How much do taxpayers really know about tax avoidance and American tax policy? Although there is a widespread stigma around taxes, not much knowledge accompanies it. With further investigation into tax policy, it becomes clear that corporations are taking advantage of people’s lack of information, exploiting the government in the process. 

In a democracy, the populace is tasked with holding leaders accountable, but when the populace is unaware or unmotivated to tackle certain issues, problematic activity like tax avoidance, the legal misuse of policy in order to minimize tax expenditure, can occur behind the scenes. 

In regards to current tax policy, Boston Latin School AP Economics teacher Mr. Patrick Boor states, “Many loopholes allow those with political, social and economic capital to take advantage of the system in their favor. Many wealthy individuals also have a lot of their wealth in other assets like real estate and other investments which get taxed at a lower capital gains rate than income.”

One of the main strategies used by corporations to avoid taxes is tax inversion. According to Investopedia, tax inversion is the process by which companies relocate or create subsidiaries overseas in order to avoid paying taxes. While there is now an international minimum tax, the impact of tax inversion and other tax avoidance practices is still significant.

Despite the prevalence of these issues, many remain relatively uninformed on the topic. Savan Boxer (III) says, “A lot of people think we should tax the rich more, but they don’t know how that would be implemented.” If people are not educated on a topic, how can they advocate for change?

Tax software companies like TurboTax depend on lower-to-middle class citizens for revenue, so they try to hinder this demographic’s education in taxes and tax policy. These companies encourage ignorance, not just because their services will be used more, but also because they are run by the same corporate tycoons who exploit American law and government.

Wealth, furthermore, grants access to tax resources like financial planners, making it easier for the wealthy to avoid paying their fair share. Enabled by poor tax policy, this inequity essentially “keeps the rich rich and the poor poor,” according to Ekin Nguyen (III). 

If the government has not done anything about these unjust tax policies and practices, there must be some incentive for them as well. Lobbying and corporate influence are familiar terms in the American political sphere, but nowhere is it more prevalent, yet hidden, than in tax policy. 

It is no accident that such is the case, since both the government and large businesses hope to hide these practices, keeping the public ignorant and placid. Transactions like these are not the only thing incentivizing the government, however. The national economy depends on large businesses, so the government feels the need to appease the wealthy.

Corporate influence, however, is a threat to democracy. How free are civilians in a country where corporations control politicians and the populace by threatening to throw a financial fit if policies do not support corporate interests? 

BLS plans to host discussions on many important financial and political topics, but the issue of tax policy tends to go under the radar. Becoming resistant to the power plays of the government and large corporations starts with education and discussion, so it is imperative that students are afforded the opportunity to learn about taxes and tax policy. Economic injustice is among the largest issues plaguing this country, but it is one that so many can unite on.