William & Mary Business Law Review
Abstract
Taxation is not just a legal duty; it is a game, and the best players always win. While governments rely on laws and penalties to enforce compliance, corporations, high-net-worth individuals, and elite tax strategists exploit loopholes, turning complexity into opportunity. This Article argues that tax avoidance is not a flaw in the system, but an expected outcome. Modern tax law does not just permit avoidance; it actively encourages it. The more intricate the rules, the more valuable it becomes to manipulate them.
Using game theory as an analytical lens, this Article reframes taxation as a high-stakes competition, where strategic players respond to incentives, enforcement gaps, and shifting regulatory landscapes. Avoidance is not an anomaly but a rational reaction to the system’s design. Governments, rather than serving as neutral enforcers, often reinforce the cycle with reactive policies that merely push tax planners toward new strategies. Those with the resources to navigate the system benefit, while ordinary taxpayers bear the burden.
Instead of increasing enforcement or making minor adjustments, this Article argues for a fundamental restructuring of tax law to change the rules of the game. By eliminating the conditions that make avoidance the smartest move through tax simplification, real-time taxation, and alternative revenue models, governments can realign incentives so that compliance becomes the optimal strategy. This approach shifts the focus from punishment to systemic reform, offering a new perspective on tax policy that targets avoidance at its root.