My Rant Against Tax Cheaters

I mailed in my taxes on Monday. I paid $50 to the Federal government and I paid $694 to the State of California. I would've owed much less had I not sold any of my company stocks last year. But I've reaped some nice gains, so it's only fair that I pay taxes on it. Besides, since I've held the stocks for over a year, I benefited from a lower capital gains tax rate.

And this leads me to my soapbox rant:

There is something wrong with our tax system, which allows people of means to manipulate their tax obligations through their claimed capital gains and capital losses. It's one thing to practice legally recognized tax avoidance (like selling stocks within a Roth IRA) and another to engage in tax evasion.

[Disclaimer: For obvious reasons, I am not going to go into specifics. Furthermore, I have no knowledge of anyone actually engaging in the conduct described below. This is just a general rant and is not directed at anyone in particular. Any resemblance of facts and circumstances to an actual person is pure coincidence. But if my rant hits home, I'm talkin' to YOU.]

Frankly, it's wrong of you to claim capital losses when in fact you haven't suffered any. And guess, what? Your reliance on a tax preparer really doesn't excuse you for claiming a loss that you haven't realized. You may have legal recourse against the tax preparer, but the bottomline is, it's your signature at the bottom of the tax form. YOU'RE responsible.

It's also wrong for you to out-and-out lie about your cost basis so that you can get a tax refund. And, no, ignorance of your true cost basis is never a defense. And besides, you're not ignorant -- your act is intentional. It's the difference of being stupid vs. a liar, and I know you're not stupid.

It's amusing (*NOT*) how you find burglary, shoplifting and any other forms of theft morally repugnant, yet have absolutely no problem evading taxes. Here's a newsflash: when you lie about your capital gains (or losses), you ARE indeed stealing from other taxpayers. If you owe it, pay it -- it's your obligation as a citizen.

And this whole argument by you and other like-minded people, that paying higher taxes is unpatriotic, is completely mind-boggling. You further justify your actions by claiming: (a) that the government is wasting taxpayer money, (b) you already pay enough tax and (c) rich people have other tax loopholes unavailable to the hoi poloi. Even assuming these arguments have any merit, which they do not, it's no excuse for lying on your tax return.

It is utterly hypocritical for you to accept the benefits of governement protection and programs, yet shirk paying your fair share of taxes. I understand that you don't like paying taxes. Neither do I. But guess what? To paraphrase Justice Oliver Wendell Homes, you pay for the privilege of living in a civilized society by paying taxes. (Justice Holmes' actual quote can be read here.) By evading taxes, YOU are unpatriotic, my friend.

And when you get audited (which I doubt you will), I won't be lending you a sympathetic ear but I'll try not to say, "I told you so."