DeLong Smackdown Watch: Daniel Shaviro Romney Tax Fraud Edition

Daniel Shaviro says that I am wrong in thinking that Romney did is not tax fraud, for what Romney did is tax fraud--if the IRS brought a fraud case it would win. But, he says, the IRS does not bring these fraud cases.

Now I want to know: "Why not?"

I wrote: I Do Not Understand Why This Is Not Tax Fraud...: Jesse Drucker on Mitt Romney….

In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc…. Romney or his trust received shares in DoubleClick eight months before the company went public in 1998. The trust sold them less than a year after the IPO….

Daniel Shaviro:

The extreme undervaluation certainly looks like tax fraud. Key evidence would be the close proximity of the valuation date and the sale date, and the absence of major new information in the interim to explain the supposed change in value. But when such overvaluations are so widespread and tolerated for years, the IRS would never actually bring a fraud charge. (Which is not to say it shouldn't, as a shot against the bow that everyone in the field, when they were done screeching about it, would keep in mind for years to come.)