Taxes are an obligation, not a moral choice

In its tax fight with Google, Starbucks, and Amazon, the UK has in essence been demanding that they tax themselves: that they pay more tax than they are legally obligated to because lawmakers, in their hectoring, say that would be the “moral” thing to do.

Now see this discussion by Reuters’ brilliant Chrystia Freeland about the notion of plutocrats self-taxing. She says, quite rightly, that the concept of self-taxation is a challenge to the authority of governments: rich people are saying they can better spend their money to benefit society than society’s representatives in government can.

The irony, then: The UK’s lawmakers are undermining their own authority when they demand that Google et al meet different — perhaps higher — demands than their own laws’. They are abdicating their responsibility to write good tax laws and to negotiate tax treaties with other nations, which are attracting business and thus tax revenue from these multinational companies by offering them better deals than other countries (it’s called competition).

And therein lies another challenge to the authority of national governments: that multinational corporations can indeed play states against each other to get the best deal in minimizing taxes and thus maximizing profits (which, let’s remember, is their fiduciary raison d’etre: maximizing shareholder value). This is especially true in the digital economy, when companies can operate anywhere, even apparently nowhere (across distributed, virtual networks), and also find customers anywhere (that’s the subject of a Guardian story today lamenting the VAT taxes it loses to multinationals selling products directly to consumers, offering lower tax rates and thus better prices … which usually is seen as a good thing for consumers).

Taxation is not a moral question. It is a legal obligation. It is the role of government to write and enforce equitable tax laws for the benefit of society. In the current fight over taxes in the U.S. — which, of course, is what the fiscal cliff is all about — we see various sectors predictably acting in their own self-interest: the middle class wanting to tax the rich, the rich hoping to at least minimize that change. In the end, after much needless pain and struggle, Congress will have to pass a tax law and we will pay our taxes as is our legal duty. I would agree that is a moral duty: to serve and protect the rest of society, to give us services and to help those in need.

But if government makes taxation a matter of moral choice, then what of the law? Where is the certainty that both companies and individuals require to plan their lives if we are held to some unwritten standard? Where is the certainty of government revenue to do its work if taxes are a matter of taxpayers’ judgment?

In an age when borders are increasingly meaningless, when citizens can organize themselves, and when new and stateless armies of hackers bear new but damaging weapons, the authority of governments is being challenged on many fronts. Here governments challenge even their own authority.

  • Solid discussion starter Jeff…

    Taxation is most certainly a legal obligation… but only if the tax laws are in fact written and enforced to be equitable and to benefit society, paraphrasing what you wrote.

    Unfortunately, that isn’t quite the case… and why there exist groups, such as the “rich,” who want to self police their own taxes (I’m sure they probably have their own personal agendas to satisfy as well). Would they be doing this if conditions didn’t warrant such behavior?

    • msbpodcast

      the “rich,” who want to self police their own taxes

      That’s essentially leaving the fox in charge of the hen house. :-)

      Problem is that its not their money, its not the government’s money either.

      Its the common property of the people of the United States of America and tallied by Federal Reserve Notes.

  • I can’t believe my government has managed to get it’s head stuck this far up it’s raison d’etre. Excellent points, Mr. Jarvis. The MP did seem to want to change the law, but she obviously didn’t expect that to happen, or she wouldn’t be relying on consumer boycotts and indignation.

    National governments do still have authority over *people.* Capital can flow effortlessly. Corporations can move to countries with the lowest taxes, least regulations, and cheapest labour. But citizens belong to the state. For the moment. As citizens are pushed to organise themselves internationally to fight globally life-threatening conditions, that will undoubtedly change.

    I propose for one month we try chaining capital and corporations to the state, and letting citizens roam the earth looking for the best deal. If we are going to be radical fundamentalists and consider things like ‘self tax,’ then we should equally consider the ‘multinational citizen.’ If you are offering good wages, we’ll be there. If you are offering universal health care, we’ll be there. If you are offering the infrastructure to build communities, we’ll be there. If the schools are good, and the public communications infrastructure is excellent, we’ll be there. if you can imagine a future for our children, we’ll be there. If you are offering a harbour from the super storms, we’ll be there briefly, until the storm blows over, and then we’ll go looking for a better deal, thanks.

    • msbpodcast

      But citizens belong to the state.

      No Brad, the state belongs to the citizens,

  • If businesses don’t self-regulate, they will be regulated. I’m not so sure if it’s in their best fiduciary interest to force governments to legislate their freedom away, but who am I to judge?

  • henryy

    hiii tanks posts

  • tiffanybbrown

    I’ll add that taxes are in many ways, a fee for usage or services rendered. You are also paying for your use of and the benefit you receive from a nation-state’s educational system, physical infrastructure, legal infrastructure, regulatory environment, financial infrastructure, intellectual property rights, real property rights, immigration policy, etc. These things make it possible for you to do business.

    You pay your lawyers and accountants for their services and rightfully see that as fair. Yet paying taxes is somehow different? It’s the cost of having stable societies with solid infrastructures and dynamic, educated workforces. Pay up.

    • anamax

      > Pay up.
      Pay up yourself.
      I’m paying for what I use as well as for what other people are using.

    • Sean

      1 taxes are excessive in the us compared to income most people end up pay 40-50% of their income in taxes ( thought most dont realized it.) when one accounts for property taxes, income taxes, gasoline taxes, taxes on mandatory luxturys like smart phones automobiles and or other transportation cost assosiated with employment. Don’t forget to add the taxes that are built into the cost of products and services, The taxes on those products and services In the form of SalesTax is where they apply. Surcharges on phone and utility bills ect. Now contrast this with the amount of money that Scandinavians pan taxes which can run 30 to 40% or more if you’re wealthy. I would venture to say that the average Scandinavian makes out better after paying an what initially seems like a higher tax rates because he actually gets government services something the American doesn’t.

      • Sean

        2 Americans can pay excise taxes for their vehicles,luxury taxes on their vehicals,gasoline taxes to maintain the roads, property taxes to maintain the same roads,and yet the roads are some of the worst in the developed world.
        3. Americans pay more for education than any other country in the world and as a result we have some of the worst education in the world. This is because of the teachers unions. Moreover poor people who work second jobs to put the kids in private schools and or mothers who stay home to homeschool their kids and give up the income that would come with work are penalized for it in the form of having to pay for the public schools as well. Many of these people homeschool and send their kids to private school just so their kids can learn to read which doesn’t happen in many of the public schools.

        • Sean

          If my accountant doesn’t do his job,or my lawyer doesn’t do his job, or my plumber doesn’t do his job I don’t pay him!
          I then find someone who can do that job and I hire them. Problem solved.
          But since corporations and unions and every sort of special interest group (Colleges universities scientific research groups political agitators Abortion groups pro animal rights groups ect.) to buy the government that they want I end up with a government I don’t want. This is why Americans hate their government and this is why all the leftists love government because the money comes out to them in the end. The teachers unions get more money then they could ever expect to make it a free-market. (Private school )Well that’s great but who has to ultimately pay for it? People who work a lot more and a lot harder and get paid a lot less. Who pays for pensions, Generally people that don’t get pensions. So when you’re taxation system is not equal and taxes from some to give to others it’s going to be hated by that part of the society that has to pay the money.

  • ya5599

    it is great.

  • msbpodcast

    I find myself thinking that our remuneration rates are all out of whack in the English speaking world, led by the United States of course. (The salaries of Québec upper-crust executives is not so disproportionately bloated for instance. Its the same for Europe.)

    Their salaries are based on the result of negotiations with executive compensation committees (which the likes of mere employees don’t get to partake in, their wages being set by some other rate chart,) and reflect the “pissing contest” that en executive’s salary has become, instead of being based on the value of any work being performed.

    The sad part is that the wage and earning divides between the 99%ers and the 1%ers are approaching spans not seen since the French Revolution, when the soit-disant nobility (who were the upper management of the day) took rather severe haircuts, administered by Guillotine.

    We may be approaching a period in (mis)management history when all of the 99%ers are so incensed by the bad behavior and cupidity of the 1% that the proles who still have employment might join the millions who have been tossed aside in the rush to profit, and refuse to work.

    At that point, we will see the true color of our self-styled overlords. Do they listen and reach some form of accommodation, or do they sick the troops on the ones they perceive as their slaves?

    Then problem with living in a “Winner-Take-All” society, with a “Winner-Take-All” economy, under “Winner-Take-All” politicians is that it does not leave anything for the losers, and guess what, they have already won it all.

    Taxes are the normal way to redistribute wealth.

    Its not the government’s money, its society’s money.

    We appoint a government to oversee and execute the appropriate redistribution of wealth, as well as maintain the necessary infrastructure for society to exist.

  • Interestingly, Starbucks has volunteered to pay more UK tax. Perhaps public and political scrutiny works, at least in the short term.

  • Steve

    No government needs to take from the wealthy to support the poor. The moral obligation that government has to the people is to respect their freedom and liberty. In taking money from those those that have earned it, in the name of compassion of others, is not the moral obligation of government in fact the government is acting immorally in taking money from anyone because the government does not have to take from the wealthy to support the needs of the poor.
    The government can print the monies required to spend as the government determines best to support the poor. Food stamps are issued in the US and is in essence printing money for the poor so it would not be a departure from the norm to print money for the poor to support the needs of the poor. This would eliminate the resentment between classes of people and raise the overall happiness of all. BY taking money from an individual you are in essence taking their freedom by eliminating what the individual seeks to do with their money, such as, save for education, take a vacation, give to the charity of their choice instead of taxes robbing the individual from the opportunity to give from the heart which is immoral in that you have taken the joy of giving from the individual.