Tag Archives: tax

But What About…? Part 1: Overview

Yesterday I rounded out the series on tax by applying the Golden Rule to the concept. Were this to be a universally shared outlook, then most people would be wishing no tax on anybody, and the multitudes of taxes that we have would be substantially reduced.

The issue then becomes all the things that tax money goes towards.

Imagine there’s a bunch of people with cups of water of different sizes, and imagine there’s a reasonably large bowl. Everyone must pour some of their water into the bowl. If the people get their water from an external source, then the bowl will fill up. If some start getting their water from the bowl, it doesn’t matter if they pour a bit of water back in like everyone else, the others will have to pour more water to sustain the water level in the bowl. The more people get their water for the bowl, the less sustainable it gets.

It is this way with taxes. It’s kind of a deception, a shell game, for teachers and administrators in government schools, for politicians, for police, and so on, to pay tax. They’re paid by tax. The money comes from those outside that system.

There was a poem of sorts that I read in History class, when we were learning about the New Deal. It was describing this concept, though I didn’t get it at the time.

It enumerated the population of the US, then gradually subtracted different tax-funded groups. Those on welfare, teachers, police, Congress, those working for government agencies, those on the New Deal, those in prison, and so on. After each subtraction, “Which leaves to do the work:” (smaller number). Then the next set of people was listed.

The poem ended something along these lines:
“Which leaves to do the work:
2. Me and the President. And he’s gone fishing.”

Of course this was an exaggeration. But I can understand feeling like that. One might think that it doesn’t make a lot of difference whether Joe Public pays for a business or service through direct transaction or through taxation, after all, he’s paying for it either way, right? The thing is, a business must walk a fine line between the various costs to provide whatever it provides, profit, and whether Joe Public thinks it’s worth that price. Under the government, there is less incentive for efficiency (if you don’t spend all your budget, you won’t get as much next year when you might need it), accountability, customer service, or value for money. We’ll get into that in more specifics, later.

If fewer people get their water from the bowl of taxation, the less water will need to be taken from those getting their water from elsewhere. The moral thing to do, then, would be to reduce the number of people taking from the tax bowl.

“Does government really need to be doing that?” is a question that we really need to consider.

Let’s Talk About Tax, Baby: Part 6

End of this series on tax, though as everything is linked, I’m sure we shall return to the subject later. In case you missed it, here’s a link to Part 1.

It is a rare person indeed who doesn’t take every deduction, credit, and legal loophole they can to minimise the amount of tax they pay. They might say how X, Y, or Z thing the government does needs more money, but they don’t put their money (*their money*) where their mouth is, and skip one reduction or another. Perhaps, deep down, they know that the money won’t go where they want it to. Perhaps that many people really do understand, even if they don’t want to admit it to themselves, that tax isn’t all that great.

I’ve mentioned before the contention that “tax is theft”. What is theft? Something is taken from you without your consent. In these enlightened times, you don’t really have the opportunity to consent or dissent, the money is taken from you before you even get it. Unless they underestimated during the year, and decide you owe something extra. Then they take it with interest. If you happen to overpay, they don’t give you your refund with interest.

Now, we might be used to being milked, we might justify to ourselves our property being taken from us. “I’m ok with paying taxes because of X.” But chances are, you’re still unlikely to be that rare person of that first paragraph. If you had the choice between being taxed a larger amount and being taxed not at all, you’d be more likely to pick “not taxed at all”.

So what of the dissenters? What of those (nearly everyone) who wouldn’t pay tax at all if they had a choice? By “have a choice”, of course I mean “able to take that choice without having violent action taken against them”. Arrest, incarceration, possible accidental death during one of those, all violence. We might rail against guns owned by the general population, perhaps even against certain acts of violence inflicted by those employed to enforce the state’s will, but we fail to see that the state can do nothing without the threat of violence.

Someone who gets a large “amount due” notice from HMRC/IRS because of some miscalculation or other clerical error, is rightly frightened (especially if they can’t pay) – not all errors get fixed. Perhaps we can up the charge from “taxation is theft” to “taxation is armed robbery”.

“The Golden Rule” is a title given to the positive version of two sayings. The negative is “don’t do to others something that you don’t want them to do to you”, the positive is “do to others what you want them to do to you.

Purely and simply, do you, personally, want to be taxed more?

If the answer is “no”, don’t wish more taxes on other people.

It really should be that simple, right? Common decency? Basic logic? If you don’t want to be taxed more, don’t wish for other people to be taxed more.

If you want less taxes for yourself, oughtn’t you should wish for less taxes on other people too?

That seems to be the best bottom line to the topic that there could be. Tune in next time as I start a series on the next logical step: “BUT WHAT ABOUT….???”

Let’s Talk About Tax, Baby: Part 5

“In the 20th century, although country houses continued to be built and lavishly remodelled, and although King Edward VII and his descendants continued to rework Buckingham Palace and other royal residences, many landed families struggled to maintain their houses and estates. Taxes mounted, depression in agriculture ran almost continuously from 1875 to the outbreak of World War II and rental income from land declined. As a result, art collections were broken up and rare library collections sold off to pay for repairs and meet demands for taxes and death duties. Eventually, in the interwar years, some people began to focus on ways to preserve the more historic houses and their collections.”

From “The Complete Illustrated Guide To The Castles, Palaces, & Stately Houses Of Britain & Ireland” by Charles Phillips, Chapter Twelve (p229)

The previous paragraph mentions the National Trust, and the Country House Scheme of 1937, “which enabled owners to leave their property to the Trust in lieu of death duties.”

The book phrases it nice and neutrally, don’t you think?

So these people who owned land used to get a reasonable income from renting their land, and/or profits from farming the land. Both parts of the economy slumped, and taxation on property and inheritance increased (possibly to make up for the lost tax revenue from the rental and the farming, does anyone think rental prices then didn’t increase to help try meet the costs?).

Pumping from a pool that isn’t being refilled.

People had to sell off their possessions to pay tax. Imagine you had to do that, this month sell off the TV, next month the DVDs, then the computer, then the CDs, then the books. How sustainable is such a system?

We’re taught about basic human needs, including water, food, and shelter. (I’ve seen wifi added to that list in recent times.) We might perhaps see that taxing the poor could threaten those things. We might concede that taxing the landlord more would increase the rent for his tenants. Here we see “tax the rich!” turn into making the rich poor, and taxing them out of their homes.

Is that not just as wrong?

That curious concept, the broke “rich” person, recurs in P.G. Wodehouse stories.

The National Trust didn’t come to the rescue here. They were the beneficiaries of a swindle. I think it’s too nuanced to be able to say something like “they were guilty of receiving stolen goods”, though I think it’s still a pretty good illustration of the phrase “tax is theft”.

The properties had been protected pretty well in private hands, over hundreds of years. It was only because of the giant governmental leech that they were under threat. So government swings in to solve the problem that they themselves caused.

Setting the rich and poor against each other is harmful to society, and breeds resentment.

It’s not a hundred years ago that this was happening, And so many are committed to the same course. I can’t say I don’t understand; at one point I would have entirely agreed. I can no longer sympathise with the sentiment.

Let’s Talk About Tax, Baby: Part 4

Too many parts of the tax series to link to the m all at the start of a post, so I’ll link Let’s Talk About Tax, Baby: Part 1, and the start of the politics series, in case you’re interested in catching up.

I was wrong. I was wrong. See, I can admit it.

I said yesterday, in Part 3, that I would wrap up the series today. Yesterday was a nice, short, self-contained concept. And when I had written it, I had already written out what was going to be today’s post. This post had three sets of musings, which weren’t very long in themselves, but the post I was going to post today would have been a bit long.

Fortunately, it’s going to be pretty easy to split them up. “Let’s Talk About Tax, Baby” will run finishing up on Monday, with Part 6. Unless something extra springs to mind.

So, today’s notion:

* “Render Unto Caesar” when not using sestertii.

If we accept the premise that Caesar’s coinage belonged to Caesar because it had Caesar’s image, and by extension that English currency belongs to the Bank of England because its name is stamped on the paper currency, and American currency belongs to the Federal Reserve for much the same reason, then that raises some interesting questions regarding things like barter and Bitcoin.

The tax system one is subject to, might require one to quantify the value of a non-monetary exchange (“payment in goods or services”) in currency, so that they can tax you on it.

One can argue that if you use their money, that they are a party in the transaction, and might have to say. Whose face is on the currency? Render unto Caesar the things that are Caesar’s.

But is this not an overstep? Caesar has no part of this transaction, Caesar has no entitlement here.

Where these transactions relate to tax, it seems to be purely on the honor system. I suspect many such transactions have no paper trail.

Here’s an article related to Bitcoin and taxes. Looks hard to keep track of. A bit of a mess, really.

I did a post on property and ownership last week, and the entire tax series is related. Something that has been implicit so far, and will be starker tomorrow, is the basic question, “how much of what you own is someone else entitled to?”

You may believe that you are obliged to use or give what you have, to take care of other people. The quote from the property post about “the footwear mouldering in your closet belongs to those without shoes”, it is for you to give, not for them to demand. “The needs of the many outweigh the needs of the few, or the one” is good to invoke when you’re the few or the one. When you’re Spock sacrificing yourself to save the ship and its crew. It is bad when the many invoke it to steamroll over the few. Like the classic analogy of democracy, “two wolves and a sheep voting for what to have for dinner”.

The Star Trek III inversion, “the needs of the one outweigh the needs of the many” is good when Kirk and his crew risk everything to go save Spock. Any number of dictators, even elected officials, could highlight when it’s bad (what’s springing to mind is the new documentary “The Killing$ Of Tony Blair“).

How much of what is yours, is fair game for the government to take? Some think everything.

More on this tomorrow.

Let’s Talk About Tax, Baby: Part 3

See Let’s Talk About Tax, Baby: Part 1 and Let’s Talk About Tax, Baby: Part 2.

A rule of thumb that I picked up somewhere along the way: tax the things you want to see less of, subsidise the things you want to see more of.

That paradigm is not one I particularly subscribe to any more, but it’s memorable, and can serve as a springboard for examining the subject.

Do you want people smoking? No? Tax cigarettes. Do you want people to drink alcohol? No? Tax alcohol.

If you don’t like people imposing their morals on other people, hopefully that last sentence got you seething. Chances are, this line got you instead, but no worries.

Do we want people in jobs and earning money? Yes? Then why do we have income tax?
Do we want people to own property?
Do we want people out spending money in the economy?
Do you want people getting enough light in their homes?
Do you want people to take away rather than eat in?

You can go through yesterday’s post and examine any taxes I may have left out, using the above framework. You can examine any taxes you happen to notice, and see whether they live up to the framework.

If it fails that test, then it shouldn’t be a tax. If it affects someone else, but doesn’t affect you (say, you don’t smoke and you’re talking about tax on cigarettes, or tax on the rich and you’re not rich), then in fairness you should refrain from supporting it.

What is left, I still would be hesitant about, but that would be a good start.

I think we’ll wrap up the tax posts with Part 4, tomorrow.

Let’s Talk About Tax, Baby: Part 2

See Let’s Talk About Tax, Baby: Part 1, if you haven’t.

There is a contention that tax is theft. If anyone else took your money in such a manner, if would be called theft, but our glorious overlords have decreed that it is legal for them to do it, so that makes it all ok.

Sarcasm aside, I was alluding to this in the charity analogy last week. If you don’t pay your taxes, some government agents (probably armed) will take you away and lock you up against your will.

But let’s set that aside for now, and even set aside “are you getting value for money?” (spoilers: no), and take a look at tax.

In history class, we might learn of crazy things like “window tax”. People were taxed on the basis of how many windows their house had (and possibly how big those windows were. The assumption being that rich people would be living in bigger houses with more windows (class warfare is nothing new). Naturally, as people don’t like to pay tax, this led to a lot of people living in gloomy houses.

So silly, we think, but people back then didn’t pay the sheer amount of tax that we do today.

So, you work, you pay income tax.

You drive, you pay vehicle tax, road tax, fuel tax (which corresponds to how much you use the vehicle), possibly mileage tax on top of that in some places (because fuel tax Just Isn’t Enough).

You go to the store (probably in your car, invoking the list of taxes above) and buy stuff (using money from your income that you’ve already been taxed on). The bulk of your shopping might be food, and there might not be sales tax on food. But included in the food cost are wages for workers at the store, and so there’s their income tax etc. Also included is transport costs for getting the food to the store from the distribution center, so all the driving-related taxes you have to pay for yourself (plus the truckers’ taxes). Property tax for the store and the distribution center. Same again of all of the above for manufacturing places that assemble many of our foods, and for farmers who grow the ingredients.

And then there are other things you buy that do have extra tax. Physical stores in the UK were quickly outclassed by online stores when it came to DVDs, several online stores set up in Jersey and Guernsey, which took advantage of a tax loophole. At one point, retail stores were selling the Extended Edition of The Two Towers for retail price: somewhere around 45-50 quid. An online store, at the time, was selling it for 15.99 (does that count as “tax evasion”?). A shopowner friend of mine lamented that that was less than he was paying _his_ supplier for them. No wonder the High Street/Main Street is in trouble.

The UK has VAT, Value Added Tax. One place produces the raw materials, and sends them on to the manufacturer for (cost + labour + profit + tax). The manufacturer makes something from the raw materials and sells them for (cost + labour + profit + tax). Depending on how many stages it takes to get to the finished product, a big chunk of change can be added to what you have to pay, just in VAT. And ultimately, it’s you the consumer who pays it.

Perhaps you’re familiar with the phrase, “it’s turtles all the way down“. Well, it’s taxes all the way down. You can go past the farmer to his suppliers, or tax added at several stages with VAT… it’s like fractals.

Fractals observed in nature are a finite pattern, so perhaps the branch looks like a smaller version of the tree entire, or the rock like the mountain. The pattern is similar, but not exact. On a computer, fractals are usually perfectly-repeated patterns, potentially going on forever (presumably system resources can become an issue). I remember a type-in program in an issue of Commodore Format, that took rather a long time to run.

Seems taxes are more like the computer version of fractals than the natural one.

Property tax. I touched on it in the “store” section. Say you have managed to buy your own house. You own the land and the building, there’s nothing you owe on it. Good job. And then some level of government comes in and charges you some kind of property tax.

Then tragedy strikes, and you’re at a point where you’re unable to pay your bills. You concentrate on things you Really Need (water, food), and cut as many things as you can. So you cut property taxes. Your dire situation goes on long enough, and they can come and take your property out from under you.

Seems like this isn’t a new thing. I was researching a castle in England, that various kings had given and taken away from various people (“An Englishman’s home is his castle: constantly under threat by the State”).

I recall a list of human needs, food, water, shelter. I have a problem with threats against those, whether it’s a government commandeering part of your property so it can widen the road, kick you out because you can’t afford the tax, or demolishing your planet to make way for a new hyperspace bypass.

You know what I mean.

Of course, there’s many more taxes. Death taxes. Import duties. Carbon tax. TV license, in the UK. I’m sure you hear of “stealth taxes”, I’ve heard of inflation referred to as a hidden tax. You’ll find big lists pretty easily if you search the internet for something like “list of taxes”. It’s kind of a scary thought just how far and wide the tentacles reach.

I find it hard to believe that anyone who would consider adding new taxes, or raising them, has any idea of the extent of taxation already in place. It’s like, you’re already the batteries in the Matrix, and there are people who want the batteries drained faster? It’s hard to ascribe good intentions to such people (other than invoking the adage about a certain road that’s paved with good intentions). Even if they have good motives, how much do those motives really count for?

Tune in tomorrow for Part 3, bringing us another angle.

Let’s Talk About Tax, Baby: Part 1

In Friday’s post, I talked about property. Today’s post is related.

When you work, the income that you receive (“wages”), is earned.

The government skimming some off the top (“taxes”), is not earned. Sometimes you will find officials talking about your money (taxpayers’ money that isn’t yet taken in taxes) as their money – they just haven’t gotten it, yet.

Over the years, I have heard discussions of a fair tax system.

One is a flat percentage system. The argument against this is that, say 10% from a poor person hits them much harder than 10% from a rich person. The rich must pay more! (overlooking that the rich actually would pay more in this system).

A saying that I’m sure I shall bring up again in future posts, is “if you pay, you get a say”. Theoretically, not taxing the poor robs them of a voice. This may be outweighed by corporations, who, while they take every loophole they can get to reduce the tax, on the other side of things pay for lobbyists and various other expenses, to influence legislation.

A couple years ago, talk of a “Robin Hood Tax” was all the rage. Perhaps you’ll remember the slogan associated with Robin Hood (and Jayne, the Hero of Canton): “robs from the rich, and gives to the poor”.

In other words, there’s all these social programs I want to fund, I have no intention of funding them myself, but I’ll happily take money from someone else to pay for them.

Is it unreasonable to point out that envy and theft are not virtues?

People like to invoke Jesus on tax. “Render unto Caesar the things that are Caesar’s” (the coins having Caesar’s likeness engraved on them). “And render unto God the things that are God’s” (each member of humanity – including Caesar – being created in the image of God. Subversive).

So we might render unto Her Majesty our Bank of England notes (do electronic Pounds in one’s bank account count as bearing her image?). And in the US, we can render our 1s to George Washington, our 5s to Abraham Lincoln, our 10s to Alexander Hamilton, our 20s to Andrew Jackson…

Did Jesus pay His “fair share” of tax? We don’t hear a lot on the subject, but one time He paid His and Peter’s Temple Tax with a coin that conveniently showed up in a fish. It seems that is not His (or Peter’s) “fair share” – it’s not siphoning off the fruits of their productivity, like modern income tax is. It’s undeclared extra income that’s being used.

Looking on the divine side rather than the human, if “the earth is the Lord’s, and all in it”, I think it safe to say Jesus didn’t give the adequate proportion of His cut of that to either the Temple, or to the occupying Romans.

This illustration has to be taken with a pinch of salt for a couple of reasons. First, the taxation system of the Roman Empire in 30-ish AD Palestine, is very unlikely to be comparable to the giant spiderwebs of either the UK or US tax codes. Secondly, giving to the Temple was seen as giving to God, and so Jesus gets a bit of a pass on that.

Overall, the point I’m trying to get across today, just at the basic income tax level, is that THERE IS NO FAIR SHARE. There is not a fair tax.

Tune in tomorrow for Part 2 for more.