Two Bridges

LOUIS XIV’S FINANCE minister, Jean-Baptiste Colbert, famously declared that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

Sadly, even among the wealthiest of clients I’ve worked with over the past 40 years, the biggest question they have for their CPA is, “What are my quarterly estimates going to be for next year?”

Due to the dreadful complexity of taxation, otherwise brilliant businessmen/women fall prey to the malaise of fatalism.  And that’s a shame, because taxes are the biggest headwind to the accumulation, maintenance, and transference (to intended beneficiaries) of wealth.

Sadder still, the accounting profession largely conforms to client fatalism and spends little time in prospective, proactive planning and remain expert documenters of history, rather than spending time shaping the future for their clients.

Then there are the myriad purveyors of products or ideas that promote significant tax savings.  These sound interesting and convincing, but, prominently displayed are seemingly duplicitous disclaimers on all the materials left behind that the purveyor doesn’t give tax advice and that the potential participant must work with his or her tax professionals before embracing the strategy or buying the product.

I do give tax advice and have been doing so for most of my career, helping people legally save millions of dollars of taxes.  I help people move money from what is largely seen as the worst charity in the world, the IRS, to a more meaningful purpose-that which matters most to my clients.  And I don’t hide behind disclaimers.

I’m calling this piece “Two Bridges” due to a familiar and brilliant analogy from Supreme Court Justice Louis Brandeis about the difference between tax evasion and tax avoidance.

“I live in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. This bridge was placed outside the downtown Washington, DC area to serve a useful social service, getting drivers to drive the extra mile and help alleviate congestion during the rush hour. If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion … If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical and suitable method of tax avoidance, and am performing a useful social service by doing so. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists.”― Louis D. Brandeis

The tragedy of life today is that so few people know that the free bridge exists, indeed.

Jeffrey Smith, CPA