A quote for @richardjmurphyMay 31, 2011 Tim WorstallRagging on Ritchie10 CommentsThe avoidance of taxes is the only intellectual pursuit that carries any reward. John Maynard Keynes. previousLarry Elliott and economic statisticsnextHe must be able to aim well then 10 thoughts on “A quote for @richardjmurphy” Bilbao boy May 31, 2011 at 5:15 pm Tim You are what my Dad calls a muck-stirrer More power to your elbow. I like (to watch) a good fight. Kay Tie May 31, 2011 at 5:35 pm It’s also one’s civic duty: depriving governments of money reduces their ability to make mischief. Blue Eyes May 31, 2011 at 10:46 pm I am a bit confused, because if it wasn’t for tax minimisation strategies, @richardjmurphy probably wouldn’t be able to spare the time to promote his particularly authoritarian form of socialism. SimonF June 1, 2011 at 12:12 am ……. authoritarian form of socialism There’s another form of socialism? Do tell. Joseph June 1, 2011 at 12:26 am Isn’t ragging on ritchie a rewarding intellectual pursuit? Gene Berman June 1, 2011 at 1:04 am SimonF: Unfortunately, Simon, although you are right in principle, as a matter of anti-socialist strategy (involving the education or persuasion of majorities in democratic societies), you might as well be dead wrong. All forms, whether wholly or only partially socialist, are handicapped by the inability of those in charge of economic aggregates not part of the market to calculate economically, to anticipate profit/loss consequences of their actions and anticipated actions, thus to allocate resources rationally. However, the clear connection between market operations and success (and its opposite) is only relatively clear where the state is either the sole proprietor of productive activities/property or is over whelmingly dominant. In all “mixed economies” or systems believed to operate in some “intermediate” fashion, the lines are blurred to the extent that “lessons” are drawn only with great difficulty and with such less sharpness as to make nearly impossible any reliable conveyance to the great mass of voters on whom future formulation depends. And, if that were not enough of a handicap for truth to overcome consistently, please observe that the very matter of the theoretically non-partisan education of the rising generation and particularly of the forming generation of political leadership is in the hands of socialists of varying stripe. So, get used to it: we’re treading as determinedly as ever on Hayeks’ “Road to Serfdom.” Very many realize we’re fucked; what they don’t realize is just how completely fucked we are. Richard June 1, 2011 at 1:44 am “The avoidance of taxes is the only intellectual pursuit that carries any reward.” This is partly an extreme example of the tax wedge. Because tax avoidance (like any other personal saving) is not taxable, it is much more valuable than going out and earning an equivalent amount of taxable income. For a self-employed top rate taxpayer, saving £1,000 of tax can have the same benefit as earning an extra £2,500 profit. Which shows why there is a Laffer curve. Once tax rates get too high, there are much more valuable things to do with your time than earning taxable income. Even though earning the extra income would probably be much more valuable to society. Jim June 1, 2011 at 2:17 pm @Richard: That is a very good point, which I have never heard made like that before, and it makes excellent sense. Lets say you are in business and fancy a bit more income. You can either a) try and increase your trade (with all the hassle that goes with that) or b) put your mind to finding some way of paying less tax on what you already earn. Its a no-brainer really. If you find a nice little tax avoidance scheme you get you extra income, but no new trade has occurred. So no new wealth is created and no more workers are employed. The logical conclusion is that tax rates should be set low enough that its not worth trying to avoid them, and people try to increase their business instead if they want extra income. David Gillies June 1, 2011 at 4:56 pm Jim, there is substitution of labour for leisure and vice versa. If you get a pay rise, you might now value your time spent working more than before since your marginal return on your labour is higher, so you work longer hours. Or, you might be happy with the same income and consume more leisure time. The marginal tax rate affects where on the spectrum you fall. There are anecdotal stories of the 70’s that essentially the only thing a group of businessmen would talk about at a party was how to get round the eye-watering taxes they had to pay. It was completely unproductive and wholly understandable. Offshore Observer June 8, 2011 at 8:43 am Here is a question is there any such thing as tax avoidance? After all you either pay all the tax you are legally obliged to pay or you don’t which is tax evasion. By structuring your affairs to minimise the amount of tax you are legally obliged to pay you are still complying with the law. On a seperate matter if one unpacks the statement by keynes one level further does it not seem to you that keynes is using the term “reward” to refer to pecuniary gain. Its almost as if Keynes is suggesting that having more money is the only real way of measuring success? Is Keynes really suggesting that making as much money as you can is a fundamentally good thing? Does the loony left know that? Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.