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The way to dealing with tax evasion is not cutting taxes


12:07 pm - July 27th 2012

by Richard Murphy    


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I’m amused to read a typical right wing response to Tax Justice’s new report – The Price of Offshore Revisited, which suggests that as much as $32 trillion of wealth may be located in tax havens – is to suggest that the problem could be solved by cutting the rate of tax on the wealthy.

What Eric Jackson, who suggested this in Forbes, is in effect saying is that the best way to reward those who have in very many cases broken the law by hiding their wealth offshore, so as to undermine the state, is to undermine the state in its own backyard instead.

We should next be expecting them to suggest that the best way to beat burglars is to ban locks. The logic would be identical.

There is, of course, a much better logic, akin to reinforcing the locks.

That requires three things. The first is to demand automatic information exchange from all tax havens – so they have to disclose which people from another state have interests in bank accounts, companies, trusts and foundations in those places. That would immediately make hiding cash there near impossible.

Second, offshore wealth hidden in tax haven trusts and companies has all to be attributed to the person who put it there – including to their estates if they’ve since died. It doesn’t matter if they don’t get the income from offshore. That would be their choice after all. They should be taxed on it in their home state anyway. And it should be subject to a penal tax rate. And if there is no income a deemed rate of return on asset value should be applied instead and that should then be taxed instead.

Third, those who do not cooperate should be subject to onshore asset forfeiture. And their right to use domestic courts to enforce their claims on offshore wealth should also be denied to them.

Yes, these proposals are penal. They are meant to be. Society has to expect its leaders to comply with the law. And if they don’t examples have to be made of them. That’s why penal policies are justified.

But there’s another good reason for this. Do this and domestic tax rates will suddenly look very attractive indeed. As they are already for the very wealthiest. They just have to realise it. And they may need a little help from policies like these to appreciate that.

And we need to supply these lessons because without such incentives to come onshore the 0% of offshore abuse will always be more attractive than an onshore positive rate of tax – as all who suggest policies of the sort Mr Jackson has proposed know all too well. Which is why we have to see his proposal for what it really is – which is just another attack on the state, and not a serious tax proposal at all.

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About the author
Richard is an occasional contributor. He is a chartered accountant and founder of the Tax Justice Network. He blogs at Tax Research UK
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Reader comments


One of the unstated assumptions in the case made by people like Jackson is that the State isn’t capable of forcing the rich to pay their taxes, so we should tempt them into paying a little bit of tax by low tax rates. This justification started in IMF and World Bank advice to countries in Africa and Latin America that are weak states and, indeed, struggle to deal with collecting taxes. But the UK isn’t a weak state, is it?

@ Guano

There we have it, the statist view of the role of taxation, the state’s duty is to force taxes from the people, thank you for making it so plain.

Yes. That’s what tax is.

4. Richard Carey

“We should next be expecting them to suggest that the best way to beat burglars is to ban locks. The logic would be identical.”

This analogy doesn’t really work, for one reason because tax is a form of robbery. It’s Murphy who is trying to ‘ban locks’, by removing any and every protection from the pillaging taxman.

Saying that taxes should be reduced is more like saying the best way to beat burglars is to keep them locked up in jail (i.e. go back to the limited government model), then we won’t need the elaborate locks to keep them from our homes.

My take on it is that some headline rate taxes are too high for the state to achieve some important policy ends, such as capital investment, especially from foreign investors.

The current solution is to offer loads of exceptions to the taxes in the form of credits and subsidies. These exceptions constitute loop-holes which are then exploited by the “wrong people” in the wrong industries. And it creates whole new industries in tax avoidance.

So the (intelligent and honest) “right wing” solution is to abolish the complicated exceptions but lower taxes overall. Once you factor in all the deadweight costs (of tax accountants, for example) which can be avoided by a simpler tax system, you certainly end up with more investment, and may even end up with more tax revenue.

“And if there is no income a deemed rate of return on asset value should be applied instead and that should then be taxed instead.”

That’s interesting. The idea that even if you’ve not made any money you should still be taxed as if you have made some money.

Quite remarkable in fact. And yet not quite as remarkable as this:

“And their right to use domestic courts to enforce their claims on offshore wealth should also be denied to them.”

You want to entirely overturn the rule of law? Those who do something you dislike are not to have access to the courts or the law of the land?

Seriously? You seriously want to abolish equality before the law?

And yes, it is an important point. For example, suppose I (or the police) catch a mugger in the act. We’re allowed to use reasonable force to restrain him. We’re not allowed to beat seven kinds of snot out of him. For criminals, even criminals caught in the act, have human and civil rights just like anyone else. As do tax cheats have rights to their property.

Sure, HMRC might claim some part of that property. But it’s outrageous to suggest that non-payment to HMRC thus removes the protection of law. It’s akin…..no, actually it’s not akin, it’s the same as….declaring someone outlaw.

The rate of return on UK risk free assets – Index-Linked Gilts – is (according to the Financial Times which is supposed to know this stuff) *minus* 2.43%. So is Murphy proposing a tax refund on non-income bearing assets?
More significantly Murphy is advocating the abolition of national sovereignty – he is dictating to every country in the world (that his dictates including setting up a huge and expensive bureaucracy that provides no benefit to that country and in some cases would require more people than actually live there is secondary to his demand that everyone from Obama to Putin to Hu Jintao To Angela Merkel to Mugabe should bow down at his feet).

8. Churm Rincewind

This proposal falls at the first fence – “The first (requirement) is to demand automatic information exchange from all tax havens – so they have to disclose which people from another state have interests in bank accounts, companies, trusts and foundations in those places.”

Well, that might be nice, but tax havens (and many jurisdictions hotly dispute this description) are sovereign states with their own laws and taxation systems. Why on earth should they agree to any “demands” from the UK, any more than we would agree to any “demands” from them?

“Society has to expect its leaders to comply with the law.”

Fair enough.

“And their right to use domestic courts to enforce their claims on offshore wealth should also be denied to them.”

But they should not have access to the law.

You know I bet the TPA et al. must be delighted that to have R Murphy as their opponent.

And their right to use domestic courts to enforce their claims on offshore wealth should also be denied to them.

No.

The state is not infallible. If there is a dispute, fairness requires an independent party to hear both sides, look at the law, and make a decision.

Richard Carey @ 4

This analogy doesn’t really work, for one reason because tax is a form of robbery.

Yeah, but by that analogy then ‘rent’ is a form of robbery too. Tax isn’t something that is just taken from you for spite; it is the price you have to pay for living in a civilised society. This is rather typical of the type of shite that cunts like you come out with and, for me at least, comes across as a very stupid argument.

It may surprise you to learn but the entire First World did not just appear out of the blue at some point in the past and then we all moved in. We have steadily created it over Centuries. Every penny you have ever made has been done so because you have access to the First World and the Nations that nurtured it.

Try it. You hate civilasation so much, so why not leave? Show us how much money you and and the rest of you cunts could make by forsaking every access to the First World markets. Buy an island somewhere and trade apples and bananas with each other, hedge funding and venture capital yourselves back to the top of the economic tree.

@ JIm
Your fallacy is comparing contracts equally agreed by both sides under the rule of a mutually agreed law (many contracts agreed between foreigners from di8fferent countries define that arguments shall be settled under English Law) with taxation which is arbitrarily imposed by the government of the locality. Have you ever tried to negotiate a mutually agreed rate of income tax with HMRC or the Chancellor of the Exchequer? Rent is not robbery and *you* come across as very stupid when you try to compare the two.
I’m not agreeing with Richard Carey – just pointing out that you devalue your case when talking rubbish, like Murphy.
Murphy elsewhere defends his $32tn by assuming there are 2900 billionaires instead of Wikipedia’s estimate of 1210 and assuming that they hold most of their wealth offshore, which latter is more obviously nonsense. Most of the “old money” is in land which, ipso facto, cannot be offshore. HM was, until recently, not liable for tax by definition and has all, or virtually all, her assets in the UK; Charles owns estates in Cornwall and other areas which he is trying to use to promote his ideas on how to benefit tenants, the Duke of Westminster basically owns Mayfair, the Duke of Sutherland owns most of Sutherland, nearly all Skye is owned by the Chiefs of MacDonald and MacLeod, …
No-one can believe that any of this can be “off-shore” – only a scoundrel would try to fool us by claiming that most of it was.

13. Charlieman

@OP, Richard Murphy: “We should next be expecting them to suggest that the best way to beat burglars is to ban locks. The logic would be identical.

There is, of course, a much better logic, akin to reinforcing the locks.”

Richard Murphy picks a bad analogy with “locks”. The biggest theft prize is almost always behind the biggest “lock”. However there are smaller prizes behind less secure protection, which add up nicely. If you are incapable of robbing a bank, rob 20 or 200 rich houses.

The same principle applies to “black money” — which is a wider term to describe money that disappears from the balance sheet, from public inspection. Richard Murphy’s proposals imply that more black money parcels will be created; overall tax denial will remain the same but will delivered in more packages.

@10. ukliberty: Note also RM’s words that “They just have to realise it.”

Allegedly, they need to be helped by people whose advice may not be welcome or pertinent.

14. Charlieman

@OP, Richard Murphy: “Society has to expect its leaders to comply with the law.”

By RM’s definitions, the accused are not role models for “honesty” or openness with the tax man. It is up to him to establish whether they are “leaders”.

@ Jim

It may surprise you to learn but the entire First World did not just appear out of the blue at some point in the past and then we all moved in. We have steadily created it over Centuries

You’re right of course.

All our wealth and progress was due to the influence of governments. They took money from us in tax and rather than let us spend it in the profligate ways we would have done, they invested it wisely on our behalf in the name of progress. That’s how the first world was created.

At the moment they take about half of our money and all we need to do to make more progress is to give them more of it. Maybe all of it.

That’s right isn’t it?

16. Richard Carey

Jim,

It seems to annoy you that I point out the self-evident, albeit perhaps banal, fact that taxation is a form of robbery. Even if it is democratically-supported, its ethical status does not change. As such, my view is to seek its limitation across the board for rich and poor alike.

The fact that during our steady rise from a hungry state of nature to what we call civilisation we have constantly been plagued by violent men who claim to be our rulers does not prove that we are duty bound to hand over whatever and however much they choose to claim as tribute.

If it were the case that some general obligation is due from us to the government for services rendered, based on some kind of Hobbesian social contract ‘common good’ principle, held to be for society’s best, well, I am a component part of that society, and, like you, have an opinion as to how much I view to be reasonable to pay the state.

17. Charlieman

16. Richard Carey: “If it were the case that some general obligation is due from us to the government for services rendered, based on some kind of Hobbesian social contract ‘common good’ principle, held to be for society’s best, well, I am a component part of that society, and, like you, have an opinion as to how much I view to be reasonable to pay the state.”

Rousseau and Hobbes argue that there is a common good to be considered.

Richard Carey argues that Richard Carey needs to be considered.

My view is that Richard Carey over rates himself.

John77 @ 12

Rent is not robbery and *you* come across as very stupid when you try to compare the two.

Er, I said that Carey and the other fuckwits that trot out this nonsense might as well compare rent to robbery, because they imply that tax is ‘stolen’ from a person. Tax is legal and a condition of living, working or trading in this Country. Carey, Pagar et al imply that they should be allowed to enjoy the benefits of living here, but wish not to pay tax, because the Country is here anyway. So do squatters, they want to live in a house, just because it is there.

Carey, Pagar and other fuckwits @ all over the shop

Do you cunts have the common dency to read your our shite?

Do you live in the real World? When do we mutually negotiate any law? When did any of you cunts mutually agree not to murder, steal, rape anyone?

I own a car, I did not ‘mutually’ agree to take a driving test, I did not ‘mutually’ agree to submit my car to an MOT test, nor do I ‘negotiate’ to buy third Party insurance either, I do not agree to abstain from driving when pissed, they are the Pre conditions I undertake when I buy a car.

If I drive without insurance and the State remove my property from me, is that robbery? I am forced to buy insurance that I neither need or want by the State, is that robbery. What If I am fined for dangerous driving? Is that robbery? Or jailed for drink driving? Is that kidnap? What if my dog attacks a child and destroyed is that robbery by the State?

In fact, I did not consent to the copyright laws either, so I am I at liberty to sell dodgy CDs from a car boot? Nor have I consented to the theft laws, should I be allowed steal from ASDA?

You know what? None of sign a consent form to live in this Country, we are expected to abide by the laws, irrespective of whether or not we agree to them.

You you fucking parasites cannot abide by those laws, fuck off and live in a Country whose laws you can abide by, but I am betting you live in a Country that have strict, non negotiable laws.

@ Jim

Rent and taxation are not comparable.

Rent is a payment resulting from a voluntary contract between landlord and tenant.

Taxation is a levy imposed by the state on its citizens and is not a contract voluntarily entered into by both sides.

You can rail against this all you wish, using as much foul language as you want, but the above is true, and you cannot make it false. Nor is it reasonable to say that, by continuing to live in the state in which he is taxed, the citizen homologates the contract.

Anyway, to answer your multiple questions @18.

Do you cunts have the common dency to read your our shite? Sadly yes.

Do you live in the real World? Yes

When do we mutually negotiate any law? We don’t.

When did any of you cunts mutually agree not to murder, steal, rape anyone? We didn’t. But to do any of the above would run counter to our principles.

If I drive without insurance and the State remove my property from me, is that robbery? Yes

I am forced to buy insurance that I neither need or want by the State, is that robbery.Yes

What If I am fined for dangerous driving? Is that robbery? If you caused no harm to anyone else, then yes.

Or jailed for drink driving? Is that kidnap? Trickier. But if you caused no harm to anyone else, then, in my view, yes. I’m a consequentionalist.

What if my dog attacks a child and destroyed is that robbery by the State? Yes. Though that does not mean that you should not be held accountable for the actions of your dog.

In fact, I did not consent to the copyright laws either, so I am I at liberty to sell dodgy CDs from a car boot? Yes. Though some libertarians would disagree.

Nor have I consented to the theft laws, should I be allowed steal from ASDA? No

You know what? None of sign a consent form to live in this Country, we are expected to abide by the laws, irrespective of whether or not we agree to them. And that’s a pity. It would be nice if we were asked to do so.

You you fucking parasites cannot abide by those laws, fuck off and live in a Country whose laws you can abide by, but I am betting you live in a Country that have strict, non negotiable laws. You may be right. Libertarians are in favour of a strong rule of law based on the non-aggression axiom and on property rights.

A bit like the old English common law.

20. Chaise Guevara

@ pagar

“If I drive without insurance and the State remove my property from me, is that robbery? Yes

I am forced to buy insurance that I neither need or want by the State, is that robbery.Yes”

And what if I drive without insurance and end up crippling someone else, leaving them in pain and jobless and unable to compensate them. Is that theft?

“What If I am fined for dangerous driving? Is that robbery? If you caused no harm to anyone else, then yes.

Or jailed for drink driving? Is that kidnap? Trickier. But if you caused no harm to anyone else, then, in my view, yes. I’m a consequentionalist.”

The problem with this sort of consequentialism is that it does not take into account your intentions (when you partake in dangerous driving and drink driving you choose to put other road users in danger), and therefore essentially hangs or pardons people on luck.

There isn’t a moral difference between shooting at someone and missing and shooting at someone and hitting (assuming you aimed to hit), so personally I feel that attempted murder should be treated as murder. I’m guessing you think that attempted murdered should be legally ok?

20

Totally agree.

22. Richard Carey

@ Charlieman,

“My view is that Richard Carey over rates himself.”

I view myself as a common man, and demand no privilege.

@ Jim,

“None of sign a consent form to live in this Country, we are expected to abide by the laws, irrespective of whether or not we agree to them.”

Yes, we are taught to expect punishment if we break the laws as written. But we are allowed to argue about how those laws should be written, and we are certainly allowed to argue against particular taxes and taxes in general.

You will find that protest against taxes has been a thread running through political history. You will perhaps remember the Poll Tax protests in the late Thatcher era? The original Poll Tax was one of the sparks for the Peasants’ Revolt. The refusal of certain prominent Parliament Men to pay Charles I’s “Ship Money” tax was a key marker on the road to the Civil War.

23. Richard Carey

@ Chaise,

“I feel that attempted murder should be treated as murder.”

Yes, indeed.

But, regarding the drink-driver there is no intent to kill or injure. What there may be is a reckless disregard for the safety of others.

@ Chaise

The problem with this sort of consequentialism is that it does not take into account your intentions (when you partake in dangerous driving and drink driving you choose to put other road users in danger), and therefore essentially hangs or pardons people on luck.

Not driving in a fashion that might kill or injure others is a matter of personal responsibility and those who do so should be harshly dealt with. That does not necessarily mean compliance with an arbitrary speed or blood alcohol limit is mandatory.

There isn’t a moral difference between shooting at someone and missing and shooting at someone and hitting (assuming you aimed to hit), so personally I feel that attempted murder should be treated as murder.

I agree. Consequentialism should not apply where there is an intention to harm others.

“You want to entirely overturn the rule of law?”

…writes the man who called for a coup in Greece.

Pagar @ 19

Rent is a payment resulting from a voluntary contract between landlord and tenant.

Yes, but the Libertarian argument is that the taxpayer should be allowed to live in the State and reap the benefits of that State, without the obligation to contribute to that State. Strip away the shite and that position is no different to that of the squatter.

Nor is it reasonable to say that, by continuing to live in the state in which he is taxed, the citizen homologates the contract.

Why not? If he is not happy here then he is at liberty to leave and join any Country that will have him. So what is the problem?

Taxation is a levy imposed by the state on its citizens and is not a contract voluntarily entered into by both sides

The State lists everything that is taxed and and gives everybody a tax code. You can earn eight grand a year tax free in this Country. That puts you into the top 12% of the World population. Not even Gordon Brown forced you to earn more than the threshold. You chose (assuming you do) to earn more than eight grand a year and buy VAT rated goods as wel, via free will.

Are you suggesting that some Statist sneaked a couple of grand into your wage packet without your knowledge?

Nor have I consented to the theft laws, should I be allowed steal from ASDA? No

Why not? If you hold that the State has no right to expect us to adhere to any behaviour that we have not given an undertaking to observe, then the onus is for ASDA to make the decision to whether or not the wish to trade under those conditions. Currently ASDA open their doors and assume that we are all under an obligation, imposed via the State, not to steal.

Why? The State have not had explicit consent from us not to steal, so where do ASDA get the idea that we are expected to abide by their code of conduct?

Yes. Though that does not mean that you should not be held accountable for the actions of your dog.

Why? If I have not signed with an agreement to abide by a standard of behaviour with the State, then why should the State impose conditions on my dog?

Libertarians are in favour of a strong rule of law

Funny that, because you have implied that the State has no right to impose any law on us which we do not consent to. If a ‘tax’ levied on us without our explicit consent is the same as money taken from us from a barrel of a gun then it must be true of a fine or prison sentence imposed on us.

27. Richard Carey

@ Jim,

Do the above rules apply to all states, or is it only this British state, which can command our total obedience, in your view?

” the Libertarian argument is that the taxpayer should be allowed to live in the State and reap the benefits of that State, without the obligation to contribute to that State. ”

As il Duce used to say: Everything within, nothing outside, nothing against the lovin’ State.

Richard @27

Do the above rules apply to all states, or is it only this British state, which can command our total obedience, in your view?

You tell me. You and Pagar are the ones suggesting that Governments who attempt to impose laws on its citizens without their express consent are the moral equivalent of muggers. So, if it morally wrong to legally enforce a tax rate on people, why is right for the State to penalise ‘wrong’ behaviour, unless they explicitly consent to follow that law?

29. Richard Carey

@ Jim,

you’re dodging the question, probably because you realise you’re sounding a little unhinged.

“You and Pagar are the ones suggesting that Governments who attempt to impose laws on its citizens without their express consent are the moral equivalent of muggers.”

Substitute taxes for laws, and that reads a little better.

“if it morally wrong to legally enforce a tax rate on people, why is right for the State to penalise ‘wrong’ behaviour, unless they explicitly consent to follow that law?”

It isn’t right, unless that “wrong behaviour” has aggressed against another person (or their property). In this case, the state is only doing what the victim has a right to do himself. If the state fails to do this, it is failing in its most minimal justificatory role.

Your problem is you mix up society, the state, the rule of law and such things into one big blog, which you call the State. Then when someone objects to one part of the state, such as taxes, you shriek that the person is against society and the rule of law, but this doesn’t follow.

30. Chaise Guevara

@ 23 Richard

“But, regarding the drink-driver there is no intent to kill or injure. What there may be is a reckless disregard for the safety of others.”

I specifically said that the crime in drink-driving is that you’ve chosen to endanger others. Really not sure what your point is here.

31. Chaise Guevara

@ 24 pagar

“Not driving in a fashion that might kill or injure others is a matter of personal responsibility and those who do so should be harshly dealt with. That does not necessarily mean compliance with an arbitrary speed or blood alcohol limit is mandatory.”

So now you DO want to punish dangerous drivers even if they don’t cause damage? I agree there’s probably room for improvement RE speed and drinking limits. What I’m talking about is the general principle of punishing people for making choices that are dangerous to others, not letting most of those people off the hook and throwing the book at those whose dangerous choices, by chance, did indeed cause harm.

“I agree. Consequentialism should not apply where there is an intention to harm others.”

Cool. What about neglect, wanton disregard for the safety/wellbeing of others, that sort of thing?

Richard Carey: “tax is a form of robbery”

John77: “taxation which is arbitrarily imposed by the government of the locality”

But it’s imposed by democratic consent. I believe that’s what the age-old slogan “no taxation without representation” was about. If you think taxation in a democracy is “arbitrary”, that means either that you dispute that it’s a democracy (arguable, I suppose), or you don’t think a violation of property rights being democratic gives it any legitimacy.

Indeed that seems to be the case:

Richard Carey: “Even if it is democratically-supported, its ethical status does not change.”

I think you need to give some kind of explanation for that, rather than just asserting it.

Indeed, if taxation remains theft even if democratic, on grounds that it is a violation of property rights, then virtually any meaningful democratic decision is theft, because it impacts on the value of someone’s property.

For example, imagine a country without a police force or courts. Many private companies and individuals would without doubt soon start providing security and investigating crimes on a commercial basis, for those able to pay. In the absence of courts, religious and secular groups would start providing arbitration of contractual disputes, and perhaps even the imprisonment of those found guilty.

Now, if a democratic government decided to provide courts and police, funded by taxation, it would obviously have to close them down first. Even if it didn’t, they would outcompete them with state aid. That would devalue their property, and from their point of view would be a heinous infringement of their property rights. If property rights always trump democracy, I assume this must be illegitimate and wrong.

But if, instead, a tremendously wealthy warlord bought out every private court and police force in town – effectively becoming an unelected King, able to influence decisions as he saw fit – no property rights would be violated, and it would all be legitimate and good.

Not sure I can subscribe to that idea.

Wow – the libertarians didn’t come off at all well in this argument.

Again.

@ jungle

If you think taxation in a democracy is “arbitrary”, that means either that you dispute that it’s a democracy (arguable, I suppose), or you don’t think a violation of property rights being democratic gives it any legitimacy.

It’s the latter.

35. Thornavis

Ben M

On the contrary the libertarians are making perfect sense it’s just that it is very, very hard for collectivists to comprehend.

36. Chaise Guevara

@ 35 Thornavis

What’s a collectivist by your definition? Because I’m fairly statist, if that’s what you mean, pro-NHS and so forth, and I believe I understand the libertarian argument fully. I simply disagree with it.

I actually have quite a lot of respect for libertarians because, unlike a lot of people, their policy is actually coherent and is based on what I see as positive ideals. I just a) disagree with them on certain moral assumptions that are essential to the philosophy, and b) think they tend to rationalise away problems with their model. That’s hardly unique to libertarians, of course, everyone does it, but it is more common among people who have one solution for every problem in the world, for reasons I hope are obvious.

37. Richard Carey

@ Jungle,

“But it’s imposed by democratic consent.”

Leaving aside taxation for the general point, are you suggesting that something that is wrong ceases to be so, when a majority supports it?

Government must be limited. This is just as important, if not more important, when it is a democratic government. Also there is the question of where the government gets its legitimacy. If it comes from the people, rather than from God Almighty, as the kings used to claim, then it follows that the people cannot give over powers which they do not possess themselves. Whereas I have a right to protect myself from violent aggression, I do not have a right to aggress violently against other people. Therefore, the government, insofar as it is acting on my behalf, can legitimately take action to protect and defend my person and property, but it cannot legitimately steal and murder – even when it is supported by a majority.

However, the state does do many things which are illegitimate, and would be considered criminal, if the state had not exempted itself from the laws which govern the rest of us, and there is no clear black and white division between ‘bad governments’ and ‘good governments’. Even if you accept the British government is legitimate democratically (once strained through our electoral system), it has done in the past and still does today things which are very morally dubious to say the least, which we’re often not even allowed to know about. Surely you don’t think it wise to permit the state carte blanche to do whatever it wants?

The state is the power of coercion. Transactions which take place under coercion, i.e., threat of violence have nothing to do with mutually beneficial exchange between free people. It may well be that the state is, as Thomas Paine wrote, a necessary evil, or as Ludwig von Mises had it, a positive good, but it is a power which will be abused, if given half the chance. Although our own government may seem innocuous enough, you can easily cast your eye further afield and find that the distinctions between government, warlords and gangsters can become very blurred.

Richard @ 29

Substitute taxes for laws, and that reads a little better.

But it amount to the same thing. Taxes are levied via Acts of Parliament and specific laws.

It isn’t right, unless that “wrong behaviour” has aggressed against another person (or their property).

But, on whose authority does the State get to impose those laws on people who have not consented to be subjected to those Laws?

You have asserted that the Government has no moral right to impose laws that enforce taxation on people who have not chosen to accept those conditions. The logical extension of that must be that Government has no moral right to impose any law on people unwilling to have a law they do not agree with foisted upon them.

If the state fails to do this, it is failing in its most minimal justificatory role.

No way do you get to sneak out the back door with that little quip. All of a sudden the man who on Saturday morning asserted that taxation laws where still robbery no matter the democratic nature of the law now wants the State to impose laws that govern behaviour on people who clearly, by their actions, do not consent to those laws. All of a sudden, when it suits you DEMAND that the State forces people to live by the rules of State. Yeah, okay, you get to pick and choose the rules you want, and ignore the rest, but the rest of us must live by the rules set out?

Then when someone objects to one part of the state, such as taxes,

I have no problem with people objecting to taxation, I have a problem with people attempting to describe taxation as ‘robbery’ when clearly it isn’t. I also object to people who assert that taxation is slavery. Both ideas a fucking bonkers and so are the people who make such claims.

you shriek that the person is against society and the rule of law, but this doesn’t follow

You are asserting that the rule of law does not apply if the person who the law is applied to has not consented to the imposition of that law. Clearly such imposition is the building block of the rule of law and, by extention, society.

How can either exist without the State having the ability to punish or sanction those who flout the law?

39. Richard Carey

@ Jim,

” I have a problem with people attempting to describe taxation as ‘robbery’ when clearly it isn’t.”

Really? Give me a definition of robbery, and I’ll show you the connection.

” All of a sudden, when it suits you DEMAND that the State forces people to live by the rules of State.”

No. I said that if the state didn’t protect and defend persons and property, it would be failing to deliver one of the most vaunted justifications for its existence. In any case, why would a libertarian demand that the state forces people to live by ‘the rules of State’?

“You are asserting that the rule of law does not apply if the person who the law is applied to has not consented to the imposition of that law.”

I have asserted no such thing. I pay taxes. It seems I do it less joyfully than you. Nonetheless I pay them. The tax laws apply irrespective of my consent. Also, I must point out that ‘the rule of law’ is not a mere synonym of ‘whatever the government orders’.

“Clearly such imposition is the building block of the rule of law and, by extension, society.”

Is that a quote from Hegel? For me, society pre-exists the state, both theoretically and historically.

@ Jim

I live in a small street of five houses.

My neighbour, citizen A approaches me and says he wants to send his daughter to university, but cannot afford it. He asks me to give him the money.

I explain I have recently lost my job and have no money to spare however he also approaches my other neighbours, citizens B,C and D for the money and they agree to help him by sharing the cost.

Citizen A points out that I am not contributing and they all get together and vote that I should do so. Armed with this democratic mandate, they send someone round to my house who tries to extract the payment from me, then throws me in jail when I am unable to pay.

Are you saying the actions of my neighbours are ethically defensible?

It’s a bit sad that discussion devolves into libertarianism when the opening post is such a strange piece.

Yes, I know there are people and organisations who want to collect a lot more tax. But that they are openly declaring that rule of law should be put down, and some kind of tax tsars (who are above courts and any laws, with subjects having no right to challenge decisions in courts) should have the final word about taxation… it’s really strange that a site which has “liberal” in its name is prepared to publish such drivel.

“The way to dealing with tax evasion is not cutting taxes”

Is that why Hong Kong has such a small amount of tax evasion with their 15% flat tax rate?

Murphy time to move to North Korea, you clearly hold severe contempt for anything capable of earning a living.

43. Chaise Guevara

@ 42 Freeman

“Is that why Hong Kong has such a small amount of tax evasion with their 15% flat tax rate?”

This somewhat ignores the whole point of preventing tax evasion.

@43. Chaise Guevara

No it proves the whole point. Murphy made the statement that cutting taxes does not get rid of tax evation…it does.

Lets not mislead ourselves, we are never going to get rid of tax evation completely. The question is how we reduce it as far as possible. The point I am making is that tax evation in Hong Kong is almost non existent. They have a flat tax rate of 15% with deductions for charitable contribution and a few provisions for if you are looking after a dependent. Tax evation is almost non existent because it is not worth evading the tax. The rate is so low that it is easier to simply pay it.

So what I am saying is “yes, cutting taxes has cut evation. Hong Kong has showed that”

45. Robin Levett

@Freeman #42:

Is that why Hong Kong has such a small amount of tax evasion with their 15% flat tax rate?

I have no idea what amount of tax evasion they have – but they don’t have a flat income tax, of 15% or anything else:

The key features of Hong Kong’s salary tax are as follows:

• Individuals are taxed at progressive rates on their net chargeable income (i.e. assessable income after deductions and allowances) starting at 2% and ending at 17%; or at a standard rate of 15% on net income (i.e. income after deductions), whichever is lower.

http://www.guidemehongkong.com/taxation/personal-tax/hong-kong-salaries-personal-tax-guide

@the various libertarians commenting on this thread:

You all seem to agree that:

Libertarians are in favour of a strong rule of law based on the non-aggression axiom and on property rights.

Yet none of you agree that the state has any moral entitlement to recover the costs from the population generally. Why?

46. Chaise Guevara

@ Freeman

“No it proves the whole point. Murphy made the statement that cutting taxes does not get rid of tax evation”

Where? As far as I can tell you’re arguing with a straw man.

His burglar analogy is apt. You could cut crime rates to zero by decriminalising everything, but that would hardly be a victory over crime, because we have a problem with criminal behaviour for reasons other than the fact that it is currently illegal.

Similarly, you would no doubt reduce tax evasion by reducing tax, because you’d lower the incentive to cheat. But at that point you’ve thrown the baby out with the bathwater by missing the fact that the underlying reason for wanting to deal with tax evasion is that you want the wealthy to make a larger contribution to society. Reducing tax evasion is a means to that end, not an end in itself.

Basically I think you don’t want to engage with the issue so instead you’re pretending it’s a different issue altogether.

@45. Robin Levett

Their system of income tax is one of the flattest of any country. You also have to not only look at the rates, but also the thresholds under those rates. The GDP in Hong Kong is quite high, with the majority of people falling into the 15% band. The people paying the very low rates (2-10%) are also the exceptions rather than the rule and only apply to a very small number of exceptions. It also considered to be ‘flat’ because the variation between top and bottom is just 15% (again the tax rate mean is almost exclusively collected around the 15% mark), where as in a country like the UK the variation is over 30%. So to avoid spitting hairs, it is not ‘perfectly’ flat, but nevertheless very flat in its application.

In response to your next point of libertarians commenting.

“Libertarians are in favour of a strong rule of law based on the non-aggression axiom and on property rights.”

Yes that is broadly correct.

“Yet none of you agree that the state has any moral entitlement to recover the costs from the population generally. Why?”

This question misses the point that is being made. It is incorrect to assume that I am an anarchist. We need government. The question is what role should this government should take. Your statement questioning whether the state has a moral entitlement to recover costs has to be dealt with in stages.

Firstly, this assumes that the state should be permitted to set spending at whatever rate it sees fit and then collect taxes to fill that gap.

Secondly, it brings into the question the ‘morals’ of taking from one person (by threat of imprisonment) money which it has not earnt. Now that is not to say public services are free, but it again begs the question of what public services should be provided. It would again be an error to think that Libertarians want government services for free. The question is actually “how” should these services be paid for. Certainly there are some services where the market would fail to provide to an efficient degree, no Libertarian is denying this. National defence is one such example. You could not reasonably have a private army. Only despot African nations have those and they are called mercenaries. It also doesn’t suppose that there should be a private police force, or a private courts system. These are the key areas that clearly a private sector would struggle to provide privately in an adequate manner. However, what this comes down to is as follows, and is a choice. Would you prefer to have the government take away a big chunk of your wage, allocate it inefficiently (as govt. seem famous for doing), and then hand it back to you in the form of a benefit (say healthcare). Under such a system you give the government your money. They, using a small bredth of knowledge, apply a uniform policy to the whole country or at least whole regions, and then dictate to you were you may seek care, even if the hospital in the area is known to be bad. The alternative is that you don’t have public health. You have private health that has to compete for patients and in doing so they provide good quality healthcare to attract patients. So instead of the government taking the taxation, they let you keep it and you can then choose which health insurance you would like to take out, from which company, and choose which hospital you want to be seen by. It is, as I said, factor of choice. Switzerland implemented just such a healthcare system and it has produced one of the highest quality healthcare systems in the world.

So is there a ‘moral entitlement’ to citizens hard earned money? no not really, and only if you accept that having a super state is the only way to run a country. By using a market with millions of people as opposed to Whitehall with a select few, you can take advantage of the every varying knowledge of many to take account of the needs of specific people, not have a one size fits all approach by the government which assumes that we are all the same.

@46. Chaise Guevara

Err. The title of the article is even called “The way to dealing with tax evasion is not cutting taxes”.

The lowering of taxes has nothing to do with decriminalising tax evasion. I would have thought it obvious that you can have a low tax rate and still have tax evasion as a crime. They are two distinct issues.

You seem to jump to the conclusion that the wealthy should pay more, and even under a flat tax system they will pay more, because they earn more, but if you see the comment I made above @47 this is not only a question of evasion, it is also a question of what tax rate is appropriate to take away the incentive to commit crime as well as provide the services necessary.

“Basically I think you don’t want to engage with the issue so instead you’re pretending it’s a different issue altogether.”

Not at all. The statement Murphy was making was tax evasion will not be reduced through lower taxes. The problem I have with the statements Murphy makes, is that he has a blind hatred of anyone who earns any decent sort of money, no matter how above board it has been done. Where this jealous rage seems to have come from I am not sure, but what he advocates is precisely what Hayek warned against in the road to serfdom, worth a read if you have not already (I suspect you havn’t given your view points). Murphy supports an approach that will lead to the very thing he despises (unless he really does want to live under totalitarian rule)

@ jungle
I was making no value judgement about taxes or democracies. I was merely stating a fact. Taxes are imposed arbitrarily. This happens whether or not the government is elected. If a government tried to negotiate a mutually agreed tax with each citizen it would either end up by charging umpteen different rates of tax or admit failure because different citizens would have different sticking points.

50. gastro george

Is it only me, or is there anybody else who wishes these idiots would emigrate to some desert island where they could run their economy bartering coconuts like their economic gurus like to imagine.

51. Chaise Guevara

@ Freeman

“Err. The title of the article is even called “The way to dealing with tax evasion is not cutting taxes”. ”

Ah. You may not be aware of this, but Sunny usually decides the title of articles and frequently gets them wrong, misrepresenting the piece. I wouldn’t base your criticism of Murphy on how you interpret a title he probably didn’t write. Also, see my final comment in this post.

“The lowering of taxes has nothing to do with decriminalising tax evasion. I would have thought it obvious that you can have a low tax rate and still have tax evasion as a crime. They are two distinct issues. ”

It is indeed obvious, who said otherwise? I drew an *analogy* with the concept of decriminalising all crime. That is not the same as saying that you want to decriminalise tax evasion.

“You seem to jump to the conclusion that the wealthy should pay more, and even under a flat tax system they will pay more, because they earn more, but if you see the comment I made above @47 this is not only a question of evasion, it is also a question of what tax rate is appropriate to take away the incentive to commit crime as well as provide the services necessary.”

I’m not sure why I’m being accused of “jumping” to a conclusion that I’ve held and developed over many years – believe it or not, this conversation isn’t the first time the question of whether the wealthy should pay extra has been presented to me.

I would say we are still low on services. And taking away the incentive to commit crime is not the only possible reaction to tax evasion and not even the most obvious one: indeed that’s the whole point of the OP and the theme of my conversation with you.

“Not at all. The statement Murphy was making was tax evasion will not be reduced through lower taxes. ”

I already asked you to point to where he said that. You have not done so. Even if the title were written by him, it’s far too ambiguous for you to confidently get “lower taxes will not reduce evasion” out of it. I read it as “cutting taxes is not the best response to tax evasion”, which has the added bonus of actually being relevant to the article.

So you need to back up this accusation if you’re going to keep making it.

“And taking away the incentive to commit crime is not the only possible reaction to tax evasion”

It isn’t. However, what we’re talking about is not tax evasion. Where you can prove tax evasion, you can already also put people in jail and try to recover funds. That is good.

But what we’re talking about is “tax gap”, which is about deliberately confusing people to believe that there’s money to be made by giving arbitrary powers to officials who would not be accountable to laws, parliaments and courts. By taxing income that didn’t exist in the first place, by taxing income that was already taxed in another country, and so on and so on. That is not good.

53. Chaise Guevara

@ 52 pjt

“It isn’t. However, what we’re talking about is not tax evasion.”

You’re quite right. I unconsciously followed Freeman’s lead in calling it evasion, but this is avoidance. Which is subjective obviously.

“But what we’re talking about is “tax gap”, which is about deliberately confusing people to believe that there’s money to be made by giving arbitrary powers to officials who would not be accountable to laws, parliaments and courts. By taxing income that didn’t exist in the first place, by taxing income that was already taxed in another country, and so on and so on. That is not good.”

I’m pretty sure this is just you listing all the negative stuff associated with dealing with the tax gap. Because there are also positive possibilities like closing off loopholes that allow richer people to minimise their tax outgoings.

54. Robin Levett

@Freeman #77:

Then for you at least, taxation is not per se theft? You therefore differ from all the other libertarians on this thread.

55. Richard Carey

@ Robin,

there’s no big difference between the libertarians hereabouts as far as I can see.

For those of you struggling with the taxation is robbery, here’s a useful representation:

http://files.libertyfund.org/img/2371/Gillray_BullForcedLoan1796_1536.jpg

56. Robin Levett

@Richard Carey #55:

Well, Freeman at least seems to concede that taxation isn’t in and of itself robbery; that seems to make him very different from the rest of the freeloaders on the thread.

57. gastro george

That jpg kind of sums it up – still living in the 17th century.

Maybe my idea of a desert island was wrong. How about Somalia? Not much government or taxation there.

Richard @ 39

Really? Give me a definition of robbery, and I’ll show you the connection.

The threat or actual use of violence, breaking into property, removing property without the knowledge of the owner.

When muggers start issuing forms and use the law to recover money, give me shout.

Pager @ 40

Your neighbours? Are they the Government or just a few people in the street without the ability to actually pass laws or raise taxes?

59. Richard Carey

@ Robin,

a strange comment. Free loader? How do you work that out? Do you think that proclaiming taxation to be robbery works as a magic charm on the taxman, allowing me an exemption? I pay my taxes. I have little choice. That’s the point which is made by calling taxation robbery. This doesn’t mean that it can be got rid of easily, but it does mean that less is better than more. I would rather have a strong society than a strong state, the latter being harmful to the former.

Libertarians do not argue that there should be no schools, hospitals, roads etc., You know this. The question is; how they are paid for? Surely it’s logically conceivable that It doesn’t have to be via the government taking in our money and passing it out again. This is how food and clothing still operates, and these are even more essential to the three things above.

60. Richard Carey

@ Jim,

“The threat or actual use of violence, breaking into property, removing property without the knowledge of the owner.”

Without the consent of the owner.

What do you think happens, if not exactly the above, if you don’t pay your taxes?

61. Richard Carey

@ Gastro,

I’ll do you a deal: I’ll move to Somalia if you move to North Korea.

And that picture was from 1796, you fool, not the 17th century.

The Government instantly puts sawn off shotgun in your mouth a threatens to blow your brains out unless you empty your pockets…

..either that or they attempt to recover the money, via the courts, which amounts to the same thing.

63. Charlieman

I can cope with trying to follow Freeman’s arguments more than those of his fellow libertarians. He appears to agree that the state should be the agency of policing, courts and national defence funded by tax. Freeman accepts that tax will be raised on the basis of wealth and income.

Freeman doesn’t think that the state should raise tax for education, health care, social services, employment insurance etc. Apparently, these should be personal responsibilities as well as provision choices (ie the ability to determine who delivers them). Quite how potential recipients of health care etc pay is undefined. Even when people pay more sensible tax (regard LibDem tax reforms as a starting point), most will still be unable to buy them. Wealth redistribution via taxation is part of the contract for a civil society.

One particular argument is sensible: the state is not very good at determining which provider of heath care or education is good in general or good for an individual. This argument becomes an umbrella for selfishness, that poor delivery justifies opting out. Lots of us cringe when public services are eulogised; the reality is that some are extraordinarily good, some are extraordinarily bad, most of them in between; thus sensible people argue the case for better and smarter public services, or different ways of doing things. Libertarians always overlook the fact that liberals, too, are dissatisfied by old fashioned state provision.

Libertarianism is a semi-rational argument for selfishness with a semi-detatched relationship with liberalism. Libertarianism — the version that bloggers present, at least — is opportunistic (cf association with authoritarians in the Tea Party movement) and incoherent.

64. Charlieman

@61. Richard Carey: “And that picture was from 1796, you fool, not the 17th century.”

I wish that I was so omniscient.

65. Richard Carey

@ Charlieman,

“One particular argument is sensible: the state is not very good at determining which provider of heath care or education is good in general or good for an individual.”

And yet you still reject the logical deduction that perhaps the state should not be in charge of things they are not very good at?

“some [state run services] are extraordinarily good, some are extraordinarily bad, most of them in between; thus sensible people argue the case for better and smarter public services, or different ways of doing things.

That’s what sensible people do, is it? Argue for different ways of doing things? But not too different, eh?

66. Charlieman

@59. Richard Carey: “I would rather have a strong society than a strong state, the latter being harmful to the former.”

Harm the state? Society should control and manage the state.

The UK poll tax riots kicked off twenty years ago because the state imposed an unreasonable tax (disproportionate to income, civil liberties questions about address registration). The riots followed a series of non-violent campaigns that made it very clear, to all but a few people, that the poll tax was unacceptable. The poll tax campaign is a fine example of why politicians have to listen to citizens, allowing society to manage the state.

I think that we have a strong society in the UK and that it demonstrates its strength when it matters. UKID was shot down in pieces. When most civil liberties questions get a sensible hearing, strong society is usually liberal.

Perhaps the strong society that libertarians seek is something different.

67. Richard Carey

@ Jim,

“The Government instantly puts sawn off shotgun in your mouth a threatens to blow your brains out unless you empty your pockets”

That’s rather phallic. Was it intentional?

68. Charlieman

@65. Richard Carey:

Me, Charlieman: “One particular argument is sensible: the state is not very good at determining which provider of heath care or education is good in general or good for an individual.”

Richard Carey: “And yet you still reject the logical deduction that perhaps the state should not be in charge of things they are not very good at?”

Err, no I did not make that argument. I am happy to debate any policy about who provides services. Ditto about whether the state holds/controls the pot of money or whether it is in escrow on behalf of citizens.

69. gastro george

I’m kind of waiting to hear on the news that picket fences have been erected in some obscure part of East Cheam to keep HMRC at bay. I’ve never seen so many tin foil hats for a while.

It also seems odd to have such a long thread arguing over money which is, after all, issued by the government and, as a fiat currency, is rather regarded as worthless by libertarians.

But maybe they’re also concerned about their “precious things”.

70. Richard Carey

@ Charlieman,

“Perhaps the strong society that libertarians seek is something different.”

Libertarians are obviously happy when ID cards and other such pernicious things are defeated, as you well know. To the extent that society is liberal, libertarians, being thoroughly liberal themselves, are content.

@53: Because there are also positive possibilities like closing off loopholes that allow richer people to minimise their tax outgoings.

Sure. That is also good, in principle. However, trying to make more legislation to close loopholes generally tends to bring in the need to give more exemptions for good purposes because everyone sees that otherwise the new, tighter law works against some good purposes. In the end, the result is a complex tax law with more and more loopholes. This is what the U.S. has reached, for instance: decades after decades of policy guidance by making the tax system so complex that clever lawyers can find more and more loopholes. The rich pay little tax.

Making the tax law more complex doesn’t help. The Mr. Hollande is about to find that out in France. Napoleon said that a Constitution should be short and obscure. “Tax justice” activists seem to want to make tax law that is long and arbitrary. That is not good at all.

72. Robin Levett

@Richard Carey #59:

Free loader? How do you work that out?

You are happy, indeed eager, for the state to provide the rule of law, but would, given the choice, deny it financing – if taxation is wrong in and of itself, then it is wrong as a means of financing the rule of law just as much as anything else.

If what you mean is simply either that the state should not be providing a given service, or that taxation is not the best means of financing that service, then say so, spare us the “point of a gun” drama, and argue that point.

The fact that you currently pay tax is neither here nor there.

73. gastro george

@72

I’ll quit my trolling and get a bit more serious.

What is being proposed is that everybody should accept a state that is only concerned to preserve existing property rights – i.e. that it should maintain the rich in their prosperity. This is more or less a reinstatement of a feudal state.

Unsurprisingly, those who are considerably worse off, largely through no fault of their own, consider that their and their children’s future welfare and prospects would be improved by a redistribution of that wealth. This is called democracy, not robbery.

74. Chaise Guevara

@ 71 pjt

Thing is, you seem to be taking the argument that complexity = bad and using it as a way of dismissing any potential suggested changes. This disregards two things:

1) Changes – including “progressive” ones – could involve simplifying the law, not complicating it. It might even be that tax law as written could be overhauled entirely, thus simplifying it: much of that complexity is probably down to clauses cancelling a previous clause that clarified a previous clause that cancelled a previous clause etc… probably replacable with a single clause.

2) Even where changes do add complexity, their upsides may more than make up for it.

““Tax justice” activists seem to want to make tax law that is long and arbitrary. ”

They don’t want longness for its own sake. See above.

As for “arbitrary”, it’s not exactly evenly set up now. And the only case where I can think of reformists actively pushing for arbitrarity is where they say we should “punish” industries that have angered the country through retroactive punitive taxation, which I agree is unreasonable.

75. Richard Carey

@ Robin,

“The fact that you currently pay tax is neither here nor there.”

What? The fact that I am demonstrably not a free-loader is not relevant to your ad hom accusation that I am a free-loader? I think you’re playing Humpty Dumpty there.

“You are happy, indeed eager, for the state to provide the rule of law”

I certainly believe in the rule of law, but I’ve not said the above, for one reason because the rule of law is not something which the state should be providing, but rather something the state should be subject to.

“if taxation is wrong in and of itself, then it is wrong as a means of financing the rule of law just as much as anything else”

Indeed, but if it is not intrinsically wrong, there may still be limits beyond which taxation becomes wrong, wouldn’t you say? If you accept that point, then you will realise that some means will be required for judging the rectitude of any particular government levy, and you will need to consider how to make the tax system just and fair and equitable. Good luck with that.

Meanwhile I work from the basis that it cannot be made just or equitable, because it is essentially arbitrary and imposed by force, and therefore the best thing is to try to limit it as much as possible for everyone, rich and poor alike.

“spare us the “point of a gun” drama”

I think you’ll find it was Jim @ 62 who introduced shotgun fellatio into the discussion.

76. Richard Carey

@ Gastro,

“I’ll quit my trolling and get a bit more serious”

Stick to trolling, George. Know your limits.

Thing is, you seem to be taking the argument that complexity = bad and using it as a way of dismissing any potential suggested changes.

Not “any” changes. But those proposed by OP are of the kind that makes law worse.

The tendency is that laws become more and more complex all the time. Everywhere, in all countries. It is becoming more and more difficult to even know and understand the law, and if you want to obey the law (and thus avoid becoming the target of such arbitrary measures that Murphy proposes) it is getting more and more difficult.

Sometimes the general tendency is reversed, law is made simpler, tax rates are made lower, and tax revenue may still go up – as in the instance I mentioned. So I am not dismissing such potential changes. But I wouldn’t trust a penny to Murphy.

Well what a debate this has spawned. I feel I should respond to some of the comments though.

1) Taxation and the ‘theft’ argument – This is difficult. It is very easy to simply say that morally, ethically, and legally the Whitehall elites should not be allowed to take off you what their little whims desire so that they may pay for projects and plans that often don’t work. However, I would not define this as ‘theft’ simply because this has been passed by legislation and is therefore technically not theft. However, that doesn’t consider the issue in great enough detail. This issue is not simply whether something is theft, but whether someone should be given the power to arbitrarily introduce taxation (which they have done without vote or consideration). It was Adam Smith who famously said:

“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”

It is of course this premise that determines what I believe. I do not think that a select few with their comparatively narrow pool of knowledge (a couple hundred MP’s and Lords) can centrally manage a country that could very well take account of the localised knowledge of millions (the citizens) to act in their interests according to their needs. How do we therefore provide people with this option of empowerment? It is through their capital. Money is no more than a representation of labour. It signifies ones ability to access labour, whether your own or another’s, and the choice of what is best for you is best decided by you, not by a politician with a vote winning agenda. It is therefore not that I would call this ‘theft’ (because it technically isn’t), but I think lowering it simply to that question is to miss most of the point.

2) The rule of law – There is no mystical meaning to this. It is a basic premise that should be protected. It simply means that the rules by which people play should be known in advance and not set arbitrarily. All peoples are subject to those rules and we therefore have a clear and predictable way with which to determine disputes. That is why I rage against retrospective law making. It is an attack on this principle that operates to protect us all, and smacks of dictatorial style politics.

3) @63 Charlieman

“Quite how potential recipients of health care etc pay is undefined.”

I did define how it was to be paid though. Switzerland has the precise system I described. You already pay for healthcare through your taxes. The NHS isn’t free. You pay for it every month with every pay check. The point I was making is take that decision away from the government, pay that money instead into a private scheme (like insurance) and then have the choice as to where and how you are treated.

4) @73 gastro george

“Unsurprisingly, those who are considerably worse off, largely through no fault of their own, consider that their and their children’s future welfare and prospects would be improved by a redistribution of that wealth. This is called democracy, not robbery.”

Two issues. Firstly, you assume that by the government seizing wealth from one to give to another it will in fact raise the living standards of the poorer, but the exact opposite is almost always true in reality, and that assumption is not based on facts. The seizure of one persons property to give to another has always lowered the standard for everyone, not raised it. I hardly needs to point out obvious historical examples. Secondly, your statement that someone’s want of a redistributive system is the rule of democracy is not following logic. What you suppose in that statement is that somehow the want of the poorer person is more important than the want of a richer person. It would also be unwise to believe that because something has a majority rule that the power cannot be exercised in an arbitrary way. It is rather the limitation of power, rather than the source that stops it being arbitrary.

5) What makes me believe that a governments power should be reduced is that I do not believe that a politician is any ‘purer’ than any of us. They are as corruptible as any doctor, banker, lawyer, garbage collector, or call center worker. Yet it seems that large sections of the left, and in many cases the right are happy to hand over ever increasing amounts of power to these people on the basis that they believe it is for the good of all of us. Consider for a moment that the rise of the totalitarian systems were born out of providing the state with ever increasing power. It is a slippery slope that we as citizens lose control of. The national socialist nazi party, the Maoist communist party, Stalinism. These all came from far more mundane principles that pushed the idea that an economy, with all its complexities and follies, could be centrally planned for.

79. Charlieman

@78. Freeman: “I did define how it was to be paid though. Switzerland has the precise system I described. You already pay for healthcare through your taxes. The NHS isn’t free. You pay for it every month with every pay check. The point I was making is take that decision away from the government, pay that money instead into a private scheme (like insurance) and then have the choice as to where and how you are treated.”

Are you sure about your argument? Choice provision is a good thing and is not uniquely a Libertarian argument. The ability to choose who provides health care or education is sought by lefty liberals in many parties.

However, many people who use the NHS haven’t paid for it; they never earned enough to pay that much tax. Their ability to use the NHS is a result of redistributive taxation.

80. Richard Carey

@Charlieman

“Their ability to use the NHS is a result of redistributive taxation.”

No, of government expenditure, only partly funded by tax, a lot is borrowed. All tax is redistributive, btw, so above is tautological.

81. gastro george

@76

Tin foil warriors, masters of their own bedroom. Man the barricades, because the unwashed hordes desire your precious things.

@78
“Firstly, you assume that by the government seizing wealth from one to give to another it will in fact raise the living standards of the poorer, but the exact opposite is almost always true in reality …”

Evidence?

“What you suppose in that statement is that somehow the want of the poorer person is more important than the want of a richer person.”

My heart bleeds for the wants of rich people, for they only have their wealth to console them.

@81. gastro george

“Evidence?”

Certainly. Maoist China, Stalinism starting as Leninism, North Korea, Swaziland, Vietnam, Lao, Angola, Czech Rep to name a few. In particular however the rise of the national socialist nazi movement in the 30’s.

“My heart bleeds for the wants of rich people, for they only have their wealth to console them.”

Inane comment that proves nothing except little considered thought goes into your thinking.

83. Robin Levett

@Richard Carey #75:

“The fact that you currently pay tax is neither here nor there.”

What? The fact that I am demonstrably not a free-loader is not relevant to your ad hom accusation that I am a free-loader? I think you’re playing Humpty Dumpty there.

Context is so important in these discussions.

Can we introduce into the discussion the concept of someone who wants something for nothing, if he can get away with it (whom for want of a better term we’ll call a freeloader) but who cannot get away with it?

“You are happy, indeed eager, for the state to provide the rule of law”

I certainly believe in the rule of law, but I’ve not said the above, for one reason because the rule of law is not something which the state should be providing, but rather something the state should be subject to.

Another unusual libertarian! The standard libertarian position is that provision of a legal system and the rule of law is one of the few proper functions of the state. So you don’t think that is a proper function of the state? Then what agency do you propose performs that function?

By the way; the ideas that the state provides the legal system and the rule of law, and that the state is subject to the rule of law, are not inconsistent.

“if taxation is wrong in and of itself, then it is wrong as a means of financing the rule of law just as much as anything else”

Indeed, but if it is not intrinsically wrong, there may still be limits beyond which taxation becomes wrong, wouldn’t you say?

Remember libertarians are talking about wrong as a moral concept here; that’s why they make the claim that taxation is robbery. No, I don’t agree that there is some fixed point beyond which taxation is “wrong”. That is why, in the part of my post most of which you have failed to quote, I said:

If what you mean is simply either that the state should not be providing a given service, or that taxation is not the best means of financing that service, then say so, spare us the “point of a gun” drama, and argue that point.

If you accept that point, then you will realise that some means will be required for judging the rectitude of any particular government levy, and you will need to consider how to make the tax system just and fair and equitable. Good luck with that.

Meanwhile I work from the basis that it cannot be made just or equitable, because it is essentially arbitrary and imposed by force, and therefore the best thing is to try to limit it as much as possible for everyone, rich and poor alike.

If you start from the premises (i) that taxation is “essentially arbitrary”, and (ii) that the fact that others will freeload and refuse to make a contribution to the common weal so that enforcement is required means that it is “imposed by force”, then you might reach that conclusion. Others might suggest that the mere assertions that taxation is arbitrary, and that freeloading is a legitimate position to take, are not sufficient without more reasoned argument.

“spare us the “point of a gun” drama”

I think you’ll find it was Jim @ 62 who introduced shotgun fellatio into the discussion.

He was the first one who actually used the word “gun” (at #26 BTW) I’ll concede. That doesn’t stop the “taxation is robbery” rhetoric being “point of a gun” drama.

84. Robin Levett

@Freeman #78:

1) Taxation and the ‘theft’ argument – This is difficult. It is very easy to simply say that morally, ethically, and legally the Whitehall elites should not be allowed to take off you what their little whims desire so that they may pay for projects and plans that often don’t work. However, I would not define this as ‘theft’ simply because this has been passed by legislation and is therefore technically not theft. However, that doesn’t consider the issue in great enough detail. This issue is not simply whether something is theft, but whether someone should be given the power to arbitrarily introduce taxation (which they have done without vote or consideration).

I would largely agree with most of this. Can we talk about the real world, though? In particular, we are talking about non-arbitrary introduction of taxation following consideration and vote.

More generally, how do you propose that the state defray the costs of performing such functions as defence and provision of a legal system and enforcing the rule of law?

85. Richard Carey

@ 83 Robin,

“Another unusual libertarian!”

There’s nothing unusual for a libertarian in the statement you quote. What happened was; you put words in my mouth. I pointed out to you that I hadn’t said those words. Now you lurch to another conclusion on what I didn’t say.

“Remember libertarians are talking about wrong as a moral concept here”

YOU were talking about wrong as a moral concept. I only used the word to answer your point.

“No, I don’t agree that there is some fixed point beyond which taxation is “wrong”. ”

Are you sure? I don’t want us to misunderstand each other. Are you really saying that you have no objection to the government taking everything you own, if that’s what they want? I guess history would be very different if everyone thought that way. For one thing, we’d never have got a parliament, the main point of which was to ensure that the king couldn’t raise a tax without its consent.

“Others might suggest that the mere assertions that taxation is arbitrary, and that freeloading is a legitimate position to take, are not sufficient without more reasoned argument.”

I have never, and I suspect you know this, said anything in favour of ‘freeloading’, either in its literal sense or in the Humpty Dumpty definition you have retreated to.

“That doesn’t stop the “taxation is robbery” rhetoric being “point of a gun” drama”.

As you concede, Jim was the drama queen. You will find me @16 referring to: “the self-evident, albeit perhaps banal, fact that taxation is a form of robbery.” Does that strike you as being dramatic? Are you working to your own definition of that word too?

@84. Robin Levett

I was talking about the real world. Tax policy in the round is voted upon by the public through the voting into power of a particular party with a particular agenda. However, none of the rate changes, none of the introductions of new taxes, or even the abolition of other taxes is every decided upon by the public. The public has not decided upon any of the Finance Acts, even where the decision being taken influence millions. I also don’t believe that it is sufficient to say that we have the opportunity to voice our displeasure with a vote every 5 years. By then the damage is done. Referendums on these issues is the best way to determine them, but this involves a re-think in the way governmental power is metered out. It would require a decentralisation of power to local communities, who would also be responsible for the collection of a proportion of the tax burden, and apply their particular policies to the needs of the area.

“More generally, how do you propose that the state defray the costs of performing such functions as defence and provision of a legal system and enforcing the rule of law?”

I have never advocated the abolition of all taxation. There are very few societies structured in such a way so as to be able to support that ideal. However, what I do support is a vast decrease in tax burden on everyone. Again this comes back to the freedom to choose argument. What rate on something like income tax? I would think somewhere between 15% and 25% could be achievable, and it would be a flat rate. I know that sounds like an increase of 5% (at a rate of 25%) for the poorer classes but it isn’t because I would only tax revenue streams once. Currently, poorer classes don’t pay tax at 20% because revenue streams are taxed in multiples. Something like council tax is a simple example. That is a tax levied on already taxed income, pushing up the effective rate. If you accumulate these taxes the poorer classes are paying 35% – 40% of their income in some form of tax.

Using the tax collected to focus on key areas where central planning will work (defence, law, police, etc) will enable government to reduce their size to something that can be sustained. The opposite argument simply will not work (for far to many reasons to go into here, but read Hayek’s Road to Serdom for a full explanation). Govt. spending is currently 700bn a year, they collect in taxes 550bn a year, leaving a structural deficit of 150bn. Now we can say that we should collect another 150bn, but that does not stop govt. spending even more, and history has shown us that the more money a government can bring its way the more they will spend and the more influence they will seek to exert over citizens lives. If we closed this gap by increasing collection by another 150bn (which I don’t think is possible because tax would rise to such a level where people would simply get on the next easyjet flight, but lets assume they don’t). That will mean that the government now collects 700bn, what is to stop them increasing expenditure? It becomes an arbitrary government rate. If the govt. was bringing in to break even they would simply spend more. History has shown us this time and time and time again. Govt. expenditure would increase to 800bn and we again would be in the same problem, because who is going to stop the government handing out more benefits to a growing population, as the increasingly disgruntled population looses incentive to work because govt. is taking away their money. Not to mention it destroys the choice I was speaking of. There will be one choice, and that choice will be what the government defines it as.

87. gastro george

@82

“Certainly. Maoist China, Stalinism starting as Leninism, North Korea, Swaziland, Vietnam, Lao, Angola, Czech Rep to name a few. In particular however the rise of the national socialist nazi movement in the 30?s.”

Heh, heh, like autocracies are just so like liberal democracies. Pathetic.

88. Robin Levett

@Richard Carey #85:

Quick one for now.

<blockquote.“the self-evident, albeit perhaps banal, fact that taxation is a form of robbery.”

Does that strike you as being dramatic?

Yes; as well as inaccurate.

Are you working to your own definition of that word too

Oh, look; IKWYABWAI.

@87. gastro george

You missed the point, and several history lessons.

All of those systems started as what you call “liberal democracies”. No voter says to the government…”We will vote you into power if you control by totalitarian rule”. Of course no person would vote such a regime into power, nor would they allow them to seize control otherwise there would be civil war, much as we are seeing in the middle east now with dictators.

I made specific reference to Germany in the 30’s because there are a number of lessons to be learnt from that situation. The rise of the socialist movement in Germany was contucted on entirely ‘democratic’ grounds. So to assume that because it is the will of the people it is automatically ‘democratic’ is wrong. This is because it provides to one person or group that no one person or group should possess and therefore to implement their agenda they must be able to depart from democratic principles in order to get anything done.

Another example of this is Maoist China, largely supported by most of the country when he came to power the idea that all were to be provided with assets by the state was very popular. However, it was the central planning of the state and the lack of individual skill and specialisation that lead to a famine between 1958 and 1961 that killed 30 million people. They all had land, but no food, and I am really not going to go into why because it would take me 20 pages but you can find it in any history of Maoist China.

“Liberal democracies” as you define don’t actually exist. It was even by the admission of Keynes that in order for there to be central planning the premise of democracy cannot hold ultimate sway. In fact he went so far as to say that Hayek who had written on the concept extensively was completely correct. “Democracy” assumes that the population is able to agree on all issues in far greater a proportion than anyone is used to. Therefore to impose central planning you MUST depart from ‘democratic’ rule in order to achieve central planning. It is simply not possible for a central body to plan in any other way.

The simple reality is that the closeness with which these totalitarian regimes are linked with a grandual and innocent providing of increasing power to the state is precisely how countries have fallen to the destructive powers. Many continue to march towards a goal, blindly failing to consider that the systems they rail against are precisly the systems that will result from their wants. I really don’t want to have to explain the vast amount of literature on the matter but would suggest you start with the socialist premise in Marx’s communist manifesto and then read Hayek’s road to serfdom immediately after.

I would therefore suggest that instead of jumping to a flippant and sarcastic conclusion like:

“Heh, heh, like autocracies are just so like liberal democracies.”

you should actually read how these systems started, and how they started with the perfectly good intentions of people, later to be overtaken by a state that needs to take more and more resources to continue to promise something which everyone is slowly marching away from. The sole method of securing democracy is to protect each and every persons property against the arbitrary rule of another.

90. gastro george

@89

You should explain your thesis to most of Western Europe, which has had higher tax rates than ours for the last 50 years without apparently descending into autocracy.

@90. gastro george

“You should explain your thesis to most of Western Europe, which has had higher tax rates than ours for the last 50 years without apparently descending into autocracy.”

Well lets consider that for a moment. The decent into collectivist rule sometimes takes far longer than 50 years. Consider the USSR as an example. On the basis as you claim, Europe has had high tax rates for the last 50 years lets consider what has happened. We have seen the systematic destruction of real wealth, replaced instead with debt financed governmental monetary policy. We have seen the rise of a European superstate who’s leaders are unelected, and who now dictates to us at what price we may sell milk to our own population, or what size eggs have to be in order to be considered eggs, or so that we may export them.

We have Brussels technocrats telling Greeks how to live, and we have monetary policy being abused in the most appaling way to the point where the Euro as a currency is technically worthless because it is backed purely by debt. The second largest party in Greece is now a communist party who has said that they will nationalise vast sectors of the Greek economy in a vain attempt to produce jobs, but the jobs will be worthless because there will be no money to pay the workers.

Its not just recently. Fortunately in this country we had the wise sense to get rid of the socialist parties of the 70’s before they became too entrenched, but only after they had bankrupted the country and ruined the british manufacturing industry by nationalising most of it. Britain used to be a tour de force in the car industry. We put the government in charge of it and five years later we just about managed to produce an Austin Allegro with windscreen wipers that didn’t fall off.

So whilst you are correct that (luckily) we have not had an authoritarian party rise to power recently (although the fall of the last one was only 23 years ago), the threat now is higher than ever before. We have the unelected EU leaders using the recession as a way of saying we need closer union. Of course they are going to say that! look at the power they stand to gain. It is only a matter of time before the super size governments realise that they can no longer govern by democracy because it requires too much agreement on too many issues.

We can only hope to achieve rights for each individual person if we treat them as individual people. You know what is good for you far better than any MP does. By protecting your rights, your property, your capital, it is the only method of ensuring a situation that can get somewhere near to the democratic ‘ideal’. (Unless of course you are one of those who has never worked and lives off the state)

92. Robin Levett

@Freeman #86:

I was talking about the real world. Tax policy in the round is voted upon by the public through the voting into power of a particular party with a particular agenda. However, none of the rate changes, none of the introductions of new taxes, or even the abolition of other taxes is every decided upon by the public. The public has not decided upon any of the Finance Acts, even where the decision being taken influence millions. I also don’t believe that it is sufficient to say that we have the opportunity to voice our displeasure with a vote every 5 years. By then the damage is done. Referendums on these issues is the best way to determine them, but this involves a re-think in the way governmental power is metered out.

We have a representative democracy. I entirely agree that that democracy needs to be improved; that however is an entirely separate issue to whether the state’s expenses should be defrayed by taxation.

As for the rest; we have different views about the purpose of government, and it would appear you have no time for welfare spending. I’m not sure why, however, flat tax is such a good idea. On the one hand, I really can’t see why the richer will stop trying to underdeclare income just because it all of it is taxed at a single rate; after all, for the relevant people, income is taxed essentially at a single rate now. On the other hand, it means that the poorer will be being taxed at a higher rate than would be the case under a progressive system.

I am also not sure how this:

I would only tax revenue streams once. Currently, poorer classes don’t pay tax at 20% because revenue streams are taxed in multiples. Something like council tax is a simple example. That is a tax levied on already taxed income, pushing up the effective rate. If you accumulate these taxes the poorer classes are paying 35% – 40% of their income in some form of tax.

would work. Are you saying that you would not tax spending or property at all; that the only tax you would levy would be an income tax?

93. Robin Levett

@Richard Carey #85:

There’s nothing unusual for a libertarian in the statement you quote. What happened was; you put words in my mouth. I pointed out to you that I hadn’t said those words. Now you lurch to another conclusion on what I didn’t say.

Let’s be clear; the exchange started with me saying:

“You are happy, indeed eager, for the state to provide the rule of law”

To which you responded:

I certainly believe in the rule of law, but I’ve not said the above, for one reason because the rule of law is not something which the state should be providing, but rather something the state should be subject to.

which led to my:

Another unusual libertarian! The standard libertarian position is that provision of a legal system and the rule of law is one of the few proper functions of the state. So you don’t think that is a proper function of the state? Then what agency do you propose performs that function?

What words did I put in your mouth? That you do not believe that the state should perform the function of provision of a legal system and the rule of law? Unless you’re going to quibble over the legal system bit, its right there in your comment above; I’ve emphasised it for you so you can see it.

I note, by the way, that you’ve avoided answering my question (which I’ve also emphasised).

We go on to:

“Remember libertarians are talking about wrong as a moral concept here”

YOU were talking about wrong as a moral concept. I only used the word to answer your point.

So when you were talking about taxation as robbery, and questioning whether “something that is wrong ceases to be so, when a majority supports it” you did not imply any moral judgment on the concept of taxation?

“No, I don’t agree that there is some fixed point beyond which taxation is “wrong”.

Are you sure? I don’t want us to misunderstand each other. Are you really saying that you have no objection to the government taking everything you own, if that’s what they want?

No, I am clearly not saying that. Can I refer you to your complaint about me putting words in your mouth, and simply suggest you read again what I said. All of it. In context; as follows:

No, I don’t agree that there is some fixed point beyond which taxation is “wrong”. That is why, in the part of my post most of which you have failed to quote, I said:

If what you mean is simply either that the state should not be providing a given service, or that taxation is not the best means of financing that service, then say so, spare us the “point of a gun” drama, and argue that point.

Then reconsider your comment.

I have never, and I suspect you know this, said anything in favour of ‘freeloading’, either in its literal sense or in the Humpty Dumpty definition you have retreated to.

You continue to reap the tax-funded benefits of living in a modern democratic state, while arguing against the state having the moral entitlement to tax you so as to provide those benefits.

“That doesn’t stop the “taxation is robbery” rhetoric being “point of a gun” drama”.

As you concede, Jim was the drama queen.

Actually, I’m going to withdraw that concession, provisionally, while you explain the point of this link, which you posted at #55:

http://files.libertyfund.org/img/2371/Gillray_BullForcedLoan1796_1536.jpg

It seemed to have some connection with the sentence you wrote appearing immediately above that link:

For those of you struggling with the taxation is robbery, here’s a useful representation:

94. gastro george

@91

I’m not sure how to rebut your froth briefly.

The Soviet Unions was born subsequent to the overthrow of the Tsar and certainly didn’t take more than 50 years. If, by “the systematic destruction of real wealth” you’re referring to the creation of fiat currencies, well that was led by the US (hardly a high tax country) in 1971. The EU doesn’t raise taxes directly from EU states, so they are irrelevant. The UK car industry was a basket case due to chronic lack of (private) investment before Leyland was created in vain out of its ashes.

But to get back to an original question:

“Firstly, you assume that by the government seizing wealth from one to give to another it will in fact raise the living standards of the poorer, but the exact opposite is almost always true in reality …”

In what way have the poor in, for example, Sweden, suffered from lower living standards because of higher taxes in that country?

95. Robin Levett

@Freeman #89:

While we seem to me reaching some kind of understanding on some issues, I really must query this:

All of those systems started as what you call “liberal democracies”….

We are talking here about the following “liberal democracies”:

Maoist China

Beginning with a revolution led by someone who said “political power grows out of the barrel of a gun”

Stalinism starting as Leninism

Do the words “October Revolution” mean anything to you?

North Korea

OK, now we’re just getting silly; let’s cut to:

the rise of the national socialist nazi movement in the 30s?.

Which is the reference for this:

I made specific reference to Germany in the 30?s because there are a number of lessons to be learnt from that situation. The rise of the socialist movement in Germany was contucted on entirely ‘democratic’ grounds.

We’ll ignore Godwin, and pass by the claim that the Nazi party was “socialist”; any vague pretence it might have had to that died with Rohm and others in the Night of the Long Knives, and concentrate on the “entirely democratic grounds”.

Explain how the rise of the Nazis in the 1930s was conducted on entirely democratic grounds.

Ok, this is going to be my last post on this article. Its getting far too time consuming and with multiple issues flying around.

@92. Robin Levett

“I’m not sure why, however, flat tax is such a good idea. On the one hand, I really can’t see why the richer will stop trying to underdeclare income just because it all of it is taxed at a single rate”

Flat tax is on an objective basis the fairest type of tax simply because it treats everyone the same and does not discriminate on the basis of wealth. The wealthy will still pay more in tax because they earn more. It is not system of flat tax that will stop tax avoidance and evasion. It is the lower rates. If you are taxing at a level where the people are happy to pay, and more importantly the public don’t feel as if there money is being wasted, then you will have a lower rate of avoidance. Hong Kong has a lower rate of 15% and avoidance and evasion in Hong Kong is almost none existent. Legislating against something does not stop it happening. Simply because you introduce tougher and tougher rules agaisnt evasion simply does not correlate to results of reducing evasion. Take other examples for instance. If harsh penalties meant lower offending then why does the USA (one of the only developed countries with the death penalty) have one of the highest murder rates of any developed country? Again, look at prohibition in the 30’s. Alcohol consumption in the US actually fell after prohibition was lifted. Those are just a few examples of legislation not impacting upon the thing they are seeking to prevent.

“Are you saying that you would not tax spending or property at all; that the only tax you would levy would be an income tax?”

What I am saying is that any taxation system should only tax income once. There are a number of different ways you could set this up but an income only tax would be one way, a consumption only tax would be another. This does raise the interesting issue of corporation tax however which I saw a very interesting comment about today. It was a comment made by a member of Occupy. They said (I paraphrase) that: “Vodafone tries to tell everyone that their employees pay billions a year in tax and therefore the earning from Vodafone is in fact huge, but this does not get away from the fact that the corporation doesn’t pay any of the tax”. Now the reason I take issue with this is that corporation tax is another tax which simply operates as another double tax. Companies don’t pay tax. Only people pay tax, and where the tax burden falls in corporation tax is in 1 of 3 places. The shareholders, the employees, or the customer. Every single penny of corporation tax is accounted for by one or a combination of those people. We therefore have to ask, is corporation tax actually fair? because the only people suffering are shareholders including pensions that don’t receive as big a dividend or return. Employees who have lower wages, or not as many are taken on because there isn’t the income. Or customers, who pay for it through higher prices.

So what I am saying is remove all double and sometimes triple taxation so that once you receive that paycheque, you will have all of it to support yourself. It is a simpler system, with less ways of getting around it, and easier to administer. I don’t for a minute support tax evasion, but we are not going to get away from it with more regulation, that will merely create more holes through which people can escape.

@94. gastro george

“The Soviet Unions was born subsequent to the overthrow of the Tsar and certainly didn’t take more than 50 years.”

That ignores the result however, because where were people better off, under the tsar’s or Stalin? Now I am not condoning the Tsar’s, don’t get me wrong, a lot of them were vile people, but I have a number of Russian friends and speaking to older members of their family and the stories they have, they would have traded Stalinist Russia for the Tsar’s any day. In any event, the overthrough of the Tsar’s was only the culmination of a concerted effort that had been developing for about 30 years, followed by Lenin and Stalin. The whole process was actually about 100 years from start to finish.

“you’re referring to the creation of fiat currencies”

That was only one piece of the pie. The massive influx of Keynesianism and debt financing that existed long after the war had more to do with it. The actions of the Fed in America in the 1990’s and early 2000’s played the biggest role in our current crash be a comfortable mile.

“The UK car industry was a basket case due to chronic lack of (private) investment before Leyland was created”

Primarily due to the Unions. It became vastly cheaper to buy a Japanese car and therefore having to pay someone nearly the equivelent of a junior doctor to weld chassis was simply unaffordable.

“In what way have the poor in, for example, Sweden”

This is a very common misconception that people love to wheel out in support of a large state. Firstly, no matter what the political climate in Sweden, government spending almost never exceeded 33% of GDP. Britain’s equivelent today is a hair over 50%. So perspective is necessary. Secondly, Sweden, whilst it has high tax rates on high earners is not particularily socialist. The wealthy in Sweden almost never paid the higher rates and they raised almost nothing because they simply took out income in capital gains. However, the effective higher tax rate of 56% is not that high because they have a much simpler single revenue stream taxation system. Higher earners in this country really land up paying 60-65%. So it is not just the advertised tax rate, but also how it is levied. Sweden also has a school voucher system so you can go to whatever school you choose, the power market is completely private and open to FDI, German companies owns most of the power. Almost all state monopolies have been abolished such as post, telecom, and transport. Large parts of healthcare is private, Stockholms largest hospital is actually a privately listed company. Corp tax is relatively low at 28%. There is very little opening hours regulation, and most interetingly – there is no minimum wage.

“Explain how the rise of the Nazis in the 1930s was conducted on entirely democratic grounds.”

The nazis had huge popular support when they came to power, and the majority of the government supported them. The history of nazi Germany, socialist and fascism is WAY too long to go into here. Hayek has some very interesting chapters on it in road to serfdom, commentated on by someone who lived through it. I would spend the next couple of days explaining it myself to no where near the standard he does. Have a read, a fantastic book.

97. Charlieman

@96. Freeman: “The nazis had huge popular support when they came to power, and the majority of the government supported them.”

The Nazis won 44% of the vote in 1933 and were without a majority to overturn democracy without the help of conservative parties, who sadly made that mistake.

Quite what this has to do with liberal democracy in the first quarter of the 21st century is unclear to me.

What happened in 1933 in Germany occurred 14 years after the establishment of the Weimar Republic in the infancy of liberal democracy. The Weimar Republic was the first to be able to hold government to account. Its failure tells us about failure of political and social debate in German society; other neighbouring countries suffered similar economic collapses but maintained liberal democracy.

But let us go back to where this topic originated.

@82: “Certainly. Maoist China, Stalinism starting as Leninism, North Korea, Swaziland, Vietnam, Lao, Angola, Czech Rep to name a few. In particular however the rise of the national socialist nazi movement in the 30?s.”

Maoism has as much connection with liberal democracy as etymology to bananas. Ditto Leninism, Junche et al. Of the countries named, only Czechoslovakia had a liberal democracy and industrialised economy before it was invaded by dictators. Depending on how you count them, Czechoslovakia was invaded on three, four, five occasions from 1938. By no stretch of the imagination could this be ascribed to liberal democracy failing as a result of internal deficiencies.

You failed to note that one of the largest countries in the EU is a failed liberal democracy, currently run by a technocratic government. This is tolerated by political neighbours and economic partners because Italy had been run by a buffoon, incapable of organising his own orgies without embarrassing himself. The buffoon’s political ideology, such that existed, was autocratic and populist, but thanks to the culture of Italy most of its malignity was diminished. I’m not complaisant: Italy is up the creek and has a lot to learn about racism, but I expect Italy to sort itself out.

98. gastro george

@96

Ha, ha, ha, ha, Sweden re-invented as a libertarian right-wing wet dream … I’m waiting for the next chapter – why the US is failing because it’s a socialist nightmare.

Are you a Daily Mail leader writer? Or maybe only 12?


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    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/fkeZW1Nd via @libcon

  16. False Economy

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  17. Phillip Tilley

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  18. Thalion

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  19. Rezza Saeful Mi'raz

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  20. HEATHER WAKEFIELD

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  21. Sam Earle

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon

  22. Emma Galvin

    The way to dealing with tax evasion is not cutting taxes | Liberal Conspiracy http://t.co/V2r1Ox1o via @libcon





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