Only the Little People Pay Taxes

23 06 2012

Category; Politics, Finance

Jimmy Carr and his Bentley

Poor Jimmy Carr has realised he made a ‘massive error of judgment’ and he’s really sorry. The comedian somehow stumbled on a tax avoidance scheme that saved him an awful lot of money – click here.

Carr is a man who feels that his success allows him to stand apart from other people. As Leona Helmsley once said;

 “We don’t pay taxes; only the little people pay taxes.”

And justice. While Leona did serve at least a little time in gaol for tax evasion (click here) Jimmy Carr has repeatedly, well, let me phrase this carefully, he has repeatedly managed to secure the best possible outcome for himself after being prosecuted for motoring offences by hiring very expensive specialist lawyers – see here for more on that.

It was more interesting to see the flailing on this issue from politicians. They simply did not know how to respond. They did not understand how their reactions reflected on the nature of our society and its governance which, given that a basic role of government is gathering and spending money, is quite revealing. I’m not sure our politicians really know what they are there for anymore.

First the Prime Minister, picking up on public sentiment, or perhaps media sentiment purporting to reflect public sentiment, weighed in saying that the scheme Carr used was ‘not fair’, ‘completely wrong’, ‘very dodgy’, ‘morally wrong’, and ‘a scam’. Click here for that.

David Cameron was feeling in the right direction with those remarks, but they get him little more than marks for trying. His error was to personalise the attack; it was an attack on the moral integrity of Jimmy Carr. And it is worrying that he does not see that is a wrong thing for a Prime Minister to do. When asked about Jimmy Carr’s tax arrangements all Cameron needed to do was generalise; to condemn all people who use aggressive tax avoidance techniques.

But Labour leader Ed Miliband’s reaction was also wrong-footed. And confused and mystifying. The thing he found worthy of comment was Cameron’s response; ‘I don’t think it is for politicians to lecture people about morality,’ Miliband said – click here. Really? Don’t you?

Miliband went on to add that he felt the ‘right course’ was to ‘change the law to prevent tax avoidance happening’. And that comment is revealing too.

There’s something quite unworldly about a man who appears to think more laws will eradicate tax avoidance, rather than being an opportunity for clever people to find a way around it. It reveals a very New Labour way of thinking.

First of all new laws need to be legislated which involves lots of work for legislators and their teams, and lobbyists from this this and that special interest. Then those laws need to be implemented meaning lots of work for bureaucrats and then they need to be litigated involving lots of work for lawyers. And, of course, they need to be avoided, which means lots of work for the clever people.

Labour never seemed to have heard the phrase ‘prevention is better than cure’. To have understood that to set the tone, the moral tone, that tax avoidance was unacceptable and simply made it understood that it was not to be tolerated and was morally and socially unacceptable would be a great deal more effective than trying to legislate against its individual manifestations. A classical metaphor; simply chopping off each head is not the way to defeat a Hydra.

Or perhaps to give an example more relevant to the contemporary politician; as Chance the Gardener said in ‘Being There,’ (click here) “As long as the roots are not severed all is well.”

Chance the Gardener said something else profound for our contemporary politicians. On being outside his garden for the first time he said :

“This is like television, only you can see much further.”

If only our politicians, unlike Chance, could see that much further.

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