Public service is a noble goal that many strive to achieve, but sometimes it can feel like a thankless task. Al Capone, a notorious figure in Chicago’s history, once expressed his frustration at not being appreciated for his efforts to provide decent liquor and fair games to the city’s residents. Despite his controversial methods, Capone believed he was serving the needs of the community.
Breaking the law can sometimes lead to productive outcomes for everyone involved. One example of this is the practice of tipping in cash to avoid taxes. While this may benefit businesses with tight profit margins like restaurants, officially making tips tax-free could have negative consequences. It could create unfair advantages for certain industries and distort incentives for workers earning tips versus salary.
Consider the case of an exotic dancer in Miami who made a substantial income, including a significant amount of cash tips. If this cash income was made tax-free, it could result in high-income earners paying lower taxes than those in other professions. The tax code should treat all forms of earned income equally to avoid creating disparities based on the nature of the work.
Sometimes, navigating the complexities of the tax code can lead individuals to engage in “productively illegal” activities, such as paying for services in cash or hiring undocumented workers. These actions may go against the law but can have positive economic effects by enabling certain transactions that would otherwise be hindered by bureaucratic hurdles.
The use of cryptocurrencies like stablecoins presents new challenges when it comes to law evasion. While physical cash allows for some level of anonymity, stablecoins can enable large-scale law evasion due to their digital nature. However, in some cases, stablecoins may facilitate socially beneficial economic activities in regions where traditional banking systems are unreliable or oppressive.
In the United States, the use of stablecoins has primarily been for trading crypto tokens, which may not always comply with existing regulations. Despite potential legal issues, these activities could still have productive outcomes in certain contexts. It’s essential to strike a balance between innovation and adherence to the law to ensure a fair and efficient economy for all participants.