Tax avoidance is supposedly legal – it exploits loopholes in the law
Tax evasion is illegal – it involves straightforward lying to tax authorities
Both have the same purpose
To free-ride the state and other citizens whilst enjoying the collective goods that they create
That’s why both are rightly called tax abuse
Actually, me, the Spudmonster, I’m the only person who calls them both tax abuse. Because everyone else calls tax avoidance “obeying the law”.
What tax abuse does to markets
Denies them the information they need to allocate capital efficiently
The opacity tax abuse needs increases risk for all market participants
Increased risk increases required rate of return for investments
That reduces the amount of funding for investment and so market activity
And that’s me jumping the shark. Paying less money to government decreases the amount of investment in the economy.
Err, yes Spud, yes.