Avoidance vs Evasion

“The avoidance of taxes is the only intellectual pursuit that still carries any reward.” –John Maynard Keynes

06-14-2021

Do you know the difference between tax avoidance and tax evasion? In a nut shell….tax avoidance is taking advantage of every legal step available to pay the least amount of taxes possible. Courts have ruled over and over again that it is our patriotic duty as citizens to arrange our affairs to pay the least amount of taxes possible. Tax evasion, on the other hand, is using illegal means to avoid taxes. This is a big no-no and can lead to serious prison time. Just ask Al Capone. For all the hideous acts he committed during his life, it was tax evasion that put him in prison.

As Calvin Coolidge so eloquently pointed out, “collecting more taxes than is necessary is legalized robbery”. Make sure you’re not being robbed.

Sometimes, it’s a thin line to know if it’s avoidance or evasion so you have to be careful. As the British politician Denis Healey pointed out…. “The difference between tax avoidance and tax evasion is the thickness of a prison wall.”

For more insight on this check out this article in US News, What to Know About Tax Evasion and Avoidance.