Ethics Discussion
Is it ethical to pay a vendor in cash in order to get a substantial discount (e.g. 25%) even when one has a pretty good guess the vendor is accepting the cash and giving the discount in order to cheat on taxes and perhaps other laws? Ignore the business reliability questions this raises (e.g. if one thinks the vendor is cheating Uncle Sam, doesn't this make it more likely he will also cheat me?). Just pure ethics -- how responsible might one be for this vendor's illegal actions, and if one is, how sure would one have to be that the vendor has illegal intentions for this responsibility to cut in.
Buying stolen goods is malum in se; buying something from someone on terms that make you suspect they're evading taxes is malum prohibitum at best. No different? No. Hugely different.
Of course. Because race relations in America in 2017 are just about as bad as they were back in 1964. The KKK still owns entire towns and counties -- if not states -- lock, stock and barrel. Sundown towns are alive and well. Racial lynchings happen every weekend still.
Thank G*d we took over the entire economic lives of restaurants, hotels and schools! Because there's no possible way we can just lay down a few rules -- that's why the traffic signs and traffic cops tell us exactly where to go and exactly how long to stay there.
The issue isn't exactly how many dollars we pay. The issue is whether or not we willingly pay all that we ourselves as a society -- through our elected representatives -- already decided we need to pay.
I'm guessing you missed "people in general" and "past a certain point".
You may also have missed the point that both sides were committing civil disobedience. Again, folks, who defy Federal court orders -- or who close down public schools which otherwise would have had to serve black children -- are also picking and choosing which rules they'll obey. And in the name of values some of us, at least, cherish -- private property, states' rights and federalism.
Change what exactly? It's a basic property of physical currency that it changes hands with out leaving a trail of records. Do you want congress to outlaw cash transactions?
No, they aren't
Resorting to Nazi comparisons any time someone brings up a law or rule they may not agree with is not well thought out.
Putting aside that the reparations were renegotiated in 1925 -- the Allies learned something from the 1923 hyperinflation -- it doesn't much matter whether the government wouldn't (as, as I said, some officials wouldn't) or couldn't enforce its edicts. The fact is they weren't enforced, and the German people elected the Nazi Party the single biggest (if not the majority) party in the Reichstag. The Nationalists then cooked up a deal with President Hindenburg and Franz von Papen to make Adolf Hitler Chancellor since they could not govern with any other party at the top.
The Reichstag was burned by a Dutch Communist, Marinus van der Lubbe. The Nazis actually knew of his plans in advance and did help him out. Not to mention the Nazis took full advantage afterwards.
On Dec 5 my Culpeper county property tax is due.
I can pay by credit card, or I can pay cash for a 4% discount.
Is Culpeper county engaging in money laundering?
Hiding money from the feds?
There's a significant difference between a discount of a couple percent, which can roughly approximate the cost of accepting credit card payments, and 25%, where it is clear the vendor is receiving some benefit from being paid in cash substantially greater than just the cost of accepting another method of payment. That benefit isn't necessarily an illegal one (maybe he's dead broke and will do anything to get cash today instead of waiting for payment from a merchant bank later), but as the percentage increases, the likelihood of funny business increases.
So you set up your tax return to maximize your tax liability? You don't take advantage of every deduction you can?
I think you have the description of who is stealing from whom backwards.
I might take advantage of laws which help.me reduce taxes but I don't purposely evade or have two sets of books or hide money to get my tax discount. You seem to have a problem distinguishing between legal amd illegal activities. Illegally withholding taxes is stealing from everybody. If you can't see that you definataly have ethics issues beyond mere political leanings.
Culpeper county won't take actual cash. When they say "cash" they mean "check."
1. The only reason to offer a 25% discount for cash that isn't sketchy is because the vendor has an enormous cashflow problem, which is it's own kind of sketch.
2. You have no obligation to his morality BUT if you pay a bill in cash and don't get a receipt it's the same as taking the cash as retained earnings and then YOU pay the income taxes on it AND the penalties for not declaring it as income. If the bill is small, who cares. If it's large then it can be easily found and can be a big deal.
3. If the bill is small the 25% isn't worth your time or the accounting hassle. If the bill is large you need to ask for a receipt or some kind of paperwork proving you paid the bill. If he balks at that, you know he's cheating on his taxes. Don't play his game, you'll only screw yourself.
4. The under-the-table cash price always seemed so rinky-dink to me. I never could figure out why people bothered with it on a large scale which brings me to my most probable scenario you are running into here::
I bet you are talking to someone in 1) the service industry who is 2) working alone (not paying labor) so the discount is out of his own pocket. I'm betting you are talking to a landscaper who this is not his main job. I also bet that he isn't really trying to cheat the government, he's trying to cheat his wife, either present or ex into not knowing how much spending money he has. If it's his ex he's cheating on childcare and alimony. If it's his current wife, he wants beer money, money for new guns and boats to go fishing in. Snowmobiles, Harleys etc... If the checks get mailed in, she sees the books and she has a few *projects* she's saving up for.
There are other costs on which the owner is saving. If he gives net 90 which is common he has to float a loan for 90 days (or.sell it at a discount to a collector) has risk of default and it may be rough on cash flow in certain seasons. Also it may be easier for the owner to refresh stock with cash. I can see many reasons other than tax evasion for giving a cash discount.
Your comment to which I was replying itself made no distinction between legal and illegal means of reducing ones taxes.
My point was that you sounded like you were calling legal means of tax avoidance stealing from the government.
Clearly you have no comprehension of what Godwin's Law is about. It has nothing to do with who wins an argument or who's point is valid or supporting or opposing certain kinds of government laws.
Godwin's Law is about one thing and one thing only: as any discussion on the internet grows longer, it becomes inevitable that someone will make a comparison to Nazis or Hitler. Nothing more, nothing less.
https://en.wikipedia.org/wiki/Godwin%27s_law
That depends entirely on what the regular markup on the vendor's services is. I.E. that 25% off may be 25% off of a less favorable price.
The cynicism and sarcasm of your first paragraph is impressive.
We live in a country with very little racism, yet large groups of the country think is as racist as 1964. This is not so, but those folks are exacting revenge in the form of "is ok to be racist to whites because.... "systemic"", which is complete and total bullshit.
We have unraveled society and reopened the wounds of the civil rights movement, in order for one side to gain political power by promising revenge for issues that they themselves call micro....
This does not end well, this treat everyone is a group and screw the rights of individuals movement that you seem to think is good.
Also if you first paragraph isn't supposed to be cynical and sarcastic, then you're really misguided.
I agree completely with your point about picking and choosing laws to obey.
Sanctuary Cities and States are inherent parts of our Federal system that are openly disobeying the law.
Now, if they WANT a strong Federal system, I'm all for it, but they are fundamentally dishonest. They will violate Federal laws they don't like but if those backing sanctuary cities and states get federal power, they will expect me to obey the Federal laws they create.
It is at this point that they will need to be reminded that the shredded the social contract and figure out how to deal with us violating their new laws.
Do libraries violate copyright?
McDonald's says they offer a 10% senior discount. I see it as a 10% penalty for everyone under 65.
What if your vendor reduced his list price by 25% and then added a 25% convenience fee for non-cash payments. With that change your ethical consideration?
In the Nazi example you give, the Nazi's themselves were some of the main perpetrators (along with the communists) of the political violence that supposedly caused the need for a strong man to restore order. People aren't totally stupid, they could see the Nazi's were neck deep in the violence. People didn't simply vote for the Nazi's to restore order, they voted for the Nazi's because they at least somewhat approved of the Nazi's chosen targets for violence. People aren't simple or one dimensional, many people (sadly) thrive in an environment such as the Wiemar Republic. (Yes, some people prefer violence.)
A current example of such behavior is anti-fa. They employ violence against a certain segment of the population. Interestingly, another large segment of the population seems to approve. I would predict that should the situation continue for long, retaliatory violence will escalate (again with the approval of a large segment of the population.)
The topic of this blog post is illegal tax activity and the morals of enabling such activity. Michael Stack who is the top of this subthread thinks breaking laws such as tax laws is lesser than say throwing in your windows. This is what I was commenting about. And seeing such sentiment many times on libertarian blogs I either think libertarians don't quite understand the theft they are advocating.
A government that is responsible for killing hundreds of thousands of innocent people around the world and partly paid through taxes. I would say the moral thing to do would be to lessen how much taxes this government gets. I know you can't do everything to stop money going to this killing machine since you also need to protect yourself and your family from it. But, if you can do business with a company that might be willing to take on this fight then more power to you!
Let's go ahead and assume you know for certain the vendor is accepting cash to dodge taxes. In that case I would not feel comfortable in dealing with that vendor. I don't have a justification for that feeling other than it doesn't seem fair to the people who are doing business above board.
Anything short of certainty throws this out the window though. It's not your duty to ensure that everybody you do business with is perfectly compliant with the 100,000+ pages of tax law and regulations everybody has to deal with.
Here is the answer:
Let’s say you walk in with a wad of cash, and he suggests a price. You agree, and make a purchase. You complete the transaction, unaware of what the cost would have been had you included delivery, had you asked for insurance... or had you paid with a credit card.
The transaction is the transaction. Period. You are not beholden to the ethical considerations regarding what else you could have done with the money, nor what he intends to do with it. (For all you know, you’re financing his chainsaw purchase so he can slaughter children on a playground.)
Maybe he wants the cash in hand because he is going to buy pot. You don’t know. But if you’re so worried about what that person MIGHT do under your limited knowledge, then you can’t possibly use cash for anything.
So the answer is, you either believe in cash or you don’t.
How about the Doctor who gives a 20% discount for patients who pay cash? He's ahead of the game because he doesn't have to pay to have the insurance paperwork processed. He's my Doctor and I asked about the sign in his office. His price for a visit is just a bit above my co-pay.
It might also be that the vendor is sick enough of not getting paid (or having to chase people for months to get paid), that it's simply worth the 25% to do the cash deal and know he's got his money in the bank. This wouldn't be similar to doctors who give a significantly discounted cash price for services because they don't have to deal with insurance forms and waiting for insurance checks.
As an ethical matter, if you strongly believe that this person is doing this to cheat on his taxes, then yes, as an exercise of pure ethics, it would be unethical. You could clear up the ethical matter by having him fill out a W9 ("It's just company policy, in case we're audited."). In this way, you are stating clearly that you may be reporting the payments to the IRS, so he would avoid his reporting of the payments on his side at his own risk.
All that said, as a libertarian, I strongly believe the "taxes are theft" mantra (at least, in our current tax regime), so I'm inclined to ask the question, "Is it ethical to coerce somebody to pay income taxes when there's a possibility they could get away with not doing so?" I think that's a personal decision.
Regardless of where in the process the tax burden falls - the tax code is always the problem!
In terms of the initial question you can make the assumption that the vendor's willingness to discount for cash is to evade taxes or you can make the assumption that he has an immediate need for cash vs waiting for a credit card or check to process. The purchaser has no accountability for the vendor's subsequent actions.
I see many of the same answers below. It's a basic procurement and reputational risk assessment. The service/goods provider's ethics don't enter into it past knowing whether or not your supply line or reputation is in jeopardy in some way. The provider may have a perfectly acceptable reason for offering the discount on a cash basis. If your supplier is dependable, then your concern extends as far as having a robust audit trail, so yes - you would require the certifications of supply (so that it's meeting your standard) and a fully itemized invoice showing the price paid. It the provider isn't willing to provide these authentically, then you're taking a big business risk. If your company's (or your personal) ethical standards make your think that your involving your business reputation or finances to unacceptable risk - e.g. if it's a crime syndicate making the offer - then you wouldn't accept it. If you concluded that the supplier is fly-by-night then you might further conclude that your supply needs higher assurances of delivery so your business remains predictably supplied, and again you wouldn't accept it.
So just how large is this "cash" transaction, and are you talking about "green" cash, or simply direct payment with a cashier's check, wire transfer, or ATF transfer? If we're talking about green cash, this certainly can't be a payment larger than $10,000, or other laws regarding cash transactions come into play. Heck, as a business expense the amount is probably quite a bit lower, since the IRS would require that you report significant payments using form 1099.
If it is a legitimate business expense, you need to have some sort of proof of the expense to support your own deductions, which might include itemized invoices, bank records, and form 1099's.
If you are truly concerned that the recipient of the cash is evading taxes, you always have the option of dropping a dime on the payee with the IRS. If he's evading taxes you can get a piece of the recovery for your efforts, unless you consider that reporting the vendor is unethical itself.
But as far as the basic transaction with a 25% discount, you don't need to be so concerned about what the vendor is going to do with the money, unless you have reason to know (not merely vague suspicions) of illegal activity that the money will be used for, or that the goods or services you are paying for are themselves tainted with illegality.
Of course, if you know that the vendor is generally unethical and engages routinely in illegal activity, perhaps you shouldn't even consider doing business with that vendor in the first place.
Irrelevant drivel. Race relations are better because of social work. Because of TV shows with sympathetic minority characters; because social pressure prodded people of all races not to make assumptions so quickly. NOT BECAUSE OF LAWS FORCING PEOPLE TOGETHER.
Taking over "the entire economic lives" of restaurants? The government already owns those businesses to the extent of the tax rate, since profits flow to owners. And the Left has made it crystal clear that to them, the whole thing belongs to anybody but the government only to the extent that the government permits it. They would take the rest in a heartbeat. Before the Democrats lost Congress there was serious talk about greatly expanding the definition of what constitutions public accommodations.
Oh, so "people in general" can't do it, but individuals can. And "a little bit" of choosing which laws you'll obey is okay; just not a lot. I'm guess that "setting precedents" doesn't mean much to you.
You should run for office. That sounds like the sort of 5th-grade civics-class pabulum that politicos dish out.
What I want is completely irrelevant. I'm perfectly fine with cash, and I'd have a major problem with it if they banned it. I'm just saying that the government has the power to set things otherwise, and hasn't done it. They don't get to rely on the assistance of private citizens in trying to police the cash market. They might get that assistance from some citizens, but they have no moral right to demand it-- no moral rights at all, as far as I'm concerned, based on how heavy-handed government is.
Just want to add one question: Doesn't the magnitude of the purchase also make a difference in how bad (or not) it is?
We make choices every day with limited information, so we are often left with our best guess.
I'd want to be more "sure" about the propriety on a $1M deal than on a $10 purchase. I'd be asking more questions the bigger the deal. Mere suspicion may be enough to deter me.
On a $10 purchase, it doesn't warrant the same scrutiny. If I "know" so (vs "good guess"), it would be wrong, but if it is merely a "good guess" on a matter so small, is it meaningful?
How far does one have to take it to be considered ethical?
Do you avoid low volume ebay sellers because you suspect the goods are "hot"? If you strongly suspect someone of a white lie in social setting, do you accept it? Heck, do you follow to a T all traffic signs, especially speed limits? Is it ethical to follow the speed limit even if one is in the left lane of a highway?
Not perfect analogies, but ethical choices nonetheless with varying degrees of knowledge and potential for impact / consequences.
On small purchase items, on a "good guess", one's conscience will certainly be clear, but should it warrant much attention vs bigger problems in society?
Wait a minute, is this vendor Ticketmaster....???
Now what they do... that's unethical.
If the cash payment is treated differently than a similar liquid payment (Check or ACH) then it raises questions. Fast payment in usable form is worth a lot compared to credit or uncertain terms. I don't think there is an ethical question (you don't know all the issues the vendor faces) but a government risk to you for unpaid sales taxes, income tax reporting etc.
If the vendor has lots of employees who are paid in cash, your cash payment is worth a lot. It wasn't that long ago that most workers were paid in cash every payday.
If you have to ask if something is ethical, you already know the answer.
I have another ticket horror story, you might enjoy.
In San Francisco we have an a theater that is now called The SHN Orpheum Theater. This is the place to see any kind of Broadway production that comes to the city. Now you can't buy tickets online from the theater itself, so you are redirected to one of their many approved ticket sellers. Each has their own seating chart and some are prettier than others, but the prices are all the same. But no matter which vendor you choose, and no matter what section you prefer, there will only be a few tickets available. You get a message like "Act fast, only 12 tickets available!" So you think, I better buy now to make sure I get my 4 tickets in the area of the balcony I prefer.
But when you attend the theater, you see that there are lots of open seats all over the theater. Even in areas that said "No Seats Available" when you looked online.
By now you probably already guessed what's going on. It's like a big shell game across multiple card tables with a pea that jumps from table to table. If the theater has 2,000 seats, it only release a subset of those seats at any one time. Each of the approved ticket sellers gets some allocation of seats and labels their particular allocation as "Almost Gone!" or "No Seats Available" depending. Then in a day or two, the cycle begins again and more seats are distributed to the ticket sellers. Yeah fun for everyone!
Now I'm sure if there were ever an investigation the theater will say "We can't release all the seats to all the vendors at one time! They might sell the same seats!" And if you asked the vendors about why they labeled a section of seats as "Act Fast, only 12 left!" they would say "Well there were only 12 left in our allocation! How could we know we would be getting another group of seats tomorrow? The other vendors may have already sold them!"
So in the end everybody's covered, well except the patron who can't know if a show is nearly sold out or its a bomb with 50% of the seats available on opening night.
Now if I could only think of a market where I could create a sense of scarcity where none exists, then I could have some fun too!
Avoiding insurance overhead allows some no-insurance surgery centers to offer an 80% discount as compared to the price provided by insurance only hospitals. I have heard interviews with the fellow who started the business I linked below. He use to work at a non-profit hospital and he explained what that really meant.
One example I recall was how Medicare compensated the hospital for surgery. Lets' say the procedure was hip replacement. During this surgery the doctor has tools and devices he always uses and perhaps another 50 different tools or devices he might occasionally use. In the non-profit hospital Medicare paid for every instrument opened. The idea was once opened the instrument had to be re-sterilized before it was repackaged. Well when you get paid to open instruments, then you open all the usual tools and all the 50 unusual tools as well. (I don't recall the actual numbers, but you get the idea.)
In the for profit surgery center, they charge by the procedure. They don't get paid to open instruments and so only open the usual tools with the rest remaining sterile unless needed.
Incentives are remarkable things.
https://surgerycenterok.com/pricing/
Warren, you are trolling us? Yes?
You have, at best, an assumption your vendor is cheating on his taxes. What level of awareness do you have? Strong suspicion? Preponderance of the evidence? Beyond a reasonable doubt?
Basically, it's none of our business what his relationship (or lack thereof) is with the IRS. We have no proof and no reason to judge his actions.
" Doesn't the magnitude of the purchase also make a difference in how bad (or not) it is?"
How bad what is?
"How far does one have to take it to be considered ethical?"
I don't think individuals or business have an ethical obligation to police the tax compliance of business they do business with.
However, If a business is that desperate to avoid government scrutiny (25% for cash is way beyond either direct CC fee avoidance or direct tax avoidance benefits) I have to wonder about how willing they would be to try to cheat me.
That's not ethics on my part, it's self preservation.
And on that ground, a business with investors has an ethical obligation to protect the capital they have been entrusted with, and dealing with a shady business could be a violation of that ethical obligation.
Back to your first question, I don't think the amount at issue affects the ethics for an individual, but it certainly affects the severity of the self preservation issue.
I consider myself a libertarian. I would not recommend resorting to illegal means to avoid taxes.
Civil disobedience has a long and respected history in the US, but properly done you accept the legal consequences.
In the case of taxes, they can garnish your wages and seize your assets and if you really piss them off, they send men with guns. Yes, the IRS has it's own armed agents. They even have their own SWAT teams.
I do not consider what is described in the main article to be enabling tax evasion. On the other hand doing business with a company either that desperate either to have cash quick or to avoid government scrutiny can be all kinds of stupid for other reasons.
Is it ethical to help another individual escape being extorted by the Mafia, or Government as it is generally known?
Slight paraphrase of what a controller at a company I used to work for stated in a similar situation: : "we'll pay 'em in cash and then 1099 the [s]uckers."
Coming to the conversation late... I guess you have never heard of the idea "fruit of the poisonous tree". a price discount may not be inherently unethical, but if you are aware of unsavory practice and you take the passed on "savings" you are at the very least condoning the methods used to supply you the discount. That is not semantics, that is being an accessory to a crime, or to a violation of a 3rd party's rights ( if you prefer that terminology.)
Same question, different context: Is it ethical to sell a car to someone when one has a pretty good guess the person might use it to commit a crime? For instance, a person you think might be dealing drugs or a member of a violent gang.
This is the important bit of your statement: "if you are aware of unsavory practice"
Mere suspicion of possible unsavory practice of an unknown type which is all we are talking about here, is not enough.
If a business has a cash flow problem and needs a large influx of cash, offering a large discount to get paid immediately is a perfectly legitimate transaction on all sides. So it is only the seller who knows for sure why a discount is offered.
Some businesses survive on contracts let by the government, automakers big box stores and supermarkets (typically involving massive available cash volumes). So when the big guys say I need a low bid, small businesses have to comply or cease doing business with these customers. This can work if the "A & P principle" (If every sale is at a loss, the solution is to sell more) is avoided.