Tax law professor and progressive blogger Linda Beale says that the reason we have tax evasion is because of too much capitalism and not enough regulation. Specifically, Ms. Beale objects to the following statement made by a New York Times Magazine author she refers to only as Adam D:
One often-overlooked lesson of the financial crisis is that shenanigans don’t happen in the absence of regulation; they happen when regulations are exceedingly complex and involve confusing, overlapping regulatory authorities.
Shenanigans happen in brute force capitalism–the kind we’ve had in place for the last few decades–until there is one dominant beast who controls everything. Regulations ain’t the cause.
Illegally hiding ones money in an offshore account to evade taxes has nothing whatsoever to do with capitalism, brute or otherwise. In fact, it is anti-capitalist to shelter one’s capital to evade taxes because it gives the shelterer an unfair competitive advantage over his marketplace rivals. What tax evaders are doing, then, is a perversion of capitalism, not capitalism itself, in much the same way Islamic terrorists practice a perversion of Islam. To denigrate capitalists for the sins of perverse capitalists is no different than denigrating Muslims for the sins of perverse Muslims.
The truth is that the dominant beast that slouches toward Bethlehem to be born isn’t capitalism, but rather statism. The former at least is subject to the checks and balances of free market competition, however imperfect those checks and balances may be. Statism, or big government, has no competition and, therefore, is in an actual position to control everything as was recently demonstrated by the
King Mayor of New York when he made it a crime to purchase a Big Gulp.
I am a little surprised that Ms. Beale takes exception to Adam D’s observation that “exceedingly complex” and “confusing” regulations create a climate for tax shenanigans. Surely she is not in favor of such regulations, as her repeated calls for tax simplification and tax reform would suggest.
Adam D is calling for the simplification and centralization of regulations, not their eradication. What’s so objectionable about that?