The Illusion of Tax Evasion
By Hans
Sherrer
©1998
Revised and updated November 2002 [1]
“Have you explored the inner
relations of an act? Do you know the causes with certainty, why it happened,
why it had to happen? If you had, you would hot be so hasty with your
judgments.”
Goethe
Introduction
Tax evasion is a politically defined
legal concept that is anything but a narrow cut and dried issue. There are
subtleties of context, as well as concrete determinations involved in assessing
whether tax evasion has occurred in every situation where it might be involved.
The reality that tax evasion laws have limited applicability is contrary to the
common public perception that it is a relatively black and white issue. Consequently,
a debunking of the widespread misperception about the nature of tax evasion is
needed.
The lack of comprehension about tax
evasion isn’t surprising, since most discussions or proceedings related to criminal
laws are conducted from beginning points that place the government’s position in
the most favorable possible light. This approach, however, tends to inhibit understanding
and obscure contrary points of view that may cast doubt on the government’s
perspective, since considering an issue is like looking at a finely cut diamond:
The angle one looks at it from can affect what one sees and believes about it. So
it is with the tax evasion. This essay concerns itself with a sorely neglected
and widely unappreciated aspect of tax evasion: the importance of the mental
state of someone suspected or accused of engaging in it.
I
The
Personal Nature of Human Actions
Like all human activities,
understanding tax evasion involves much more than merely looking at what a
person has done, but requires an awareness of the person’s intent and purpose underlying
that action.
The hidden depths of the human mind
and the mysterious nature of what drives people to act as they do are evidenced
countless times each day by events in every person’s life. A cursory look at
just one common daily occurrence will suffice to illustrate this point. Let us
suppose that in
It doesn’t belabor the point to
emphasize that while you can observe and record what a man, woman or child has
done, it only provides the information for you to guess the why and wherefore
of the reasons influencing them to do it. If what a person has done is
important for some reason, the intent, purpose and influences behind their actions
can’t honestly be ignored as if they didn’t exist, simply because they may seem
inexplicable or unfathomable. The fact that you aren’t privy to the innermost
processes involved in determining an action someone has taken, doesn’t make
those unknown reasons any less real, important or valid. What is known
from observing the above mentioned hypothetical man, is that he bought a loaf
of white bread in the course of his daily life. What isn’t known are the thought and decision making processes that led
up to him doing it? The same could be said for the innumerable other actions comprising
the fabric of his life.
The foregoing is important to
understand in the context of tax evasion, because a key element of tax evasion
is it involves actions allegedly undertaken by someone with a specific purpose
and intent to commit a crime. Hence, it necessarily involves all of the
numerous nuances of the nearly indecipherable individual motivations and
purposes of action that underlie, and are an inherent part of even the simplest
of daily activities, such as the purchase of a single loaf of white bread.
The recognition that tax evasion involves
the complexities of human actors (even when businesses or other organizations
are involved, human beings make the decisions) is particularly significant
because we live in an age of homogenization and conformity such as the world
has never seen before. Multinational corporations have made standardized products
and brands of such things as food, clothing, beverages, electronics, entertainment
and automobiles widely available not just in the
II
The
Redefinition of Individualism
Various aspects of the
centralization that is occurring in the
Proponents of these ideas are not
afraid to reveal their objective in reshaping the inner soul of humanity, because
the “new individualists” they describe are brazenly referred to as artificial persons. [6] It is
little comfort when we are informed in The
New Individualists:
“It cannot be emphasized
enough that the designation artificial
person does not mean these people are becoming phony or insincere. Rather,
it refers to a changing conception of what constitutes an individual and indeed
makes someone individual. ... It is
an individualism predicated not on the self,
but on the person: while self connotes a phenomenon that is inner,
nonphysical, and isolated, person
suggests an entity that is external, physically present, and already connected
to the world.” [7]
This description reveals that the
very concept of a new individualist constitutes a perverse twisting and
outright obfuscation of the definition of the word individualist, which is defined
by Merriam-Webster’s Collegiate Dictionary, 10th edition as: “one that pursues
a markedly independent course in thought or action.” That has been recognized
as the definition of individualist since it was first used in 1840.
The essential defining element of people
referred to as new individualists is they aren’t considered to possess the
inner animating life force that has historically been acknowledged as indistinguishable
from an individual person exercising it. Their susceptibility to being
unnaturally influenced and manipulated by outer stimuli, and their appropriate
responses to them, is the most salient common personal characteristic of the
new individualists. Thus, the very concept is a mutation of the historical
definition of what an individualist is. Particularly considering that when the
proper stimulus is applied by the organization(s) a new individualist is a part
of, he or she is expected to respond like a Pavlovian dog to the ringing of a
bell. [8] The most dutiful of the new
individualists repeat and unquestioningly follow the word and letter of rules,
regulations, laws, and orders in mantra like fashion. [9] They march
in a carefully defined procession while thinking they are retaining the essence
of what they’ve been taught is individualism. [10]
Consequently, the most visible
distinguishing characteristic of these new individualists is they essentially mimic
the world-view/paradigm of the organizations they are a part of. In the
Interestingly, it is the offspring of parents who are a part of
large organizations who are showing the most widespread signs of being infected
most deeply with the new individualist syndrome. The spread of the syndrome
through the
“Out of this slow and agonizing death of the authentic self, there is arising a new social character: the artificial person. This new social character is already discernible among a vanguard of the organization offspring and is now emerging among the remainder; it is likely to spread eventually throughout the middle class and, as often happens, attract the lower class and surround the upper.” [12]
One profound consequence of the
spreading of this doctrine through Western culture is that its supporters are
becoming ever bolder in publicly endorsing the idea that the government is the sovereign
entity and the new individualists are its subjects. Thus, everyone who is
inculcated with this doctrine is considered to occupy a subservient position to
the government, not unlike that occupied by the British people in relation to
the Monarchy under the doctrine of the “divine right of kings.” [13]
In spite of the proclamations about
the emergence of the new individualists, they are at most, only a new
phenomenon in the sense that they are becoming more prevalent among the general
population in the
A cultivated incredulity for
different ideological points of view is an important component of people described
as the new individualists, as well as anyone who shares their basic outlook. Their
mindset severely limits their vision of human possibilities. So much so, that
they find it a difficult, if not impossible to comprehend that someone can
honestly act contrary to what is considered to be the “party line” of the organizations
they are associated with. They view any conduct that deviates from the norm
established by their accepted authorities with suspicion, and even hostility. They
also have difficulty imagining that behavior contrary to what is approved by
those authorities has not been deliberately done by a person in violation of
the rules/law with the specific intention of doing so, knowing it was the wrong
thing to do. They have this attitude, because that is the only circumstance
under which they would have so acted.
This implanted, and in some cases ingrained prejudice against actions and the
people engaging in them that may not have official organizational/government
sanction, undermines respect for the immense diversity of thought, and peaceful
and socially constructive action that human beings routinely engage in. Nevertheless,
this attitude of intellectual tunnel vision and denial of the veracity of that
which seems unusual isn’t new. It was evidenced in medieval times by the
Catholic Church’s response to Galileo’s recognition that the Earth revolved
around the Sun, and today by the intolerance of Supreme Court justices to
people that have views different than their own. [14]
III
The Non-recognition
of Independent Choices
As the public forums in the United
States become increasingly dominated by those who cannot conceive of reliance on independent thought and action as a natural
and normal part of their existence, then those who engage in such activities as
naturally as they breath, eat and sleep will be isolated from the mainstream of
the politically dominated aspects of society to an ever increasing degree. Men
and women who exercise individual prerogative are increasingly being labeled as
misfits and outsiders - simply because their thinking doesn’t fit the
proscribed mold of what is politically/organizationally acceptable. Accepting the
idea that people have free will to choose forfends the imposition of a cookie
cutter ideology on them. It also necessarily involves recognition that a
person’s intent and purpose in acting as they do is of paramount and particular
importance in understanding any activity they engage in. These considerations
are of significantly less importance for people who can be described as new
individualists, because (at least in public activities) the sovereign
organizations they are a part of, such as the federal and state governments,
dictates the general form of their actions and defines their motivations for them.
The unchecked propagation of men and
women throughout the
The rejection of contrary points of
view - simply because they are different from those endorsed by organizational processes
- is an extremely dangerous practice to percolate throughout society. It is a
natural part of life for people to adhere to dissimilar ideas relating to the
conduct of their life that have nothing to do with the influence of others. There
is nothing inherently sinister, evil or destructive about thinking, believing
or acting differently than others. Such differences are usually healthy and
help to diversify and strengthen society as a whole. If a man or woman is a Mormon
or Jewish, engaging in their religious practices does not have anything
inherently to do with someone else who professes to be a Catholic or an
Agnostic. If someone goes about the business of living their life in accordance
with their personally held and cherished philosophical ideas and religious
beliefs, it cannot be used as evidence that they are engaging in deliberate
subterfuge of the religious beliefs and philosophical ideas held by others.
For example, Seventh Day Adventists
don’t abstain from working on Saturday to antagonize Protestants or undermine
their faith, but because it is an innate part of their religious principles. It
is just as certain they aren’t engaged in guerrilla warfare against Muslims or
Baptists or Atheists by not working on Saturday. It is a peaceful and
societally harmless expression of their religious beliefs, in the same way that
eating kosher food is a socially and personally nondestructive religious
practice of Jews. There is nothing unusual about people individually or in
groups engaging in non-physically destructive everyday activities that are
different than what an observer is used to seeing, or would normally do him or
herself. Those innocent activities most definitely aren’t being “done with a
bad purpose or with an evil motive.” [15]
This emphasizes that often times
what may superficially appear to be one thing, is in fact quite another. Such
as when someone drives past a gas station and stops at one further away, it
can’t be assumed that the driver overtly rejected the gas station that he drove
past. That may be the case, but then again it very possibly isn’t. Just as with
buying a loaf of white bread, the reasons are buried in the mind of the driver,
and his or her actions are the result of an innumerable number of personal
circumstances that can’t be ascertained from merely observing what they have
done. It might be an expression of the routine of their life, but even if it
isn’t an everyday occurrence for the person, it may nonetheless be recognizable
as consistent with how they live. However, the mere suggestion a person’s mental
state is not an indispensable element in understanding his or her actions is
nothing less than an attempt to deny that human beings possess the life animating
power of free will. Yet that denial is what underlies the world view of the new
individualists in control of political life and all the major public
institutions in the
IV
The Nature
of Tax Evasion and False Prosecutions
On the federal level, tax evasion is
defined as the willful attempt “in any manner to evade or defeat any tax
imposed by this title or the payment thereof.” [16] Tax
evasion typically involves three primary elements: that someone was required to pay money in taxes; that
they didn’t do it; and that their
failure to do so was willfully “done
with a bad purpose or with an evil motive,” and without a “good-faith belief”
in the lawfulness of their actions. [17]
Consequently, to engage in tax evasion, a man or woman must engage in the deliberate evasion of a consciously and voluntarily accepted legal financial obligation. [18] This is
specifically recognized by the fact that to be convicted of tax evasion, the
government must prove beyond a reasonable doubt that someone took specific
actions to evade paying money to the government that he or she believed to be a valid debt owed to it. [19]
Willfulness of thought and deliberateness of action are symbiotic twins that
form the core of tax evasion. There must be perfect harmony between them. Furthermore,
tax evasion is based on the presupposition that the intentions of people are
knowable, which has been pointed out is questionable in even the simplest of
situations. [20]
Engaging in a specific action or pattern of actions does not in and of itself constitute a violation of tax related laws. [21] Likewise, the mere nonpayment of taxes that someone is alleged to owe doesn’t necessarily provide specific evidence of tax evasion, only the nonpayment of a debt. [22] Furthermore, the thoughts, intentions, and purpose of any action that can be superficially construed as tax evasion cannot be ascertained from the mere observance and recording of one’s actions - because engaging in an activity is not in and of itself tax evasion. [23]
Figuratively speaking, in spite of
the fact that an activity may look, taste and smell like tax evasion – it isn’t. This is because the appearance
of an activity doesn’t legally define that activity as tax evasion. An example
of this is that two people can engage in the exact same financial activity that
may arouse the scrutiny of government monitors, and they can do so at the same
time, and even in concert with one another, yet neither, or maybe only one of
them may be committing tax evasion.
This seeming incongruity is more than a very real possibility, because only one
of them may have the requisite mental state necessary to constitute the offense
of tax evasion. For any number of religious, philosophical and/or legal
reasons, the other man or woman simply doesn’t possess the mental state of intent
and purpose required to constitute tax evasion.
There are variants of two forces
that can underlie a person’s actions: internal and external influences. While
the actions of people are based on external and internal intentions and
purposes, the concept of willfulness
establishes a line of demarcation defining whether a suspected activity
actually involves tax evasion. External conditions can influence a person to
financially act in ways that may cursorily appear suspicious, but which have
nothing to do with tax evasion. Some of the external motivations of suspected
tax law violations can be identified as a desire to protect one’s assets by
establishing a trust as an estate planning device; financially arranging for
the college education of one’s children or financial security of one’s family;
assisting a friend or relative with a loan; protecting newly acquired assets
from a vindictive ex-wife; or setting up a corporation or limited liability
company to protect one’s business enterprise from specious lawsuits.
In contrast, internal influences are
those which result in someone perhaps running afoul of the appearance of tax
evasion by living their life in accordance with their guiding principles. That
is, internal influences and purposes of action are natural expressions of a
person’s value and belief system that don’t vary with the pressures imposed by
the outer world. Such actions are internal in origin, and are not external responses
to outside stimuli. These can include fundamental disagreement, based on one’s
religious and/or philosophical values with specific or general public policies.
Whether based on external or
internal influences (or a combination of the two) when someone is suspected of
engaging in activities that have the possible appearance of violating the tax
evasion statute, an actual violation is determined by whether the person crossed
the line marking the parameters of “willfulness.” However, it is almost a
logical impossibility for a person acting on internal influences to be
construed to have acted with criminal “willfulness.” This is because a person’s
“good-faith belief” that they were acting within the parameters of the law -
which negates “willfulness” - doesn’t have to be objectively reasonable or even
seemingly rational to any particular observer. [24] It is
purely subjective. In common terms, the apparent absurdness of a person’s beliefs
doesn’t make them a tax criminal. It may make what they do appear to some
people as odd, different, or unusual, i.e., something they wouldn’t do, but a
person’s level of eccentricity is not evidence he or she is a criminal engaging
in tax evasion. Furthermore, when viewed from the perspective of their
underlying intentions and purpose, the actions of those acting on the basis of
external influences typically lacks the criminal “willfulness” necessary to
constitute tax evasion.
Whether resulting from internal or
external influences, seemingly incriminatory appearing actions have no
relationship to tax evasion when they lack the essential element of criminal
“willfulness.”
Yet, it is well known that the
portion of an iceberg that can be seen above the surface is only a very small
part of the whole iceberg. Similarly, an action is only the visible part of a
story that isn’t anywhere near complete without an understanding of the unseen influences
and purposes behind it. However, discounting the idea that people can be
independently influenced – which new individualists would automatically do - necessarily
alters the substance of what can superficially appear and be considered by an
observer to be tax evasion. If internal and external influences are effectively
eliminated from the equation of tax evasion by the non-recognition that a person
can think and act outside the approved bounds of thought and action proscribed
by an organization such as the government - then the element of “willfulness” and
the individuality of spirit expressed by it, has been eliminated in fact while
retained in name.
This de facto elimination of
“willfulness” as an element needing to be proved by the government can have profound
consequences in a tax evasion prosecution. Not only because it makes the
conviction of an innocent person likely, but a criminal prosecution based on an
alleged violation of poorly defined and vague tax laws of questionable
applicability is one of the most convenient and effective tools of ideological,
cultural, religious and political control available to government in the United
States. Politically inspired prosecutions have long relied on specious
allegations of tax evasion. In Spies v. United
States (1943) the Supreme Court recognized the center stage that tax
evasion takes in the IRS’s arsenal of weapons it can wield against Americans: “Section
7201 is not an obscure provision; it is the principal enforcement provision of
the I.R.C., “the capstone of a system of sanctions which singly or in
combination were calculated to induce
In this regard, the use of debate
tactics intended to strengthen the appearance of one’s arguments by keeping
one’s opponent off-balance, are also highly effective in the courtroom
melodrama of a criminal tax prosecution. Government prosecutors accomplish this
in a tax evasion case by placing relatively little emphasis on the issue of intent
and purpose while trying to overwhelm the sensibilities of the jurors with the
physical details of what the accused defendant has allegedly done. These
arguments are in conjunction with portraying a defendant as a bad person
deserving to be convicted. This tactic is accomplished with considerable help
from the manner in which the judge conducts the trial: particularly evidentiary
rulings related to the alleged physical and testimonial evidence the government
is permitted to use, such as “bad character” evidence.
Federal Rules of Evidence 403 and
404(b) are intended to prevent the use of “bad character” evidence with little
probative value, i.e., which doesn’t directly relate to the charge(s) against a
defendant. The purpose of this restriction is so a defendant won’t be wrongly
convicted on the basis of the government’s characterization of him or her as a
bad person, when there is little or no actual evidence the person committed a
crime. Allowing the jury to consider information that paints a defendant as a “bad
character” allows the prosecutor present a case to the jury of, ‘convict the
defendant because the government doesn’t like him or her, and so you jurors
shouldn’t either.’ This is a powerful tactic because the prosecution’s primary strength
in tax evasion cases is presenting apparently incriminating facts that on their
face may allude to the possible appearance
of tax evasion. That tactic is powerfully supported by the government’ portrayal
of a defendant’ personality facets, beliefs or attitudes as making him or her
deserving to be convicted. In plain language, permitting the government wide
latitude in using information that can paint a defendant as a “bad person” allows
the prosecutor to cover up the lack of actual evidence the defendant committed
tax evasion by using the age old tactic of simply smearing him or her.
Basing a prosecution on the false
premise that tax evasion is primarily determined by a person’s physical actions
or personality quirks is the perfect strategy for prosecutors skilled in manipulating
and deceiving a jury composed entirely, or predominately with people
identifiable as either new individualists or other men and women unduly
susceptible to the influence of an authority figure. Possessing minds as
malleable as Play
This underscores the danger posed to
independent thinking and acting Americans by the overwhelming percentage of people
in the U.S. that willingly kowtow to arbitrary, but legitimate appearing
authority. Psychologist Stanley Milgram’s experiments at
“Most people exhibit mindless obedience to authority. Professor Stanley Milgram’s experiments almost forty years ago at Yale University revealed that two-thirds of a representative sampling of Americans would inflict life-threatening high-voltage electric shocks to someone they knew was innocent of any wrongdoing, even when that person was screaming and begging for mercy (Milgram 1975; see also, Kelman and Lawrence 1972). Even more disturbing, this large percentage of Americans would inflict pain on innocent people willingly and even enthusiastically based on the mere request of someone whose authority was established by nothing more than his wearing the white coat of a laboratory technician and speaking in a firm voice. These people readily substitute obedience to authority figures for the dictates of their personal moral code. They have been called “sleepers” because they can slip into and out of a state of moral blindness on command (Bauman 1989, 167).” [28]
Professor Philip Zimbardo’s 1971
Stanford Prison Experiment also confirmed the nature of American’s to assume a
visible drone like servitude to authority figures. [29] The
dramatic movie, Das Experiment,
released in theaters in the fall of 2002, was loosely based on the findings of
Professor Zimbardo’s experiment.
As common as the follower mentality of Americans was nearly four decades ago, it is even more prevalent today, since the societal and political factors encouraging the growth of new individualist like characteristics in adults and children is unchecked. The groveling of Americans to authority figures is true of both new individualists, and people that simply don’t have the gumption to stand up for what they may inwardly believe to be right. [30] The prevalence of this attitude in society and amongst jurors helps facilitate the misuse of the law enforcement process against innocent men and women, by enabling successful but unwarranted criminal prosecutions for tax evasion and other alleged crimes. The limiting parameters of an obedient person’s perspective of the world makes them particularly susceptible to becoming active participants in an unjust prosecution, and in the larger sense, an institutionalized system of evil. [31]
Men and women on a jury who don’t
have a predisposition to condemn people that appear to be different than
themselves in their beliefs and attitudes, and who have a healthy skepticism of
people that aren’t as tolerant as they are, have a partial immunity to
carefully crafted government arguments intended to divert their attention from
the actual issues they are responsible for judging. These men and women
understand that their function as jurors is not to rubber stamp the label of
criminal on everyone the government accuses of being a criminal, like beef
processed on an assembly line in a slaughter house. Rather, their role as
conscientious members of society is to utilize their experience, knowledge,
judgment, and unique perspective of life in assessing the entire sphere of criminal
elements necessary to convict someone whose actions and intentions they are
standing in judgment of.
Irrespective of the specific and
particular claims of intent and purpose made against a defendant in a tax
evasion case, their state of mind is an essential determinant of whether they
actually engaged in the criminal activity they are accused of. Someone can’t legitimately be accused of deliberate
disrespect for, disobedience of, and/or noncompliance with a known legal obligation
merely on the basis that they did one thing instead of another. It would be
foolish to even propose that the failure of a Protestant to follow the specific
practices of the Islamic religion - such as bowing to
It cannot be considered just, moral,
or righteous in any sense of the word, to prosecute (or more accurately persecute) a person for peacefully
engaging in activities that when considered from a perspective of tolerance, can
simply and honestly be characterized as different. Yet societal conditions in
the
V
Conclusion
Describing an innocent activity as tax
evasion doesn’t make it true anymore than calling a black dress red changes its
color. However, the ability of an inaccurate first impression to color
subsequent opinions is well known. Once the idea is implanted in someone’s mind
that a person has done something nefarious, even though the person hasn’t, then
insofar as they are concerned the person has
done something wrong. The malleability of a person’s perceptions is a quirk of
human nature that is exploited every time the government takes advantage of the
susceptibility of people to suggestion by basing a tax prosecution on the
illusion it has occurred, when in fact it hasn’t. [32] In the
same way a skilled illusionist depends on his ability to deceive an audience
for the success of a stunt, the government relies on the sleight of characterizing
innocent actions and intentions as villainous in order to manufacture a false
prosecution out of thin air without respect or regard for their innocent mental
origin. [33] A courtroom
is then used as the backdrop for the presentation of an elaborate charade by
the government identical in its intent to an illusionist’s performance that is
carefully crafted to fool the audience: the latter works to deceive a paying
audience, while the former deceives the judge, the jurors, courtroom observers,
reporters and the general public.
The extent of this charade is hinted
at by the fact cases of alleged tax evasion are such gross misapplications and
misuses of the criminal law that a person’s actions may merely involve tax
avoidance. This is significant because federal courts have unequivocally acknowledged
the legality of tax avoidance numerous times. The Supreme Court, for example, recognized
in Gregory vs. Helvering (1935), “The
legal right of a taxpayer to decrease the amount of what otherwise would be his
taxes, or altogether avoid them, by means which the law permits, cannot be
doubted.” [34] That is
the law of the land. The “good-faith intent” to engage in tax avoidance negates
the essential tax evasion element of “willfulness:” i.e., a person cannot commit
tax evasion while engaging in what they subjectively believe is a legal activity,
and every business and individual in American engages in tax avoidance to one
degree or another. [35] The
conclusions in a recent study are indicative of how pervasive tax avoidance is:
However, in spite of their legality
and beneficent effect on society, innocent tax avoidance strategies can easily
be woven into a tax evasion prosecution by an unscrupulous prosecutor. Even
more unjust is the alleged criminal action of an accused may not even involve
what can be described as tax avoidance, since they may be unrelated to any tax
consideration whatsoever. [37] This typically
occurs when the tax laws are used as a weapon of political reprisal, as a prosecutorial
pressure tactic to coerce a guilty plea to other charges, or if someone has politically
contrary opinions, or unpopular religious or philosophical ideas. It is well
known, for example, that President Richard Nixon used the IRS to harass his
political opponents. [38] The use of
the IRS as a harassment device began long before Nixon however, and it continues
to the present day. The 2002 trial of Ohio Congressman James Traficant is a
prime example. He was prosecuted for tax evasion after openly criticizing the FBI, the IRS, and expressing support
for a revamping of the federal grand jury into an independent investigative
body, from its current role as a ceremonial rubber stamp for whatever the U.S. Department
of Justice presents for its approval. [39] Such
prosecutions may attempt to create the illusion of tax evasion from someone’s
suspected behavior by obscuring or ignoring their internal motivations that
don’t constitute willful behavior, or
mischaracterizing the alleged tax evasive events themselves.
The elusive and political nature of
tax law enforcement is starkly revealed by that fact that in a nation of 285 million
people, the odds of any one person being convicted of federal tax evasion is
less than miniscule. In 2001 it was about one
person for every one million five hundred thousand Americans. [40] This
proportionately translates into two
tax evasion prosecution a year in
From the extraordinary judiciousness
of their use, it is obvious that the criminal tax laws are only directed
against carefully targeted men and women. This observation is supported by the
fact that it is known virtually every adult and every business in the
That the criminal tax laws can’t be
divorced from the political conditions under which they are enforced and
selectively applied is emphasized by the tens of millions of ordinary people and
businesses that openly engage in, and routinely facilitate tax evasion every
day without being investigated, much less prosecuted for tax evasion. [43] It is only
in highly specialized circumstances that a person in the
All of the foregoing emphasizes the
overwhelming importance of recognizing the role that a lack of willfulness plays in overcoming a
phantasmic tax evasion prosecution. If you can make your way through the fog
and deceptions of a prosecution based on the use of smoke and mirrors intended
to obscure the nonexistence of tax evasion, the truth is often times waiting on
the other side to reveal the innocence of a person victimized by a wrongful
prosecution.
END NOTES
[1] This is
an undated and revised version of an essay by the same title published in, The Ethics of Tax Evasion, ed. Professor
Robert W. McGee, Dumont Inst for Public Policy,
[2] While as
little as twenty years ago it was considered a flight of fantasy by those
considered to be a part of the conspiracy fringe of American society, the
active centralization of economic, political, and ideological interests
worldwide is now such an accepted fact of life that it is publicized by
literally all mainstream print and broadcast media outlets. It is summarized
under the broad heading of the New World Order. For example, in a 1997 speech
at Harvard University, U. S. Secretary of State Madeleine Albright confirmed
that the official policy of the
[3] The Stepford Wives was a film released in 1974 about how in a town called Stepford, independently acting married women - and the individual animating life force of their personalities - were replaced by androids that mimicked their appearance and exhibited a bland conformity of thought and action, while being slavishly obedient to every command of their masters/husbands.
[4] The New
Individualists: The Generation After the Organization Man, Paul Leinberger
and Bruce Tucker, HarperCollins, New York, 1991, pp. 16-18. It should be noted that
this idea implicitly undermines existing fundamental social structures of
American society, such as the family, by a perceptible transfer of allegiance
and loyalty to artificially created politically related organizations. The same
process occurred in
One notable aspect of the automaton like thought processes of new individualists is their near absence of critical thinking skills, since that is the one mental characteristic that would undermine their adoption of the new individualist physical and mental persona.
[5] The New American Ideology, George C.
Lodge, Alfred A. Knopf,
[6] The New Individualists at pp. 16-17.
[7]
[8]
Perhaps the most visible characteristic of what are referred to as the “new
individualists” is that they are considered to be a cog in the wheel of the
system they are a part of. This is precisely the attitude that leads to the
most base of human atrocities, because it tends to neutralize the influence of
the human conscience of those who ascribe to it. The extensive documentation
available on the Germans under the National Socialists reveals that they could
quite accurately have been described as “new individualists,” in the same way
that a majority of people in the
[9] The concept that the State or another organization (such as a church) is the sovereign entity in society isn’t a new idea; it goes back thousands of years, at least to Plato. Men, women and children described as “new individualists” are distinguished by a process of self-identification that doesn’t include the mainstream American concept of individualism based on personal autonomy and self-directedness.
[10] See e.g., The
Edge of the Abyss, Alfred Noyes, E. P. Dutton and Company, Inc.,
[11] There
are at least a couple of major factors contributing to the growth of those who
are euphemistically referred to as the “new individualists.” It is more than a
vague possibility that the alteration (some might prefer to call it the dilution) of the human gene pool is an
integral part of the social welfare programs established and pursued by federal
and state governments in the
[12] The New Individualists at p. 16
[13] See e.g.,
Unsound Constitution, George P.
Fletcher, The New Republic,
[14] In 1616 Galileo was formally warned by the Catholic Church that his astronomical ideas sympathetic with Copernicus’ theory that the Earth revolved around the Sun were contrary to Church teachings. In April 1633 he was imprisoned for two weeks while being interrogated before the Inquisition about his celestial opinions. Galileo agreed to plead guilty to a charge less serious than heresy in exchange for a more lenient sentence. Sentenced to an indefinite term of imprisonment for having “held and taught” the Copernican doctrine, and he was permitted to spend the last eight years of his life under house arrest after recanting what he believed to be true. See e.g., Galileo, Encyclopaedia Britannica.
This point is also illustrated by quoting from the dissent of Justice Blackmun to the Supreme Court’s ruling in Cheek v. U. S., 111 S. Ct. 604, 615 (1991): “That being so, it is incomprehensible to me how, in this day, more than 70 years after the institution of our present federal income tax system with the passage of the Income Tax Act of 1913, 38 Stat. 166, any taxpayer of competent mentality can assert as his defense to charges of statutory willfulness the proposition that the wage he receives for his labor is not income, irrespective of a cult that says otherwise and advises the gullible to resist income tax collections. One might note in passing that this particular taxpayer, after all, was a licensed pilot for one of our major commercial airlines; he presumably was a person of at least minimum intellectual competence.” The reader will note that Justice Blackmun found it “incomprehensible” that someone could have an opinion different from his, and not only questions the mental competency, but the intellectual competence of the defendant Cheek, because he ascribed to ideas contrary to Justice Blackmun. Because he couldn’t conceive that defendant Cheek actually believed in the ideas that he did in fact believe in to such a degree that he was willing to be imprisoned for adhering to them, Justice Blackmun voted to affirm his conviction and thereby negate the necessity for the State to prove he acted willfully. Justice Blackmun’s dissent is an excellent example of the mentality possessed by those described as “new individualists.” What many people would call honest disagreement, they consider a sign of someone’s insincerity, deliberate recalcitrance and mental incompetency.
[15] Cheek v.
[16] Title 26, Section 7201 of the United States Code, quoted in part.
[17] Cheek v.
[18] The reason I have chosen the wording “consciously and voluntarily accepted legal financial obligation” is that the U. S. Supreme Court stated in the Cheek decision (Cheek v. U. S., 111 S. Ct. 604, 610 (1991)) that someone can only be adjudged to have acted willfully if he or she “voluntarily and intentionally violated” a known legal duty. It is a logical impossibility for someone to voluntarily fail to do that which they haven’t voluntarily agreed to do in the first place. If someone stops you on the street and demands your wallet and you refuse to provide them with it, you haven’t voluntarily failed to fulfill a legal obligation, because one didn’t exist in the first place. An everyday example of a consciously and voluntarily accepted legal financial obligation would be walking into a grocery store, consciously picking up a loaf of bread, deliberately walking to the checkout counter and voluntarily handing the amount of the bread’s purchase price to the grocery clerk. If that person had walked out of the store with the bread under those same factual circumstances without having paid for it, they would have “voluntarily and intentionally violated” a known legal duty and committed the crime known as shop lifting.
[19] Cheek v.
[20] This can
be true even when someone tells you -
particularly in the context of a legal matter - what their intentions were for
doing something. This is the case because of the implicit threat of violence
that permeates every encounter
between an individual person and any
government representative. The psychological factors involved in all such
situations necessarily cast doubt on the voluntariness or actual veracity of
anything that someone reveals to a government agent or representative. A man or
women may conceal their genuine thoughts or refrain from emphasizing the truth
in order to appease the government representative(s) they are confronted with,
by telling them what they want to hear. By doing this, they may hope to positively
influence the degree to which the ever threatening violent weight of the
government is brought to bear against them. A well known example of how this
works in the real world, is that mandatory sentencing laws have given government
prosecutors the power to “psychologically coerce” innocent men, women, and
children to plead guilty to crimes they didn’t commit - in order to avoid the
possibility of losing a trial and having a much harsher sentence imposed on
them. [See e.g., Prosecutorial
Lawlessness Is Its Real Name, Hans Sherrer, Justice Denied Magazine, Vol. 1, Issue 6, at: http://forejustice.org/wc/prosecutorial_lawlessness_v1_i6.htm;
and, Prosecutors Are Master Framers, Hans Sherrer, Justice Denied Magazine,
vol. 1, issue 9, at: http://forejustice.org/wc/prosecutors_are_master_framers_JD_v1_i9.htm]
The mentally influencing factors involved in the phenomena of
psychological coercion are well known as constructive
force. For an enlightening discussion of the latent violence surrounding
contacts between people and government representatives, see: Law’s Violence, ed. Austin
[21] Ratzlaf v. U. S., 114 S. Ct. 655, 657
(1994) While the Ratzlaf case didn’t
specifically have to do with “tax evasion,” the definition of willfulness
applied by the U. S. Supreme Court in resolving the issues of “money
laundering” it did involve, was similar to that used in tax evasion cases. At
page 659, the Supreme Court provided an admonishment because, “The trial judge
in Ratzlaf’s case, with the Ninth Circuit’s approbation, treated [Section]
5322(a)’s “willfulness” requirement essentially as surplusage - as words of no
consequence.” See also, Cheek v.
[22] Haas v. Internal Revenue Service, 48 F.3d 1153, 1155, 1160-1161 (11th Cir. 1995)
[23] Cheek v.
[24]
[25] Spies v. United States, 317
[26] The
phrase politically defined offense is used to describe tax evasion, because it
is what is known as a malum prohibitum (wrong
because they are prohibited), or an artificial man made “regulatory” offense or
“quasi crime.” These are in contrast with malum
in se (wrong in themselves), or a natural crimes such as robbery, rape,
murder and arson. The man made nature of tax evasion has been recognized by the
United States Supreme Court in such decisions as Cheek v. U. S., 111 S. Ct. 604, 609-610 (1991). A particularly
clear explanation of malum prohibitum
offenses was provided in The Phoenix
Solution, (by Vincent T. Bugliosi, Dove Books,
That idea is not a flight of fancy. It is not uncommon for malum prohibitum government manufactured crimes to be reinstated to their prior status of not being considered criminal. Two examples are tens of millions of Americans are old enough to have been alive when the mere engagement in homosexuality (amongst consenting adults behind closed doors) was a crime in many jurisdictions. In today’s political climate, anyone who proposed making homosexuality a crime would be publicly tarred and feathered. A similar example is the Supreme Court’s 1973 Roe v. Wade decision made a previously criminal activity, aborting fetuses, a legal activity. The criminal stigmatism has been removed from both homosexuality and abortion, and from the dominant political point of view, they are now considered lifestyle choices.
[27] The U. S. Supreme Court partially addressed this when it wrote in Cheek vs. U. S. at 611, “Knowledge and belief are characteristically questions for the fact finder, in this case the jury. Characterizing a particular belief as not objectively reasonable transforms the inquiry into a legal one and would prevent the jury from considering it. ... it is not contrary to common sense, let alone impossible, for a defendant to be ignorant of his duty based on an irrational belief that he has no duty, and forbidding the jury to consider evidence that might negate willfulness would raise a serious question under the Sixth Amendment’s jury trial provision.” It further stated at 612 that, ““[i]t is not the purpose of the law to penalize frank difference of opinion or innocent errors made despite the exercise of reasonable care.”
[28] The Inhumanity of Government Bureaucracies, Hans Sherrer, The Independent Review, Fall 2000, p. 249, 251. See also, Obedience To Authority, Stanley Milgram, Harper & Row Publishers, N. Y., 1975.
[29] To read about Professor Zimbardo’s experiment go to the official website of the Stanford Prison Experiment at: http://www.prisonexp.org/. A video of the experiment is available for purchase. The experiment has never been repeated because of the legal and psychological implications of its participant’s realistic responses to being immersed in an artificial prison/jail environment.
[30] Jurors are often heard to say after voting to convict a person that they don’t believe the person is guilty, but they were kowtowed by the contrary opinion of other jurors into voting against their conscience and true opinion of the facts of the case. A very contemporary example of this phenomenon is that at least one of the jurors that voted to convict Ohio Congressman James Traficant in 2002 publicly stated only a few months later that he believes Traficant is innocent of all charges. Yet the atmosphere created by the judge in the courtroom and by his fellow jurors in the jury room induced him to vote guilty in spite of the failure of the federal government to prove Congressman Traficant committed any crime.
[31] See e.g.,
Ordinary People and Extraordinary Evil: A
Report on the Beguilings of Evil, Fred E. Katz, State University of New
York Press,
[32] This is also true of many civil tax proceedings where the burden of proof is on the person filing as the plaintiff against the IRS or a state tax agency.
[33] While the
standard of willfulness used in tax evasion cases (affirmed by cases such as Cheek vs.
[34] Gregory vs. Helvering 293
[35] A person doesn’t have to even be engaging in tax avoidance to be prosecuted wrongly for tax evasion As noted elsewhere in this essay (see e.g., fn. 39), the government can easily paint innocent and perfectly legal financially related activities that don’t have anything to do with tax avoidance as nefarious and criminal.
[36] “Price
Fixing Overseas Alleged to Avoid Taxes,” Jim Abrams,
[37] Tax avoidance involves arranging of one’s financial affairs in such a way as to reduce one’s tax liability to the minimum amount possible under the tax laws. Prosecutions for tax evasion don’t necessarily involve eager, but perfectly legal tax avoidance efforts, since tax avoidance, much less tax evasion, may not have been a specific consideration of an individual criminally charged with tax evasion. For example, a single man or woman with no heirs may have a trust created that has a library as the beneficiary, which then purchases a house or other assets, the ownership of which will be transferred to a library upon the person’s death. A prosecutor with a new individualist’s mentality can easily paint this noble act as being something only a scoundrel would do.
[38] While it is widely known that this occurred during Richard Nixon’s presidency, it didn’t begin or end with him. See for example, The American Police State: The Government Against The People (How the CIA, FBI, IRS, NSA and other agencies have spied on Americans during seven administrations), David Wise, Vintage Books, 1978. Politically and ideologically motivated criminal investigations and prosecutions continue to be common occurrences in the U. S.
[39] Congressman Traficant was also prosecuted for several other charges that “piggy backed” on the tax evasion charges against him. Piling on charges is not an unusual tactic in tax evasion prosecutions, since their “smear” effect helps to strengthen the illusion that the accused has been involved in something infamous.
[40] In 2001
there were 193 convictions in federal court for tax evasion. (See: TRAC’s
website operated under the auspices of
[41] This 83
to 1 ratio is based on the fact that there were 15,980 deaths classified by the
FBI as murders in 2001, (Source: Crime in
the United States 2001, Federal Bureau of Investigation, U. S. Department
of Justice), and in 2001 there were 193 federal convictions for tax evasion.
See
[42] See e.g., http://www.namiscc.org/News/2002/Summer/PerscriptionDrugSafety.htm. It is estimated that 119,000 people die in hospitals every year from an adverse reaction to a drug prescribed by their doctor. 119,000 deaths / 193 tax evasion prosecutions in 2001 = 617. USA Today published an article entitled, “Prescription Misuse Costs Nation Billions,” that reported prescription drug related problems cost an estimated $75.6 billion and cause 119,000 deaths yearly. That was in 1995, and nothing has been done to alleviate the situation, so it is at least as prevalent, and possibly much more so today.
[43] It should be noted that all tax evasion prosecutions (as are all criminal prosecutions) are selective in the sense that all potential prosecutions are subjected to a filtering process. All of the innumerable criminal prosecutions that the government can potentially initiate are analyzed and sifted through by a selection process. The selectively chosen cases that survive this process are earmarked for prosecution. This filtering process that determines who is and isn’t prosecuted, has been likened to a sieve. For an elaboration on this concept, see: “The Criminal Court as Organization and Communication System, Abraham S. Blumberg, in Criminal Justice: Law and Politics, ed. George F. Cole, pp. 87-291.
[44] In the
context of how false tax evasion prosecutions are used in the