The following, very lightly edited, comment from someone who I do n0t know called Bill Lawrence was put on the blog this morning and is far too good not to share:
I have been watching the comments here and I am struck by the familiarity of the arguments in favour of tax avoidance. For those who object to it the argument is over the conflation of the terms moral and legal. It is the same argument we saw exercised in the expenses scandal.
‘I broke no law, therefore I did no wrong, therefore I acted morally,' is the argument put forward.
Logically this only holds true if there is no such thing as society, a point confirmed by the libertarian Robert Nozick. If I owe no responsibility to the person next to me beyond that which is defined in a contract (such as law) it is logical, if I do owe such a responsibility it is not. Tax forms part of the mechanics of a system of government founded upon the assumption that society does exist. Our way of life is not simply a financial competition.
That is why the concept of ‘fairness' is entailed in the conventions and protocols of our legal system. It is not possible to define such a term any more than it is possible to define “virtue, love, conviction, knowledge, conscience” to paraphrase Marx. In a society, judgement of such issues is a matter of metaphysics, morality, ethics. These are listed in order and below these comes legality.
Kant offered the principle of duty. Kant's principle deals with duty as the moral basis for actions. What Kant means by duty may not correspond with a more general understanding of the word. For Kant, to act morally is to act from a sense of duty. Duty is not imposed on a person by external forces, when the law ‘imposes a duty' it is not the same thing.
With apologies for the damage this may do to philosophical discipline, duty is the imperative acting upon an individual's action regardless of whether they want it to or not. I may wish (have an inclination) to act toward another in a certain way. Duty should determine whether I do act in that way or not and that action may or may not coincide with my inclinations. In essence a moral person knows or can deduce what is good and bad and acts accordingly even when it is to their personal disadvantage or directed toward someone they do not like or even someone who will not treat them with the same moral principle.
The conflation of morality and legality is corrosive to society and leads to a form of quasi-libertarianism bereft of true morality. When the ‘State' is defined as the ‘Economy' and contract law is allowed to displace the indefinable concepts entailed in Common Law we will lose many things. Not the least of these are democracy and the protective umbrella of law that aspires to moral validity and which is equally available and equally applied to all.
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The point is that morality is subjective and not always an issue for the State to intrude upon……
Many religious people would have a different opinion from others over morality, especially with regard to homosexuality, paying interest on loans, sex outside marriage…..etc etc.
We create laws to even these disputes out as being a fixed point that we can all live with…….many things people consider immoral or object to will remain within the law.
Also certain immoral acts, such as adultery, are best left alone by the state. I don’t want another persons opinion of morality limiting and controlling my life, especially a quasi religious ideological extremist like RM.
Richard
I expected you to say such a thing
If I am an extremist it says a great deal about you
You will happily be restored to the delete list
Richard
Richard Whoever needs to read Michael Sandel’s ‘What Money Can’t Buy’.
Using the concept of ‘subjective morality’ is neo-lib speak for turning the other way when we know deep down that something is wrong. Also, used to keep the State out of individuals affairs – especially extremely rich individuals eh?
I note below that you offered to delete this gentleman in the future.
Wise move.
“The moral side constraints upon what we may do, I claim, reflect the fact of our separate existences. They reflect the fact that no moral balancing act can take place among us; there is no moral outweighing of one of our lives by others so as to lead to a greater overall social good. There is no justified sacrifice of some of us for others. This root idea, namely, that there are different individuals with separate lives and so no one may be sacrificed for others, underlies the existence of moral side constraints, but it also, I believe, leads to a libertarian side constraint that prohibits aggression against another.” Robert Nozick, Anarchy State & Utopia, 1974, 1999 edition, Blackwell Publishers, Oxford.
The quotation sets the libertarian benchmark for morality. It claims that people will behave morally without regulation. This may be true in the selfless sacrifice of volunteers in the Ebola outbreak. It may be true of the Salvation Army volunteers working with the forgotten souls on the streets of London. But of course as ventures they are a total loss economically speaking.
The claim was demonstrably not true of Nike’s treatment of child labourers in Asia. Nor was it true of Union Carbide’s exploitation in Bhopal. We have yet to see the outcome of Philip Morris’ law suit for compensation from the Australian government. It seeks to recover profit loss on its sales due to plain packaging laws for tobacco products. The laws were introduced by a democratically elected government in pursuit of a declared electoral mandate. It would seem legal constraints are the next target of the libertarians.
As for the claim that libertarianism could be effective in prohibiting aggression to others, I wonder whether the activities of the private armies such as Blackwater or ArmorGroup in Iraq can be considered moral. They are certainly profitable.
As the law stands it would be legal for me to go to the garden centre and buy certain plants, I won’t name them, or to collect others from the hedgerow. It would be a matter of simple chemistry to produce highly psychotropic extracts. I could not be prosecuted if I sold them, perhaps on your street. Legal, yes, but moral?
Is there really no place for morality informing regulation?
I come to this from another proposition – that of Ayn Rand in that she felt that man’s duty was to fulfil one’s self and not be concerned with anyone else. Apparently she is widely read in America.
She more or less demonstrated this idea through her books like Atlas Shrugged and The Fountainhead.
During Adam Curtis’ docu-film ‘All watched Over by machines of loving grace’ it has a vintage black and white interview with her explaining this ‘philosophy’ – it amounts to self realisation via the ignorance of others. In her own words……
Adam Curtis digs out loads of good vintage interviews – for example in one of his films there is an interview with von Hayek where the great man (joke) is asked about the concept of altruism. Von Hayek says that he never considered this demonstrable human trait at all.
I think that this in itself sums up the reductionist tendencies of neo-liberal thought – they over-simplify human relations and reduce it down to transactions and then have the temerity to call the more accurate observations of human behaviour ‘subjective’.
It’s bullshit. As for Nozick’s assertions, we’ve seen States step back and let the financial sector do what they want to do and look what happened – all the way from BCCI, Barings right up the RBS – there was NO self regulation at all – just greed.
And in America much earlier, the Government deregulated the savings and loans sector and look what happened there?
What is missing too often is a narrative that explains what taxes are for and why we all benefit from them and the opportunity to keep hearing this message over and over again. From this we might be able to generate some feeling of ‘moral duty’ in paying ones’ taxes.
Agreed
Hi Richard,
Really interesting blog post that goes to the heart of the disconnect between a very priviliged few and the rest of society.
The mantra of profit above all else, which is enshrined in the contract between investors and public companies, has filtered into all areas of economic life. For both companies and many wealthy individuals this enables a justification of behaviours which put into another context would be totally unacceptable.
Unfortunately, the disconnect between the perpetrators of these behaviours and the people it affects has never been wider (starting at school and continued from there). It’s easy to see no value in the social contract when you have no points at which you interact with the groups below you in the economic pecking order.
It is not a question of the state controlling your morality. It is about society being able to run its own affairs [including health, education, housing etc. without having to submit control to profiteers, speculators, tax cheats, fraudsters and gamblers.
Stonking stuff – exactly!
But your very definitions imply a moral judgement.
Society (by which I assume you mean Governments) are best to run the services you describe. All other people are profiteers etc is, your moral judgement.
Others may say that (e.g.) education is best run by private companies as they are best at doing that. That is their moral judgement.
If I decide to educate my children privately, whilst paying all taxes demanded, why is that immoral?
Did I say it was?
Max
Try reading Michael Sandel’s book (see above). The argument that market thinking is morally neutral is challenged once and for all and is in my opinion shown to be not always correct.
Any neo-lib economics book will tell you that morality is made up of ‘value judgements’ but who is to say that Ayn Rand’s thesis or Milton Friedman or von Hayeks pronouncements are not also value judgements? Plainly they are just as value prone as is Marx, Keen, etc., etc.
Sandel is not arguing against markets per se – he is saying that the thinking behind them has limits – there are some things that should not be dealt with by markets or market thinking.
If we reflect on this a little more, there are always those people who are competitive for resources and are more transactional than others. And yet there also plenty of people who are altruistic or more moral in their judgements. The two are different – maybe not better than each other – just different.
But if we have a society and markets dominated by the former way of thinking, then what problems might that create? And what if we were altruistic in every sense about everything? What problems there?
The most pragmatic way would to try to have a system that was fair and addressed both concerns and led to some sort of balance – not one or the other but a mix. This is where I feel that effective state regulation comes into play.
I also believe that it is up to our politicians to create that balance and not to favour one way of thing over the other (as they tend do so now). This is why I think that politics from 1979 has been a complete failure.
We are too dominated by market thinking now Max – market thinking needs to concede ground now – not expand anymore – because it is really beginning to create huge problems in society and the health of the planet.
Thanks for this
I really liked reading this comment and it deserves huge prominence.
I am amazed at the furore about HSBC . All of the bigh banks offeredoffshore accounts to HMNWs for years . I worked in an IFA company for a number of years and the offered their rich clients Luxembourg accounts ….. HMRC are trying to say that they cannot say what they did when offered data nor what they did when they got it.
It is their legal duty to pursue tax not declared. When someone does not disclose a taxable source of income that is still a crime under the Taxes Acts . DO HMRC not know this? Where there is no effective policing of the system it usually arises from corruption. So if Lynne Homer goes do we take bets on which big 4 Accountants provide her with a new job?
Good point
(Apologies to Richard for wasting his time. I know nothing of tax or the law & I don’t understand this article.)
The spirit of the law is nonsense, there is only the law. And if the law does not reflect the spirit of the law then the lawmakers have got it wrong. To correct this, simplify tax law. I don’t mean a flat-rate tax, I mean abolish all tax relief and restart. Sure, governments use tax relief to encourage good behaviour in people & companies, but it seems that all tax relief is open to abuse. In engineering, the best designs (the most effective, efficient & robust) are the simplest. I like this article by Marina Hyde: Britain’s tax code is an incredible 17,000 pages long, surely a dog-whistle to the very rich.
What is vanilla? Vanilla is not having enough wealth to worry about inheritance tax. (I understand people in the South East may be concerned because of their house prices, which is a failure of the economy.) Vanilla is not employing an accountant unless you’re self-employed.
It is widely acknowledged by lawyers that there is a spirit to the law
And the obsession with 17,000 pages in an internet era seems odd to me
And simple taxers have massive loopholes in them
Mike, I have to contradict your statement ‘there is no spirit of the law’. Equity was introduced to mitigate the rigour of the common law, allowing courts to use their dissection in accordance with ‘nature law’. The nature of ‘natural law’ can be debated but it arises out of moral principles.
discretion not dissection.
“Good Value: Reflections on Money, Morality and an Uncertain World.”
The title of Stephen Green’s book, which can be bought on Amazon for 1 penny.
Haven’t bought it. Don’t use Amazon.
I know lots of libertarians through my association with the land value taxation campaign. I have observed that none of them are mothers.
Can I turn that into a blog?
Of course.
Equity only applies in the context of common law (I.e. case law). It is of no relevance when dealing with statute law, which is where the overwhelming body of tax law lies. And it is certainly not “widely acknowledged” by lawyers that there exists a “spirit of the law”.
There is no reason at all why an equitable construction cannot be applied to tax law
And a purposive approach which deduces legal intention of both the law and taxpayer can and does happen
Your comment makes no sense
OK I mostly agree. But what is the end game? Is it maximum Revenue generation or not ?
For example if a rich Russian spends loads in London’s shops paying VAT and so supplying employment here but avoids say Income Taxes and would decamp to a Non UK location if he was properly taxed under a “fair” UK tax regime is that a good or bad outcome?
Ok it’s the first example I could think of, but what I am trying to say is that a Fair Tax regime is not necessarily a Revenue maximisation one. That could be, say, the difference in staffing/ not staffing a Hospital A&E department.
They won’t relocate
Stop talking nonsense
London is not cool because of tax
And anyway, you make some pretty basic errors on macro as well as micro economics
To Jen … I read Green’s book out of perverse curiosity, and no I didn’t buy it from Amazon whom I’ve boycotted for last 2 years!
For me it was a perfect example of cognitive dissonance. The yawning gap between his claimed beliefs and what he practiced when leading HSBC. Mark Steel could not have written a better parody…
And Carol – your point captures so much. Thanks
I was aware of that dissonance when I met him
It was harder to think of a man more out of touch
Its a different point but I have another theory about them being out of touch, having observed the banks and the City first hand over some 40 years. When they had branches, regions, districts, they had a form of nervous system that linked them to the wider economy and society. That was systematically dismantled during the 90s and early 2000s. Not unrelated to the hijacking of many of the major banks by their investment banking arms.
Today’s bank senior managers and directors have minimal awareness, understanding, or concern as far as the wider economy and society is concerned. It also severely limits their ability to lend intelligently. A curious exception that perhaps proves the rule, is the Bank of England with its network of Agents around the country. As I understand it (and they were a consulting client for some years) the agents’ input provides a healthy counterweight to the opinions and analyses of the Bank’s economists, many of whom ‘don’t get out much’
Decentralisation of the banks might be a key element in any bank restructuring, as important as breaking them up