Wealth-creator™.

[PhilipT]

Sure - but there has also been abuse of the prevailing tax system since time immemorial ...

Please define what is and isn't 'abuse', in this context. If the government of the day introduces a window tax, and I avoid paying it by bricking up my windows, is that an abuse of the system? I think not.

Perhaps it needs saying again, and more firmly: There is a moral obligation on those framing the laws, including the tax laws, to get them right. There is no moral obligation on taxpayers to pay more tax than the law requires, and it is reprehensible of politicians who have failed to frame good laws to claim that there is.

[ahinton]

Please define what is and isn't 'abuse', in this context. If the government of the day introduces a window tax, and I avoid paying it by bricking up my windows, is that an abuse of the system? I think not.

No, indeed it is not - and that is precisely what many people did when one was introduced; the evidence of that is still to be seen on properties in Bath, for example.

"Abuse" of the tax system (to me, anyway), means finding and taking advantage of loopholes that wouldn't be available had those who frame tax law done their job properly and fairly. The moral obligation upon them to get thos laws right is perhaps putting it a little too harshly in that it is impossible ever to get them 100% right for everyone at all times; that said, I broadly agree with your point here and, after all, the best efforts at all times to get tax laws right is what taxpayers pay those who frame them to do! All that I might add here is that this obligation is not merely moral but legal; those who frame those laws have a contract with and legal responsibility to their shareholders, i.e. the taxpayers.

Perhaps it needs saying again, and more firmly: There is a moral obligation on those framing the laws, including the tax laws, to get them right. There is no moral obligation on taxpayers to pay more tax than the law requires, and it is reprehensible of politicians who have failed to frame good laws to claim that there is.

There does need to be proper ongoing monitoring of situations where people (not always wealthy ones) are able to take unfair advantage of current tax law, without a doubt, but this should be done rationally and fairly without disadvantaging anyone unreasonably and it should be undertaken on the basis that amassing wealth is not in itself a crime. The problem with this for some is that amassing wealth IS a crime, even when committed by those who pay all their taxes. Certain avoidance schemes that currently fall within the law need to be looked at and I have no doubt that there are some that need to be reconsidered or possibly even abolished altogether. That said, the amounts that such reasonable measures that increase the tax burden of the rich could bring into Treasury coffers is very small compared to that which could be brought in by making British tax rates competitive and encouraging people to come into the country and pay our taxes rather than the more punitive ones that they pay where they are now and that which could be saved in outgoings by fundamental overhauling and simplification of our tax system.

[aeolium]

Perhaps it needs saying again, and more firmly: There is a moral obligation on those framing the laws, including the tax laws, to get them right. There is no moral obligation on taxpayers to pay more tax than the law requires, and it is reprehensible of politicians who have failed to frame good laws to claim that there is.

Then you presumably believe it is entirely acceptable, and even to be applauded, that Jimmy Carr used the K2 scheme to minimise his tax liability to 1% of his income, and wholly the fault of the government for failing to prevent the use of the scheme? This scheme apparently operates by allowing salaries to be transferred to a Jersey trust which then loans "investors" back the money. And you would presumably not comprehend why Barclays and other banks have signed up to a code committing them not to engage in tax avoidance, for surely tax avoidance is entirely proper and any failure to collect tax is a failure of legislation or administration?

Greece is an interesting example of what happens when the view becomes widespread that if you can get away with paying as little tax as possible (ideally nothing) you should - after all, it is the government's fault if that happens. The government is deprived of a substantial part of its potential income, wealthy people get to keep a lot more of their income, inequality increases greatly as those left paying taxes are primarily those tied to PAYE schemes, infrastructure deteriorates and the whole stability of society is jeopardised. The rich are not greatly bothered by this as they can always take their money elsewhere; they can leave the sinking ship.

The point is that taxation is not merely a legal question, it is also a moral one, and society does not operate on laws alone but on a whole network of trust which governs relations between people, groups, organisations. Taxation enables a great deal of what most people consider to constitute a civilised society. That is one reason why, when people see wealthy people using artificial schemes like K2 to greatly reduce their tax liability, many (not just some politicians) think it is morally wrong.

[heliocentric]

Quite so, aeolium. Crucially, in general the more money you have the more loopholes there are to take advantage of. I'm a bit shocked at some of the morality on show in this thread, although I think I'm probably more shocked at the amount of verbiage some people expend on what is one of the least interesting subjects in the known universe, unless you're an accountant, but maybe there are a lot of accountants contributing...

[MrGongGong]

I think I'm probably more shocked at the amount of verbiage some people expend on what is one of the least interesting subjects in the known universe,

I always fail to understand how folks (in the media mainly I know) seem to regard the details of finance (particularly the whole thing of pensions and tax etc ) as something that we should always have in our minds. There really is more to life than that ?
I caught the end of someone ranting on on R4 yesterday about how governments need to reward those who "do the right thing" , which to their mind means "saving for your old age", so if we all did that at the levels we are supposed to there would be no CD sales, no concerts etc etc
money is important BUT it's not the main purpose in life , those of us who have had a brush with mortality might have something to say about it all ?

[eighthobstruction]

Perhaps "do the right thing" could be a subliminal message flashed on TV screens during Eastenders or Location Location....Build a House DEsign Restoration / ReBuild a Mansion Abroad etc....

[MrGongGong]

Perhaps "do the right thing" could be a subliminal message flashed on TV screens during Eastenders or Location Location....Build a House DEsign Restoration / ReBuild a Mansion Abroad etc....

The phrase always makes me think of this

http://www.youtube.com/watch?v=-s9KCLLaPHI

[Serial_Apologist]

The phrase always makes me think of this

http://www.youtube.com/watch?v=-s9KCLLaPHI

When did that thing of everyone clapping over their heads start up? It was before the Mandela Wembley concert. I tried this once and put my shoulder out. I've always hated clapalongs (god there was one at some JAZZ I went along to last night!) and never been a rock fan.

[eighthobstruction]

About the same time Simple Minds were filling stadiums with NEW GOLD DREAM....(also playing sons bedroom)

[aeolium]

although I think I'm probably more shocked at the amount of verbiage some people expend on what is one of the least interesting subjects in the known universe, unless you're an accountant, but maybe there are a lot of accountants contributing...

Well, I'm not, and I agree it's not a very thrilling subject - I'd rather be discussing apples or plays - but there were some opinions being aired that I thought ought to be challenged...

[vinteuil]

Well, I'm not, and I agree it's not a very thrilling subject - I'd rather be discussing apples or plays - but there were some opinions being aired that I thought ought to be challenged...

.... yes, and thank you for your #78 (as well as your earlier similar challenges!), which is indeed a good summary of how I for one see this -

The point is that taxation is not merely a legal question, it is also a moral one, and society does not operate on laws alone but on a whole network of trust which governs relations between people, groups, organisations. Taxation enables a great deal of what most people consider to constitute a civilised society. That is one reason why, when people see wealthy people using artificial schemes like K2 to greatly reduce their tax liability, many (not just some politicians) think it is morally wrong.

[Serial_Apologist]

.... yes, and thank you for your #78 (as well as your earlier similar challenges!), which is indeed a good summary of how I for one see this -

Strongly seconded.

[ahinton]

Whether it's tax on income or not, there's been tax of one kind or another right back to Mediaeval times when the peasantry paid tithes, so the same ethical/moral principles apply.

But do they? You are, of course, correct in terms of the facts, but what I'm referring to is national tax levied and paid in accordance with national laws, which is not the same kind of thing either from a legal or a moral standpoint; not only that, you mention only the "peasantry" paying tithes, whereas much of what exercises people in this thread is the contributions that they believe ought to be made by the wealthy people - i.e, those who, in Mediæval times, would have been levying the taxes!

[Serial_Apologist]

But do they? You are, of course, correct in terms of the facts, but what I'm referring to is national tax levied and paid in accordance with national laws, which is not the same kind of thing either from a legal or a moral standpoint; not only that, you mention only the "peasantry" paying tithes, whereas much of what exercises people in this thread is the contributions that they believe ought to be made by the wealthy people - i.e, those who, in Mediæval times, would have been levying the taxes!

Right.

[ahinton]

Then you presumably believe it is entirely acceptable, and even to be applauded, that Jimmy Carr used the K2 scheme to minimise his tax liability to 1% of his income, and wholly the fault of the government for failing to prevent the use of the scheme? This scheme apparently operates by allowing salaries to be transferred to a Jersey trust which then loans "investors" back the money. And you would presumably not comprehend why Barclays and other banks have signed up to a code committing them not to engage in tax avoidance, for surely tax avoidance is entirely proper and any failure to collect tax is a failure of legislation or administration?

I cannot speak for PhilipT, of course but, as far as I am concerned, I do indeed blame the lawmakers who had been insufficiently adept, skilled, imaginative and efficient in keeping on top of such matters. Mr Carr (and others who used the same scheme) did not break the law, so either what he did was perfectly acceptable (which even he himself has now agreed is not the case) or the law should not have sanctioned his doing it; clearly, the latter applies. Failure to collect tax is a different matter from failing to levy it and is not usually a failure of legislation but of administration only, which anyone who has received an incorrect tax demand - be it for too little or too much tax - knows well; either the taxpayer has accidentally of wilfully completed an erroneous return or HMRC has assessed the tax due incorrectly or both.

Tax avoidance, on the other hand, is indeed entirely proper and takes all manner of forms from ISAs, pension contributions, income tax/CGT/IHT allowances at one end to some of the shadier and more suspect avoidance schemes on the other; since the fact that taxpayers can use any of these avoidance measures without risk of breaking the law is fine and indeed has to be so, it therefore follows logically that schemes such as that of which Mr Carr and others took advantage, whilst legal, ought arguably not to be legal and this is where the tax lawmakers need to be constantly vigilant, because new schemes are dreamed up daily if not even more frequently. Fair taxation is dependent upon viable, workable and fair tax law that, as far as possible, continuously seeks to cover all eventualities; in this, it's a little like computer viruses and other malware, in that there'l be another one along in a minute and it must be addressed.

Greece is an interesting example of what happens when the view becomes widespread that if you can get away with paying as little tax as possible (ideally nothing) you should - after all, it is the government's fault if that happens. The government is deprived of a substantial part of its potential income, wealthy people get to keep a lot more of their income, inequality increases greatly as those left paying taxes are primarily those tied to PAYE schemes, infrastructure deteriorates and the whole stability of society is jeopardised. The rich are not greatly bothered by this as they can always take their money elsewhere; they can leave the sinking ship.

Whilst there is some degree of truth in that, it's not the entire story. Greece has, for one thing, also suffered from considerable corruption within its tax inspecting and collecting organisations where officials have on occasion gone so far as to cook taxpayers' books in order that they can help themselves to some money. The view (not only in Greece) should always be that everyone should pay as little tax as possible because, as I've stated previously, that is (or at least should be) identical to "as much as is fairly due, no more, no less" - in other words, the taxman should not seek to extract a penny more in tax than is properly due. It follows that the wealthier taxpayers will end up with more in their pockets because they had more in their pockets before handing over what's due to the taxman.

Anyone who feels that the wealthy are taxed insufficiently can complain about one thing only - the tax laws that enable this to occur - but these are the same in principle as the ones than enable someone to reduce their annual tax bill from £2,000 to £1,500. It matters not what anyone does, there will always be inequalities in wealth; what needs to be done is to stop getting so exercised about that and start thinking carefully about what avoidance schemes should be outlawed.

The point is that taxation is not merely a legal question, it is also a moral one, and society does not operate on laws alone but on a whole network of trust which governs relations between people, groups, organisations. Taxation enables a great deal of what most people consider to constitute a civilised society. That is one reason why, when people see wealthy people using artificial schemes like K2 to greatly reduce their tax liability, many (not just some politicians) think it is morally wrong.

Such schemes can fairly be deemed to be "morally wrong" only to the extent that they are legally unjustifiable and, if the lawmakers decide that they are legally unacceptable and they are outlawed, taxpayers wishing to continue to use them must break the law and take the consequences. Do you consider it more "morally wrong" for wealthy people to use certain legal tax avoidance schemes (while they are still legal) than it is for those with modest assets and incomes to do the same (even thought the particular avoidance schemes that they use might be different ones)?

I cannot speak of K2 as such because I don't know enough about it, but I'm sure that it's only one of thousands of schemes that some legislators might see as appropriate targets for amendment or abolition; one of its constituent parts, however, involves using offshore trusts and loan instruments and even some pension funds and other transactional exercises do this, so if legislators start trying to interfere with this kind of thing on principle, it might risk bringing down far more than they'd originally intended, imagined or expected, with far-reaching negative consequences for society as a whole.

It is also worth noting that "society" - of which there most certainly IS such a thing! - makes ever greater economic demands on itself and raises its members' expectations continuously. In the same way as it is simply not possible to expand one's listening time to take in more and more music indefinitely, it is not possible always to expect to generate ever greater tax revenues in order to meet those social demands and expectations, because sufficient funds simply aren't there to do so. It's therefore no wonder that borrowings are so high; if we want to continue to improve NHS, state education, state benefits et al, an ever increasingly money supply will be needed and one cannot expect that the taxpayer will always have the ability to meet the ever increasing bills to fund those social improvements. Taxation does indeed have a part to play in what you call "a great deal of what most people consider to constitute a civilised society"; you're absolutely right about that. What it cannot do, however, is be the sole universal and eternal provider of funds for use to benefit society.

Lastly, may I once again attempt to make a serious and genuine plea about the morality v. legality aspect of taxation in pointing out that the morals of a society would not be expected to undergo anything like the frequent changes, both fundamental and detailed, that its tax laws undergo and, if it were, morality would clearly be identifiable as a very fickle and non-immutable phenomenon.