Tax day looms, and no one is ever happy about that. Many think taxes are too high, a few people think they're too low, everybody objects to the complexity of the forms and the special-interest favors of tax codes. But should taxes be seen as an ethical question as well? The Founders wouldn't accept taxation without representation; Thoreau refused to pay taxes to protest the Mexican war, as later Americans did during Vietnam; today a few fringe survivalist groups resist paying taxes.

Since he first floated his idea for a tax cut on the campaign circuit, one of George W. Bush's favorite lines was "It's your money, not Washington's,"

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implying that taxes are theft on the part of government. Last year, former Rep. John Kasich of Ohio, then chairman of the House Budget Committee, added the latest interpretation, declaring that taxes are "a moral issue." This is so, Kasich said, because "every time we cut taxes, we make government less important and people across the country more important."

There's no doubt that taxation takes away people's money and no doubt that tax cuts reduce that effect. Less clear, however, is where the morality of taxation lies. No taxes would be nice. Yet every society since well before the Roman Empire has collected them, and every philosophy of government, including libertarian theory, acknowledges some degree of taxation to be unavoidable--even in a minimalist state, government would need to defend the shores, enforce contracts, and keep the peace. The Founding Fathers obviously expected Americans to be taxed, or they wouldn't have included, in the Constitution, a set of rules governing how the House of Representatives can vote out tax bills.

So the issue really isn't whether taxation itself is moral. The issue is whether strict tax compliance is the ethical obligation of an honest person or corporation. In other words, if you fudge your 1040 form, is that playing the system, or is it cheating?

If tax cheating interests you, now seems the ideal time. After the IRS was discredited by disclosures of excesses in the 1980s and 1990s, the pendulum swung in the other direction, with IRS staff cuts and congressional instructions to reduce audits. Two decades ago, one personal tax return in 63 was audited; in 1999 it was down to one in 300, and only one in 131 for taxpayers declaring more than $100,000 in income, who have the most to gain by cheating.

Because auditing is down, most experts believe that cheating, or at least fudging, is up. (Others believe that in good economic times--when more people have salaried jobs, on the books--tax cheating goes down.) Millions of people deduct much of their car ownership costs as a business use (commuting expenses are specifically prohibited as business expenses), or claim a home-office expense for just bringing some office work home.

Exaggerated claims of "noncash" charitable contributions, based on time or donations of used items, are widespread. Electronic filing has made it easier for people to apply for fake taxpayer ID numbers and file false tax returns--and then claim a refund. Many Americans claim to be "farmers" to qualify for tax benefits, but their properties sure don't look like farms. (One reason you read about "vanishing farms" is that whenever real estate speculators sell property that they are calling a farm for tax purposes, it counts as a vanishing farm.)

The most widespread form of tax cheating is underreporting of income--not only waiters and waitresses who don't declare their tips, but laborers, tutors, and even doctors and lawyers who do work for cash or personal checks and never declare the gain as income. (Still, most people have no opportunity to cheat by underreporting their income, because most taxpayers have all their income reported both to them and directly to the IRS, on W2 and 1099 forms.)

It may seem, when you underreport income or claim false deductions, that you're merely pulling a fast one on Big Brother. Actually, you're cheating your honest neighbors, whose taxes must pay your missing share--or cheating your children, who will be saddled with extra public debt.

Then there's the tax ploy that's legal--but. Today, many corporations devote considerable resources to shifting earnings among foreign divisions, to take advantage of tax loopholes on foreign profits. As a result, U.S. corporations overall now report only about two-thirds of their profits as taxable, down from 91% a decade ago. Many individuals engage in real estate shell transactions to exploit loopholes--the "passive loss" that occurs only on paper is a perennial gambit.

A creepy but legal rich person's loophole in use in recent use has been the "ghoul trust." This mind-bogglingly arcane ploy involves a rich man or woman finding someone under age 21 with an incurable disease, then creating a trust that appears to give huge amounts of money to that sick stranger for medical care but that actually generates tax breaks for the giver and then a low-estate-tax transfer of money to the rich person's children when the diseased stranger dies. Today, there are law firms that specialize in finding dying children and getting their parents to agree to participate in a ghoul trust for a fee. This is sick in more ways than one.

Corporations and individuals who exploit tax loopholes argue that if they don't, someone else will. These are classic arguments of irresponsibility--"Hey, officer, everyone else was speeding too"--and send precisely the wrong moral message. How many corporations that have exploited offshore accounting loopholes have also instructed their lobbyists to ask Congress to close the loopholes and then lower the overall corporate tax rate? That would be the responsible position. How many who claim passive real estate losses write to Congress asking that the loopholes be closed and then the top rate lowered?

No one can doubt that the existence of law firms that specialize in tax avoidance, or Fortune 500 offshore divisions created expressly to beat the taxman, engender public cynicism about tax compliance. So do the complexity of the tax codes and the obviousness of special-interest lobbying for tax favors. But the fact that others are cheating is never an argument that you, too, should cheat--"Hey officer, somebody else had already broken that store window before I reached in to steal the TV."

People in democracies are free to oppose taxes and to vote for representatives who will cut them, but they're not free to cheat. Once Congress picks a tax level, anyone who cheats on that level ought to feel ashamed. Paying our fair share of taxes is one of the promises we make to each other under the social contract. Cheating on that promise is no different from stealing from the neighbor's well.

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