Mark Hubbard drew my attention to a post about tax avoidance by Massey University tax lecturer Deborah Russell:
Despite everything you might hear, most New Zealanders mostly pay their taxes, on time and in full. We’ve got a very good compliance rate here. Somewhere between 80% and 90% of taxpayers pay their tax on time, and over 60% file their returns on time.
Like we have any option? The case for citizen buy-in is impossible to assess or prove when the law forbids choice.
People who won’t pay their taxes free ride on other New Zealanders.
Tax aoviders not only free ride on other New Zealanders, but they undermine the whole tax system. Tax compliance is a trust game: if people think that other people comply with tax law, then they are more inclined to do so themselves. But if they think that other people are rorting the system, and not paying taxes, and squirreling money away, then they lose confidence in the system, and start to avoid paying taxes themselves. The reasoning is straightforward: who wants to be the only schmuck left.
This interests me because it's exactly the same thought process I've heard blamed for benefit exploitation in Europe. The reason for the decades-long increase in people relying on state hand-outs is attributed to progressive capitulation from those thinking, "If you can't beat them, join them." The more normalised living off the state becomes, the greater the benefit uptake will be.
The one defense that these tax avoiders might try is that their activities are perfectly legal...But even if the procedures used are legal, it’s not clear that they are ethically acceptable. This is in fact the closest I can get to understanding exactly what a rort is: it’s something that is technically legal, but nevertheless pushes the law to such an extent that it is immoral.
Again the "perfectly legal" tax avoidance defence has its parallel with the 'perfectly entitled' tax take defence. Many have become far more concerned with legal entitlement to benefits than moral.
But look what follows:
We’ve heard a great deal of nasty rhetoric about people on benefits in recent years, but very little about the scungy behaviour of tax avoiders and tax evaders.
By Russell's logic, we should be hearing "nasty rhetoric about people on benefits" if the behaviour of tax avoiders and evaders is also "scungy". If people who don't pay tax are "free riding" so too are those who take it when they do not need to.
The problem is both groups are failing to accept her "common good" philosophy.
This isn't a defence of greed or laziness. But without the "common good" ends realised only via state force, those character traits would be visited upon their bearers - not you and I.
