Whilst the furore regarding Jimmy Carr’s avoidance of paying more than a nominal amount of tax appears to be fading, the issue of the morality behind avoiding tax remains (for anyone not aware of the issue there is a link to the Jimmy Carr story here and Prime Minister David Cameron’s argument that he was ‘morally wrong’ to avoid paying tax here). Can we talk of our moral obligations to pay taxes? And even if we can, is it possible to put actual figures to these arguments?
In The Republic and Crito Plato argued that people have a moral duty to their state (‘morality’ is a modern term; for Plato the terms ‘just’ and ‘unjust’ roughly fit the criteria of moral and immoral). The state provides for us, in terms of schools, medical treatment, infrastructure, etc., and in return we agree to obey laws, pay taxes, etc. Whilst this is a gross simplification of what can be a highly contentious set of implicit obligations, in broad terms it could be argued that this seems fair enough. Unfortunately, Plato (and many who joined in the argument) didn’t get round to putting a number with the argument, which leaves us to ask the more awkward question – how much? What is my (or Jimmy Carr’s, or Phillip Green’s) fair share in this mass payment to fund the state? Because this is what the argument of morality often comes down to; when we cannot produce quantifiable figures we tend to look at what is fair. But does this lead to an equitable solution?
Can the use of resources be justified? This would certainly appeal to the notion of fairness which lies at the heart of morality. Those who use a resource the most should pay the most.
This, of course, falls foul of even the most basic rules of usage. If someone has a need to access medical care provided by the state because of extreme illness and vulnerability, the very notion that this person should be asked to pay more in taxes to fund this immediately offends our sense of fairness. Even the term ‘use’ can be difficult to apply; whilst it appears reasonable that I should pay some taxes to fund a police force and legal infrastructure to keep me safe, I rarely call upon them. If the cost of funding these resources is spread across all law-abiding citizens then it is probably far lower for each of those individuals than the costs attributed to someone who breaks the law and is arrested, incarcerated, looked after by the state in prison for months or years, etc. So usage would argue that this person should pay more taxes to fund their use of the police and legal system – but they would justifiably argue that it is not in their interest to fund a body which has then taken punitive measures against them.
The issue of usage again raises its head when we examine the notion of the richer members of society paying more – again, the question must be ‘is this fair’? When looking at what the state provides, there is no special road for rich people to drive on, they must drive on the same road that we all drive on; if they are taken to a state-funded hospital there is no special doctor kept on call to deal with more wealthy patients. Their use of state-funded provisions is the same as for everyone else – even those who do not pay taxes for reasons such as low wages or unemployment. Asking people to pay more than others for the same amount of usage would again offend our sense of fairness – if I were asked to pay more for a resource than you were simply because I had more money on me there is no doubt that this would be considered unfair.
An additional argument applied to the issue of tax avoidance is that some people can do it whilst others can’t – Jimmy Carr can afford to have an accountant look after his taxes and get him good deals that just aren’t available to the likes of you and me. At last, we appear to be approaching something which resembles unfairness – the differential treatment of some people in comparison to others. However, is this the case? There is no law to stop anyone from employing the services of an accountant, merely the practicality that employing them would probably cost far more than it would save in taxes for the average person. In this way it is no more immoral than a person owning a house when others cannot afford to do so. In this respect, we are also talking about a sliding scale; is it immoral to put money into a tax avoidance scheme (e.g., an ISA) when some people cannot afford to save any money? Surely this is those with (a bit) of money attempting to not pay their ‘fair share’?
None of this post has been an attempt to defend either the non-payment of taxes or the actions of any individual; it has been an attempt to show that the morality argument cannot easily be applied to the issue of taxation. In this respect, I believe that the morality argument fails on at least three broad points:
1. High use of public services cannot form a moral basis of taxation, as this leads to morally repugnant cases such as the use of medical services.
2. Amount of money earned cannot form a moral basis of taxation, as this leads to differential charging for the same service, which breaches our moral notion of fairness.
3. That there are different rules for the rich is shown to be a false argument, as this is shown to be a scale of return argument in which most people make the (correct) decision of whether to avail themselves of a service.
One of the reasons why Jimmy Carr attracted so much criticism was because he had attacked Barclays Bank in a satirical sketch for their tax avoidance schemes. This opened him up to charges of hypocrisy, and it was probably this more than anything which led to him having his change of heart over payment of taxes. I have also heard commentators talk about ‘shaming’ people who avoid tax into paying their taxes. But is this morality? Is morality doing the right thing, or being seen to do the right thing? The notion of morality seems to have an intrinsic element to it – it seems to have an element of Immanuel Kant’s idea of duty, of thinking about what I ought to do and then ensuring that I do it. Whilst that is fine in principle, would that everybody in the world actually did it; because, as I alluded to briefly above, we don’t. We all try to gain a little for ourselves, through putting money in an ISA, or buying things for the future at 17.5% before the VAT goes up to 20% the next day, and in hundreds of other ways. We think it doesn’t matter matter because it’s just a small thing, it’s just us, and what harm can it do in the grand scheme of things? But according to Kant, it does matter – because you either behave in a moral way or you don’t, there is no halfway house. The categorical imperitive is just that.
This is just a brief starting point on a theme I intend to explore more closely. For now I want to leave it with an alternative viewpoint to the above from Peter Hitchins, a viewpoint which I would like to explore in later posts, which argues that tax avoidance cannot be morally wrong when those who receive the taxes do not use it for the good it was intended.