Food service is a perfect industry for college kids. Restaurant work provides flexible hours and doesn’t require much experience. The pay tends to surpass the minimum wage and, in most restaurants, servers take home their tips in cash each night.
But just like any other industry, Uncle Sam wants his cut. The IRS requires servers to declare tipped income, so it knows how much they owe in taxes.
Credit card tips are often reported automatically. The business has to collect that money from the customer and then pay it out to the server, so there’s a paper trail. If the IRS suspects underreporting, then it is easy to prove.
When a customer leaves a tip in cash, though, reporting essentially works on the honor system. The Taxman expects servers to declare cash tips, but cash is untraceable. No one (not even the employer in many cases) can prove cash-tip income exists. Whenever a new employee would ask how to declare cash tips, a server I used to know would remark, “I don’t know — I’ve never had any cash tips!”
As a tax accountant once told me, “Some people choose not to report cash tips. Whether or not you do is between you and the Lord.”
So do servers have an ethical obligation to report (and pay income tax on) cash tips? For that matter, do you have an ethical obligation to pay taxes in general?
To answer this question, we first need to establish a philosophical framework through which to understand taxation. Such a framework must begin with the concept of “the state.”
We can define “the state” as an organized political community holding a monopoly on the legitimated use of coercion, or force. For example, if you steal your neighbor’s TV, we as a society don’t allow your neighbor to use violence against you to recover it. But we do license the state to do so. The police can arrest you, seize the TV and return it to its rightful owner. This is the most basic function of the state: to protect individuals’ rights (in this case, your right against having your property stolen).
But the implements necessary to serve this rights-protective function cost money. The state uses its coercive power to raise this money, through taxes. In private society, exchange is voluntary — if you have something I want, I can offer to give you something you want in exchange. But the state precludes voluntariness. While it may purport to provide something of value in exchange for the money you pay in taxes, you have no choice in the matter. If you don’t pay, the state may take your assets, or worse, your freedom. And if you’re unsatisfied with what the state provides, you can’t take your money elsewhere, as you can in private business.
Gay rights advocates boycotted Chick-Fil-A when the company expressed its opposition to gay marriage. Boycotts are, by nature, tied to moral judgments because we tend to see supporting an entity through economic exchange as an implicit endorsement of its actions and principles. This idea is ingrained in our society, so deeply that we codify it into laws prohibiting criminals from profiting off of their crimes.
But we can’t boycott the state. This becomes especially problematic when the state undertakes actions we find morally repugnant.
There is one exception (sort of): conscientious objection. Historically, conscripts who found war unconscionable could serve in noncombatant roles. Today, the United States military will discharge from service any who object to participation in war. This objection must be a moral one to war in general—a pragmatic objection to a particular war is not a valid justification.
Conscientious objection, however, does not excuse you from supporting morally objectionable acts through taxes. You can’t conscientiously object to the state using your tax dollars to fund drone-bombing campaigns in which collateral damage may include civilians. You can’t boycott the state when it uses your money to execute a commando-style drug raid on the wrong house, mutilating a toddler with a flash-bang grenade in the process (as happened in Georgia in 2014). And if you find the state’s unconstitutional, warrantless spying on your digital life troubling, too bad — you’re paying for it.
The military can continue to function without those it releases from duty based on moral objections, but as a practical matter, the state could not, and would not, exempt individuals from paying taxes for such reasons. To resist being coerced into participating in an immoral act, or a system that sanctions immoral acts, cannot be immoral. In fact, we often view this type of resistance as morally right. This leads to one last objection to overcome: legal positivism.
The basic idea of legal positivism, in a nutshell, is that it doesn’t matter whether a law is “right” or “wrong,” it only matters that it was created within an accepted legal framework—“Like it or not, the law is the law, and must be obeyed.” If we don’t like a particular policy, we must change it within the established political process.
Few would argue the law-breakers of the Civil Rights Movement were in the wrong; that they should have waited to sort out state-sanctioned discrimination through politics. The idea that the validity of a law depends, at least in part, on its moral weight, permeates American society. Just look at our three most recent presidents, all of whom admitted to having used illicit drugs during their lives (and none of whom would have made it to the White House if they’d been caught).
As a taxpayer, you cannot choose, à la carte, which policies your money goes to support. If disobedience to coerced endorsement of immoral acts is deserving of moral approbation, not only do you have no ethical obligation against tax avoidance, you have an ethical obligation to pay as little tax as possible.
Of course, if you choose to follow your conscience rather than the law, don’t be surprised when you find yourself crucified for the sins of others.
