Saturday, 18 August 2012

Lies and Taxes

No matter one's political persuasion, it is hard not to think, as Willard Foxton argues in an interesting essay that the income tax code in the UK (and in the US too, for that matter) is too complex. In a more cynical mood I would be tempted to say that the tax law is so complex, because complex tax laws benefit the rich, and the rich make the laws.

In the UK there have been several scandals on tax avoidance, perhaps most notably, one of the two biggest Scottish football teams blowing up due to an offshore tax evasion scheme. At first I was unable to understand in the news reports why other football teams, and their fans, seemed so rabidly angry at the Rangers. But of course: football does not have a salary cap, so if a team unfairly spend less money on tax, it can spend more money on players. By cheating at their taxes, the Rangers were also cheating at football.

Taxes are political footballs as well, especially in the US. In the US there is an additional crazy phenomenon that creating a new program makes you an irresponsible tax and spend liberal that is taking money out of the pockets of working families, while cutting taxes makes you a deficit hawk. (I mean, uh, not to get too overtly political or anything?) Therefore if you are an American politician---of either party---and you want to create a new program for a noble goal, e.g., to pay for college scholarships for middle class families, why not make it a tax credit? That way, you get the noble program, and you can say that you're cutting taxes too!

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