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Why you shouldn't cheat on your taxes

Sure, it's illegal, but it's also not very profitable.

By Karen Datko Jan 4, 2011 11:01AM

This post comes from Jim Wang at partner blog Bargaineering.


Have you ever been tempted to cheat on your taxes? asks a recent post on The New York Times' You're the Boss blog. Like almost everyone else, I've been tempted (everyone has been tempted or thought about it -- if you haven't, then you're a much better person than the majority) but I've never cheated on my taxes.


Here are just three reasons why:

It's illegal. The first reason is the most obvious one: Tax evasion is illegal. Remember Wesley Snipes? He's in prison right now for three years after being convicted of failure to file tax returns. 

How much would you pay to avoid being in prison? I don't know about you but I'd happily pay my taxes to avoid jail.


It's not profitable. Would you steal a dollar if you could keep only 35 cents? What if you could only keep 25 cents? Depending on your tax bracket, that's exactly what you're doing. When you fail to declare a dollar of income, you basically "get" a fraction of that. Even after you add in FICA and state taxes, you're still getting only half of what you're stealing. You take all of the risk but you get only half of the return. It's simply not profitable.


Let's say you play the numbers game. How many people evade taxes and aren't caught? How many hours does it take to try to clear your name? Do the math and tell me whether it's better for you to spend that time trying to earn more money or whether you should try to evade taxes on what you've already earned. (Let's not even consider how much prison time you might get!)

It's bad for society. When you engage in tax evasion, you're basically stealing from everyone else who does pay taxes. You aren't stealing from the government or some amorphous entity that you can dehumanize. You are stealing from your neighbor. You are stealing from your parents. You are stealing from your children.


The rules are the rules and you pay what you owe. I'm glad to read stories like this where people who fail to pay taxes are punished It's an interview with Gary Barbera, who failed to pay $77,675 in taxes. He had to pay $119,744.55 in restitution and interest, a $30,000 fine, plus got three years of probation that included ankle-bracelet monitoring while on house arrest.


There are plenty of reasons why you shouldn't cheat on your taxes. These are just three.


More from Bargaineering and MSN Money:

Jun 17, 2011 5:10PM
in response to "everything else was taken"'s comment: ' Let's just stick with the illegal part, which is enough for most people; these other arguments are -- sorry -- unconvincing. '

I disagree.  There is a sub-segment of the population who simply does not care if what they are doing is illegal. These are the individuals who literally do steal from their parents; from their children. These people leave messes everywhere, dumped on everyone who they have had the opportunity to exploit.  I am the child of one such person.  
Jan 7, 2011 2:04AM
Let's just stick with the illegal part, which is enough for most people; these other arguments are -- sorry -- unconvincing.
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