Tax Evasion: What and Why

Swapan Mukhopadhyay

Evasion

Evasion

and Avoidance

Tax Evasion

tax evasion: efforts by individuals, firms, trusts and other entities to evade taxes by illegal means. usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating deductions).

Norms about tax evasion may influence the individuals decision whether to evade taxes or not in two ways: Most people feel the need to justify their actions to themselves. The individuals own norms about tax evasion will therefore affect his decisions whether to evade taxes or not. Most people are also influenced by what they perceive to be socially acceptable behavior, at least among people who are important to them.
Project: 2411 Tax Evasion in Norway

The essential problem involved in the measurement of tax evasion is that its illegality provides an incentive for individuals to keep the activity hidden. Furthermore, by its very nature, tax evasion does not appear in any official statistics. This implies that the extent of tax evasion cannot be measured directly but must be inferred from economic variables that can be observed.
DAN USHER Queen's University, Kingston, Canada.

Tax Evasion or Tax Avoidance ?

Before proceeding, it is worth making some distinctions. Tax evasion is the failure to declare taxable activityshould be distinguished from tax avoidance, which is the reorganization of economic activity, possibly at some cost, to lower tax payment. Tax avoidance is legal, whereas tax evasion is not. In practice, the distinction is not as clear-cut, since tax avoidance schemes frequently need to be tested in court to clarify their legality. The terms black, shadow, or hidden economy refer to all economic activities for which payments are made but are not officially declared. Under these headings would be included illegal activities, such as the drug trade, and unmeasured activity, such as agricultural output by smallholders. Added to these would also be the legal, but undeclared, income that constitutes tax evasion. Finally the unmeasured economy would be the shadow economy plus activities such as do-it-yourself jobs that are economically valuable but do not involve economic transaction.
DAN USHER Queen's University, Kingston, Canada.

Different types of Tax Evaders or Tax Avoiders

Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. By contrast tax evasion is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a synonym for tax avoidance. Tax protesters : Those attempting not to pay tax believing that they have discovered interpretations of the law that show that they are not subject to being taxed. An unsuccessful tax protestor has been attempting openly to evade tax, while a successful one avoids tax. Tax resistance : declared refusal to pay a tax for conscientious reasons (because the resister does not want to support the government or some of its activities). Tax resisters typically do not take the position that the tax laws are themselves illegal or do not apply to them (as tax protesters do) and they are more concerned with not paying for particular government policies that they oppose.

Psychological Zones in human beings

ZONE X ZONE A (something about you.neither (I know, you know) you know yourself nor anyone (What everybody knows about else . Quest of mankind to you including yourself) explore this zone) ZONE C ZONE B (You know, but I do not) (I know, but you do not) (Something about yourself that (Something about yourself that only you know but no one I know but you do not) else)

Psychological Zones in human beings

Examples on zones

ZONE X (mental elevation, wisdom, awareness, fulfilment)

ZONE A (I know, you know) (What everybody knows about you including yourself)
ZONE B (I know, but you do not) (behavioral pattern, personal traits, exhibit of emotions)

ZONE C (You know, but I do not) (State of mind, internal response

towards relationships, propensity towards concealing crime)

Tax-related offences

The Army

Infrastructure

Scientific Research
Impact of

Tax Evasion

Health Care Education The Police

Where do I fit in the picture?

Me
I directly serve the society. I reach benefits to the people, and to the evaders too.

SOCIETY

Enjoys infrastructure benefits

EVADERS

Do not pay taxes Cheats the society

About me
10 years of progressive experience in investigating auditing of accounts Experience gained in highly evasion-prone geographical area Led teams in countless raids, search and seizure operations Encountered countless situations involving high personal risk