By Raymond C.
Taxes are terrible. Nobody likes paying them. In the United States, it is estimated that $400 billion to $500 billion dollars worth of taxes go uncollected per year due to evasion and non-compliance. Another $100 billion gets lost through offshore banking. Ouch. These are eye-popping figures and would certainly go a long way to help solves some of the budget problems we are currently dealing with.
There is however one little problem, nobody seems to know how to deal with this problem of tax non-compliance. Here is a story that deserves some ridicule. On February 8th Harry Redknapp, the current coach for English soccer team Tottenham and Milan Mandaric, the owner of Sheffield Wednesday, were acquitted on charges of tax evasion after five years of investigation and court proceedings. The details of the case are pretty common for tax evasion trials; it involved a bank account in Monaco opened in the name of Redknapp’s dog, and Mandaric depositing a sum of money into said account, thus saving each party a small tax bill. Now here is the kicker, the amount at the center of this transaction is 189,000 pounds. Which, even taxed at 50%, quite high by any standard, comes out to a 94,500 pound tax charge plus some penalties. The cost of this five-year investigation? 8,000,000 pounds.
Sometimes the numbers just don’t add up. Ask yourself, in what circumstance would you, normality and sensibility presumed, spend $100 to seek a return of just 0.875 cents? Or rather, more generally, is justice worth pursuing at any cost?
Now, the argument for pursuing cases such as this one is the notoriety. Governments believe that ordinary people, like myself, will refrain from cheating the system because we see these cases play out on the news and famous people do sometimes go to prison. However, it might not be the right approach to combat tax evasion. The IRS has recently been very successful with infiltrating the UBS client side tax evasion system by turning one of the key bankers within the bank itself. The settlement forced UBS to turn over 4,450 names and eventually that number may increase to 10,000. It allows the IRS the access to enough information to prosecute a large number of Americans for skipping out on their taxes, in another word, a big payday for the IRS at a very minimal cost.
I believe this is the correct way to go about finding a solution to this issue and the correct way to spend our tax dollars.
