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How not to evade taxes September 9, 2006

Posted by federalist in Taxation.

So you go out of your way to make half a billion dollars in personal income in such a way that the government doesn’t hear about it.  The government believes its fair share of that income is $200MM, but you don’t volunteer any of those taxes.

If the government finds out it will make you pay and throw you in jail for a long time.  (Oh, unless you find a corrupt President you can pay off to grant you clemency.)

I’m ambivalent on this sort of thing.  On the one hand, it’s a sort of deliciously libertarian gesture.  On the other, only really rich people can afford to pull this off, and it’s not like they’re making big sacrifices as tax protesters: if it works they profit handsomely.

Which leads me to my big question: If you cheated the government out of more than $200MM, couldn’t you afford to invest some of those savings in a security and escape plan?  How does a guy like Walter Anderson actually get caught?  Or could it be that personal tax evasion on this scale happens all the time and it’s only the really sloppy or unlucky ones that go to jail?



1. federalist - April 4, 2007

Here’s a great article about how war protesters are fighting taxation. Interestingly, in almost all cases they avoid jail. And if they are willing to switch jobs often and avoid acquiring large or traceable assets, it seems that the IRS has a hard time ever catching up with them.

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