Periscope Depth

the season opened last July ever since the U.S.A. went dry

A few weeks ago, I got a mailer offering me a nice discount on any purchases from the New Hampshire Liquor and Wine Outlet. For those of you not from New England: the Outlet is the only chain of stores where hard liquor or wine may be sold in New Hampshire. Since New Hampshire has no sales tax, the discount on the final price, compounded with the savings on this coupon, more than paid for the trip. So Sylvia and I drove up to Derry on Saturday afternoon, taking in the gorgeous fall foliage on the way. I loaded up my cart with several massive bottles of mid-tier liquor – Tanqueray, Canadian Club, Smirnoff – and paid a mere pittance. A trifle, for the joy they’ll bring.

Jaunts like this remind me of why I’m not comfortable identifying with either of the major political mindsets in America – either conservative or liberal.

Conservatives tend to champion the “rule of law” as if it’s a value in and of itself. “Sure, the illegal immigrants in the Midwest aren’t committing crimes in record numbers,” they say, “but their very existence in the States is a crime.” Or consider Rudy Giuliani’s “broken windows” crackdown in New York City in the 90s. The idea seems to be that an environment of widespread lawlessness encourages greater crime. The problem – outside from a lack of empirical evidence in either Arizona or Manhattan – is that we’re all lawbreakers. We all scoff at the laws we find inconvenient and adhere to the laws we like, or the laws we can’t get away with breaking.

The relationship between New Hampshire and Massachusetts is a perfect example. There’s a long-established trend of Massachusetts residents motoring up north to buy wholesale clothing, cartons of cigarettes and liquor in New Hampshire. This trend is so well-known that massive corporations cater to this sort of thing, as American Express did when they sent me that discount mailer. The coupon rang up on the register as “AMEX MASS.” Now, there’s nothing illegal about a Massachusetts resident buying liquor in New Hampshire – provided he reports it at the end of the year and pays his use tax. Which I promise you, I am definitely going to pay come April 2011. You just see if I don’t.

But I know not everyone else abides the law as closely. So you’ve got an endemic, multi-generational culture of tax frauds in eastern Massachusetts. Has this driven up the crime rate in Boston? Does this make the North Shore a greater source of other forms of tax evasion than typical for the country? Because, if not, I think we need to reconsider the “culture of scofflaws” idea.

On the left side of the aisle comes the notion of the tax burden in the first place. Whenever I get into an argument over the justification of taxes, I’m told that they’re a “payment for services rendered” by the state and federal government. The same way I might pay two dollars for a gallon of milk, or a thousand for a computer, I pay the Commonwealth of Massachusetts and the U.S. Treasury several thousand dollars a year in exchange for bank bailouts, secret prisons in Afghanistan and ConAgra subsidies. Which I suppose makes sense.

I can understand the reasoning that taxes are money that I owe to the government (even if I’m not sure I buy it). But I can’t understand the reasoning that taxes are money of mine that the government already owns. And if you think I’m exaggerating, consider this Huffington Post article, about a series of tax loopholes that “cost the U.S. $60 billion a year” (the headline’s words, not mine).

The author’s mindset seems to be that Google doesn’t owe the U.S. money – rather, that Google was holding money that already belonged to the U.S. and hasn’t returned it fast enough. It’s the distinction between “I promised to buy you a six-pack” and “you put your six-pack in my fridge; let me get it for you.” I understand the former, but not the latter, especially if I bought the bespoke six-pack.

Google, Microsoft and the other companies who employ the “Double Irish” strategy aren’t breaking the law. They are taking advantage of loopholes in corporate tax law. You might consider that sort of behavior uncivic, if you think that people have an obligation to maximize their tax burden. But no actual human thinks that way. In fact, 100 out of 100 people I talk to think the opposite – that if you find a way to lower your tax burden, whether it’s through charitable donations or investment strategies or setting up a trust for your child’s education, you go for it. And you can see that sort of mindset in the New Hampshire Liquor and Wine Outlet, which advertises to Massachusetts residents to come thumb their nose at the law.

If you think I’m misunderstanding or caricaturing your view, let me know. I’d be happy to discuss it with you over a glass of illegal booze.