The Morality of Tax Avoidance – Misconceptions


A recent New York Times article on President Donald Trump’s alleged tax avoidance has renewed the debate on the morality of paying one’s “fair share” in taxes. Is it moral for a man to use loopholes within the tax system to minimize his own tax payment? The answer is not just an assertive yes. If anything, one may have a moral obligation to do so.

Funding the Machine

There is the fairytale story that we pay taxes so that the court system can maintain justice, the military can defend our borders, and the unfortunate and elderly can be cared for. And there is a grain of truth to this story. There are certain people who benefit from programs funded by tax dollars. But tax dollars also fund terrorist organizations, the horrors of foreign intervention, immense corruption and inefficient bureaucracy, police brutality, and bailouts to elites. No human being could possibly endorse every single action funded by tax dollars.

Therefore, tax avoidance means not only withdrawing funding from the good, but also withdrawing funding from the bad. We could go into a complicated weighing of each tax dollar spent and find some subjective conclusion as to whether the good outweighs the bad or vice versa, but that’s unnecessary.

Many people take a moral issue with funding Planned Parenthood because, although they do many things, one of those things is abortion. Many people saw it necessary to boycott Chick-fil-A after anti-LGBT comments from the CEO. Surely if comments from a CEO is enough to make funding a business morally questionable, these people must say the same about funding the US government with Trump as its president? Or they may take issue with certain groups Chick-fil-A funded, not wanting their money to go there. But far worse groups have received taxpayer dollars.

Say, for example, that I found a tax loophole that allowed me to reduce the tax I legally owe by $5,000. How many people can truly say that they wouldn’t make the same choice I would and take advantage of that loophole? I could do any number of things with this money. I could give it to a family member or friend that could greatly benefit from it. I could donate it to a local charity, one that is much less bureaucratic and will spend the money wisely. I could donate it to a DonorSee project. Or I could spend it, and help support whatever business I buy from. Any of these options are much less likely to fund terrorism than by giving it to the US government.

Paying One’s “Fair Share”

One criticism of (specifically the rich) avoiding taxes is the inequality aspect. How could it possibly be fair that someone within the middle class has to pay more in taxes than someone rich?

Simply put, it’s not fair. Nobody likes to pay taxes, and everyone thinks their own taxes are too high, but that those wealthier than themselves should be paying more. But given the earlier argument about funding the machine, and given that everyone only pays the minimum amount of taxes that they need to, would it not be better to celebrate tax avoidance wherever we see it, whether it be by the rich, the poor, and everyone in between?

Instead of acting like crabs in a bucket, dragging down anyone daring enough to try to escape, imagine if we all cheered on any example of tax avoidance. We now assert that if anyone does it, this is wrong, because he’s not “paying his fair share” (as if contributing to society can only be done through paying taxes).

This is a call to emulate, not discourage.

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Nathan A. Kreider is author of the Misconceptions column for Being Libertarian, and has written for the Austrian Economics Center, the Foundation for Economic Education, and the Liberalists. He also occasionally publishes a blog and video content, including short book reviews, which can be found on his website, He can be contacted by email via [email protected]