Tuesday, December 11, 2012

Statistics on Tax Prosecutions - A New Article Offers Some Insight (12/11/12)

Readers interested in the broader role of plea agreements in the Federal criminal universe, should read a new article, Kyle Graham, Crimes, Widgets, and Plea Bargaining: An Analysis of Charge Content, Pleas and Trials, 100 Calif. L. Rev. 1572 (2012), here.

The author bases the article on a lot of statistics that he has combined into a database useful for the subject of the article.  The sources of the database are summarized at p. 1574 n. 2.  The author concludes the article as follows (pp. 1629-30):
In the final analysis, this Article argues that in at least one important way, crimes should be treated more like widgets, or at least more like "normal" products. Just as corporations engage in market studies prior to a product launch, they also will periodically assess whether their existing products have generated substantial profits, or are leading to losses. Congress and state legislatures have manufactured thousands of crimes. It is difficult to believe that all of these crimes have produced the "profits" - social gains - that legislators believed they would. Close review of crime-specific data would allow states and the federal government to shut down poor-performing product lines, streamline others, and perhaps even add a few new models. Crimes may  [*1630]  not represent widgets, but that does not mean we cannot take an inventory of our previous orders.
The author makes some interesting comments in the body of the article about criminal tax prosecutions are follows:

Pp. 1574-75, footnotes omitted):
More so than most federal crimes, felony tax evasion, codified at 26 U.S.C. § 7201, tends to produce convictions when taken to trial. According to data compiled by the Administrative Office of the United States Courts (AOUSC),  less than 14 percent of all tried counts that allege this crime result in not-guilty verdicts. This figure is significantly lower than the overall acquittal rate at trial across federal crimes. Given the slim prospects for acquittal, one would expect that defendants charged with this offense would agree to pretrial guilty pleas relatively often. By doing so, these defendants would position themselves to receive a sentence reduction for their early acceptance of responsibility - as good an outcome as they might expect under the circumstances. In fact, the contrary is true - this charge is approximately three times more likely to be taken to trial than the "average" crime is. 
p. 1587 (footnotes omitted)
At the other pole, some crimes are difficult to prove because the evidence commonly relied upon to show guilt is ambiguous or subject to impeachment. For example, it is sometimes said that crimes that require fraudulent or specific intent are difficult for prosecutors to establish. 76 Perjury, in particular, is oftentimes described as challenging to prove. But not all variants of perjury are equally situated in this respect. Perjury in connection with one's tax returns may be relatively easy to show, since we assume that most people know roughly how much money they make. Trial perjury, on the other hand, can be more difficult to prove, since the circumstances that tend to surround this offense make it much more difficult to rule out alternative explanations (such as simple forgetfulness) for the false statements at issue.
Pp. 1625-1626 (footnotes omitted).
E. 26 U.S.C. § 7201 (Tax Evasion) 
Finally, some offenses ensnare a relatively high percentage of defendants who will refuse to enter a plea under almost any circumstances, no matter how generous the proffered terms. Some of these defendants might insist on objectively hopeless trials for a reason that oversimplified, punishment-focused applications of the rational-actor model do not fully account for: principle. 
In particular, the plea and trial rates for tax crimes suggest that some defendants in these cases are true believers who will refuse to accept plea bargains that a "rational" defendant would eagerly embrace. As mentioned at the outset of this Article, charges of felony tax evasion (26 U.S.C. § 7201) went to trial approximately three times as often as the dataset average (12.2 percent of these counts were tried, as compared to 4.4 percent for the database as a whole), even as the acquittal rate for these charges (13.8 percent) was significantly lower than the average for all crimes. Unlike charges under 18 U.S.C. § 924(j), this disparity cannot be explained by reference to any particularly severe consequences of conviction; sentences for tax evasion are rarely more than a few years, unless the defendant is a repeat offender or the evaded taxes are massive. 
Some defendants refuse to enter guilty pleas in these cases because of the costs of conviction, others because of the benefits they believe will accrue only from taking a case to trial. Well-heeled tax-evasion defendants within the former category may opt against trial because the stigma that attaches to any conviction - by plea or by trial - represents a large component of the punishment that attaches to the offense. Tax-evasion defendants in the latter class, meanwhile, may refuse a guilty plea because they sincerely believe that the federal tax laws are unconstitutional. 
These constitutional challenges do not work out well for defendants. Almost twenty years ago, the United States Supreme Court held that a considered, fundamental disagreement with the constitutionality of the tax laws does not represent a valid defense to a charge of tax evasion. Yet even with this guidance, many tax resisters remain unwilling to concede the point, and demand to take their cases to trial. One exasperated federal judge catalogued some of the "tired arguments" advanced by these defendants: 
That defendants continue to press these arguments in court despite their nonexistent odds of success underscores how many parties simply do not behave as extrapolation from likely trial outcomes might predict. To these defendants, principle or other inchoate interests override tangible matters like custody time, upon which most rational defendants are supposed to fixate. This point is often lost, however, even on the most astute observers. The passage in the paragraph above, for example, which relates a series of predictably futile arguments that defendants may prefer over plea deals, was written by none other than Judge Frank Easterbrook. 

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