NYT: Markets Punish Tax Evasion

Barbara Taylor of the New York Times blog "You're the Boss" has made an observation that small business owners who evade taxes may not be doing themselves any favors.  Because the the value of a business is based on a multiple of seller discretionary earnings or a percentage of gross sales, there is little payoff in under-reporting income on tax returns since doing so devalues a company; when an owner decides to sell then, he cannot expect a buyer to offer him a purchasing price that reflects the full value of his business.  While they may not make their checks payable to the IRS, these tax-dodging business owners certainly get hit with a hefty implicit tax. 

Posted by Joshua Hock, Associate Editor, Wealth Strategies Journal