Is Taxation Theft?

[Monte Carlo]

Here in the UK there is a big debate going on about Tax Avoidance (legal tax avoidance, or as we call it here at the Schloss Monte, common-fricking-sense).

 

A popular comedian called Jimmy Carr has been found to put his money in something called K2, so he pays less tax than the guy who cleans his windows. Behold! http://www.bbc.co.uk/news/uk-politics-18531008

 

Now, personally, I will agree to paying more tax once governments stop wasting it on small wars, the feckless, EU subsidies and overseas aid programs for countries with nukes. If you can afford nukes you can afford very basic welfare provision. Until then, making your tax affairs efficient seems perfectly reasonable to me.

 

But yet... even the Ayn Rand fanboi in me gets leery of paying less tax than the guy who cleans my windows. My heart is flinty but not *that* flinty. Which is why I support a modified flat tax that would lift low-earners out of tax *completely* and encourage the rich the pay more (rather than avoid). The rich in the UK pay a shed-load of tax.

 

For the record, I am a middle-earner. I am not rich. But one day I'd like to be and the politics of envy is always the ugliest. But by the same token I don't want to pay less than a poor guy.

 

So for this call sign, a flat tax = win.

 

What do you guys think?

[Enoch]

Well to the extent that you allow that government has at least some legitimate functions, then it needs at least some revenues. And from rather long experience, most nations have come around to the opinion that some form of generally applicable mandatory taxation (passing over as ridiculous the hardcore Randian 'voluntary taxation' bit) is the best way to get those revenues. (User fees work for certain types of governmental functions, but they run into problems to the extent that these fees fund goods/services that either are difficult to exclude people from-- crime prevention, for example-- or that you don't want to exclude the indigent from, like public education.)

 

You hint at wanting to be selective about the expenditures your taxes pay for, which is an understandible sentiment. Opinions will always differ on what exactly the legitimate expenditures of a government should be, but the western world has generally decided that some form of representative democracy is the least-bad way to resolve those differences. And, while it really sucks when the bulk of your countrymen vote to fund things that you think are stupid/wasteful/etc., absent some valid appeal to an overriding prinicple (e.g., some provision of a written constitution), that's just one of the costs of doing business in a democracy.

 

Anyhow, The justification for graduated taxation is usually the argument based on diminishing marginal utility of income/wealth/expenditure. The shorthand normally used is the Rawlsian "veil of ignorance"-- assume that you have sentience before birth, and can design a system of taxation without the benefit of knowing whether you're going to be rich or poor, smart or stupid, etc. The outcome of that exercise is one of hedging your bets-- taxing the "good" outcomes relatively heavily in order to make the "bad" outcomes less onerous. There is, however, a point where this takes on the appearance of class warfare. It's nebulous and opinions will differ, but I think that most people would agree that the democratic process has been abused to the point of unfairness by the time you get to "one for you, nineteen for me" extremes. (Raising class-warfare-type concerns in present debates in the U.S. about moving the top income tax rates from 36%-ish to 39%-ish, though, is rather ridiculous.) Also, as a practical matter, extreme-top-rates end up making your rich folks into tax exiles.

 

And, then, of course, there are all the various exceptions, exemptions, deductions, credits, etc., that get written into tax codes for policy reasons. Each incremental step usually makes some sense, but they tend to accumulate over time and turn the whole affair into something mindbendingly complex and prone to various dodges and abuses. I'm going to reserve comment on the morality of using such abuses for now. From an institutional point of view, the best solution here is to blow the whole thing up and re-write it on blank paper from time to time. (The last time the U.S. did this on the federal level was in 1987, and we're due for another round.)

 

 

Means of taxation is, of course, a related discussion. In general, you can tax income, you can tax wealth (property taxes), and you can tax expenditures (sales taxes or value-added taxes). Each of these approaches have strengths and weaknesses in terms of fairness, practical challenges, administrative costs, potential for fraud, and other considerations. Most jurisdictions I've seen end up using a little of each of these.

Edited June 22, 2012 by Enoch

[Zoraptor]

I ended up basically paying no tax at all (pretty much only VAT, think I even got NI contributions back) when I worked in the UK, but only because I knew someone who told me how to do it. It was actually a rather weird feeling, despite being completely legal.

[Humodour]

Flat taxes (as opposed to progressive graduated taxes) hit the poor the hardest and the rich the least. I will never endorse them, and that holds true for the existing flat taxes of GST/VAT.

 

For instance, who is more able to afford a flat tax of 20% attached to their purchases of bread and veggies? A struggling low-income single mother, or a rich businessman continuously looking for loopholes to pay 0% tax, like Australia's greatest ****ups Rupert Murdoch, Clive Palmer, or Gina Rinehart?

 

Screw Ayn Randian corporatism. I reject it. Capitalism is a means to an end: universal human elevation. It is NOT NOT NOT the end itself, and Ayn Randian corporatism doesn't achieve the desired end (it achieves a different end: class warfare and an ultra-rich elite).

[Calax]

One of the things my economic history professor (who was terrible at his job... he knew his stuff but couldn't make it interesting and flipped out on my class... yadda yadda) made sure to pound into our heads was that in order for an economy to continue to grow and be successful, money needs to keep moving and being used. The issue with the UK system you're discussing (and to a degree, the system here in the US) is that the money isn't really being used. It's in storage and thus it cannot increase the size of the economy or benefit the government of the person holding it.

 

The graduated tax system is put in place so that somebody who earns 10 bucks a week isn't loosing a dinner to the tax man while the guy who earns 10 million looses (effectively) nothing. Sure he'd moan and groan about the 2 million bucks, but he still has the other 8 to do with as he likes, and 8 mil is far and away above what is necessary for a person to live.

 

As to the taxation for things that you want? There'd be no way to REALLY do that. At best what you could probably set up is something like American Idle for each government program....

 

"For your tax dollars to go to military, Press One.... Para instructions en espanol, marque numero nueve....

For your tax dollars to go to Planned Parenthood, Press 2

For education, Press four

For social services Press five

... "

 

you get the idea. Beyond that all you can do is try to change things in your elections, but the elections have gotten so far out of the control of the population that it's not even silly.

[Nepenthe]

I think everybody considers the system they live in to be worst, but generally I tend to lose my sense of humour when I have to pay like 38 % tax because I'm "rich" (ie. make over 5000 euros a month before taxes), but millionaires get off with a flat 28 % (because they can funnel it all into capital gains).

 

Talk about the wealthy feeding the middle class to the poor to keep them peaceful.

[Darth InSidious]

Yes, yes it is. And the state is a racket designed to extort from you. I mean, what have they ever done for cont. p94

[Wrath of Dagon]

A flat tax can be made fair by exempting a certain amount of income form taxation, thus there still would be progressivity up to a certain point, and the poor would pay no tax. Having said that our spending is too high to be have a flat tax with a reasonable rate, so probably the best thing is to have a 15% and a 25% bracket. With elimination of all deductions that would not only bring in sufficient revenue but also improve economic growth due to the higher efficiency of a flatter tax. Not that I ever expect that to happen, the voter is too stupid and selfish to understand or care of what's best for the country.

[Tigranes]

I think everybody considers the system they live in to be worst, but generally I tend to lose my sense of humour when I have to pay like 38 % tax because I'm "rich" (ie. make over 5000 euros a month before taxes), but millionaires get off with a flat 28 % (because they can funnel it all into capital gains).

 

Talk about the wealthy feeding the middle class to the poor to keep them peaceful.

 

Your point still stands, but is +5000 euros a month really 'middle class' where you are? Curious if people would really consider that typical in any way.

[Gorth]

I think everybody considers the system they live in to be worst, but generally I tend to lose my sense of humour when I have to pay like 38 % tax because I'm "rich" (ie. make over 5000 euros a month before taxes), but millionaires get off with a flat 28 % (because they can funnel it all into capital gains).

 

Talk about the wealthy feeding the middle class to the poor to keep them peaceful.

 

Your point still stands, but is +5000 euros a month really 'middle class' where you are? Curious if people would really consider that typical in any way.

Is that before or after tax? Makes a world of difference if you pay 38+ percent.

[Meshugger]

Nepethe probably lives in Helsinki, where the housing prices are so ridicolous that 5000+ euros a month is just enough to be middle class. In the rest of the country, that kind of wages are usually payed for positions in the middle/upper management-tier.

 

As for taxing in general, as long it is percieved as a just measure by its constituents in a democratic society, then i can accept it. Otherwise it is a slippery slope to tyranny.

[mkreku]

You walk on roads made possible by tax money, you were born in a hospital made possible by tax money, you are whining on the ****ing internet made possible by tax money.. and you focus on the negative and have the gall to call it theft.

 

Some people.

[Monte Carlo]

You live in a Scandie statist paradise and therefore your opinion is moot.

 

The government takes my money and gives it to India, the feckless and to pay for schools that struggle to teach kids to read and write. I think the government has some gall asking me to pay for that.

[Guard Dog]

Taxation per se is not theft. Everyone who benefits from the common good of society should help pay for that society, Of course that certainly does not happen in most countries. The idea of even the poor having no tax obligation to fund the benefits they enjoy does not sit well with me. I think a national retail sales tax that exempts food and medicine and other essentials is worth considering in lieu of income taxes because it taxes consumption and impacts everyone. Everyone pays proportionaly to their participation in society. The more you spend the more you pay.

 

However, there is the argument that that will give birth to an under the table barter economy and I'll admit it might. Despite the marxist rantings of one of the less pleasant posters of this board I do think a flat tax is also a fair solution.

 

As Enoch posted really no one has heartburn with paying for roads, police, public services, national defense, etc. It really becomes irksome when our hard earned money is wasted and given to those who do not deserve it. Not much you can do about it but vote the SOB's out when they do misuse it.

 

I can't wait for November.

Edited June 24, 2012 by Guard Dog

[Meshugger]

It is true that there's a level of dissonance between what people and their respective governments think is a justified funding of taxes. Of some reason, when people get elected and get the power to be part of handling the state budget, they suddenly get a higher tolerance on what is wasteful and what is not.

[Guard Dog]

Now there is a truth if ever I heard one.

[Gorgon]

It really pisses me off that I'm required to pay for the upkeep of our state owned TV. If it was ONLY public service then fine, but it's bloody danish X factor and overpriced new offices for everyone. All the journalists and anchorpeople are effectively enployed by the population. Now if only we could fire all their asses as well.

[Monte Carlo]

^ Ditto the BBC. I'd make it subscription only in a flash. It's another tax.

[Calax]

It is true that there's a level of dissonance between what people and their respective governments think is a justified funding of taxes. Of some reason, when people get elected and get the power to be part of handling the state budget, they suddenly get a higher tolerance on what is wasteful and what is not.

I think part of it is also the fact that the politicians are doing their best to stay electable, and thus are trying to appease the hyper vocal minorities. Thus politicians will vote for a bill simply becuase it has pork in it for their district so they can go back to their voters and declare "This is what I got your county! Vote for ME!"

 

Also insert the standard "money in politics" garbage.

 

I do think that GD's got the right idea with taxation of goods more heavy than taxation of income, but income should still be a part of it.

[Nepenthe]

I think everybody considers the system they live in to be worst, but generally I tend to lose my sense of humour when I have to pay like 38 % tax because I'm "rich" (ie. make over 5000 euros a month before taxes), but millionaires get off with a flat 28 % (because they can funnel it all into capital gains).

 

Talk about the wealthy feeding the middle class to the poor to keep them peaceful.

 

Your point still stands, but is +5000 euros a month really 'middle class' where you are? Curious if people would really consider that typical in any way.

Is that before or after tax? Makes a world of difference if you pay 38+ percent.

A bit over 5k before taxes, and Meshugger is right on the money re: cost of living around here. I'd say it's about average, maybe a bit more for young people with an academic degree and actual gainful (private sector) employment, I have friends who are associate lawyers who make less, and bottom-rung (or close to it) coder friends who make more.

 

I'm mostly happy, tbh, I'm just haemorrhaging money after a couple of years in grad school and basically neglecting everything.

Edited June 25, 2012 by Nepenthe

[Rosbjerg]

This is a complicated discussion, but calling taxation theft seems a little rash to me. Mostly I'm annoyed about the fact that if the extremely rich and the large multinational cooperation actually paid the proper taxes they should, then a lot of the current debt of most nations could be avoided and if those industrious extremely rich people actually cared about how their money was spent (because a large amount of it went into the national coffers) then the system might actually be efficient as well. Instead their worryingly great skills at avoiding paying for most things is "wasted" on the private sector and their personal bank accounts instead the nations.

 

It really pisses me off that I'm required to pay for the upkeep of our state owned TV.

 

Amen..