I've just listened to yesterday's Moral Maze on BBC Radio 4 - on which I was a witness - again. Since it is broadcast live it's hard to get an objective view of what is happening when shuffling in and out of studies, and so on.
Three things cam out to me. The first is the audacity and depravity of the Hayekian view that decries democracy in the name of greed - and would overthrow democracy at the first possible opportunity. This depravity is also far more common in the Conservative party now than many realise. Opposing it is, of course, a key part of the tax justice campaign Just as we're one of the strongest pro-business lobbies there is so too are we profoundly pro-democracy and defend it against the battering it gets from offshore and the lawyers bankers, accountants and others who work there with the aim of undermining the democratic will of elected parliaments.
Second, the pedantry of the right is so apparent, both in those interviewed and in those on the panel, and the sheer nastiness of their approach is cleart. I am, of course, familiar with this. I have suffered it on this blog for a long time and I frequently meet people like those interviewed and I never cease to be struck by the fundamentally anti-social nature of their behaviour, attitude and comments which treats all but those who they think share their intellectual and financial good fortune as little better than serfs. That was all too apparent last evening!
Third, is how inconsistent the arguments of those opposing tax justice are. They have little argument - as was made clear of the first commentator under questioning - he simply offered rhetoric. Or they deliver ad hominems - as Melanie Phillips clearly wanted to do of me as an accountant and failed somewhat when I agreed my profession was unethical which I really do not think she expected. And they will also perpetually play devil's advocate precisely because they have no moral viewpoint to project and therefore can adopt any position that suits their immediate and transient purpose for abuse.
I enjoy exposing the threat these people pose to our society and the desire they have for a totalitarian takeover of our state, for that is their goal. It is hard to believe the current government does not share it on occasion.
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Thanks for the link; I’m listening to it now. I was impressed by your contribution – thanks for making the moral case.
I’m no economist and have found it hard to follow the arguments about the true figure for the tax generated by the 50% top rate. What has really annoyed me is that when Osborne has said that the 50% rate will generate little or no extra revenue, there has been no condemnation of the clearly greedy avoidance measures. They may be legal but they are clearly immoral, and given how politicians love to use moralistic language (remember what was said about rioters last year? They were described not merely as criminals, but as depraved and savage), I’m surprised that such blatant refusal to support society has gone unchallenged. The case needs to be made more strongly for taxation as our membership fee in society.
Agreed!
But that’s all tax – not just income tax
I just listened to the programme, and have to agree with the points you make in this blog post. I would prefer it if the people who wish to live in a neo liberal country with minimal taxation and state interference would go and find one, and live in it. If that means that the majority of the top 10% of earners would up sticks, so be it. Perhaps other, more ethical and more socially responsible entrepreneurs would take their places. If these high earners are ‘wealth creators’ rather than hoarders why isn’t there currently more investment and spending?
You gave a dodgy answer over whether you have ever advised a client to avoid tax. Very unconvincing performance.
My answer was deliberate, and careful. What it made clear is some would not agree with me on where the line is. Phillips seemed to think paying into a pension was avoidance. My answer allowed for that, deliberately. Nuance is something I can do even if Phillips, and maybe you, can’t.
It also allowed for the fact that – as I have openly acknowledged – on some issues I have changed my mind, as wise people do as experience, education and practice all change and develop. So I did once think paying dividends from companies acceptable – I’ve made clear that in the 80s I was one of the first people toi ever write an article on how to do it – although it certainly did not propose personal service companies. In that case that’s not a dodgy answer at all. It was actually in the time available making clear that when one is discussing morality cliff edge ‘black and white’ answers are not always right – it depends on your perception of morality.
But then I suspect you heard what you wanted to hear, and not what I actually said
“Phillips seemed to think paying into a pension was avoidance”
You yourself have claimed that as recently as 7 March:
http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2012/mar/07/taxing-the-rich-pensions-taxed
“If you take off pension tax relief at £150,000 they will not tax avoid as much as they are. People stuff their pensions to avoid paying tax. Instead, they will take the cash and pay their taxes.”
OK, so you said “avoid” and not “avoidance” and if you are pedantic you would come back and try to make a distinction. But the implication from your comments made it clear that you regard paying into a pension as tax avoidance.
For the avoidance of doubt – I have never said paying into a pension is tax avoidance. Curtis used that phrasing. I did not. And I was arguing about making a level playing field on contributions between top rate and basic rate payers – something quite different
You are being a pedant – and you even admit it
Which is why I won’t be wasting my time with you again, as I have advised re comments, this week
All true, Richard, except that I’d question your very last sentence. I think there’s strong evidence to suggest that this government (and unfortunately I have to say, the last one for long periods in office) CONSISTENTLY follows this course. I should qualify this by saying that I take contemporary totalitarianism not as centralised control by the military or a single political party, but as control by an alliance of what we might term big finance, big business and the rich.The control they exercise – or seek to exercise – is not direct but via a network of agents. At a national level this includes lobbyists, PR companies, think tanks, professional associations, and of course, less formal networks and associations. Internationally the OECD, IMF and World Bank, play the same role, though I concede that from time to time these bodies have wandered slightly ‘off-message’, usually as a result of the arrival of senior staff with a more ‘progressive’ world view.
The ultimate aim of what we might call shadow totalitarianism is, of course, to influence and control government and governments to such an extent that neo-liberalism becomes the dominant – and eventually sole – basis for all forms of public policy and government activity. I’d argue that in the UK in the last week we’ve had the passing of the NHS legislation, Camerons speech on infrastructure privatisation, and many features of the budget – and its underlying philosophy – that all demonstrate this. Ultimately it’s the replacement of genuine participatory democracy with cipher government/states that maintain a democratic veneer (e.g. the ‘new’ Burma). And ultimately, it does of course rely on the production and subsequent election of politicians who’ll promote the cipher state rather than the courageous state. Step forward Cameron, Osborne, most of the Tory party and a fair number of Lib Dems and Labour politicians too (not to mention the Republican Party in the US). It is, in short, the rise of neo-feudalism, as has been noted by a number of contributors to this blog over the last few years.
And I wholeheartedly agree
Richard
The fact that you think that people who support minimising one’s tax exposure want a “totalitarian takeover of our state”, whereas you, someone who wrote, “The Courageous State” which essentially asks that the government do far more than it currently does, do not, is quite incredible.
Not incredible at all
I wrote about the need for democracy
It was clear that there were those on the programme who want to overthrow it
It’s really rather black and white on this one
I thought Witness 1 was pretty honest on this. The free market & democracy aren’t compatible &, obviously, FM should win. That was why he applauded tax avoidance as a way of frustrating the wishes of a democracy.
I suspect Francis Fukuyama didn’t plan for this !
While I agree with everything else that you say I don’t think you are being entirely fair to von Hayek and many Hayekians (not all) in saying that they decry democracy and want to see its overthrow. Hayekians believe that free markets and a minimal state are the best way of preserving democracy, you and I both belive that view to be profoundly wrong, but I don’t believe that they want to see democracy overthrown. Both Keynes and Orwell acknowledged that they shared a common concern with von Hayek, who fled the Nazis from his native Austria, about the preservation of democracy, although having a similar view to you and I about the likely consequences of the policies that he advocated.
Hayek may have thought that
His followers seem to very clearly want to overthrow democracy now
I differentiate the two
Stephen
I don’t think you listened to the MM, particularly witness 1.
In the states the more far-out r-wing libertarians are quite open in seeking to dismantle democracy. Their favourite tactic is to seek election promising to reduce taxes without any equivalent reduction in services. The result, obviously, is that the state becomes insolvent. Lo & behold, it cannot any longer provide any services, …. job done. (This is point where those less pedantic than I would add an emoticon).
I enjoyed the programme and hearing your point of view but I don’t understand how the government can create jobs. Do you mean by having more public sector workers or by giving/lending money to private businesses?
Who owns an enterprise makes no difference to the validity of the job created
When BP was state owned it made jobs
So it did when privately owned
They were both real jobs in the oil industry
So the government can create jobs as it wishes – including those considered highly productive! We’ve just forgotten that simple fact
So you tell Curtis that people pay into their pension to avoid tax, but then say here that doesn’t mean paying into a pension is tax avoidance.
And it is not tax avoidance
As I have always made very clear
It may mean people avoid tax – but it is tax compliant behaviour – and what parliament intends
I’d rather parliament changes it’s intention – which is what I was arguing for – but I am quite clear now and have always been – paying into a pension is not tax avoidance just as having an ISA is not
Now very politely – stop being a pedant
but the point is what is “tax compliant behaviour” – many people have choices about how to organise their affairs or how to conduct a transaction – you have never really been clear on how to distinguish paying tax correctly versus making a choice between actions which results in a different tax answer.
for example, I may have some savings, I can choose to put in my pension and obtain a tax advantage or I could choose keep in a savings account – both are valid legal choices but both result in vastly different tax treatments.
another example is the sale of a company (likely to be tax free or taxed at the lower CGT rate) versus the sale of assets of that company (will be subject to prevailing rates of corporation tax in the first instance and then additional tax if the proceeds are extracted from the company). Again both are valid legal choices, but its not clear to me whether you consider the second example as “avoidance”?
the line between tax compliance and “avoidance” is not a clear one – your oft quoted mantra of “right amount of tax in the right place at the right time” is arguably meaningless as the definition of “right” is extremely difficult – right according to who? the man on the Clapham Omnibus, me, you, who?
All of those are tax compliant
I have never said there is no room for tax planning
The law provides options – the taxpayer can choose
You are creating a straw man
I suggest you stop doing so
I read your blog with interest and share most of your views.
Recently, while on a business trip, I’ve met a guy who says he doesn’t pay any taxes. He added, that what he does is completely legal, also from moral point of view.
He called himself a “perpetual traveler” – lives one or two months in a country, then moves somewhere else. He said that as he has an online job, why spend his life in rainy Britain, while he can work in nice and warm Thailand or Panama.
Lifestyle? He said yes. Is it tax avoidance? Where should he pay the taxes? He said he doesn’t have to, as he is not resident of any country or owns a business anywehre.
And added, that he pays it in form of airline tickets.
Gave me some thinking, but I couldn’t imagine changing the address so often.
I met someone like that once
He survived by taking a lot of drugs
His life seemed like hell on earth
No wonder his wife had left him
In fairness, I doubt that is what I’d call avoidance. He may have a UK passport but its doubtful that he benefits in anyway from the UK. He couldn’t claim NHS if he was ill, his business doesn’t in anyway benefit from UK law & security. His wife & children, if he has any, are bereft from him.
It sounds quite an idyllic life if you don’t have a wife & children.
If you do, it sounds like selfish materialism gone mad !
How can you be legal from a moral point of view? It suggests to me that the guy is probably neither.
What a frustrating thing that programme was to listen to. You did as well as you could given the absolute need not to even hint at LVT. Had you done so, or were you to become known as an advocate of LVT, you would immediately be put on the list of people who could not be allowed to appear on the air. The BBC are well aware of people like Carol Wilcox and Dave Wetzel who could have demolished the Tea Party cant in a couple of sentences, so why do you think they were not asked to appear?
The Tea Party argument has to be broken down by asking, first, what is government for? and where is the boundary between wealth that has been created by the actions of the community, primarily through the actions of the government, and the wealth that is the product of the individual’s labour?
The answer to the first question is that the government ensures secure occupation of land, by defence of the realm, the maintenance of civil order in the last resort, and the recognition of rights to land occupation through the granting and protection of land titles.
The second question leads to the issue of location value, a forbidden area in economics even though we all know all about it. The busker at Victoria will earn more than he will doing the same thing one stop away at Vauxhall. The difference is location value, usually referred to as rent. It arises because of the presence and activities of the community, in this case by creating the railway system.
Once these two issues are brought into the discussion, the Tea Party case largely collapses. What has to be conceded to the Tea Partygoers is that the PRESENT tax system has a large deadweight loss that shunts many people into an economic siding and then leaves the government with a massive welfare bill if they are not to live in abject poverty.
The problem then boils down to the 1% who refuse to give up their privileges.
Do you think that we need to re-define ‘avoidance’. It isn’t useful any more.
There is the world of difference between claiming the ‘age allowance’, (say), and artificial transactions, which are not strictly illegal.
Didn’t someone call this ‘evoision’?
I have done this on my briefings page
Thanks.
I listened to the programme.
I had difficulty with it, because -no offence intended- I found all the participants, except you, to be- well, bonkers. Are we expected to take them seriously, or were they selected for their ‘bonkersness’?
Well, I have to say I did not think the Methodist bonkers
But it says something for the right now that they are all, as you say, bonkers
Or worse