A Taxing Time

This “off the wall” essay, I say with tongue in cheek, proposes to explain how taxes have evolved from the days of a tithe at 10% to a maze of taxes found in today’s global economy. The literary works of two authors are used to explore this progression. Taken together they bind the elements of fact and fiction into this fantasy, which is used to demonstrate the relationship between politics and economics.

Any discussion of tax begins with the principles of a good tax system so profoundly stated by Adam Smith in his book The Wealth of Nations published in 1779. In fact, they have proven to be timeless in influencing political economics.

These four principles are: one of equity or fair treatment by nations in applying their taxes. They should be convenient for the taxpayer implying a user-friendly environment for the payment of tax. Thirdly a tax system should encompass certainty as a goal where tax authorities and taxpayers know what to expect. Finally imposing taxes must be economically viable for a nation meaning there must be a net gain in the process hence the wealth.

Transparency embraces these concepts and is the mantra of many organizations today. As we will see this is not always the case.

Adam Smith also coined the idea of an invisible hand, a term used to describe the ideaology that persons seeking their economic self-interest benefit society as a whole versus big governments stifling of incentives to produce fails us in its application. The context in which it is used in this proposal creates an image of sinister workings behind the scenes in big government.

The exponential growth and complexity of nations needs in the global environment is immensely different now requiring governments to find ways to fund the wealth of their activities.

This brings us to the other great book written by George Orwell in 1948.

This dystopian fictional novel is simply called Nineteen Eighty-Four. Here we are introduced to the mysterious character of Big Brother who is watching over us. He is depicted as the dictator of a totalitarian super state called Oceania. Watching over us carries no goodwill like a shepherd caring for his flock. This is not fair or equitable by any means. In this proposal Big Brother assumes the role of big government and its revenue authorities or ministries. . Orwell has developed words and phrases in his book that are central to Oceania and the notion of Big Brother watching over you. There are four ministries responsible for implementing Big Brothers wishes. The Ministry of Peace is concerned with war. The Ministry of Plenty is concerned with starvation. The Ministry of Truth where the Thought Police operate and The Ministry of Love which houses Room 101, a torture chamber where people face their worst tax nightmares. No love is lost here.

Other words and phrases are used here to formulate the workings of these ministries. The context of their use here serves to augment the idea of how tax authorities powers have disrupted the political economic relationship.

Newspeak is the language used in Oceania. It controls the thoughts of its citizens. Doublethink is the part of Newspeak that works to brainwash the populace into believing that two conflicting views are acceptable at the same time like fact and fiction, the premise for this essay. It governs all aspects of the law reflecting the super state’s changing whims where on any one day 2+2=5 or maybe 3, symbiotic in believing both to be true at the same time. What a nightmare it is for taxpayers, this uncertainty.

Doublethink is embodied in the names of these two ministries that concern us. Truth = propaganda and the altering of history to suit the authorities needs. Love = the infliction of misery.

Revenue authorities around the world incorporate in their names words like “service”, “agency” and “authority”. Providing a service hardly equates to the invisible hand picking your pocket. Agency conjures up some unwarranted investigative powers of big government. As for authority it puts the stamp on Big Brothers dominance.

In this scenario there is no escape. All persons are given a number validating their existence, SIN ‘s, TIN’s and PIN’s, by which they are addressed. This is the key to watching over you. These numbers prompt returns, which are the medium for collecting handsome sums of money. This is all done through Telescreens which are computers doubling as security cameras. They are the apple of Big Brothers eye. God does not exist in Oceania so forget using a hot line for help. Clearly this is inconvenient and unfriendly.

Failing to submit a return will alert the Thought Police. It’s warranted they will search your drawers and pockets. You cannot plead that you forgot or have lost it in a memory hole. Their powers include the detection of thoughtcrimes like tax evasion a criminal act of deceit and even tax avoidance supposedly the legitimate structuring of ones affairs to pay paltry sums of tax. Heaven (?) forbid that you end up in Room 101. Conveniently they will turn a blind eye to the consumption of marijuana that invokes a state of euphoria in the populace towards Big Brother. The taxing of this consumption increases the state’s reserves of course.

The myriad of different taxes only adds to the entangled way the web has been woven to trap unsuspecting taxpayers in providing wealth for Big Brothers continued existence.

When all of this becomes too much attempts are made by taxpayers to seek the shelter of a tax haven or avail themselves of tax incentives offered by governments to attract economic activity.

Multinational corporations argue that they have legitimately structured their affairs to avoid paying tax or very little. “Tax shaming” is a tactic used by Big Brother to incite the general populace against recalcitrant persons forcing them to fess up. Needless to say the Thought Police will pounce and send them to Room 101 where the buck stops. Starbucks nightmare has cost them 20 million pounds in fines.

Mr. Depardieu’s rusher like defection in protest of a 75% wealth tax imposed by France illuminates the sensitivity taxpayers have towards tax regimes efforts to pick their pockets. “Mon Dieu” he exclaims confusing heaven to be a haven as he depar… .ted. “A….dieu”.

The battle between keeping nations economically viable by demanding their share and the propensity of taxpayers to limit supplying them determines the health of their wealth. The stealth of the manner adopted by governments is proportional to the manna received. In other words the degree of transparency plays a crucial role in wealth creation.

It comes down to politics. Although extreme the well-documented tax turmoil in Greece epitomizes tax avoidance where the government’s blind eye has greased the wheels with lax law enforcement, bribes and underhand dealings. This culture has devastated their economy with billions in uncollected tax. The ripples are felt far and wide.

This fantasy of blended fact and fiction elects to demonstrate how government’s policies have lost sight of the economic side of the equation as their wealth erodes. Any balancing act must surely revert to the principles of a good tax system where sound politics yields economic prosperity.

It leaves us with the stark reality of dealing with that brown envelope arriving in the mail. That is a certainty.

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Labels: Poly Tics