About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

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 MODERN LAW REVIEW Volume 18 May 1955 No. 3 THE ATTITUDE OF THE LEGISLATURE AND THE COURTS TO TAX AVOIDANCE * 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. 209 VOL. 18 14

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most