One of the perpetual obsessions of the right wing of politics is law and order. It is they argue the fundamental duty of the state to defend the citizen, and even more importantly, their property from all assaults from criminal wrong-doers. And I have to say I see a lot of good reason for thinking that true.
But they drop that demand when it comes to tax. On Friday I published research with the Tax Justice Network and the Tackling Tax Havens web site detailing tax evasion in 145 countries, including the UK. The UK, I suggested, loses £69.9bn a year as a result. I never once suggested it could recover all that: clearly it could not. No tax system is fool proof against crime. But it is very obvious we could do a great deal more - and I suggested that stopping sacking tax inspectors was the first and obvious step in the process.
What has the reaction been? Tim Worstall, that perennial spokesperson for all that is bizarre in right wing thinking, has given one response. He has said , quoting my paper:
we can see that the average tax as percentage of GDP in European countries is 38.9%. Let us imagine that the sensitivity of currently untaxed activities to taxation is 40%. So, we go off and collect, on the next £10 billion of economic activity, our 38.9%. We get £3.89 billion in tax revenue.
Well, actually, no we don't. For by taxing it we've reduced that economic activity by 40%. So, when taxed, there's only £6 billion in activity. We actually get £2.33 billion in revenue. But economic activity has fallen by £4 billion.
We're poorer overall.
We'd be better off just not worrying about what those criminal bastards, the tax dodgers, are doing over there in the last 10-15% of the economy. We're made richer by ignoring it.
Let's be explicit about what he's saying here: he's explicitly condoning crime. He's saying we should simply allow it. He says we're better off for this criminal conduct.
It's an astonishing argument. It's like arguing we would be better off if looting were allowed - which would certainly increase the consumption of some. Because let's be clear - that's what tax evasion is akin to. It's looting. It's looting from those who are honest and pay to support those who act criminally and will not pay.
And what would happen if Worstall was right? Well, of course, the tax system would fail, rapidly, as it already is when it comes to small businesses, where as I have shown well over half of all small companies already fail to submit tax returns each year. So we'd rapidly descend to the point where Greece is. Where the welfare state would fail (as no doubt Worstall wants), where criminality was normal, where trust failed as everyone was fiddling and honesty was but a memory, and where business itself also collapses becasue in that environemnt the incentive to invest, produce or even work fails. You might just as well be criminal. That seems to be what Worstall wants.
He could, of course, be dismissed as the usual right wing libertarian extremist except for the fact that there are so many of them in the Tory party and even some highly placed Lib Dems who agree with him. But medium sized firms of accountants seem to share this view too. In the Telegraph today it is reported that Hacker Young have issued a new report in which they say:
extra investigations and more aggressive stance by the HM Revenue and Customs risks making the UK a less attractive jurisdiction for businesses.
“The Government and HMRC now seem to believe that they found the secret of alchemy,” said Roy Maugham, tax partner at the firm.
“All they need to do is invest more money in tax investigations and compliance work and the extra tax income will keep flooding in.
“The reality is that much of the money that HMRC collects from compliance work is from businesses that feel intimidated into settling or where HMRC is able to outspend a less well-resourced small or medium sized company.”
Mr Maugham said many UK companies have moved their domicile overseas to Ireland, Switzerland and Malta not just because of the UK's high business taxes but because of the increasingly aggressive attitude of HMRC to tax collection.
“There is a downside to their tough approach,” he said.
Or in other words - despite the enormous losses to tax evasion and tax abuse this firm seems to be saying H M Revenue & Customs should back off and let business get away with what I might call an honesty box approach to taxation. Bluntly, if true that's another argument supporting what would be an inevitable step towards the creation of a criminogenic business environment.
It is utterly irresponsible of this firm to argue as they do, in my opinion. And their representation of the taxpayer being bludgeoned into paying is so far from the truth it is ridiculous. I am under no illusiuon about how tough a tax investigation is - I have done them. But honest taxpayers also, I know, have nothing to fear from them. I have never seen a penny paid that was not owed. Not on my cases anyway. That's why this argument is so disingenuous.
Hacker Young should, I think, be ashamed of themselves. All accountants should be applauding a tough investigations regime. Honest business can only thrive on the basis of a level playing field - and that only exists when everyone pays their tax that is owing, in full.
But it seems many want a biased playing field - a playing field where the dishonest get all the advntages and rip off honest business and taxpayers until the point where society itself would collapse under the burden of their crime.
Is that what the right wing are coming to? It certainly looks like it. And it's something the left have to challenge. Robustly.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
On Worstall; he seems to be assuming as well that tax paid just disappears from the economy, or ‘reduces economic activity’ as he puts it – he’s completely ignoring the fact that it is spent by the government (often on wages), which is then re-spent, re-taxed, etc etc.
You’re right – a point I have made here, recently
But such thinking is a little too difficult for him
If you are charged with tax evasion are you entitled to a trial by jury?
99.9% of such allegations are settled without trial
If you are charged the answer is yes
Don’t be silly! Most such taxpayers would not want a trial by jury because:
1) the legal costs would be astronomical.
2) There is a real risk of prison.
3) It is cheaper, less stressful and less risky to reach an agreement with the Inspector involving payment of tax, interest and penalties and no jail.
tell that to harry redknapp (tottenham manager) whos tax evasion trial starts in january at southwark court
But that’s the exception….
Oh dear Tim Worstall – caught bang to rights.
Doesn’t he also naively assume that all this evaded activity is benign?
“One of the perpetual obsessions of the right wing of politics is law and order”.
Actually they are more obsessed with”order”, which helps them to keep hold of what they have, than “law”. They are only really interested in the “law” bit insofar as it is used to ensure “order”,
… i.e. keeping impertinent upstarts who question their right to grab everything for themselves, in their place….
Wow… see what we did there?
We already live in a criminal society. Think about it – a bunch of Normans come over here, nick all the good bits, and then say “Right, from now on there’ll be no nicking, it’s against the law!” The law maintains the status quo till this day. What we live in is run by crooks and the ancestors of crooks for their own benefit and has been for centuries. We’re encouraged to think of it as ours as that keeps us passive and cooperative. The Romans used the same trick (when they came over here, nicked all the good bits etc.) as their historian Tacitus observed of the then Britons, “In their naivety, in their ignorance, they call this civilisation when really it’s but part of their servitude.” Looks like the then Britons had much in common with the present Britons.
BB
“Let’s be explicit about what he’s saying here: he’s explicitly condoning crime. He’s saying we should simply allow it. He says we’re better off for this criminal conduct.”
Not quite. I’m saying we’re better off by ignoring rather than attempting to eradicate this last amount of crime. Something we actually do all the time: we don’t send out detective squads to catch jaywalkers, don’t have riot police making sure late night drinkers put the burger wrappers in the bin. We chase and prosecute crime according to the resources that have to be spent to do so and the benefits we get from having done so.
As to the maths of the example above. Say it’s cash in hand no VAT work (which a lot of it is). Pre-cracking down on the tax evasion there’s £10 billion of economic activity going on. Post-crackdown there’s that £2.33 billion in revenue, yes there is. But there’s also only £6 billion in total economic activity. Is £2.33 in tax revenue worth the loss of £4 in economic activity? Clearly possible to have different views on this but I would argue probably not.
If the numbers change, we get £2.33 in tax revenue and only a £1 reduction in activity…..or let’s say for each £1 in revenue we get only a 30 p reduction in economic activity (which is about what the tax deadweight costs are for an economy like ours) then perhaps I would argue for the crackdown.
But not when a crackdown would make us all, in aggregate, poorer, no, probably not.
Anyone who thinks jaywalking can be compared to tax crime cannot be taken seriously on anything
Well done on ignoring the point being made Richard, well done.
As you yourself say:
“But on the other hand you allocate resources to have biggest impact ”
All I’m suggesting is not allocating resources where the returns are less than the resoures allocated. Gaining less than you spend is also known as “becoming poorer” after all.
That is not what you said, at all. You came nowhere near saying that. You said tackling tax evasion made us worth of so we should not do it – even if it cost £70 billion a year and corrupts society.
I’ve made clear I never expect to see all the lost cash recovered. But equally I said this is crime – and that marginal cost analysis does not apply to crime – or we’d rarely investigate much of it.
What you’re saying is we shouldn’t even try.
But in that case, tell me at what point do we decide how much tax criminality we accept and how do we decide who should get away with it, and who should not?
And why, if as I suggest, and I’m very sure I’m right, we could spend £1 billion, change a few laws, and collect £20 billion, shouldn’t we do that?
And please also explain why tax crime should be subject to marginal analysis when we never apply such logic to other crime (and do not to benefit fraud, ever)?
The simple fact is that your argument fails your own economic tests and every test of ethics ever invented.
And of course those who engage in tax evasion at the lower end of the scale – suppresing income and overclaiming expenses as individuals are often also claiming benefits such as tax credits which are dependant on level of declared profit.
“Anyone who thinks jaywalking can be compared to tax crime cannot be taken seriously on anything”
Quite. I think that’s Tim’s point.
With limited resources, it is impossible for us to satisfy all wants. So we have to make choices. Prioritise. See chapter 1 of most high school economics text books.
Fighting one type of crime necessarily means less resources for fighting other more serious crimes, and less resources for non-crime-fighting activities (schools, hospitals etc).
I’m afraid your headline is a little meaningless. There has always, and will always be crime. If you want to live in a world without crime, you need to find a cave or an island somewhere. The UK is a place of comparatively little crime.
What I want is a world where the allocation of resources to fighting crime is given perspective. I don’t want significant resources thrown at low value tax evasion where the likelihood of a return in recovered tax is outweighed by the cost.
And if we fight tax crime – which is the biggest crime by far in the UK now at £70 billion a year, at relatively modest cost the gain – say £20 billion a year for a £1 billion outlay – is enormous
Why would you chose to turn down such a rate of return – when it is clearly available?
Your own failure to apply your own marginal analysis logic here is very telling and says a) you suspend your logic when it suits you and b) your desire to promote criminality is motivating this agenda
When multinationals and ultra-rich individuals avoid tax by means of the mechanisms put in place for this very purpose in tax havens, who profits from that extra £x billion? My (admittedly limited) understanding is that it has precious little, if anything, to do with “economic activity”, but serves only to make the very rich even richer – at the expense of the rest of us (not only in the UK but in other and poorer parts of the world). Indeed, the rich would be a little less rich if they paid their due to society. I wonder who Mr Worsall really means by “we”?
That those who are rich and powerful enough to pay unprincipled accountants, lawyers and bankers to allow them to make use of the devious schemes devised in tax havens to avoid paying their dues to society, while those unable or unwilling to do the same pay the price, is simply unacceptable.
Whatever the financial cost (if indeed there would be one), the UK government has a moral duty to do all in its power (which is quite significant, given that it controls a majority of the world’s tax havens) to crack down on tax abuse through this route and to take the lead in fighting for the abolition of secrecy jurisdictions world-wide. Will it do that? Sadly, I doubt it – too many vested interests.
Hmm, not sure your logic stacks up here.
Lets take the cash-in-hand statement and the conclusion you draw that if taxed, none of the economic activity would take place. An example will easily show this to be absurd:
My washing machine breaks down. I call a chap up and he gives me a cash quote for fixing it of £100. I ask no questions and he then goes on to pay no tax on this income. This is the current situation you describe.
Now, imagine that the engineer is too afraid of the consequences to commit this tax evasion and refuses to give me a cheap cash quote. I have a few options
a.) Pay him the quote inclusive of tax
b.) Buy a new washing machine (more than the price of the fix but I get a better/newer washing machine to replace my old and now defunct one)
c.) Seek another quote to try and get another cash quote. Howerver, given the fear of getting caught no-one is prepared to do this now
d.) (Now this is your proposed option!!!!) DO NOTHING
Clearly d. is not an option at all. I need a washing machine and though I may have to pay through the nose to get one, I will none-the-less end up with one of the options a or b.
You will also note that in both the viable options economic activity is actually increased
not decreased.
The same is true of many other cash in hand industries (mechanics, builders, nannies etc).
What is so dangerous to many honest firms is the ability of tax evaders to have an unfair competative advantage. For those market fundamentalists this distorts the market place and moves us a long way from the perfectly competative situation they so desire
Very well said
You write, “It’s an astonishing argument. It’s like arguing we would be better off if looting were allowed — which would certainly increase the consumption of some. Because let’s be clear — that’s what tax evasion is akin to. It’s looting. It’s looting from those who are honest and pay to support those who act criminally and will not pay.”
Do you take a similar view regarding benefit fraud? Should it be prosecuted wherever and whenever it occurs, or are there any minor infractions which you think it would be counter-productive to suppress?
Of course it should be tackled
No one argues otherwise
But on the other hand you allocate resources to have biggest impact where tax fraud is 70 times benefit fraud
have you spotted your deliberate contradiction yet? why would you make less effort on benefit fraud compared to tax fraud? If you are suggesting we should ignore costs vs benefits in relation to tax fraud then surely you should apply this to all crime, including benefit fraud? Tut tut Richard. Not like you to be so inconsistent.
Out of interest, would you propose the same approach to benefits, i.e. would you support a highly aggressive approach to investigating benefit recipients, even if the cost of carrying out those investigations would be greater than any amount which could be recouped?
No
We can never solve all crime
But tax fraud is 70 times benefit fraud
So whilst of course measures to tackle benefit fraud are important tax fraud is both more important and likely to be much more systemic
I initially found some merit in your article even though I didn’t agree with it in its entirety.
However, if you aren’t proposing to apply your principles consistently, there is no credibility to it.
But I am being consistent
I am just saying tackle the worst crime first
Surely you would agree?
Why tackle shoplifting when there are bank robberies taking placecall round you?
I wouldn’t agree in general; for example, I don’t want the investigation of rape to be ignored until murder is eradicated. However, even if, for the sake of argument, I were to accept that premise, surely that would imply we should ignore tax evasion and focus on violent crime.
If we’re trying to achieve more for bang for the buck then going after tax evaders promises a far greater yield than chasing benefit fraudsters.
Society should function on ethical rather than wholly economic values – and it is not morally acceptable to follow the diktat: – the greater the economic damage to society the greater the punishment.
The whole world knows that the rich and powerful dodge tax courtesy of contacts in government and the City facilitated by smart arses operating from tax havens. Equally the world is beginning to realise that morally and economically the most cost effective crime prevention is the closure of tax havens.
Benefit fraud is a crime and increasing penalties could raise it higher up the crime priority league table, but in cost effective terms the revenue saved is miniscule compared to preventing tax dodging.
Bill, I don’t know what the yield from chasing benefit fraudsters would be, but Tim Worstall’s suggestion was to stop going after tax evaders when the yield from doing so becomes negative. If there is a yield to be obtained, then the situation is not relevant to this thread.
The difference of opinion is that TW suggests stopping pursuing tax evaders at the point at which there would be no financial benefit, while RM suggests continuing the pursuit as a matter of principal, even if the financial impact on the treasury is negative.
However, I don’t think the difference between the two positions is as great as it first appeared.
Another apologist for crime then?
What is it about you right wingers when it comes to tax abuse? Why do you love it so much that you argue totally different criteria for dealing with it to all other crime?
Or is it that you all want it to undermine the state you loathe so much? Are you actually suggesting crime should be used to destroy society. Is that it?
Could I make a suggestion that, as best practice, people replying on here be advised to begin their comment with the name of the person they are replying to, as the way replies only go down one level can make it a little unclear who a reply is directed towards.
But that is already the case.
Having a team of investigators following a benefit claimant around for several weeks cannot be “economical”, with respect to that single claimant. The benefit of that single activity is to instill fear in other claimants who may not be entitled to the benefit they receive. It is similar in the case of tax evasion. Tax clampdowns in the building “arena” are usually accompanied by people “disappearing” from sites for several weeks !!
A bit difficult to instill fear into those hiding behind teams of accountants and solicitors though.
Bill Kruse writes, “If we’re trying to achieve more for bang for the buck then going after tax evaders promises a far greater yield than chasing benefit fraudsters.”
Possibly. But if bang for your buck is to be the argument, then going after big league tax evaders promises a far greater yield than going after little league tax evaders.
For the smallest tax evaders the yield is almost certainly negative: just as for small bad debts owed to any business, it is not worth the administrative expense of pursuing them.
Which is more or less what Tim Worstall said.
No he didn’t
He excused crime
Are you doing so too?
Natalie, I find your logic astonishing: only investigate financial crime if the benefits outweigh the costs. So if I hold up a branch of RBS and steal £1000, since the police investigation and any court costs would far outweigh the money to be recovered, there is no point pursuing me. We have limited resources and everyone accepts we have to prioritise, but using purely economic arguments as a basis for chasing criminals is not what a civilised society is about. Beside which, there is the deterrent factor: people need to know they may get caught and punished. If I run a business and I see my competitors dodging tax with impunity and undercutting me as a result, where is the incentive for me to remain compliant. If people know they aren’t going to be pursued, the non compliance will only increase. Witness what has happened with Tax Credit cases: HMRC has continually been increasing its write off levels for claims due to reduced manpower, and occurences are sky rocketing.
Well, you don’t go after minor tax evaders and individual benefit fraudsters because individual prosecutions are individually cost-effective, you go after them and give successful prosecutions as much publicity as you can pour encourager les autres (if I have that right!). There’s no comparison between the reasons for doing that and the reasons for chasing big-time multi-billion type fraudsters as in those cases each individual case can yield considerable financial return as well as give pause to les autres.
@ Bill Kruse
Quite agree. Fear of prosecution (irrespective of the cost of that prosecution) is the best deterrent against crime. And the greater the penalty the greater the fear.
And this prosecution must be vigorously pursued notwithstanding, as JohnM notes, that there will be those (rich and powerful enough) to hide behind teams of accountants and lawyers.
Without this we have anarchy — but anarchy only available to a privileged few.
In much the same way as a tax haven expects its ordinary residents to obey the minutia of the law — but prospers by allowing a priveledged few access to Alice in Wonderland “regulations” not available to ordinary mortals.
@ Natalie Solent
For the smallest tax evaders the yield is almost certainly negative
With the greatest of respect, what is your basis for this claim? The idea that HMRC would knowingly pursue an enquiry into a trader where there is likely to be a net loss to the exchequer is, frankly, ludicrous. HMRC have limited resources to carry out compliance activities and cannot afford to employ a random, scattergun approach. Compliance checks must be risk assessed before they begin and and estimate of yield made. It’s HMRC policy to drop cases where the outcome isn’t worth the powder and shot. That’s just common sense.
Also, there’s something that you and Mr Worstall are overlooking, and it’s such an obvious point that to ignore it seems almost wilfull. Where an HMRC enquiry reveals that a taxpayer has failed to declare all of their income, there is no exact, empirical way to determine how much has gone undeclared. The corner shop owner might supress his purchases and understate his takings and manipulate his invoices. In so doing, the figure of profit on his tax return becomes a percentage of the actual figure. But what percentage? 90%? 50%? 10%? Nobody will ever be able, hand on heart, to say that the full amount of tax can be collected from that trader. It’s possible that even the trader himself will not know.
So, to say that HMRC should not bother themselves to chase after “The Little Guy”, when the scale of their evasion CANNOT be known until there is an investigation, is naive at best and, as Richard says, showing support from criminality at worst. I suspect that your position (and Tims) is likely to be somewhere between those two extremes… possibly best described as lazy indifference.
That’s why I can’t support your views – the tax gap is not something to be indifferent about.
On average, a tax inspector brings in around 15 times her cost to the exchequer in yield. At higher levels (tackling high end avoidance schemes), this yield rises to an average of 50 times her cost. HMRC funding is such that only a fraction of businesses are the subject of tax enquiries at any given time. More funding = more enquiries = more yield to the country, to be spent where it’s really needed. If there is more and more investment in tax inspectors. the point at which the average yield drops below 15 times the cost of the inspector will be the point where we should consider the investment to be enough. It really is a no-brainer.
Until then, the crooks are getting away with it.
Finally (and this is just my opinion), “The Little Guy” that Tim Worstall is defending so stoutly – for every one of him, there are loads of others that are playing with a straight bat. The cry of “No Fair!” that small businesses are making are undoubtedly coming from this minority of thieves, who just don’t like the fact that they’ve been caught and are squealing about it. I advise you don’t listen. They deserve the tax bill, interest and penalties they get.
Thanks
Excellent analysis
“What is it about you right wingers when it comes to tax abuse? Why do you love it so much that you argue totally different criteria for dealing with it to all other crime?”
No, I think it should be dealt with on the same criteria as other crimes, such as benefit fraud. In both cases de minimis non curat lex. As you have correctly said in response to Paul Lockett, we can never solve all crime.
“He excused crime
Are you doing so too?”
I see no excusing of crime in the passage you quoted, i.e. “We’d be better off just not worrying about what those criminal bastards, the tax dodgers, are doing over there in the last 10-15% of the economy. We’re made richer by ignoring it.” He does not appear to excuse the crime of those he calls “criminal bastards”. He makes a utilitarian argument about costs versus benefits.
I utterly disagree
He is blatantly saying do not tackle this crime as it pays to ignore it
There is no utilitarian argument in crime
Ir much else come to that
There is jus n this case your moral indifference that is indicative of corrupted ethics
Hi Richard,
Economic libertarians don’t believe in taxation. In fact they don’t believe in a role for government – hence no need for taxation. Everything should be handled by the marketplace, according to them. Murray Rothbard was a prime advocate for this kind of thing.
If the libertarians can’t axe the government, then they try to minimise as much as possible – hence privatisation, outsourcing government roles, cutting taxation and cutting welfare. The Americans have been doing it for years. Conservatives are generally happy with the libertarian line until you talk about cutting defence, police and liberalising things like drug use. I think Worstall is thinking along this line.
Richard I think a policy of zero tollerence to any crime will be effective. Because people get away with it year on year the crime increases in it’s population. In those socities the law is not enforced and corruption is endemic (example India)
The biggest crime is that a lot of this money is not in circulation to do good in society, by creating jobs and other investment for the benefit of all.
The sad thing is that value is destroyed by the crime. For example at the level of say a resturant not paying VAT or PAYE at the legal rate the value of this business is reduced because future sale of the business has to be done in cash purchasers as there is no way the accounts will provide any assurance to a lender.
Two things need to happen, through democratic process we must lobby individual MP’s to make them aware of the crime and ask them to respond by ask them individually and collectively protect the citizen from the crime of tax evasion. Second thing is the offshore centres must be closed down, there is no choice the majority of the people of the world must take action.
Hear, hear.
Hear Harish; winner of the PSG’s “Best Comment of the Blog”.
Tim who?
Very well said Harish. Fully agree – and with your previous post also (though maybe it’s more a case of pour décourager les autres – from tax-dodging ?).
Lobbying MPs seems a good place to start. Seems it needs someone to produce a template letter which individuals could use and adapt and publicise it widely on appropriate websites. Maybe this is already in hand somewhere?
End tax havens now!
Richard is the best guy to ask for such a template letter.
If we could get MP’s E mail addresses we can do it quickly plus it is Green.
MP’s must declare well before the next election whether they are for or against tax evasion crime and whether they think £70 billion lost is a materilal sum which should be recovered by the New Parliament. This way, let the voters decide with their ballot box who they think will get the stollen money back.
Clearly the present incumbents are too busy to bother with a mere £70 billion.
Put each member of the public on commission, if we can vote in a Parliament who promise us not to let this go on, we could get a tax refund of £1,1666 using 60 million as the population. How about it, who does not want this money to go back to the honest taxpayer.
The answer to this is to sign Caroline’s petition on tax evasion on line – check it out
Isle of Man
A few years ago a PR company employed by the Isle of Man government to disguise the island’s nauseating antics came up with the clichéd slogan “Freedom to Flourish” a banality which is still appended to government correspondence..
The government is not specific as to the extent of this “freedom” or its universal availability — but judging by reports emerging from the island its ordinary citizens are not exactly “flourishing”.
So the world can only assume that the “freedom” applies to tax dodgers and their clever-clog retinue of bankers, accountants and lawyers — all of who will be “flourishing” quite comfortably.
Thoughtful of the Isle of Man government; as if we didn’t know already!
Students researching the art of tax dodging may wish to visit:-
http://www.youtube.com/watch?v=a8OZZ7CuQ4Y
Not to watch the bizarre video but to read some of the comments posted beneath!
I’m confused. Are you saying that there’s no such thing as an efficient level of crime?
If not, then why don’t supermarkets employ a security guard for every aisle?
Yes I am saying there isn’t an efficient level of crime
I’m saying that’s fatuous and offensive extension of the already inhumane logic of neoclassical economics
Compare and contrast two statements.
Richard Murphy: “We can never solve all crime”
Richard Murphy: “Yes I am saying there isn’t an efficient level of crime”
If we can never solve all crime then there is a level of crime that it is efficient to have. Only if we can solve (or prevent, clean up, stop) all crime can it be efficient to do so.
If we cannot solve all crime then we have to make a decision about which bits we’re not going to sovlve: otherwise we will be devoting ever more resources to solving that last bit of crime even while we know that we cannot in fact reach the goal.
Thus there is an efficient level of crime to accept that we have.
Still justifying crime and your support for it then Tim?
Keep digging that hole
I and many others are enjoying you showing your true colours as the man who says let’s ignore tax crime
If you deny reality then it’s an impossible debate.
I am saying it’s the wrong argument
Therefore of course there’s a debate
Your position is the absurd one
Oh, and Tim, please remember that the argument against combatting tax abuse is also the argument against stopping the movement of the proceeds of crime. If the tools exist for hiding money from established tax taking jurisdictions, then those tools will be able to be used by any savvy criminals.
The bigger they are, the cleverer they tend to be (it’s that market thing, see, the bigger the corp, the more competition it crushes – ergo tougher regulation on the market creates more freedom for more corp entities and so more efficient competition to provide for the consumer – but hey don’t let your ignorance of real life get in the way of your text book).
So your argument condones the drugs and vice lords, the arms dealers and peddlers of social disease.
The fight against tax abuse is the place to start, not the one to ignore because your petty little head cannot stand the thought of the state actually weilding some power for the public’s benefit.
@Tim Worstall
Cleaning-up any type of crime is about commitment and resolve.
If people in authority/power have a vested interest in a particular crime continuing then very little (except window dressing) will be done about it.
Hence the persistence of tax havens which cost the Treasury £billions and wreak havoc across the world. All to satisfy the greed of an extraordinarily small and powerful elite.
Which an ever increasing number of people are beginning to realise.
Thanks in part to the Tax Research website —
But perhaps no thanks to yours!
So you still don’t think that there’s such a thing as “an efficient level of crime”?
Really bizarre.
I don’t know how you can say that it’s not the argument. It very much IS the argument:
“What’s the equilibrium point at which you should stop pursuing a crime because the returns (measured in utility/joy/social cohesion/money) are outweighed by the costs?”
In essence, that is the argument, is it not? and you’re telling us that there’s no nash equilibrium? Even though by your own admission – ““We can never solve all crime” – it must surely exist?
I feel like a jury member in The Chewbacca Defence.
http://www.youtube.com/watch?v=l1QI4P0YqtM
*HEAD EXPLODES*
This is an ethical issue
The farcical concept of equilibria cannot be applied to ethics
It’s a very small mind that thinks it does
And a fundamentally unethical one
“The farcical concept of equilibria cannot be applied to ethics”
Well that is game theory out of the window then!
Indeed
remember it’s just a theory
It’s not fact
all theory has its place – and equally occasion when it should not be used
Your are confusing the m with he terrain. Big mistake
Arnald, I reject that line of argument as uncivilised and illiberal. The fact the some people may use an item for criminal purposes is not in itself a reasonable justification for banning it. If it was, pretty much everything would be banned
but them I reject your concept of liberalism as fundmentally uncivilised – which is exactly what it is intended t be
Describing it as only a theory and not fact is somewhat redolent of creationist arguments used to reject evolution. Of course it is a theory but it has been applied in many practical situations to resolve problems – it helped understand the cold war to the benefit of all. Besides if the classic prisoners dilemma isn’t an experiment in ethics and equilibrium, then what is?
I deal with your argument here
http://www.taxresearch.org.uk/Blog/2011/12/05/why-neoliberalism-doesnt-work-when-it-comes-to-tax-crime/
Let’s just tot up the offensive remarks:
I’m….
“fatuous”
“absurd”
“small minded”
“unethical”
I think my extensive group of friends and family would disagree there.
And all because I asked a simple question about your belief in the existence of a well known and proven concept – ‘the efficient level of crime’.
We all know that it exists because there are literally hundreds of thousands of examples of it. Not only that but – as Tim pointed out above – if you accept that “we can never solve all crime” then by the rules of logic it must surely exist.
With all due respect, it’s just very odd behaviour to avoid recognising the inconsistency of your logic.
To my knowledge, we’ve never really debated before and I came to your blog with an open mind and a willingness to hear your side of things but as it transpires you’d rather stick to a 100% indefensible position and throw mud. It’s not attractive.
As I said before, whilst you deny reality there’s nothing to debate.
I deal with this here http://www.taxresearch.org.uk/Blog/2011/12/05/why-neoliberalism-doesnt-work-when-it-comes-to-tax-crime/
Your logic is the one at fault
My criticism is well founded
This government actually applauds looting because they continually implement policies designed to move money from the public purse into those of the rentier class. Witness PFI and Social Impact Bonds.
Also witness Hartnetts gift to Vodafone and to Goldman Sachs. Therefore, this government are going to applaud tax fraud even though it robs the UK economy of tens of billions of pounds a year.
But then, what do you expect of a government that is essentially working for the banks?
Having read all the comments you can see the dispute being clearly between a practical position of getting results versus an ethical position and doing the right thing no matter what.
Obviously with a title such as the Courageous State RM is going to follow his ethics but do we really want a Government to folly such a righteous agenda even if it hirts the economy?
The other problem is that society does not see Tax evasion as a real crime, certainly not as bad as petty theft in a shop, mugging or burglary. If you want people to support you RM then you will have to convince them otherwise…….
So you’re another right wing proponent of crime, the creation of unfair competition and the destruction of honest business then?
@Richard (not richard murphy). You said: “do we really want a Government to folly such a righteous agenda even if it hurts the economy?”.
The problem is, you assume that this is a simple calculation – if the cost of cracking down on the crime is greater than what might be recovered, then net it is a ‘cost to the economy’. This is nonsense. The cost of the crime on the economy is far greater than that, when understood in terms of of decreased levels of trust, poorer social relations, perhaps lower morale in law enforcement, lower confidence in the government, greater likelihood those who get away with it will re-offend (and tell their friends) etc etc.
Basically every crime has a social cost that, whilst harder to quantify, is clearly much greater than the initial economic cost. This is the dangerous myopia of the neo-liberal worldview, which minimises the human interest and reduces people to a cog in a machine or a number on a balance sheet. It might make some richer but it has and will destroy societies in the process if it is allowed to pervade.
I can understand that argument but a social cost is based on morality and that is subjective, each person has a different line that they will not cross. An objective indication of cost to the economy is easier to get behind.
I believe the public want results, not just the platitude of being morally “right”
Nonsense
The people of this country want Courageous leaders
And a Courageous State
Not moral depravity, which the right have amply evidenced in this debate
@Richard (not Murphy):
“An objective indication of cost to the economy is easier to get behind.”
It’s not because it’s easier that it’s morally “right” or indeed what the people want. And since when was defending morality a platitude?
Morality may be subjective but the laws of the land are built around what most people believe to be moral or not. Some would argue that theft, robbery or even murder are moral, but most would not. So these are quite rightly criminal offences – as is tax evasion! Surely what the other Richard means by a courageous state is one which respects that principle above all?
“society does not see Tax evasion as a real crime, certainly not as bad as petty theft in a shop …”
If that is true, then it is a very sad state of affairs. But is it true? Have there been any serious studies?
“If you want people to support you RM then you will have to convince them otherwise…….”
I think that’s what he’s trying to do! And I believe he has growing support. What is needed now are some politicians who are willing to stand up and be counted as courageous leaders of opinion rather than mere followers of those with the most powerful lobby.
With all the arguing about the tax evaded on the grey economy, and how big it would be and how much would vanish, measn that we are missing the point. Unlike tax avoidance schemes by banks or evasion through tax havens, this is a form of evasion that WE ALL can help to reduce. Do not pay people do work on your house in cash and demand VAT receipts. Do not buy DVDs, cigarettes, booze out of the back of a car. Perhaps some building work won’t go ahead becasue it is 20% more expensive with the VAT a,d maybe less cigarettes and booze will be consumed, but I certainly don’t see any issue with that!
In Spain, where tax evasion is considered a national sport, the Hacienda (Tax Office) is becoming increasingly effective. This thanks largely to state-of-the-art computer systems which are able to cross check cash movements.
For example withdrawals of even modest amounts of cash from pefectly honest personal bank accounts are immediately considered to be “suspicious” and perhaps destined to participate in tax dodging by paying for goods/services in cash …
Investigation is often immediate amd all parties found to to be involved in such illegal transactions are prosecuted and served with VERY big fines.
It is a sad indictment of our society but “fear” is now the only effective deterent
One wonders how the Spanish authorities will cope with Bitcoin…
There is no lack of interest from HMRC in pursuing tax evasion in the small biz sector, particularly the self-employed builder.
Their lack of interest seems to be related to inputting large amounts of time to large evasion/avoidance, where the evidence has passed through so many bank accounts and companies that they lose both track [of the cash] and interest.
I do not see that reducing the quantity, and hence skill, of tax inspectors is going to help the “cause”.
One presumes that the reduction of same is something the politicians have been instructed to do by their real masters: And I do not mean us.
@Richard Murphy
“We can never solve all crime”
I don’t get it, genuinely, I think I must be missing some fundamental point to your argument.
Assuming a moral will to solve all crime, then the police could probably get pretty close to 100%, provided they were given the resources. Resources just being another word for money with which to buy manpower, technology, technical expertise etc. However society has never come close to giving the police such resources, there’s always a trade off between what can be done at a reasonable cost and what has to be left unsolved. Obviously the more heinous of crimes are given the most resources and a financial analysis is not relevant, but somewhere down the scale comes a point where somebody has to say, “we can’t afford to allocate more resources to that investigation” it may be a sad situation, it may be morally wrong, but until such a time that society keeps voting for more and more money for the police it is a reality. Richard, with the line I quote above you seem to accept such a line exists somewhere.
Worstall seems to suggest that as far as tax evasion goes the line is were the costs still balance the immediate benefits. Assuming there are secondary social benefits, then the line might be moved to a point where the costs of investigation are greater than the tax immediately collected, but there is still a line where somebody has to say “This is too expensive to investigate”
So my question is, how does one decide where that line is?
I deal with your argument here:
http://www.taxresearch.org.uk/Blog/2011/12/05/why-neoliberalism-doesnt-work-when-it-comes-to-tax-crime/
@ Bill Kruse
BITCOIN ANONYMITY
All Bitcoin transactions are broadcast to the entire network and are essentially public record; unlike regular banking, which attempts to preserve customer privacy by keeping transaction records private. Although Bitcoin keeps the ownership of addresses private at the same time it publishes all transactions and a record is created showing that a sum of money was sent from one address to another.
Even if users do not make ownership of their addresses publicly available it is difficult for anyone else to connect the transaction with them. However, if an address is connected to a user at any point it can be possible to follow back transactions because each participant likely knows who paid them and may disclose that information on request or under compulsion.
“Attempting major illicit transactions with Bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb. We are working with the government to make sure indeed the long arm of the government can reach Bitcoin… “ Jeff Garzik – Bitcoin developer
Oh RM where were you last night when you were needed? It was the annual Hardman lecture at the ICAEW. The head honcho of Deloitte was giving a talk re a competitive UK tax system.
He so lacked leadership imagination,and made daft comments that even tax pros who don’t agree with you wished you were there to liven things up. It would have been an open goal for you. The speaker only got one question (from somebody I know-and that reluctantly) such was the reaction to the banal Big 4 (he liked to call it the big 6!) case being put forward.
Sorry
I was doing a book launch event
Or I might have been there
Mind you – it looked like it would be banal from the outset
Don’t believe it (always) when Deloitte puts on the act of stupidity.
They are experts at it. It is known as camouflage! And not knowing the difference between “4” and “6” is just another way into lulling the naive into thinking that Deloitte is a company which is rather dim but nice.
All of which to disguise the truth that it is an evil, thieving, conniving collaborate that would sell its own Granny if there was a profit in it.
The ACEAW is poodle to the Big 4 that gets a smack if it doesn’t do what it is told.
Deloitte and the ICAEW; made for each other. Literally!