avoidance != evasion

Fwiw, the first definition I found for the word evade is “escape or avoid, especially by cleverness or trickery.”

In the US, they are very specific, distinct things.

Tax Evasion[0] is not paying taxes you legally owe. Tax Avoidance[1] is finding ways to owe less tax. Evasion is considered illegal, but Avoidance can practically be considered encouraged, as it's perfectly legal and rewards practitioners with lower tax bills.

[0]https://www.investopedia.com/terms/t/taxevasion.asp

[1]https://www.investopedia.com/terms/t/tax_avoidance.asp

>> an practically be considered encouraged

It is openly encouraged. All those little policies, those loopholes, are there to encourage certain behaviors and discourage others. Want to funnel profits into live insurance on your employees in order to avoid tax? (Walmart does this) Go right ahead. That bit of tax code is there specifically to encourage the use of life insurance. If it is in the code, it is there because the government wants you to use it.

Most people reading this are probably aware of the distinction in technical, legal terms. But it doesn't matter, because we're not prosecutors or the IRS.

But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy.

My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy.

Society, as represented by the government, wants charities to exist to assist with causes that society values, like, I suppose, architecture. They encourage this through the tax code. Society also want for-profit businesses to pay their fair share of taxes. This is blatantly a deceitful manipulation of the tax code, whether it's legal or not I don't care, they've abused the law to do things it wasn't intended to do

The difference between avoidance and evasion is very important. One of them is legal and economically encouraged, the other one is an accusation of a crime.

Also, most people learn this in high school. Calling it evasion when it is avoidance only confuses people as to what you mean, and makes people think you don't know what the terms mean.

> My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy.

But objectively speaking, you are aware it's the exact opposite? It's like trying to defend a function in C that causes UB by claiming it works on your machine. Yes, ok, but it is still UB. Your opinion does not change that, or what other people assume you mean when you say things.

The exact opposite of tax avoidance is tax evasion? I think not. Tax evasion is legally tax avoidance that has been proven to be illegal. What about tax avoidance that hasn't yet been proven so, or maybe the charge has been thrown out on a technicality, or maybe it rests on exploiting a loop-hole? To me, that might not be tax evasion legally, but surely it's tax evasion in spirit. And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words.

Small misunderstanding, he gave two scenarios, one which he claims is tax avoidance, one which he claims is evasion. My "opposite" referred to him swapping which one is by definition either avoidance or evasion.

> And since we're not in the middle of some courtroom proceedings, in spirit is how we should understand these words.

Agreed that one should be charitable with their interpretations. That said, not caring (or knowing) about this important difference between the two terms is a signal that one only has a shallow understanding of these matters. What useful opinion could one hold about how companies should be taxed when one doesn't understand basic economic terms?

edit: changed you->one so as not to seem accusatory

The merit in clarity and precision has less to do with your particular occupation or averageness and more to do with raising the floor for intelligent discussion upwards.

One of the things we debate as a society is taxes, because we live with them, pay them and discuss the services and salaries these taxes pay for. It is therefore incumbent upon participants to put their best foot forward in the larger discussion, and equating avoidance with evasion mimics vapid and hollow rhetoric. Else why bother to participate?

It is fair to criticize IKEA and you can certainly stake out a position as an adversary to their tax avoidance scheme without equating it with tax evasion out of a sort of intellectual laziness for one is within the realm of legislative discretion and the other within the real prosecutorial discretion and lead to two entirely different discussions.

> But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy.

Do you contribute to a 401(k)? Deduct home mortgage interest from your taxes? If so, you've participated in legal tax avoidance, too! I don't think either of those are scummy.

That’s right. The US uses its tax system to incentivize behavior. Say the government wants its citizens to buy more electric cars than ICE cars. It can put a ban on selling ICE cars but because the US by and large detests regulation, that has a huge political cost. So instead the government gives you a tax credit for buying a Tesla.

Or the government wants to encourage home ownership, so it makes mortgage interest tax deductible.

Or it wants you to get married so it gives you a tax break for filing jointly.

Or it wants you to live in Alaska so it gives you a tax credit to move there.

Or it wants you to revive an economically insecure geographical area so it gives your business a tax break for operating there.

Or it wants you to hire ex convicts so it gives you a tax credit for each one you hire.

This is a mechanism that is used by the federal and state governments to drive behavior. Arguably churches being tax exempt then is the government encouraging its citizens to participate in church activities because we are only one nation “under god”.

The tax system is effectively an operant-conditioning system, functioning on both corporations and individuals, where the negative stimuli are taxes and the positive stimuli are tax credits.

Seen under this lens, any individual or corporation who is not practicing optimal "tax avoidance" — i.e. doing the things required to qualify for tax credits, and avoiding the things that would cause taxes — is not putting themselves as fully under the thumb of the state's operant-conditioning apparatus as the state would like.

The state wants you to min-max your taxes. The tax system is designed around the assumption that taxable entities will min-max their taxes. If you're not doing it, you're not just leaving free money on the table; you're also being sub-optimally pro-social in the state's (society's?) opinion. "Tax avoidance" is to Western states, as "social credit score" is to China: a score of how well you're living up to the government's expectations for you. Of course they want you to aim for the best score you can!

(I can understand people refusing to minimize their tax burden for ideological reasons — i.e. refusing to be manipulated into certain behaviors by the state. But I don't think I've ever heard anyone espouse this stance. Most people don't even understand that taxes are the state attempting to manipulate you.)

"Tax evasion" refers to illegal actions to indeed evade tax lawfully due.

"Tax avoidance" is the perfectly legal practice of (more or less aggressively) minimising the amount of tax lawfully due.

Everyone engages in tax avoidance at least to a degree.

People don’t like thinking this way... it’s difficult for a lot of people to grasp, for example, that if they have children and claim those children as a deduction they are thereby avoiding federal income taxes. Individuals avail themselves of the parts of the tax code that benefit them just like Big Corps do. You are not required to claim offspring as a deduction, so I guess by the logic of many people in this thread anyone who does is scummy because they are avoiding taxes? Seems kooky.

Obligatory quote from Judge Learned Hand:

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

I most people wouldn't your example tax avoidance. That deduction is meant for that particular situation and claiming it is to be expected. Exploiting some complicated loop-hole is something else entirely. That's what most people would label as tax avoidance.

You are making a distinction that doesn't exist. What you might consider a complicated loophole might be what every company with a CPA considers standard practice. Just because it's not obvious to a layman doesn't mean it's not the obvious standard operating procedure for corporate taxes. They are both "avoidance" in the same way, which is taking advantage of specific provisions that benefit that tax paying entity.

It's the same with the mortgage interest deduction. You avoid some level of taxes as a homeowner by deducting your mortgage interest. Until you have a house and need to do so, it may seem like some weird loop-hole in the taxes, and when you have a house and use it, it's just something you do every year.

Don't expect a multi-national company worth hundreds of millions or billions to view the tax system as being as opaque and complicated as it seems to an individual. Their situation is vastly more complicated than an individuals, and their capability to navigate the tax system is vastly higher as well with multiple CPAs on staff or a large firm hired, so they can take advantage of those provisions put into the system specifically for them.

That is effectively my point. It may be worth reassessing your perspectives if you are comfortable saying “when I use the tax code to my benefit, it is okay” but “when he uses the tax code to his benefit, it is not okay.” Fundamentally it is the same thing. The only difference is the scale. I’m open to arguments as to why this conclusion is correct, but it really seems like the classic case of hating on Big Corps because they are big, not because they are doing something bad (which they often do, but not in this case. To my mind).