Tax justice – only the cheats pay more

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As I mentioned some time ago, this site is moderated. I got bored by some people putting up comment that seemed to add to debate. Most comments from those I consider to be from the far right fall into this category, but every now and again someone puts so much effort into proving just how far from the main stream some on the right wing of tax and commerce are that I feel it necessary to let their comments onto the site.

Take this one from Paul Rogers, for example. I've no idea who he is, but he clearly believes that 1) I'm ant-business 2) I would like 100% tax rates 3) my approaches can be compared to those of Robert Mugabe.

I really do wonder where people like Paul are on the political spectrum. It's true I've written for some think tanks and journals that are related to or are read by those who habitually think of themselves as social democrats. Maybe some are democratic socialists. But I've also written for Policy Exchange, which is David Cameron's favourite think tank. And right now I have pretty regular contact with all main UK political parties, which seems to suggest I'm pretty much where I think I am - in the centre ground.

That's unsurprising. Look at my CV. I have a strong track record in business. I've never argued for higher tax rates per se, although I do believe that governments who promote low tax rates to induce relocation of income really earned and properly taxed elsewhere are both wrong and usually have a failed commitment to a local population unless their actions are backed by harmful tax practices. As for comparison with Robert Mugabe, I presume that's just gratuitous insult.

The reality is that people who do not like what I argue do not want to pay tax. That's, to be blunt, anti-social behaviour at best. At worst it does, of course, become illegal behaviour. And the truth is that this anti-social behaviour increases tax rates. The logic is simple. It's true, I do want increased government spending on climate change and the Millennium Development Goals. I accept that, but the amounts involved are relatively small. Thereafter I think by and large the level of government spending a society wants is remarkably static, as UK experience shows. I know it's increased of late, but in proportionate terms the increase is not spectacular, within historical precedents and (most importantly) the political opposition seems to have little will to change the outcome. So, let's assume government spending is broadly fixed. Let's call it about 40% of recorded GDP for now.

Then let's assume that there is just one economy, but it happens that part is recorded and part is not. Let's say the recorded part is £1,000 billion and the unrecorded part £200 billion (a possible, even likely, ratio of the two). That means for those who pay tax the overall burden is 40% using these assumptions. But if the unrecorded part were taxed, which is what I campaign for, or if tax avoided were collected, as I believe appropriate, then the similar cost of the state (£400 billion in this case) would be collected over a tax base of £1,200 billion.

That means average tax rates fall to 33% for all compliant taxpayers. Only the cheats pay more.

It's hardly surprising that centre ground politicians see the appeal of this logic, is it? Indeed, it's hardly surprising that the majority of voters do as well.

And to argue against it really is very hard. I do, of course, know it's a panacea that can never be achieved in its entirety. I'm not naive. But does that mean progress in the right direction is wrong? I can see no argument that would say so.

That's what tax justice is about in large measure. I will allow comments that can show why this is unjust to be posted. I am of course the arbiter of that, but I'm not expecting many successful comments to get through.


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