The Conclusion emphasizes the book’s primary argument, that its proposed system of means-based adjustments to the tax compliance rules would more effectively deter tax avoidance and evasion by the rich than would reforms focused solely on increasing the IRS’s funding or on rules targeting specific potentially abusive activities. It notes that the book has provided four practical applications of this approach – as adjustments to tax penalties, penalty defenses, the statute of limitations, and information reporting – but that these examples are just the beginning. The book concludes that its analysis and new approach to tax administration should be relevant to legislators and other tax policymakers, scholars of both tax law and progressivity, and federal and state tax administrators.

How much tax revenue is lost each year as a result of noncompliance? How much of this lost revenue is from the richest taxpayers? How do the rich avoid paying taxes and why does it matter? This chapter considers these basic and important questions. The answers explain our motivation for writing this book and provide a starting point for the arguments that follow. This discussion also begins to explain why this book focuses on high-end tax noncompliance as a distinct challenge for the tax system. To answer these questions, we begin by describing exactly what we mean by tax noncompliance. The discussion then presents research findings on the scope of tax noncompliance and how it is shared across the income distribution. It then explains how high-end taxpayers can often avoid paying the taxes they owe by taking advantage of strategies that are not available to low- and middle-income taxpayers. Finally, we discuss why high-end noncompliance is harmful to the tax system, and why policymakers should treat it as a pressing challenge.

This chapter addresses the role of tax advice in encouraging aggressive and abusive tax planning by high-end taxpayers. It begins with a discussion of the different roles of tax advice, one of which is its use as a form of tax penalty insurance. The chapter then shows how the rich benefit disproportionately from the ability to avoid penalties through tax advice. After describing these effects, we offer a proposal for incorporating means adjustments into the tax penalty defense rules, focusing specifically on tax advice, and we respond to potential objections and concerns.

This chapter turns to the structure of the tax compliance system and how it attempts to address high-end noncompliance. It begins by situating the tax compliance rules within the broader tax system. The discussion considers what they share with all tax rules and what sets them apart. The following sections begin a more detailed dive into the structure of the tax compliance system. After addressing what motivates taxpayers to comply with the tax law, the discussion considers the main components of the tax compliance system, and how these components leverage taxpayer motivations to improve compliance. With this important context on the tax compliance system established, the discussion then returns to the challenges of high-end noncompliance. The final part of this chapter describes the two most prominent approaches in current law and reform proposals. The first general approach is to increase funding of the Internal Revenue Service so it can more effectively deter noncompliance and recover unpaid taxes. The second general approach is what this book terms “activity-based” rules, targeting the specific taxpayer activities that can either indicate or enable tax noncompliance.

Tax avoidance is one of the most controversial and widely debated topics in taxation law. This chapter examines the concept of tax avoidance and distinguishes it from the concepts of tax evasion and tax planning with which it is sometimes confused. It also discusses various judicial and legislative responses to tax avoidance. In particular, it focuses on the specific anti-avoidance provisions in div 6A of pt III ITAA36 and pt 2-42 ITAA97, which have been enacted to address certain income alienation schemes designed to divert income from taxpayers who are subject to high rates of tax to their associates (eg family members and related entities) who are subject to lower rates of tax. It also discusses service entity arrangements, which have been used by some professional firms to split income.

The strategy of structural reforms in practice is the object of this final chapter. As an example, the history of the first centre-left government in Italy in the 1960s is considered, with reforms concerning the nationalization of the electricity sector, the reform of the secondary schools, universal wealth assistance, pension reform, the workers statute expanding workers rights, etc. A worldwide stage of retreat followed the fall of the Bretton Woods system and the affirmation of neoliberal governments in key countries (Thatcher in the UK, Reagan in the USA). The negative consequences and the shaky theoretical foundations of neoliberalism are illustrated. A renewed strategy of structural reforms is proposed, both in an international dimension and with specific reference to the case of Italy.

In the 1920s and early 1930s, both the public and scholarly understanding of capitalism was governed by a logic of individual visibility. This angle, however, can easily obscure the fact that invisibility helped shape German society as a capitalist society too. The chapter thus argues that a focus on the interplay of visibility and invisibility can improve our understanding of capitalism in Germany and beyond. By way of example, it analyzes the investment practices of the ultra-wealthy industrialist Thyssen family. It elucidates their opportunities of keeping capital invisible by concentrating public attention to specific family members within the bounds of a nation or Europa, thereby enabling hidden networks of less prominent family members and asset managers to act globally. Although these practices emerged within the specific historical context of the interwar period, they remain relevant today. The chapter thus highlights the long-standing history of exploiting invisibility in capitalist societies.

This chapter examines the peasants’ everyday resistance to heavy taxes, particularly the land tax, the livestock tax, the road tax and the wheat protection tax under the single-party regime. It shows that under the authoritarian single-party system, peasants coped with the increasingly burdensome economic demands of the new state and resulting social injustice through everyday and informal means. In contrast to the existing accounts that mostly regard the peasants as atomized under the absolute control of the state, this chapter portrays them as a relatively active social dynamic, which annulled the great part of the taxes in practice and compelled the government to soften its heavy taxes.

Chapter 7 examined the concept of tax avoidance in the context of EU law. This chapter also examined various types of anti-abuse rules and their compatibility with EU law. An attempt was made to assess the Court’s judgments in the area of controlled foreign companies, thin capitalization and transfer pricing. The position following the introduction of the Anti-Tax Avoidance Directive was also assessed, whenever relevant. It was shown that there is some tension between established case law and the provisions of the Anti-Tax Avoidance Directive, most of which apply primarily in a mechanical way. What was also notable was the shift of emphasis from having the Court of Justice scrutinize national anti-abuse rules, to demanding from Member States to introduce de minimis anti-abuse rules based on this Directive. As regards transfer pricing rules, it was argued that the current judgments of the Court of Justice could give rise to variable interpretation of basic concepts of international tax law, due to the obscure relationship between the Court’s commercial justification test and the OECD’s arm’s length principle.