Regulatory Failure and Judicial Responses to High-Value Tax Evasion: A Comparative Analysis of Pakistan and the United States
Abstract
High-value evasion poses a serious threat to the state's capacity, fiscal justice, and the legitimacy of the rule of law. Despite formal legal systems that criminalise tax evasion, enforcement outcomes in most cases indicate a failure of thesystem when it comes to economically and politically powerful actors. This paper provides a comparative criminological discussion on regulatory failure and judicial reaction to high-value tax evasion in Pakistan and the United States. On the basis of moving beyond deterrence models, the research conceptualises elite tax evasion as a structural product of legislative ambiguity, administrative weakness, enforcement asymmetry, and judicial posture, shaped by unequal power relations. A three-layered system of regulatory failure, including legislation, administration, and enforcement, is established to indicate how these dimensions interact in a cycle of impunity that self-reinforces. Drawing on neutralisation theory, the rational choice perspective, institutional anomie, and power asymmetry, the paper explores how elite actors rationalise and strategically exploit structural opportunities to evade them. The analysis examines judicial reactions through deferential, formalistic, activist, and substantive postures to determine whether the courts alleviate or reproduce regulatory failure. Although institutional capacity varies significantly between the two jurisdictions, both have mechanisms that facilitate high-value evasion: political interference and limited investigative capacity in Pakistan, and legal complexity and litigation-based enforcement in the United States. The results show that regulatory failure is not simply a matter of capacity but a governance issue.