Dining With The Tax-Collectors

One of the things that her Majesty's Government has recently been banging on about is what a terrible thing it is to avoid tax "aggressively".

(I'm not sure how much aggression goes into that, to be honest: most individuals with high net worth would delegate the job of cutting tax payments to their accountants, who are not typically of the attack-dog demeanour. Perhaps Mr. Osborne should be more worried about people avoiding tax ploddingly.)

Be that as it may, the cry of the Coalition has gone out that evading tax is morally wrong.

But are they right?

The usual citation from Revealed Theology on this one is Christ's admonition - when asked if the Jews should continue to pay tax to their Roman occupiers - to "render unto Caesar what is Caesar's". The point of this story is that His political adversaries were trying to whip up some trouble and had set this question as a trap, which He nimbly sidestepped. The answer, then, was really a nice piece of verbal sleight-of-hand.

In any case, very few people today look to revelation for their moral attitudes (what with all the stoning and eye-putting-out 'n' all) so the more usual question is whether there is a rational reason for thinking that evading tax is ethically a bad thing.

If one considers tax to be a form of charity or wealth distribution (a way to fund healthcare and social security for those less fortunate than those with taxable income) then I suppose one can argue that taxation serves a socially benign purpose. There is no logical reason, however, why someone who dodges taxation may not contribute to charity at least as much money as they withhold through avoiding tax. Charity may have a definite moral character that paying tax does not, since it is voluntary.

Moreover, not all taxation has a socially beneficial function. There is the Offence Defence Budget for a start. And before you complain that were everyone to withhold tax revenue then we could not nationally benefit all citizens such as the military, police and fire services: the responsibility for funding these services has an equal benefit to all, yet all citizens capable of paying for them do not contribute equally. The redistributive function of taxation and the social contract element should not be confused.

People who avoid taxation tend to top-slice their payments: they still pay at least as much as is required for essential services and often tens of thousands of pounds more.

Tax avoidance is generally intended to mitigate disadvantageously high tax regimes, and the people best placed to use it are the ones who have such wealth that they can pretty much afford to switch tax regime at will. Try sheltering your assets when you have no assets to shelter. The ultimate sanction of those wishing to avoid tax is therefore to emigrate, at which point we lose not only income tax, but also the many other sources of taxation to which the rich, and the rest of us, are usually subject. Such as V.A.T. on purchases.

The wealthy live under no moral or ethical obligation to pay tax. The politicians and media who - with increasing frequency - treat as wrongdoers those who take practical steps to husband their resources are, on the other hand, venturing onto very perilous moral & practical grounds.