It’s all become quite vitriolic.

On By Mick CanningIn Morality, opinion, Taxation

Which was predictable, of course, and, really, it always has been.

This high profile UK Member of Parliament or overpaid football star has avoided paying taxes on a huge income by squirrelling it away overseas somewhere.

That one has done it by calling his money something else – Ethel, perhaps, or William Wildebeest. I don’t know.

Others do it other ways, but the law supposedly only gets interested if the perpetrator pretends that the money isn’t theirs, or so I thought. Because apparently you can invent a non-existent company and stuff the money into that, register it on an island somewhere in the Caribbean or on a small planet not far from Jupiter, and then legally avoid paying any tax on it.

Nice

Society demands, quite rightly, that if we are to live in that society, there are certain rules that we abide by. One of these rules, generally, is that we pay our taxes.

Taxes go to pay for, amongst other things, our hospitals and our emergency services. Those that seek to ‘avoid’, i.e. evade, paying their taxes, presumably still wish to live under the rule of law, and would want to be treated in a hospital should it prove necessary, and if their house caught fire, would presumably like to have the fire put out as soon as possible.

The root of the anger and hostility is, quite simply, fairness. When the average member of society sees that a number of extremely rich individuals can legally flout the law by manipulating where their money is and what they call it, whilst those who are blessed with only a tiny proportion of their wealth have no choice but to pay their share, then there will naturally be resentment.

The fact that the law allows it will do absolutely nothing to curb this anger.

Of course, different countries have different tax laws, some of which are set up to encourage foreign investment.

Which then seems to be a small step from foreign-capital-sitting-quietly-in-an-account-‘earning’-interest–not-paying-taxes-and-not-attracting-attention-from-its-country-of-origin.

That something is legal obviously does not necessarily prevent it from being morally repugnant.

And I am sick of hearing the argument that if we do not bend over backwards to favour and reward the rich then somehow our country will lose out.

Presumably they will take their money elsewhere if we don’t – oh, they have done already, did you say? Never mind. Give them some more.

The laws on income tax, specifically, have been formulated and changed and added to and changed again over a couple of hundred years, so it should be no surprise that what we have today is a hotchpotch of laws and loopholes. Perhaps if they could be scrapped and then a new, simplified, set drafted, we might be able to get to grips with this in a proper way.

Because it is no longer acceptable for the law to continue to function in this manner.

It needs to be fair; it needs to be morally right, as well as legally right.

And…keep it polite, please, folks!

44 thoughts on “It’s all become quite vitriolic.”

  2. ‘It needs to be morally right, as well as legally right.’ Ho, don’t get me started on tax, Mick, especially Inheritance Tax. Do you know that you can’t gift money to your children after your death, money you’ve already paid tax on, without the government taking another almighty chunk out of it? That may be legal but it’s morally repugnant. As my lawyer wisely told me, when I was redrafting my Will, the only way to avoid Inheritance Tax is to leave your children no money to inherit. Spend it now! (He then gave me his bill…)

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  3. I found the Panama papers intriguing. I would have loved to see the faces of those big shots when they found out they were exposed.
    You are right it’s absolutely unfair when there are hard working people who do things by the book. But then again greed is always a big factor here. The rich always want to be richer…and like you said, the laws should be rewritten. Even though I’m sure that people will still find other ways…

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    1. I’d have loved to have seen that, too. Yes, greed is the factor. I’m sure that simplifying the whole structure would make it work better – that’s almost a universal rule, after all. And there will always be other ways, the trick is to make them unattractive, I suppose.

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  7. A couple of years ago, William H. Gates Sr (the father of Bill Gates) made a series of public statements about how people should pay more taxes. Of course, Mr. Gates is a tax attorney whose job it is to help hedge fund managers pay less taxes than concrete workers. For Mr. Gates Sr. higher taxes mean more business.

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  8. I wonder why a flat tax wouldn’t solve many problems. Everyone pay 10% of their income (if earning more than a poverty level of income). Our tax code here in the States is absolutely insane– thousands of pages long. I don’t think even the tax man understands it. That seems immoral to me. How does one know what’s going on? And don’t even get me started about military spending….

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    1. I’ve no idea – I know most people seem to feel that those who earn huge amounts should contribute a bit more, although it’s the avoidance issues that really cause anger. I do feel that simplifying it all would help.

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  9. Simplification would be a good think Mick. Say 15% across the board. It wouldn’t really hurt those paid vast sums and they can soon recoup from interest. Some people think that would have our politicians lining up to leave the country and I’m not sure what point they’re trying to make. There’s always a plus surely.
    We do live in an unfair society when we pay tax on our income and then pay another tax on it when we spend anything with VAT and then anything we leave to the family above a certain amount, after death is hammered yet again. They do like more than one bite of the cherry.
    Hugs

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    1. Oh, I can’t imagine the politicians leaving, David. They’re in it for the public good and would probably still be happy to represent us even if we didn’t pay them.
      Erm…anyway. yes, simplification. Surely that must be the answer. I think we can take it that the government needs to raise a particular sum of money each financial year to fund whatever it chooses to fund (what that should be is an argument for another time), and it should be possible to come up with a tax rate based on that, surely?

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  10. I couldn’t agree with you more, Mick, but I’m pessimistic about meaningful change. The political classes in many countries these days are mainly made up of the rich and super rich. TV interviews on major networks tend to involve extremely wealthy people questioning other extremely wealthy people. The print press are to a large extent controlled by the media empires of billionaires. (I have respect for The Guardian in the UK. I know they are set up as a trust, though — a fact I think not unconnected to their having a reputation for investigative journalism.)

    Consider the following list. (The figures are in US dollars and taken from various sources. While not all of these sources agree precisely (lack of transparency being part of the problem), they nonetheless serve to make the point. The figure for Justin Trudeau is probably too low now.)

    Malcom Turnbull (Australian PM) – Net worth $137 million
    David Cameron (UK PM) – Net worth $50 million
    John Key (New Zealand PM) – Net worth $34 million
    Barack Obama (US President) – Net worth $12.2 million
    Justin Trudeau (Canadian PM) – Net worth $929,109

    It’s not impossible to be extremely wealthy and have some concern for the poor, but I wonder how much understanding they really have of what it’s like to try to get by on very little.

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    1. It is impossible, sometimes, to avoid the conclusion that they look after their own; a charge frequently leveled at them in the press and, of course, on social media. The feeling seems to be that they have no incentive to take action to make the system fairer, because it benefits them and their associates only too well as it is.
      Obviously, there must be some who would really like to make a difference; I know nothing about those in charge in Australia and Canada, for example, but I like to think that Obama would like to make the system fairer if he was able to, although I suspect that his hands would be tied by Congress and all the other big hitters. Unfortunately it is a long time since we had a leader in the UK who did not fall into the category of privileged and wealthy, and who might be expected to try to make a difference to the system.
      I don’t think that anyone would expect miracles, but just to make the system a little fairer and simpler would go a long way.

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      1. I think those voices are right, Mick. Many politicians (TV journalists, business leaders, etc.) have no incentive to change things because they do very well from the system as it is. It’s easy to take an Olympian view about, say, the need for poverty as a tool to keep production costs down (increased labor supply=lower wages) when it’s all abstract and you never come face to face with the consequences, let alone have to suffer them yourself.

        I believe there are those who genuinely do want to make a difference. Some politicians were not born wealthy or have worked closely with the very poor in the past. (President Obama is a good example.) Sadly, they have to fight tooth and nail against massively powerful vested interests.

        It’s also possible (although not exactly common) for someone born into great privilege to make a genuine, consistent and effective effort to help the poor. FDR did exactly that, for which he’s still a hate figure among the right-wing to this day.

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        1. Your point about an Olympian view is a good one, Bun. One would wish that our leaders could spend some time in the places where the poor struggle to make a living. I have spent some time working on minimum wage jobs in factories and other places and I was very fortunate that I only had to do so either between other jobs, or to make up money in lean periods when I had no other work. Some of what I had to do was unbelievably repetetive, soul-destroying stuff, and the thought of a lifetime spent like that just scraping by is awful. At the very least it needed to be better rewarded. And the conditions of many workers in other countries, of course, is far worse.

          I know that the world is not a perfect place, but that is no reason why a certain amount of adjustment should not take place.

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  11. I think that it is at the extremes where this really causes friction and the ‘off shore’ element grinds on most people’s sense of fairness in much the way it does for Amazon and Facebook. Tax avoidance is inherent in our system right from the first £1 earned as we have a tax free allowance (that isn’t available to higher tax payers). Only the very poorest, those who have no assets and no income do not participate in tax avoidance in some way because they have nothing to pay tax on. Tax avoidance comes in many guises, whether it is is in sliding income tax rates, pension contributions, isas, inheritance tax allowances (just up to £1 million on your house), no capital gains if you sell your main residence. Flat taxes are neat and clean but inherently load the lower earners with a disproportionate burden and I wouldn’t want to see them. So personally I think it wrong to get het up over tax avoidance per se and link it morally to tax evasion but i wholly agree that squirrelling something off shore when you benefit from a full life on shore is wrong. Which encourages the idea of returning exchange controls or a similar system that became discredited in the 1970s but probably needed reforming rather than scrapping. Nice post and quite understand your frustrations over the disclosures.

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    1. I certainly agree that it is the extremes especially that cause friction, Geoff. I’m not sure that I agree, though, when you suggest that only the very poorest do not participate in tax avoidance. If I earn less than the threshold of £10,500 (or whatever it is this year) I pay no tax, because it simply isn’t levied on that amount of income. I’m not avoiding it.
      I will, of course, pay tax when I spend it, but I’m deliberately only writing about income tax in this post. Whatever the pros and cons are over things such as inheritance tax and isas, I think is much less clear cut.
      And I would link tax avoidance morally to tax evasion, partly because some of the schemes are so devious, and partly because some of the examples that have been aired comprise individuals who earn over a million pounds yet avoid paying any income tax at all. When the average Joe has to pay his wack, then I find that morally indefensible.
      And there are many people who are happy to accept that they should pay their fair share, and make no attempt to dodge them even if they might be able to do so.

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      1. So it’s choosing to reduce the tax one pays that’s wrong? A perfectly tenable proposition of course but then one could not buy national savings bonds or invest in Isas ( where the income is tax free so falls into the income tax point you mention) because ones tax bill will be less if one does so ones action would be morally reprehensible. Or take up the new pension every employer will have to offer post 2017 because currently the contributions will give you income tax relief. Seems harsh. My point is that tax mitigation arrangements when used via off shore structures are egregious and I agree should be eradicated. But some tax avoidance seems to me to have a sound moral base to it – ie encouraging saving.

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        1. It seems like splitting hairs, perhaps, but Isas are offered free of tax to encourage saving, not as a means of avoiding tax (only a couple of pounds, in any case. Hardly the huge sums being avoided by the scoundrels being discussed), and the pensions are equally generous because they will, in the long run, save the government money. It’s not choosing to reduce a tax bill that is wrong, it is how that choice is made.

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  13. Whilst you are all on your moral soap boxes, I wonder how many of you ( HONESTLY) wouldn’t take up the challenge and shove your money off shore if you could… if you had enough to worry about and if you thought you could get away with it.
    Too much fluffing up of feathers and huffing and puffing – probably because not many of you have enough to worry about off shore accounts.
    So stop being small minded about those who have done it – and won or lost ( ie he who dares, wins – or not) and accept that in this society we need a few corrupt people to make our world go around.

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    1. Thanks, L.B. I knew I could rely on you to shake things up!
      Since I wrote the wretched post in the first place, perhaps I should answer (although I can only speak for myself, of course).
      Well, I certainly don’t have that sort of loot, so it isn’t an option for me. But would I do it if I had? No. I wouldn’t. I would be hypocritical in the extreme writing this post in the first place if I was likely to take the same course of action that I’m criticising, and I am confident that I know myself well enough to know that I wouldn’t.
      I would not do it for the same reason that I would not steal or kill (for example), and that is because to me it is morally indefensible.
      I don’t think that I’m a particular good or righteous person, but I could not live with myself if I went against anything that I believed in.

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      1. great reply. I am against killing of course and I would say stealing as well, but many would immediately round on me and say I would be stealing if I secreted my money away off shore ( and maybe I do LOL ) Frankly, Sir, I don’t give a dam.
        So for me I would have to say I have double standards. I think I have high morals… I don’t cheat ; steal on an everyday level and I try to be kind and helpful. But because I think I work really hard and give a lot back, if I could pay my UK taxes ( and I do) and sift money away, then I would.. and I suspect so would many of the sniffy lot as well….

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        1. If you ‘pay your UK taxes and sift money away’, then I’m not sure that there is anything to argue about. After all, the post was all about those who don’t pay them. Assuming the money being sifted is being sifted post taxation, then all is sunshine and tweeting birdies.

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          1. who knows who reads the posts, so its important to have some sort of Secret Squirrel about all of this! I think Cameron and others do pay their taxes – just not as high a proportion as others would like….. and that’s the same, whether you pay some tax or no tax…. you are stretching the rules. But then, rules are made to be broken, eh?

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            1. Hmm. We will clearly have to agree to disagree over this one. But to use Cameron as an example (since you mention him), I would say that the Prime Minister of the UK should, at the very least, set an example and be seen to pay tax at a fair and reasonable rate if the rest of the country are expected to follow suit.

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  14. There are definitely plenty of tax dodges out there, and the more money you have the more you can take advantage of them. But it’s not just individuals, companies might be even worse. Consider what I discovered when researching my Liechtenstein post: a country with a population of 37,000 and 73,000 registered companies, mostly paper companies. And all because Liechtenstein has very low tax rates.

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  15. Taxation is a very complicated issue, and I am horrible at math. But I do know that here in the US, it’s so complicated that no one other than the IRS and a few very well informed tax attorneys have a clue. A flat tax, no loopholes, would be a huge step in the right direction, but that’s never going to happen. Just a lot of posturing and blaming and excusing from both parties…..

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    1. No, it will probably never happen. Too many people make their living out of the complicated intricacies of the system, and too many powerful people have a vested interest in the status quo. The only way will be if enough people make a fuss, it just might result in a few positive changes.

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  16. I, too, would prefer to see a flat tax, but I think it’s extremely unlikely. You’re certainly not alone in your frustration over what to do about the rich who manage to acquire enough power to flout the laws or pass new ones all they wish. I’m too cynical to see much hope for a solution. It’s been a problem forever.

    I suppose we could all write stories about it, to light our little candles against the darkness.

    But the blog post was pretty good, too. 🙂

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