No One Likes Tax Avoidance

You would be hard pressed to find someone who supports tax avoidance. We all agree that at least some tax must be collected for the police, fire service, the military, etc. Only an extremely libertarian inclined individual would suggest that it is acceptable for multi-billion pound companies to only pay tax on a tiny percentage of their income. However, I believe that it is not enough to oppose tax avoidance and that only radical change to our economy can prevent large companies from dodging their responsibility to society.

There is little political will to tackle the problem of tax avoidance – the government would much rather spend its time exaggerating the problem caused by poor people. Whenever anyone suggest that a stronger line be taken with large companies, their apologists argue that if we are not nice to the wealthy people and let them get away with whatever they want, then they will take their money elsewhere. As recent tax probes have shown, if rich companies do not pay tax when we are very nice and accommodating to them, then I am not certain what we have to lose by compelling them to pay more tax.

A political and popular desire to tackle the entrenched privileges of wealth is needed to stop tax avoidance. Whenever a particular gross piece of excesses is uncovered, we as a nation simply tut disapprovingly but nothing ever changes. We are currently going through a phase of rumbling and groaning when people have to grudging admit that the perhaps the wealthy do treat their social obligation as a wall to urinate against. Still even if new laws are passed and loopholes closed, tax avoidance will still continue on a grand scale, as you cannot prune neo-liberalism into something fair or compassionate. This is what most people (including a lot of lefties) would like to believe, partly because it conveniently avoids questioning the wider implications of tax avoidance. If companies treat their social obligation to pay tax something to be wriggled out of, how do they view health and safety or even employees’ wages? If you think the idea that a company would try to avoid paying its staff is ridiculous, then look at McDonald’s attempts to do just that in America.

An economic system which concentrates wealth among the few, as opposed to distributing it more evenly, will always have the problem of these few wealthy individuals taking advantage. They hold the greater amount of power and thus cannot be compelled to pay their fair share of taxes. What we have seen recently with Starbucks, Google and others is an indication that taxes which are supposed to be inescapable (remember the old adage) can be avoided by the wealthy as our wealth based system will always create an incentive for the rich to avoid paying their fair share of tax.

The solution to wanton tax avoidance is to change the way we think about wealth completely. We need to stop thinking about wealth as a goal in itself, but more a by-product of success in another field such as science or art. Wealth (much like fame) is a life goal in and of itself, one which we acquire through cynical self-interest, the proof for this is that no small child ever said they wanted to grow up to be a hedge fund manager when asked what they wanted to be in primary school. We also need to stop respecting people purely because they are richer than us. Being wealthy does not necessary mean you are a more creative or intelligent human being, it more likely means that you had a bigger leg up in life than others. Mainly we need to think about the global plutarchy of the ultra-rich as a different sort of person who transcends national identities and inhabits a world so different to ours it might as well be alien. The idea that people whose existence is so far removed from the pressures of normal life know what is best for the average person is laughable. We need to stop bowing down to the extremely wealthy and living in fear that they will take their money else where - that fire sale has already happened. We need to remember that social obligations are for everyone, and it is grossly unfair that wealthy companies pay a smaller percentage of tax on their income than the average private citizen who earns a lot less.

Only with radical change will the excesses of greed and wealth be stopped. Small, incremental changes will not stop tax avoidance, sweeping reform of our entire political and economic system is needed. If we are all so disapproving of tax avoidance then it is time we face up to what the underlying causes are and accept what the solution is.