The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

Sunday, April 15, 2018

At Tax Time, Teach Your Kids About Money and Morality – Tablet Magazine

Alas, on that very day, Jonathan had been planning to sell some of his often-blacked-out stock. But because he’d been in that farshtunkiner meeting, if he’d sold the stock, he could have been charged with insider trading—even though it was unlikely that anyone would have known he’d been in a meeting he wasn’t actually supposed to be in. Even though we already knew that the entire world of big-money Internet consulting was built on sand and made of Siegfried-and-Roy smoke and mirrors. We talked about it. And we opted to obey the law, even though we knew it meant we were unlikely ever to make so much money. Furthermore, it took us 10 years to pay our way out of the negative tax consequences of being forced to hold on to increasingly worthless stock. (To this day, if you ask Jonathan about the Alternative Minimum Tax he turns a sickly green, like Kermit the Frog.)


Well, I hate to break it to you, but you could have sold that stock legally. It's not insider trading to sell stock just because you happen to know it's about to tank, if it was part of a plan you had to sell the stock before you had that information, if you had that information because you're an insider. Insiders do it all the time. Of course, you'd have to prove you had this plan, if the SEC decides to sniff around you. And if they decide to sniff around you, you don't have to be guilty to get hosed. So maybe you did the smart thing by not selling, but not because it was the ethical and legal thing to do.

The ethics of tax law are like the ethics of how many sheep you should hand over to the Vandals, Huns, or whoever are holding up your village at the moment. Should you hold back a few sheep? It depends on how likely you are to get caught and made an example of. Except in that case, it's all pretty straightforward. With the tax person (a.k.a. taxman), it's more complicated. Not ethically, just factually. I think Jews, like everyone else, understand this point very well. Some Jews make a big deal about being ethical and paying their fair share. As do some WASPs and probably everything other ethnic group. Some subset of them probably do think its ethical for the government to threaten them with jail for not paying their taxes. The rest of us just don't want to be made an example of.

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