At a high level, what makes tax evasion wrong is when people are able to benefit from the commons — stable currency, weights and measures, a climate of rule of law and the commensurate security of property — without paying into it. People who have successful businesses and are worth millions of dollars would be robbed and cheated every single day if it were not for the vast array of institutions — expensive institutions — that facilitate the climate of trust and security characteristic of developed countries today.

Let me be the contrarian here: history seems to suggest otherwise.

All throughout history, any society of sufficient complexity develops strong hierarchies, with a small ruling elite. Throughout history those ruling elites almost never had a problem exerting sufficient oppression on the majority of the population so as to remain rich and powerful. Indeed it has been argues that the ruling elites of yesteryear were substantially more wealthy in comparison with the rest of the population than today's rich. Ruling families tend to last centuries (e.g. the almost 2000 year rule of Europe by a few families like the House of Habsburg which ruled Austria for > 600 years, or ongoing 2.5K years ruling family in Japan, the Shang dynasty ruled in China for 554 years. House of Saud is ruling for nearly 3 centuries. Etc etc.) We remember the French revolution, because it's so rare.

Contrary to what you claim ("expensive institutions"), oppressing a large number of people into submission is cheap, provided the oppressors cooperate tightly and efficiently. (See also the prevalence of slavery in almost all known societies before industrialisation).

It has been argued that by letting the rich get off with some tax evasion, the population buys them off, buys their acceptance of democracy and low-levels of oppression.

This is bogus because “the rich” we are talking about here only exist because of peace and security and these other institutions. The historical rich were not people who sold snacks; they were the people providing stability and security — they were warlords. Someone like Bezos or Gates is not able to oppress and doesn’t need to be bought off.

It is true that Bezos' and Gates' ascent depended on "peace and security and these other institutions", but wealth once acquired can easily be defended by burning those institutions to the ground; indeed that would probably increase their relative wealth through making almost everybody else worse off.

Hard to believe that Bezos or Gates would find it difficult to hire enough mercenaries to defend their position at the top of the social hierarchy.

History certainly seems to suggest that the ruling class virtually always manage to do this. The main way in which the ruling class looses power has been being displaced by other members of the ruling class, which is why dictators are always especially suspicious of their own army and secret service leaders. For example, after the collapse of the Soviet Union, Russia became a fiefdom of 4 oligarchs pretty quickly, and they were displaced by a high-ranking ex-KGB operative (Putin) and his people, i.e. by a gang from another power center.

What historical evidence to the contrary would you put forward?

The evidence you cite is actually the evidence I would cite. If Bezos and Gates were to hire mercenary armies — and really needed them, because the uniformed services of the United States were not available — they would need to rapidly change the character of their leadership. They would be a different kind of elite, if they managed to make the transition at all.

My point is that the kind of elite we get in a context of peace and security is very different from the kind we get outside of it. Russia is run by a former member of the security forces, and that is often what happens in a time of disorder. How many other former leaders of Russia were drawn from the security forces, and when?

Seven of the eight leaders of the Soviet Union were military men — all but the last. Gorbachev was trained as a lawyer and worked as a bureaucrat of some kind.

Yeltsin, a civil engineer, followed Gorbachev in 1991 as the first President of Russia. Putin followed Yeltsin in 1999.

> stable currency, weights and measures, a climate of rule of law and the commensurate security of property — without paying into it.

You are making a very big assumption here - that paying taxes guarantees you these things. I assure you, it does not.

In fact, I believe that public services and the amount of tax you pay have been out of sync for a very long time - that is, that it is quite possible to pay a lot of tax and get none (or only a few) of those services.

I am not saying it guarantees those things and that guarantee is not relevant to my argument at all. They have to be paid for, they aren’t free.

It is definitely possible to pay a lot of tax and get nothing and that is something to be opposed. America’s existence is testament to the resentment that unjust taxation evokes.

The majority of us would agree that 100% taxation is unworkable, as in, every single cent of income I earn is seized by the state.

Given your comment, I assume you think 0% taxation is also infeasible.

So we agree that somewhere above 0% and below 100% taxation there is some optimal amount. However, given the circumstances of the country and our personal philosophies, we may disagree on that optimal level.

The fact that free people can move to lower (or higher!) tax jurisdictions, and judge the quality of those services based on how much they pay and what they get in return, is a good thing in my opinion. The competition keeps politicians from elevating taxation to that unworkable 100%.

> The fact that free people can move to lower (or higher!) tax jurisdictions, and judge the quality of those services based on how much they pay and what they get in return, is a good thing in my opinion.

I think few would disagree that if you move to a new jurisdiction to benefit from a different tax scheme, that's fine. But therein lies two problems: First, so few people are able to move; the wealthy are disproportionally able to have their pick of tax jurisdictions so they can extract benefits from one society and then jump ship when it suits them without returning benefits to that society.

Second is when people move on "paper" to benefit from another jurisdiction but don't physically move in reality. Thus they continue to benefit from the society they nominally "left" but don't pay into it. That's the kind of tax avoidance / evasion that most people have a problem with.

> First, so few people are able to move;

Let me tell you a little story. In 2013, Croatia had some 350,000 unemployed. In a country of about 4 million people, that is a lot. Today, we have the lowest unemployment rate in the EU. What happened?

Many of those people (and even some that were employed) left for Germany and Ireland. It's gotten to the point that the government has increased non-EU worker quotas in order to plug the hole - despite being part of the EU and having access to its huge labor market!

So, as you can see, at least in the EU, people can and do move.

What does this have to do with taxes? Germany does not have a problem with tens or even hundreds of thousands of skilled migrants emigrating to fuel its economy. But God forbid that some billionaire decides to leave Germany for Malta - that's an atrocity and a EU-wide problem that MUST be solved. Despite the fact that the EU is based on the free movement of labor, goods AND capital.

I think that in the future, more and more people are going to be voting with their feet - and not just the rich. Between gerrymandering, vote buying, corporate lobbying, vocal minorities, apathetic voters and defective electoral systems (first past the post/two party systems) many have lost faith in democracy.

> Second is when people move on "paper" to benefit from another jurisdiction but don't physically move in reality. Thus they continue to benefit from the society they nominally "left" but don't pay into it.

What jurisdiction allows this?

The US is particularly draconian by taxing worldwide income; every other country that I know of will tax your income if you live there.

Many jurisdictions have residency rules that allow people to partially move - e.g in the UK if you have a residence overseas and spend less than half a year in the UK, you don't count as UK resident for that tax year.

Although really most of the tax avoidance schemes rely on moving one's income and assets to a company and then playing games with the "residency" of the company.

I wonder if it's such a great loss. What if a few hundred Americans moved to Australia? Is whatever they would do with their wealth in the US worth more than the price we pay for their disproportionate political influence?

You’re thinking country level, but let’s go one step below that: when one billionaire moved from New Jersey to Florida, it was a major issue for New Jersey’s annual budget.

> Simply put, people vote with their feet, and the rich have the best shoes money can buy.

I have been on vacations on Malta. It is a nice place for a vacation, but it is not the most interesting place in the world to live in.

Rich people are rich because they have access to luxury items, health care, transportations systems, etc. For all that to exist a complex society is needed where citizens have education, transport, health care, food safety, clean water, rule of law... and all that costs money, a lot of it.

If rich people leave that society, how rich are they? How easy is to just tax the business that produces wealth?

Malta, as a nice place as it is, cannot produce super-rich people. Is Malta decides to isolate itself it just becomes an inhabitable rock in the middle of the Mediterranean. The same goes for more tax havens.

Rich people will vote with their feet, but the economy will not care. Taxes are needed to generate any wealth independently of the tantrum of a few rich people.

I agree with you that Malta may be not as vivid as London. However, its citizenship is still good for moving anywhere else in Europe, isn't it? I mean, it takes 1 year to "buy" it and then there is no need to reside there. (You may check it yourself, there is a detailed brochure here https://www.greenlion-immigration.com/countries/malta/)

In a just world, the 100 countries signed on to the information sharing agreement would embargo travel to and from Malta and other countries that support evasion, with passport seizures at the border when their citizens enter with Malta passport stamp pending the outcome of a criminal investigation into their reason for visiting.

Sounds like a great world!

I hope someday to be befriended by a wealthy person, so that I can better empathize with the trauma that such a policy would inflict on them, but I am poor because I funded someone’s book and have never known anyone rich enough to care about avoiding taxes. Perhaps someday I will have such a friend, but not today. Based on your reaction, I envy you that :(

> [Malta] it is not the most interesting place in the world to live in. Rich people are rich because they have access to [...] If rich people leave that society, how rich are they?

So you want to prevent rich people from moving to low-tax jurisdictions for their own good? How kind of you!

> If I donate to a nonprofit, itemize my deductions, and get a tax reduction based on my donation, am I not "evading" taxes?

No. You're mixing up terms. That's avoiding taxes. There's a critical distinction in the tax world between avoiding taxes and evading taxes. One is legal and common, one can send you to prison and get you a lifetime of close IRS scrutiny.

Simplified, evading means to not pay what you actually owe (what you should be paying). Avoiding means to use entirely legal means - such as deductions - to not owe the taxes in the first place. To evade taxes you always have to do something illegal. In avoiding taxes you should never break the law.

Emigrating to lower-tax countries is not illegal. So it's not tax evasion, correct? Anything I do that is legal cannot be tax evasion?

Well if you donate money it should, in a perfect world, be only tax deductible if it is for an effort society seems of special value so that incentives are implemented to support this.

So tax deductible donations show what is important for a society at large. And society profits.

Leaving a country to evade taxes doesn't help society at large. People do this after they profit of the infrastructure and all other stuff society provided and paid for with taxes.

But nonprofits encompass a huge variety of organizations, some promoting guns (the National Rifle Association[0]) and others paying for abortions[1]. Wouldn't it be better to force everyone to pay their taxes owed, then if they are truly altruistic, donate whatever extra they want?

I really don't see how tax deductions for donations aren't glorified tax evasion strategies.

[0] https://www.snopes.com/fact-check/nra-tax-exempt-non-profit/

[1] https://abortionfunds.org/

The passage I quoted is about evasion, not avoidance. To give a bit more context, the prior sentence speaks of "misuse".

> The Organisation for Economic Co-operation & Development is scrutinizing the potential misuse of these schemes. In October 2018, it released a blacklist of 21 jurisdictions, including Malta and Cyprus, that it believes are undermining international efforts to combat tax evasion.

What we're talking about here is hiding assets that are subject to taxation. Like Swiss banks did for many years.

"donate to a nonprofit" is not 'tax evasion' (which is illegal)

You could argue it's tax avoidance, but it's not even that, it's just making a donation, and that's how they are taxed. It's part of your normal activity: taxes are higher on some things than others.

Creating a non-profit as a special purpose vehicle would be 'tax avoidance' but if it's legal, it's legal.

The OP's comments are perfectly just i.e. punishing tax havens because there's deep incentive for them to facilitate actual tax evasion, moreover, they enable the stockpiling of surpluses generated elsewhere. Especially for those part of a 'common market' - you can't have taxes at 1% in Malta and 50% and France, it's not going to work.

Dubai does not have any tax deals with the US, it's built on utterly shady tax dealings. Much of the money poured into Afghanistan by the US for reconstruction ends up there, for example. It's super duper dirty.

People are not fleeing China because of 'taxation' in the classical sense, they're fleeing for a pile of other, obvious reasons.

People are however fleeing France, partly due to 'taxation' and this is an issue ... they have some issues with competitively and their solution of 'just tax the rich' will not work out if that's it.

Worth considering: normalize the migration data against 'regular people' and what you'll find is that still a lot of Chinese are moving to Australia/Canada, and in general people are moving there, the US anyhow!

I'll bet the one that sticks out a little is France. I don't suggest a ton of people are leaving, net.

> You could argue it's tax avoidance, but it's not even that, it's just making a donation, and that's how they are taxed. It's part of your normal activity: taxes are higher on some things than others.

Right, but if it's perfectly legal to emigrate to a lower-tax jurisdiction, is that not "part of normal activity"?

I think there's an argument to remove the tax deduction for donations. If you are doing it altruistically, then you still owe your fair share to the government, no?