Friday, 14 December 2012
Death and Taxes
The only guarantee in life is death and taxes. I can agree with death, there is never going to be an escape from that fate but taxes are far from inevitable. There is no need nor is there a benefit to general taxation. They lead to a wasteful use of scarce resources, appropriating the means of production from the competent, placing them in the hands of central planners with no such track record.
Taxes have been in the news of late for a number of reasons. Starbucks, the global coffee brand, has recently declared it will make 'charitable donations' to the tax-man here in the UK, highlighting the absurdity of taxes. The donation is a rational PR stunt to appease customers, the majority of the public still believe taxation is a noble cause. Google and Amazon on the other hand opted out. Eric Schmidt, Google's ex-CEO said it was Capitalism and was proud of the companies track record. Personally given a choice if I would prefer Google to have the money or the Government, I'd choose Google every time. They provide me with useful services for free (in many cases, they now give me hardware for loss prices, such as their Nexus products). On the other hand my Government continues to tax me more. It says I can't have a state pension until I'm over 70 which will no doubt rise further despite the fact I pay 10% of my income to National Insurance which is one giant ponzi scheme that will never pay out. Healthcare is rationed. I have to use badly managed transport systems currently under the grip of the state. I struggle to see the value for the thousands of pounds I pay in general taxation every year.
Everyone likes to take the moral ground in relation to taxation both rich and poor. Many think taxes should be raised - so long as its not them. People on low incomes believe the rich should pay more. Billionaires such as Warren Buffet, presumably to appear charitable, asks for people on high incomes to pay more. He doesn't mention the fact that he himself does not have a high income, he earns his fortune in dividend payments and such. Of course for those earnings he campaigns for lower taxes - again, others should pay taxes, so long as its not me!
Taxation is such a farcical system and is only kept afloat along with the inefficiencies of the State by the co-exisitng free market. Mises long ago proved Socialism would collapse as it lacked a price mechanism in order to divert scarce economic resources. Taxation is a direct abolition of this price mechanism, there is no alignment with consumer demands and it abandons entrepreneurship. In the end the systems collapses and needs to be re-managed with the guidance of prices.
Tax avoidance is not a moral problem it is a rational human action, we all do it. Booze Cruise. Imported Cigarettes. Inheritance Tax, gifts to Children. Putting funds under other family members names to reduce the taxation on investment income. Contractors/Self Employed declaring income as company dividends. Everyone to some extent or other looks to avoid tax, however they then proceed to take the moral ground when a company or individual does the same. Jimmy Carr was demonised for using workarounds recently, but why? People on various levels of incomes do this all the time, it was nothing new.
One day I believe taxation will be banished to the history books but the majority still believe it to be of benefit to them. Over half the population in the UK get some form of "benefit" payment from the state, reinforcing this belief. We can't give Heathcare or the Police to market forces, who will protect the most vunerable. Electronics, that great bastion of State run economics, the most vunerable now have widescreen TV's when once a TV was a luxury good, a case of more for less. Myths and fears ring in peoples minds keeping one to known conventions. A classic myth is Communist Cubas "Worldclass Healthcare". Dig a little deeper, deeper than a Michael Moore propaganda film, and the truth comes out. In Cuba it is hard to get even basic medication such as Aspirin, we're not talking about some complex surgery, just a simple product that costs pennies in the West. Cuba's infant mortality rate is low for a reason and its not the healthcare. They simply don't count infant deaths below the age of 6 months or so. Of course this is when the most deaths occur, I could make a "WorldClass" healthcare system with statistics like that. In Western countries like the US they even include premature babies, the ones that only with modern Western Technology have the opportunity of life. In Cuba they die. Old Communist Russia used to fudge the numbers of people who died in hospitals by simply pushing patients outside the grounds when they thought they would die. Bribes were common. Anaesthetic - forget it. You were lucky to get a simple procedure like X-Rays due to rations on X-Ray film.
The UK's NHS heathcare system is bankrupt but there is still the dogmatic belief that people need state healthcare. Meanwhile regulation stifles private competition. Other half baked initiatives such as PFI amounts to nothing more than failed state planning being transferred to large corporations who have their nose at the trough. It won't work for the simple reason Governments will mismanage the funds as there is no price system, no consumer demand, no entrepreneurship. To solve such economic calculations, you need to remove all regulation and Government involvement. Only then will people on the lowest incomes derive greatest benefit.
Taxation is enshrined in law. If you don't pay you go to Jail. I don't believe this will change in the short term as there is not enough critical mass within the public for the abolition of taxes. I believe over time the Government will become bankrupt on a number of fronts and seek the markets help to run such 'sacred' services. Once the public sees the value for money, it becomes irreversible. Then people see what little the Government offers them and wake up to the fact that taxation is wasteful, increased public support for the abolition of taxation becomes more popular. Until that point I guess the majority of us will say we all need to pay more tax, so long as its not me.