Moral Crusade

Hasn't everyone got a bit obsessed with tax avoidance at the moment. For some reason there is a moral crusade being launched by the Left and now David Cameron to crack down on people who are not doing anything wrong.

Moral Crusade being launched by the Left.

What's illegal about tax avoidance, absolutely nothing. People want to keep more of their money and stop the government taking it. It could be argued it is more moral to avoid tax than giving money to the government considering they waste so much and cause a lot of damage with it. But what is more important is that we let people make their own decisions in life, so long as they are not breaking any laws. To not do so is interference that deeply annoys people and leads to a less cohesive society. Imagine if we were doing this on whether people should buying and reading the Daily Mail, an activity involving money and one that a large proportion of people criticise. There would be great upset and that is wrong.

So why do we have this moral warfare? The rhetoric doesn't seem to be about reform of the tax law. Apart from George Osborne saying occasionally how the Treasury is trying to close some loopholes there isn't much said by the Left about rewriting tax law. Instead it is more immediate demands of cough up to lots of major companies and well known and important figures from comedians to politicians.

Nigel Farage has been accused of avoiding Tax through the Isle of Mann.

Maybe it's an attempt to punish those people who 'caused' the economic crisis. This idea is a ridiculous one though because of course the economic crisis was caused by a lack of taxation of businessmen and Nigel Farage. More tax causes a worse economy and its is government, which includes civil servants and ministers, getting involved rather than individuals and wealth creators that cause our economic woes. The fact is tax avoidance is done by a very large proportion of the population to some scale through accountants and tips from search engines. I don't see many people blaming the 99%, as the occupy movement always stresses, for the Great Recession.

Guardian tax diagram showing the 'sinners' who owe us money.

Perhaps then it's about actually paying off the debt. According to the Guardian who are experts on tax law (see video below) if we collected all the tax that was 'owed' to us by companies it would meet the amount the Government has cut in the country. The problem is, they forget where this money saved from the taxman is going, it funds peoples jobs and actually helps the economy. What would this money do in state hands? Well the state is a spender, it creates no money. Administration is loss making even on the basis of paying wages and the less said about Keynesian spending the better. The argument here, although sounder than others, is still full of holes that cannot be plugged.

So why is this really happening? It's just the Left hating those that create money and those who stand up for capitalism again. If we look at the Left view optimistically the wealth creators of this country can lose sight of the moral mission they must have to look after people and thus should focus on welfare and not jobs. If we look at it negatively the Left believe that anyone who makes any money is oppressing someone else and that everyone should give almost everything to the saintly state, seemingly the most common view of those most angry crusaders. Thus they will attack anyone they perceive to be doing something to make a profit and tax avoidance is the new way of showing this up whether it be by business or people who defend capitalism.

Capitalism Rocks! The Left will never understand money and the economy. 

I do worry about this idea of moral law, because it is no law at all. I wish Conservatives would show this up more, although recently David Cameron has pointed out Labour's own tax avoidance schemes to show hypocrisy.

Dave is not wearing a tie for tax purposes as it technically resides in the Bahamas.

Weekly Poll Lowdown

So if you were the civil servants and ministers in HMRC right now it seems you would be pressing for greater tax burdens on Google and other companies that have been avoiding tax. However, there was no clear outcome on how much should be paid, those who thought a lot more should be paid were equal to those who say they should not be forced to extra pay tax. So there is just over a 50:50 split on the issue. Here are the full results. 

Should Google pay more tax on the basis of the current law?

Yes, it should pay a lot more	46%
Yes, it should pay a little bit more	8%
No	46%
Unsure	0%

Just over 50% of you are a bit mad in my opinion. The law in this country allows companies to use loopholes in exactly the same way in which a large amount of people do for their own personal income. Yet there is seemingly some sort of moral crusade to make sure that Google pays what is actually extra taxation. Just because big business is big there seems to be an idea that it should be pushed below the law and receive extra charges which it should not incur. Coincidently, the same people who are pushing for companies to pay more tax are those that believe, wrongly, that business caused the recession when it was actually the government (I'm not talking about the boom bust cycle in general just how this recession has been worse and that too much government caused it).

Many people are seemingly going on a moral crusade to over ride the law. 

There is also an interesting legal debate on this too. The country is governed by the rule of the law and not the rule of the mob and its pressure, that's why at the moment Abu Qatda can't be deported. People wish to use their moral pressure, which they actually have no right to do, to force others into what they think is right. This is seemingly ok for issues where there is a consensus but people will push for more radical and ludicrous things. We may get into a position where just because a small proportion of the electorate believes something is right the Government can intimidate business into doing what it wants. People are taking power away from business, which ultimately has to serve its customers, and handing it over to politicians. Not a great move.

Ignoring legal absurdities though, why would you want business to pay the extra tax? This 0.3% of growth we have at the moment is probably all down to extra money left over after taxes that is put back into to the economy. Investors do like big profits, but they like making big profits bigger. That means bigger business it means more jobs and a better quality of life for all people. So there is an economic benefit to not force these extra taxes and get some of that growth that everyone wants. If the government got this money it would waste it, like always, and then we'll all be that little bit poorer.

So what would I do if I was in HMRC. Well I'd stop bothering all these companies and actually try reform the tax laws in the UK. There is a competition argument to making the tax law in the country the same for all business and that can easily be done by making it a lot simpler to understand for business people, lawyers, civil servants and MPs, who all struggle at the moment. There will never be no tax avoidance, but it can be reduced. Codification and rewriting will both help. We should simplify the law and not have a moral lynch mob. 

Codification of tax laws is much needed. It has got to the point where no one actually knows the law.

Please vote in the next poll on the sidebar.