Apparently tax evasion destroys money these days

The argument on the scale of tax evasion is vibrant. I have contributed figures for the UK and EU. I have in the past contributed to research on losses to developing countries. I think such figures help. The OECD is not endorsing any today. They do not need to do so: I am happy that the loss to the world that I have estimated of $3.1 trillion is indication enough of the seriousness of the issue.

Sigh.

Tax evasion does not, of course, whatever Ritchie says, cost the world anything. We are still a closed system. That less money goes to governments does not mean that that money ceases to exist. It still gets spent or invested somewhere or other.

Indeed, dependent upon what happens to that money, and how badly the government that didn’t get it would have spent it, tax evasion could, conceivably, result in an improvement in the human condition. But even leaving aside such an extreme (for example, someone takes the loot from tax evasion and invests it in a malaria vaccine, as opposed to the British Government which would have used £10 billion to build an NHS computer system that does nothing at all) it’s still true that tax evasion does not mean a loss for the world. Only a different distribution of the cash.

17 comments on “Apparently tax evasion destroys money these days

  1. In Richie’s world view everything meaningful is provided by the state therefore tax evasion is close to destroying money.
    I don’t agree with this but I hope it helps understand the logic.

  2. Tim

    Given that we are lurching into the festive season, I really think you ought to send Mr. Murphy of Norfolk, a Christmas gift to say thank you for all the gifts he has unwittingly given you in 2013.

    I formally call upon the followers of this blog to suggest the gift that Tim should buy out of his earnings at Forbes (he,he!) and despatch post haste to Norfolk.

  3. If we assume that, as a general rule, governments spend money less efficiently than we spend our own, something almost every economist from Adam Smith on would, then tax avoidance or evasion is almost always beneficial except where the cost of the avoidance scheme is particularly expensive.

  4. if it wasn’t RM, I’d suggest you need to read more charitably, and take “costs the world” as short hand for “costs in terms of the global sum of lost tax revenues”

    recently on Stumbling I wrote about a “firm wanting to” and was accused of “Greenspan-style misdirection” because firms don’t want things, people do. If there’s one sign of clever-stupid, it’s making far too much of figures of speech or choice of vocabulary.

    but as I say, in this case RM probably doesn’t realise the difference.

  5. Pingback: Tax evasion doesn’t destroy wealth « Samizdata

  6. Rob, I’ve said this for a while.

    He flips and flops on just about everything.

    Pro EU, anti EU, There is incidence, there isn’t incidence. He believes in democracy. He’ll influence changes in the law without standing for election. He cares for the poor and vulnerable, but the idea our elderly can choose where they want to live is a neoliberal heresy.

    But there is one constant idea from which he has never deviated: that we need more tax officials. That’s the one unifying constant behind everything he says.

  7. BB
    One turkey twizzler? Then he can twizzle it. And he could boast about being a locavore too.

    Actually, he may be right in one sense. If you add up all country trade deficits and surpluses you get a world trade deficit. So clearly we are exporting too much to Mars.

  8. Murphy sometimes seems to think that any private spending destroys wealth by taking it away from the State.

  9. Well, it’s laugh a minute day, today.

    Leaving aside the utter garbage, do I hear echos of Gordon Brown here?; “I am happy that the loss to the world that I have estimated…”

    Doublethink. Fries the brain eventually. Delusions of grandeur. Saving the world. Omnipotency.

    The man should leave his brain to science, in a Pythonesque fashion. That is, right now, this instant, without waiting for nature’s course….

  10. The 1% are not part of the real world, I suspect. The real world is normal people on average incomes who depend on the state to provide the necessaries, whereas the 1% live in their own bubble and don’t interact with the 99% except to deprive them of stuff.

    So if the 1% keep money that should have been paid in tax, then it has been removed from the real world.

    Murphy is of course part of the 99%, being an ordinary chap with an ordinary job and a perfectly ordinary income, who is therefore exposed to harsh economic realities like all the other real people. Not like the 1% with their cushy jobs paid for by thinktanks, high incomes, company directorships, and so on.

  11. @ Pellinor
    According to the givingwhatwecan website Murphy is in the top half of the top 1% globally [I have assumed his wife gets an average income for a GP but that they have no investment income because they have no savings living hand-to-mouth on a joint income, after tax, of a mere £114,400].

  12. john77

    that is a typical; neoliberal tactic, using facts, as if facts can ever undermine a Courageous State.

  13. Pellinor “The 1% are not part of the real world,
    Murphy is of course part of the 99%”

    The real world? In the real world, you’re in the top 1% of earners world-wide on £32k a year. You think Murphy isn’t in that bracket? When he bangs on about world poverty he’s doing so from the comfort of the top 1% in the world while accepting money from the Joseph Rowntree Foundation that could be being put to use to alleviate someone who really needs help. If he really cared about the poor, he’d work for the foundation for nothing.

    Besides, that 1%/99% is a load of crap. Someone on £150k creeps into the top 1% in the UK. You think they have anything in common with a billionaire? Someone on £140k a year is in the 99%. You think they have anything in common with someone on JSA?

    The left is always whining about ‘divide and rule’ tactics yet that 1%/99% is a classic, clumsy attempt to do just that.

  14. john77 and Andrew: I was putting it from Murphy’s point of view. Or being slightly sarcastic. Or parodying him…

    Actually, I’m not sure which it is, it’s a bit of all three. Oh lord, I seem to be having trouble telling Murphy’s views from a sarcastic parody :-)

Leave a Reply

Name and email are required. Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>