Before considering the phenomenon of taxation denial, let's think for a
moment about about a remarkably similar modern "post-truth" phenomenon:
Climate denial is not so much about denial the reality of climate
change and human responsibility for it - it is about confusing the
public in an attempt to prevent governments from taking concrete steps
to counteract climate change. The basic message of climate denial is
"the science is unclear" and "the jury is still out".
This was always malicious nonsense. It has been clear since the 1960s
that the concentration of CO2 in the atmosphere is gradually rising due
to human activity, and in the long term that can only result in higher
global mean temperatures. You can't change the laws of physics. Of
course climate is complex and there is a lot of detailed research about
climate change. So you can always say that
"the science is unclear" and "the jury is still out" about the details.
But the same applies to any academic discipline.
The motivation behind climate denial is financial. A lot of people are
making a lot of money out of the fossil fuel industry, directly or
indirectly. They stand to lose (or no longer make) a lot of money as
the industry is forced to move into renewables. For many people, being
honest about climate change is a very expensive business, or it seems
that way at first glance. But that is hardly a good excuse, because
climate change is destroying the future for everyone's children, and
causing hundreds of millions of future deaths, especially in developing
countries. These things are obvious, but in their selfishness people go
to great lengths to deny them, as if they were stupid and evil. And
perhaps they really are.
The simple truth about taxation
Taxation denial is remarkably similar to climate denial. Taxation
denial is not so much about refusing to pay tax, or claiming that
taxation is highway robbery. Arguments like that do not go down very
well. They are too obviously wrong. It is too obvious that the rich
only became rich because of the infrastructures that they used, which
in turn were made possible by taxation.
The taxation denialists are more cunning than that. They want
to confuse the general public about the role and importance of
taxation. Their basic message is: "the economics are unclear" and "it's
too complicated for you to understand". They like to roll out complex
theories about the relationship between taxation, inflation,
unemployment, economic growth, and so on. Once you start yawning, they
know that they have won.
But taxation is very simple. Governments need a lot of money to provide
essential infrastructure and services for everyone: water
supply, electricity supply, roads, public transport, welfare,
hospitals, schools. All kinds of very expensive things. The money can
only come from taxation, and it will only be paid fairly if people are
required to pay it by law, supported by strong, fair taxation
departments. Moreover, the system can only work if individuals pay
according to their means, which includes their income (or capital
gains) AND THEIR WEALTH. The basic principle of progressive tax is that
the more you have, the greater percentage you pay. Capitalism tends to
make the gap between rich and poor grow wider, because the more money
you have, the more you can make; progressive taxation can be used to
counteract this tendency and maintain some semblance of democracy.
These things are simple and obvious, but taxation denialists like to
pretend that they are not. Their tools of trade are complex, uncertain
economic theories and terminologies that most people don't quite
understand. Their motivation, of course, is to pay less tax, and who
cares if that means millions of people of dying in poverty? The main
thing, for them, is: When can I buy that second car? And after that a
second house, then a vineyard and a yacht, and so on.
The most important social problem today is the gap between rich and
poor, which is steadily and apparently inexorably growing in most
countries. The best and most obvious solution to the problem is to
raise taxes for the rich. Since being rich is more about wealth than
income or capital gains (that's what the word rich means: wealth), it
is obvious that wealth has to be taxed directly, and if it is already
being taxed, it is probably not being taxed enough. It is obvious that
most of the 20 000 children who die in developing countries every day
(20 000! every day!) of hunger, preventable disease, curable disease
and violence could be saved in the long term if the international
community finally took decisive action to stop tax havens and force the
rich to pay a reasonable level of tax on their wealth, such as for
example 1% per year. So why aren't we doing it?
The response of taxation denialists to the previous paragraph is to
laugh and say how ridiculous. Of course things are much more
complicated than that! Of course you can't introduce wealth tax, it is
not going to work! How are you going to implement it? What about all
the problems that you cannot solve! And it won't make any difference
anyway! The amount of money that you make will be too small! And
besides there is the trickle down effect! You just have to wait for the
rich to give jobs to lots of people and the economic problems will be
solved! And so the nonsense goes on. And on. And on.
The simple, obvious solution: Wealth tax
There is a very simple solution to our economic woes, including chronic
poverty in developing countries (such as the UK and the USA, but also
the others), "austerity" as the rich get richer, a global
economic crisis after which the global rich were even richer than
before, growing national debts, lack of finance for basic public
services, lack of finance for urgent projects to tackle climate change
and so on. The solution is called taxation, and nothing could be
simpler. Everyone (including the multinational CEOs, if they have a
passport) submits a statement every year of their income AND WEALTH to
their local taxation office, and those offices independently decide
which statements to investigate, because they could be fraudulent. In
the end, the more people have, the more they pay. It's as easy as that.
Of course there are lots of complicated schemes out
there to evade or avoid tax, especially by taking advantage of
differences between laws in different countries. But there is an easy
solution to that too. There is an urgent need for
taxation laws to be simplified and internationally harmonized. It is up
to the lawmakers to do that, and not respond to pressure from taxation
denialists to keep things complicated so they can take advantage of the
loopholes. One possibility is to phase out tax deductions altogether.
Just imagine: a world without tax deductions! Another is to stop people
avoiding tax by putting their money into hedge funds, foundations and
so on. The general principle is
simple: if people have access to their money, it is theirs and it
should be taxed, regardless of where it is being stored away. They
should pay tax according
to the amount of income and wealth, regardless of how they are
making their money, which is none of the government's business. The tax
denialists like to claim that it is not possible to enforce such
things. They are generally either lying or distorting the truth. The
truth is that if governments really want to solve these problems, they
will do so.
It follows, incidentally, that rich people should be kept out of
government, otherwise these fundamental problems will never be solved.
But I digress.
When the world wakes up to the truth distortion that is constantly
going on in the area of taxation, and the secret collaboration between
the rich and the discipline of economics that is behind it, we will at
last have the courage to stand up and say: just tax the rich and get on
with it. Because it really is that simple.
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