provided for personal use and not declared if memory serves.

Second, there is the question of intent. I know those with Swiss accounts were trying to evade taxes. I'm not sure that Geithner was. I've got an MBA, some financial sophistication, and my taxes are surely less complex than his but I'm sure if you went through my returns with a fine toothed comb you would find mistakes.

Third, there is a question of equal treatment under the law. Even for the Swiss account holders, if they voluntarily came forward and paid up the IRS said that they would not be prosecuted -- and that is for a far more egregious offense.

Fourth, there is a question of the standard of evidence. In this country, we require evidence beyond a reasonable doubt for a criminal charge to stick. You can argue that there is a reasonable doubt about forgetting to declare some income -- but not about hiding a million bucks in a tax haven.

Finally, I want to address the most troubling claim, that because you think there has been some unfairness in the system the IRS "gives up the right to collect taxes." As I'm sure you'll agree, this system -- democracy with checks and balances, is the best one tried on the planet to date. Sure it is imperfect and unfair at times -- it is designed and run by humans. If everyone decides that they need not pay their fair share until the system is as fair as they want it to be we'll end up with next to nobody paying. Then the things you value: aid to Israel, a strong defense, the police, etc. won't be possible. The things that I value: education, the FDA, the NIH won't be funded either. This particular paradox - conservatives claim that they don't want anarchy or tyranny but are unwilling to pay the price for democracy - that drives me crazy. They claim to love our country, but fight against our government - trying to starve it of the money it needs to run.

I don't like everything our government does. I hate some of the things our politicians do. There is injustice and waste in our system. I am happy to lobby for a more efficient, less corrupt system - but not at the price off vilifying the great system we have. I think that conservatives should feel the same way.