The news this week has been chock full of stories about so-called “white collar criminals” like Helmsley, Tomko, and Ikebe, who made money by evading tax on millions of dollars. In many of these situations, jail time was drastically reduced (in Helmsley’s case from 16 years to less than 2 years) or altogether avoided (Tomko and Ikebe) due to mitigating circumstances that usually involved social stature, education, wealth and the nonviolent nature of the crime.
While it’s true that tax evasion is nonviolent in nature, so, too is robbery and drugs charges. However, in the US, those charges usually carry with them some jail time.
Additionally, the idea that the wealthy can be rehabilitated when substance abuse is involved (Tomko alleges that he was influenced by alcohol for his bad acts) but the poor cannot is controversial. In Tomko’s case, his charitable activities (donations to Habitat for Humanity) were viewed as evidence of his good nature. Helmsley is said to have avoided chunks of her community service by having her employees perform the jobs – apparently, the argument was that the work was still done (she was only ordered to redo some of it).
So, today’s Fix the Tax Code Friday question is:
Should those who commit willful and massive tax evasion be subject to jail time?
Are fines and penalties enough? Are ‘good works’ or charitable acts sufficient evidence of good character? What do you think is an appropriate sentence for nonviolent ‘white collar’ criminals?
Definitely jail time. Like Al Capone, these guys usually get nailed for taxes but they’ve skated on a host of other sins.
Question, Kelly: How can one find out the status of a tax fraud case, whether the party has gone to jail, etc.? I was blogging on a Florida businessman named Roy Snowden of Java Jo’z Coffee who was convicted of tax fraud & sentenced. Can I tell if he’s serving time yet?
If there’s fraud involved, i.e., lying on the forms or doctoring the books, then definitely jail time. For non-payment or non-filing? Definitely NOT jail time. We don’t have debtors’ prison for good reason, and owing money to the government that you can’t pay shouldn’t be any different than owing money to anybody else. For that matter, I think tax debts should be discharged with bankruptcy too.
I think true examples ought to be made of such scum. We have a voluntary compliance system; those who don’t volunteer and who are actually caught should pay treble the amount of tax shirked and spend at least 1 month in jail for each $50,000 unpaid.
Fair disclosure – my wife used to be in Chief Counsel’s Office.