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18 Mod. L. Rev. 209 (1955)
The Attitude of the Legislature and the Courts to Tax Avoidance

handle is hein.journals/modlr18 and id is 221 raw text is: THE
Volume 18                May 1955                      No. 3
WHAT is tax avoidance? The shortest definition I know is  The
art of dodging tax without actually breaking the law -a phrase
which owes its origin to the title of Mr. Stephen Potter's book
on gamesmanship- The art of winning games without actually
cheating. A more precise definition is not easy to frame.
First of all, tax avoidance must be distinguished from tax
evasion. Avoidance is legal; evasion illegal. The man with a
new Swiss watch in his pocket who says to the Customs  I have
nothing to declare  is evading tax and should be clearly distin-
guished from the man who keeps within the law and does not use
fraud or concealment.
Motive is also an essential element in tax avoidance. The man
who deliberately adopts one of several possible courses, because
that one will save him the most tax, must be distinguished from
the man who adopts the same course for entirely different reasons.
A tax avoidance transaction is one which would not be adopted
if the tax-saving element had not been present.
The motive of the legislature must also be taken into account.
Several of our taxes are imposed for economic or social reasons
as well as for fiscal ones; the high tax on spirits was intended to
reduce drunkenness, just as the additional profits tax on distri-
buted profits was imposed to reduce dividends. A taxpayer who
acts as the legislature intends him to, and reduces his drink, or
his company's dividend, cannot fairly be described as a tax avoider.
Hence, we must define tax avoidance as a transaction which
(a) avoids tax, (b) is entered into for the purpose of avoiding tax
or adopts some artificial or unusual form for the same purpose,
(c) is carried out lawfully, and (d) is not a transaction which the
legislature has intended to encourage.
Tax avoidance is nothing new. The conveyance of land to A
to the use of B was used in the fifteenth and sixteenth centuries
* A University of London Special Lecture in Laws, delivered at the London
School of Economics and Political Science on February 21, 1955.
VOL. 18                                           14

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