David Quentin tweeted during a tax discussion yesterday that companies "really are emanations of the state; creatures of statute".
David was absolutely right and he used the word emanation correctly, meaning something which originates or issues from a source. Given that there is no company that can exist without statute law then it should be beyond dispute, one would have thought, that companies emanate from the state.
Not to the tax trolling pedants it was not: far from it in fact. Ben Saunders, a key member of that tribe, was straight into action, arguing that David had to be wrong as there was a legal definition of 'emanation of the state' and as such no other could be used - and as it disagreed with the use David was making of it he had to be wrong.
This means Sunders missed a fundamental polysemic point - which is that a a word can have many meanings. But not to the tax trollosphere they can't. In their puritanical fervour everything has a precise and certain meaning, even if it is known only to a few of whom they think they are amongst the chosen few, and woe betide anyone who might challenge their perception of the status quo.
David acted with good grace, as he always does. Jolyon Maugham made clear he thought David was right. And David had the last word - posting:
I am very happy to admit that it was a grave error to use the word "emanation"; should have said "eructation"
For those not familiar with eructation, the politest interpretation is burping.
I admit I think I might have used the word flatulation - the coincidence of source with the commentary offered would have been too strong for me to have resisted.
But the real point is what really went on here. David used a term correctly - and in the context of his political economic thinking surrounding these issues - and was jumped upon not because he had made a valid point - which he had - but for three other reasons.
The first was to try to discredit him using a narrow interpretation of a phrase which would be familiar to only a tiny number of people.
The second was, no doubt, to narrow debate to the terms of reference the tax trollosphere wanted it to be engaged upon.
And the third was to consequentially suppress discussion of alternatives to a current situation where reform is needed.
This is this groups standard modus operandi. It is, no doubt, deliberate. It is largely effective - these people do very clearly discourage debate - and it therefore suppresses free speech by many so that the very narrow view of these very limited number of people appears to have more support than any reasonable analysis might suggest appropriate. That is why I will not have anything to do with them, and will not let them respond here to this post (they will have plenty of other places to do so).
But there us something else to note as well. The ten (or less) people I would associate with this activity have between them, as far as I can see, never once come up with a single notable contribution to debate or a single original idea of any sort whatsoever. Their aim appears to solely be to deter others from considering reform to a system that is patently not working.
And that's why anyone who wants serious tax debate has to exclude them from contributing because fair and open discussion is not possible when they are determined to prevent it. Which is why I won't be on Jolyon Maugham's blog again, because much as I admire his ambition his terms of engagement do at present prevent any possibility of success.
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Funny, because I thought you left Jolyon’s blog because you weren’t able to answer the criticisms made of your piece.
I wasn’t aware of any criticisms
I read some points not worth addressing as their authors had not engaged with the issues
The key criticism was that there has, for years, been an awful lot of avoidance going on around employer’s NICs, and so your (theoretical) conclusion that there wouldn’t be seemed at variance with the facts.
You also said that economists believe people seek to maximise net income. Perhaps you don’t regard this as an important point, but it betrayed a fairly serious misunderstanding of mainstream economics. You could have cited someone who actually believes this, and you could have corrected yourself, but simply walking away and crying foul seemed a little childish
I did not for one minute say there was no avoidance. I offered five differing potential rates of tax
But the point you and others still miss is that the choice of structure has to be made before the event and the facts are only known afterwards so that any choice is almost bound to be suboptimal and the blanket suggestion of incorporation that the profession invariably offers (and I am reliably informed it does) is based on a) maximising income for the profession and b) a failure to acknowledge that this transfers risk to the client in a way that they may not appreciate and c) may not achieve the desired outcome
I did not walk away
I just said no commentator seemed capable of engaging with the argument – as you have not – and in that case there was nothing else to say, which there wasn’t
It’s you, respectfully, who, like others, has resorted to calling names in response to a serious, reasoned and wholly appropriate analysis which you apparently could not even be bothered to read properly
“…the point you and others still miss is that the choice of structure has to be made before the event and the facts are only known afterwards so that any choice is almost bound to be suboptimal…”
That is the point I specifically addressed. My argument was that you do not *need* the full facts to make a sensible decision: if you have choices A and B, and you know that in almost every case A will give an outcome that you will regard as better then B, then you can perfectly sensibly decide to go with A. You have refused to engage with my argument.
All you said was “you make the precise error I say practitioners make i.e. They assume facts they cannot know and advise on them”. This completely ignores my point that you don’t *need* the facts – in fact, only acting if you have the full facts results in paralysis.
Are you prepared to engage with my argument at all?
I am so pleased you’re clairvoyant Andrew
It’s a quality most of us do not possess
There is nothing else to add
If you regard “Income of X will result in tax of Y, using published rates and allowances” as clairvoyance, then yes, I can see that you might struggle to find anything else to add 🙂
You know your income in advance do you?
Yes, I do 🙂
Many clients don’t, but (as I noted before) it is perfectly possible to come up with some scenarios. So: if you assume income of £100k, you can see what the result would be for the different options. You can then assume £50k, and £200k, and £1 million, and see what the results are. If A consistently gives better results, then you know it is better even if you don’t know what the actual income will be. If A being better depends on income being above a certain threshold, you can use your expectations to guide you – only a couple of weeks ago we concluded that a certain client was better off as a sole trader, for example.
This isn’t rocket science. Even very small businesses do business plans these days, and stress-test them.
I really feel like I’m teaching you to suck eggs, here.
I feel like you are describing disguised employments here
And appear capable of thinking of NI planning alone
A narrow world view, I would suggest
Given that your article was about self-employment as opposed to employment, and NI is one of the major factors there, I don’t think that “thinking of NI planning” is necessarily inappropriate 🙂
I’d also point out that thinking of NI planning doesn’t necessarily have to be followed by “…alone” – thinking about one thing does not preclude thinking about other things too. The thing about giving an example to support an argument is that it is just one example of many relevant aspects. Giving completely exhaustive consideration of everything that might be relevant in a discussion is neither an example, nor terribly helpful to a back-and forth debate 🙂
But to return to the actual debate: I am saying that it is possible to make useful informed decisions on the basis of incomplete information. Are you saying that it is not possible to do so – that any decision based on incomplete information must be so inherently flawed as to be useless?
I am saying that I think few professionals do make decisions based on data
They sell what they think is in their best interests and because in some situations it may save tax and NI claim they have done their professional duty
I think that far too narrow a view of professional duty
Ah, now that’s an entirely different point.
So although your article is arguing that it is not possible to use data to make decisions, your point is that (whether or not it is possible) advisors don’t actually do it.
Now this confuses me. You’re complaining that people aren’t engaging with the points you want to discuss – but the point you want to discuss is not actually the subject of your article.
If you want to discuss whether advisors make decisions based on data, why not write an article on that subject?
Incidentally, so far as I can tell you must be hanging around with the wrong crowd. Everyone I work with is at great pains to find relevant data to help drive decision-making, and to make decisions in their clients’ interests.
Andrew
You are as tedious as ever
All these points have been covered many times already
Richard
They’ve been covered many times, yes – by me, trying to get you to respond!
The most I can get out of you is to say that you’re not going to deign to reply. You make me have some sympathy with Jeremy Paxman, which is not an easy feat 🙂
Except I have answered – continually
And I have also sat in front of Paxman – which i doubt you have
He asked sensible questions
In my view if a barrister uses a term of art (which he must know has a legal meaning), in a way that differs from that specialist meaning without explaining that fact, he is being highly disingenuous. At the very least he is deliberately trying to create confusion in what he clearly considers to be lesser minds.
He was discussing the issue in another context
It’s you who is proving my point
I should say that many of the usual trolls have posted pedantic or abusive comments in response to this
They have been deleted
I’m not sure if I count as one of the pedantic trolls, but the term “emanation of the state” does have a narrow technical meaning which I would expect most lawyers to know, meaning a body under state control. If you will excuse a link to Wikipedia, see http://en.wikipedia.org/wiki/Emanation_of_the_state
Most companies are not under state control and so are not emanations of the state in that sense.
But of course a body corporate is just conjured together from a few pieces of paper, by the force of law. A legal person, but not a natural one. Essentially a legal fiction. It doesn’t exist without a law that recognises it.
A term that is perhaps used more often for companies or corporations, and carries a similar meaning to the one that David seems to have meant, is “creature of statute”. See http://en.wikipedia.org/wiki/Creature_of_statute
Sorry – it has a narrow technical meaning in a very specific environment
And all change is anyway dependent upon new understanding that frequently requires new use of language
David was, I think, making a very specific use of an idea in an unfamiliar way to be, as a result, the purveryor of an understanding previously absent
That is how change takes place
That is precisely why some are restricting debate by deliberately creating shibboleths with the intention of suggesting only some uses are acceptable
And that is fundamentally wrong, in my opinion
If it is your intention to maintain that shibboleth that I think you too are on te wrong side of the debate
Oh, I see David already mentioned “creature of statute”. I don’t think you find find many people who deny that companies are created by man, but it is not very helpful to use a phrase with a pretty well-understood meaning (on Wikipedia, no less: hardly obscure!) to refer to a different thing, unless you say so first.
I’m not sure what you mean by closing down debate. Surely it is important to understand what a person really means, otherwise we end up talking past each other. Or discussing definitions rather than the substance.
As you, say, perhaps he intended to be provocative. In which case, surely he succeeded? There again, he has invented the “eructation of the state”, a turn of phrase which which deserves a much wider audience.
Respectfully, stop being a pedant