Today\’s Ritchie

Sigh. Being anti-tax is anti-democracy now.

Richard Teather:

This is attacking a classic use of a tax haven, as explained in the previous chapter, in which a person resident in (or otherwise subject to the taxation system of) a highly taxed country places his capital in a tax haven where it can earn untaxed income. While there are many cases where the home country does not tax foreign source income (such as the UK’s non-domicile exemption discussed above), most Western countries have a worldwide taxation system that seeks to tax the worldwide income of its residents (or all of its citizens in the case of the USA). This tax haven income therefore does not cease (legally) to become liable to tax merely by being earned offshore: it is still liable to tax and the investor has a duty to report it to his home tax authority. In practice, however, if the investor does not report his income, then the home country can have great difficulties in discovering and taxing it, particularly if the haven country has strong banking secrecy laws.

While I am not seeking to condone dishonesty or criminal activity, from an economic perspective this is merely another example of tax competition: indeed, it is often necessary behaviour in order to take advantage of tax havens. Without the willingness of some to engage in this sort of activity, tax competition would be much less effective and therefore reduce the benefits that flow from it for the rest of us.

OK. So people breaking the law limits the ability to impose restrictive laws upon us.*Shrug*. Semms pretty obvious to me. Put the tax on cigarettes to high and people will smuggle them. Put the tax on booze too high and people will smuggle that. As indeed they do. Put the tax on tea too high and people will smuggle that, as indeed they did to the point that at one time 75% of tea consumption in England was smuggled.

People who evade (ie, break the law to not pay them) taxes place a limit upon how high tax rates can be.

As I say, *shrug*.

People breaking the law by rioting in the street put paid to the poll tax as well.

Ritchie sees this differently.

I added the emphasis: what I think he is doing is condoning criminality.

This is supposedly done, you note, top preserve the right to property. This, however, is an entirely false argument. Since property rights are inseparable from the duty to pay tax – both coming from the same source and being indivisible –  the right to hold property is equally and exactly matched by the duty to pay tax. So anyone arguing a tax is not legitimate has at the same time to say property rights do not exist or that government is illegitimate. Those are the options.

Now note that Teather does not say that people are right to evade tax. Only that by their doing so they they make tax competition more effective. That is, that there are effects from their doing so, effects which are beneficial.

Note also that no one is saying that tax is not legitimate: only that taxes which are too high will be evaded thus there is a limit upon how high taxes can be put.

I think that is what is being said. Those from the right and the financial elite who seek to justify tax crime and the avoidance of obligations to government seek to undermine the state and the society we live in.

No, we\’re just observing that tax rates above a certain level can lead to a fall in revenues collected. You know, observing what happens in the real world? This Laffer Curve thing again?

Do click through to see the comments as well. Most fun.

8 thoughts on “Today\’s Ritchie”

  1. If being anti-tax is anti-democracy (and good spot!), does that mean that the most democratic jurisdiction is the one with the highest tax rates? Presumably, that up-ends a lot of historical theorising, as the Democratic Republic of Germany really was democratic after all!

    It really does puzzle me how people on the left can say that private property rights are derivative from something other than the dignity we have by virtue of our humanity. I thought they were all over human rights, but embarrassingly for them, most of the declarations list the freedom to hold private property alongside concepts like the right to life and freedom of speech.

  2. Huh, I was just talking to a guy, a proper working class guy on not much more than the minimum wage who spent 3 months in the nick because when they introduced the poll tax it was double what his rates had been and he refused to pay it.

    I guess he deserved it.

  3. Put the tax on tea too high and people will smuggle that

    Not necessarily.

    Put the tax on tea too high and some people will get so angry they throw teabags at the local harbour and then start a revolution, founding a nation that becomes a beacon for personal freedom, free enterprise and gun nuttery.

  4. Remittance Man:

    It’s a “package deal,” my good man (and I’ll take it). As the song goes, “you can’t have one without the others.” (And, yes, I know I added the “s.”)

    It’s something like that other, equally-valid “package deal”: good, fast, cheap. That package allows you to have any two you’d like–but never all three.

  5. Ritchie is a sanctimonious super twat. Taxation is theft even if might be used in a good cause. When it is a) pissed up the wall and b)used to help create a police state as well–Piss off Ritchie.

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