It is an axiom of human behaviour that whenever a cherished ideology is discredited by experience its defeated disciples console themselves by claiming moral victory. Nowhere has sanctimonious humbug been more zealously propagated than by the adherents of dinosaur socialism in the realm of taxation. A kind of moralistic blackmail – effectively a theology rather than an empirical economic thesis – insists that taxation is in itself a virtue.
That insidious notion has gained surprising traction. The more tax people pay, the more moral they and the society they inhabit are accounted to be. Among large sectors of the commentariat the Judaeo-Christian ethic has been replaced by fiscal masochism. While the ostensible purpose of this manic state extortion is to reduce economic and social inequality, little attention is paid to the efficiency with which the state deploys taxpayers’ money or the objects on which it lavishes it: the act of confiscation has become a morally purifying rite in itself.
There is now an urgent need to challenge this superstition by reappraising the whole purpose and justification for taxation by the state, questioning lazily accepted assumptions and subjecting the issue of revenue raising to fundamental scrutiny. We need to go to ground zero, create a tabula rasa and reassess the ethics of taxation.
Tax is as old as human society: it is frequently referred to in the Bible and other ancient chronicles. It is a necessary function of government of any kind: the only society that could exist without taxation would be a state of anarchy. Beyond that fundamental axiom, however, everything else should be open to question.
By what right does the state confiscate its citizens’ money? By right of the fact that it provides them with military defence, domestic policing and welfare to prevent the poorest in society falling below a civilized standard of living, is the evident answer. There is a clear justification for the state raising revenue to enable it to carry out its legitimate responsibilities. But what about the vast and ever-enlarging range of its illegitimate interventions?
Why, for example, should central or local government have an “arts policy”? Not only is it the gratuitous expenditure of taxpayers’ money on an activity in which government should have no locus, but it also invites political manipulation of culture, with all the totalitarian implications of such an extension of power. The range of areas invaded by the intruder state today – spheres of life never previously within the compass of government – is enormous and a threat not only to citizens’ wallets but to their autonomy.
To pre-empt public resentment of the state’s usurpation of power and plundering of its people, the propaganda beamed from the bogus moral high ground insists that money is somehow spent more ethically by the state, in contrast to its frivolous expenditure by private citizens. This absurd imposture ignores the wealth creation that only the free circulation of cash in the market can generate and disseminates the pernicious notion that government ultimately owns its citizens and their assets.
Increasingly, it seems, it does. In Britain the overall revenue take now amounts to 41.1 per cent of GDP, in contrast to the United States where it is just 22 per cent. In Germany the figure is 45.3 per cent and in France, home of Thomas Piketty, 51.5 per cent. Massive as that figure is, it is inadequate to satisfy the rapacity of the French state, whose expenditure in 2013 amounted to 57.1 per cent of GDP.
This is the road to ruin. We have grown accustomed to every transaction of everyday life – house purchase, drinking a bottle of wine, driving a car – being subject to arbitrary imposts by a government that has contributed nothing to the exercise. It is time to challenge the right of government to seize our wealth and squander it unnecessarily and inefficiently.
Why is tax avoidance – a perfectly legal protection of interests – so virulently demonised? Not because it creates unfair inequalities among taxpayers (which it may do), but because the greedy state covets ever more revenue. If government cannot draft watertight legislation to enforce state extortion, it cannot complain if accountants circumvent its rapacity; if that is unacceptable, so is the adversarial system of criminal justice.
Taxation, at a reasonable level, is a practical necessity, not a grand ethical gesture. Paying tax is not moral, merely an avoidance of criminality; a genuinely moral act is voluntarily giving to charity. State confiscation of private wealth, beyond a legitimate level, is immoral and should be denounced as such. It is neither moral nor productive to transfer wealth from its most careful stewards – those who have earned it – to the most irresponsible, i.e. politicians and state bureaucrats.