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.

  • http://josephratliff.com/ JosephRatliff

    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.

  • http://twitter.com/bradbelltv Brad Bell

    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,

  • http://www.facebook.com/tatarynowicz Michał Tatarynowicz

    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.

  • 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.

  • http://twitter.com/RapidAndi ʍǝɹpuɐ

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