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Source: (consider it) Thread: Tax Avoidance is a Sin
cliffdweller
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quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Mere Nick:
quote:
Originally posted by Alan Cresswell:

Put simply, if the archbishop needs that much knowledge to discuss the morality of taxation then by rights this thread should sink to the bottom of Purgatory as no one else here has the right to comment on the morality of taxation. And, all other threads in Purg would do the same if we apply the same level of "must have a working knowledge of specialist subject" criteria.

If he is going to use his position and authority to speak on a matter then, yes, he should only use that position and authority to speak about things about which he actually has a clue.
The thing is, to me it seems he does have a clue. He knows, for example, that several multinationals use legal means to move money around such that they a) reduce their total tax burden and b) pay more of that tax in nations where the government has less need for the revenue (naive assumption being if they needed more revenue tax rates would be higher). He also clearly recognises that in many cases this reduces the amount of tax multinationals pay in countries where they do considerable business, and those countries struggle to fund education, health care and other programmes that benefit their people. He then points out that the (perfectly legal) practices of these multinationals directly or indirectly affects the lives of the poor to their detriment. That is a moral issue. We don't need to know the intricacies of the various tax codes in question to recognise the moral question. We just need to see the effect these practices have on the poor.
Exactly. Again, the cries of "incompetence" so far seem to be entirely synonymous with "He's saying something I don't like!"

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Alan Cresswell

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quote:
Originally posted by Jay-Emm:
I'm also still not happy about the "doing what the customer wants" is the moral requirement.

Well, I would say that clearly if a customer hires an accountant with the instructions "organise my finances so that my income is maximised" then, providing that organisation of finances is legal, the accountant is honour bound to do his best to so organise his customers finances. In many cases, though probably not all, that will include reducing tax liability. The question of morality lies at the feet of the customer seeking to maximise his profits, not the accountant who does what his client instructs.

On the other hand, an accountant advertising themselves as experts in ethical investing may find that the most ethical investments for his client involve increased tax liability, especially where that tax would be paid to governments of impoverished nations.

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cliffdweller
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quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Jay-Emm:
I'm also still not happy about the "doing what the customer wants" is the moral requirement.

Well, I would say that clearly if a customer hires an accountant with the instructions "organise my finances so that my income is maximised" then, providing that organisation of finances is legal, the accountant is honour bound to do his best to so organise his customers finances. In many cases, though probably not all, that will include reducing tax liability. The question of morality lies at the feet of the customer seeking to maximise his profits, not the accountant who does what his client instructs.

John Woolman famously had a very different take on this question.

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moonlitdoor
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quote:

originally posted by Alan Cresswell

b) pay more of that tax in nations where the government has less need for the revenue (naive assumption being if they needed more revenue tax rates would be higher).

I would say that assumption was not only naive but completely erroneous. Tax rates haven't got much to do with how much governments need the money.

I expect the archbishop probably does have enough knowledge to speak as he does. Certainly one shouldn't assume that his knowledge is restricted to what he is quoted in the press as saying.

But I have to take issue with this

quote:

We don't need to know the intricacies of the various tax codes in question to recognise the moral question. We just need to see the effect these practices have on the poor.

This seems to go right back to the blanket condemnation of all actions which don't maximise tax payments, which earlier everyone was denying was their point of view. The morality of the practices has to have something to do with the practices, not just to do with the effect on the poor.

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malik3000
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quote:
Originally posted by Adeodatus:
quote:
Originally posted by malik3000:
(Or maybe civilization is just something for effete weaklings with low testosterone.)

And perhaps civilisation has nothing to do with testosterone.
I was being facetious. Contrary to the opinion of many on the east side of the Atlantic, some of us on the west side are capable of irony, even some living in this citadel of earnestness, the U.S.

As for the rest of your post, Amen!

[ 03. July 2013, 21:48: Message edited by: malik3000 ]

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Otherwise, things are not just black or white.

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Jay-Emm
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quote:
Moonlit door [on prev page]
This seems to go right back to the blanket condemnation of all actions which don't maximise tax payments, which earlier everyone was denying was their point of view. The morality of the practices has to have something to do with the practices, not just to do with the effect on the poor.

I don't think that follows. I mean in my view we have
A)
There's perfectly good means of cutting down tax because you're consciously doing more good elsewhere (e.g. a charity).
B)
There's perfectly good ways of cutting tax for being cheap, by taking actions (where presumably this has side effects that have benefit).
C)
There are illegal methods of cutting tax, (e.g. not declaring it at all), some people suggest this is also immoral.
D)
There are (various posters suggest) ways of minimising tax that fail to deliver what was intended, but fit the letter of the law (the people who sold a picture of an x-box on e-bay might be a commercial analogue). Again some people suggest this is immoral, others that it is moral, others that it doesn't exist.
E)
For completeness I think there are illegal ways of minimising tax while doing good,
F)
and illegal ways of maximising tax paid.
G)
There are (I assert in potential, and from casual experience in practice) numerous grey areas between each of these.

To decide if each of these is reasonable or not requires a child's understanding of the tax code. If I'm wrong it's not a lack of knowledge of the practices.
To decide their morality I can't see where the tax knowledge comes in, accountants ought to have thought about it more so one might expect them to be more likely to be right, but it's not their accountancy skills per se.

Some case studies may (in potential) be also (provisionally) categorised with that knowledge.
But I don't see how accountancy knowledge really helps apart from dividing AB&D from CE&F (which is an important skill, but not the one claimed). It might give a handy shortcut to using Economics/Sociology to determine the expected consequences.


And on to another topic (after yet another stupidly long post, hopefully someone else will have the bon motte, to say what I mean to say more concisely [which I think fulfils translation])

quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Jay-Emm:
I'm also still not happy about the "doing what the customer wants" is the moral requirement.

Well, I would say that clearly if a customer hires an accountant with the instructions "organise my finances so that my income is maximised" then, providing that organisation of finances is legal, the accountant is honour bound to do his best to so organise his customers finances. In many cases, though probably not all, that will include reducing tax liability. The question of morality lies at the feet of the customer seeking to maximise his profits, not the accountant who does what his client instructs.

Oh I quite agree it's definitely a factor. It's just a few of the posts (it's actually better on this thread, more especially on company responsibilities) seem to have it as the only factor to such a strength that it seems bizarre. It must be the right thing to do because..., and it makes me highly uneasy as an argument. The conclusion might be correct. But there clearly needs to be other leg work done to qualify it (or revolting other conclusions).

[ 03. July 2013, 21:47: Message edited by: Jay-Emm ]

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Leorning Cniht
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quote:
Originally posted by Marvin the Martian:
So some of the discussion on this thread would have us believe. I wonder how many of the "you're supposed to give as much as you can, not as little as you have to" posters voluntarily give more money to the taxman than they have to?

Well, I can't speak for everyone, but my point is not "you should pay as much tax as you can," but "you should pay the amount of tax determined by the application of the spirit of the law, rather than by exploiting loopholes".

So, from my point of view, the tax-free gains that Gee D makes on his house are entirely fair, because the legislation intentionally excludes gains on your home. If, on the other hand, Gee D owned several homes, and rotated his nominal residence between them in order to claim tax-exempt gains on them all, I'd call him immoral, even if he managed to obey the letter of the law.

Similarly, politicians flipping their primary residence back and forth in order to claim the largest possible sum in expenses are immoral, whether or not they are within the letter of the law.

Reducing your tax bill by making large charitable donations, or by placing your money in a tax-exempt retirement savings vehicle? Fine. Reducing your tax bill by becoming a wholly owned subsidiary of Marvin (Cayman Islands) Ltd., which owns the rights to the Marvin persona and leases them to you for large annual sums? Not so fine...

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Cod
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Some months ago I listened to a very interesting interview by an ex-City of London worker. Unfortunately I cannot remember his name, but I can clearly remember the point he made: specifically that the tax avoidance industry works in favour of the British economy.

Here's how it goes. Tarbucks, a worldwide purveyor of entertainment, earns income on various developed countries. In order to avoid tax, it creates trusts and incorporates various holding companies located for legal purposes in various sub-tropical islands nominally ruled by Britain or some other Western power. By doing this, Tarbucks is able to declare all income in the sub-tropical island, and by doing so avoid having to declare any income in the UK, the US or other similar country. As Alan has already pointed out, this is not arcane stuff. it is straight-forward tax planning.

However, establishing and administering this arrangement requires the services of expensive lawyers and accountants who are generally not located in the sub-tropical island. They are more likely to be found in Canary Wharf, near - and this is the important bit - where they live and spend their considerable disposable income.

Over the last couple of decades, this has worked well for the UK as it has resulted in an economic boom in the provision of financial services. The money lost through the avoidance of UK tax is actually offset by the money this industry generates to people living and working in London.

(I note as an aside, that the real losers as countries without financial centres, and third-world countries in particular).

All these rich people will, after all, pay some income tax, and given the size of their remuneration, it will be more than, say, a factory worker even if the effective rate of tax is much lower. They will also pay VAT on their expensive purchases. And leaving tax aside, the money they spend into the economy will have the effect of stimulating it, albeit in a non-egalitarian way. They will invest in new business. They will create property portfolios, thus driving up house prices and generating increased local rates. Once they have become sufficiently (ie, eyewateringly) rich, they may decide to "put something back" and establish charitable foundations for the improvement of the non-smelly poor.

What this illustrates is that John Sentamu is aiming at the wrong target. If you are a multinational in competition with other multinationals, it is foolhardy not to avoid tax, because failing to take steps to avoid it makes you less competitive. I prefer to think it is the responsiblity of governments to oversee the establishment of tax laws that require multinationals to pay tax where they, in reality, generated their profit.

Contrary to what many say, it would not be hard to legislate for this. Some countries, and NZ is one, have a general anti-avoidance law that allows the taxman to look through artificial arrangements such as the above, and tax according to the reality of the situation. There is therefore in this country, and some others, a legal distinction between tax mitigation (ie, minimising one's tax burden by using the tax laws as they were intended to be used) and tax avoidance.

Although this solution has posed a great many jurisprudential problems in theory, in practice it has ensured that taxpayers use the tax laws as they were intended to be used.

I suspect that the wholesale adoption of general anti-avoidance laws across the developed world would cause mayhem in financial centres, and cause the loss of a good many high-earning jobs. It would probably also reduce inequality, but at the expense of gross wealth overall. It would take considerable courage for a country with an important financial sector to take this step, which is why I don't expect it to happen.

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Cod
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quote:
Originally posted by Leorning Cniht:
quote:
Originally posted by Marvin the Martian:
So some of the discussion on this thread would have us believe. I wonder how many of the "you're supposed to give as much as you can, not as little as you have to" posters voluntarily give more money to the taxman than they have to?

Well, I can't speak for everyone, but my point is not "you should pay as much tax as you can," but "you should pay the amount of tax determined by the application of the spirit of the law, rather than by exploiting loopholes".

The problem with this is that tax law has no spirit.

I would be very interested in comment from any US tax lawyers because I understand the law works differently there, but in English-derived systems, tax law is applied to the form of a business arrangement, not what is actually going on.

An addendum to my previous post: I see the UK has introduced something of a general anti-avoidance rule, but it is very defensively framed, ie, it applies to arrangments that "cannot be regarded as as a reasonable course of action". How that is interpreted will be a matter of politics, I suspect, and given the general background of tax law, is open to being read right down.

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Demas
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Here are some concrete tax avoidance scenarios:

1. A government wishes to encourage donations to charities, so it gives donors a tax break if they donate. A company donates to charity and reduces its tax bill.

2. A government wishes to encourage saving for retirement, to reduce the future pension cost, so it sets up a special type of account which doesn't tax interest. A person saves money using this type of account and reduces their tax bill.

3. A government wishes to encourage local films, so puts in place a tax deduction where a local company makes a film. A filmmaker sets up a new company, makes a film, and then gets a tax deduction.

4. A government wishes to encourage local car manufacture, so sets in place a tax reduction for companies with local car factories. A foreign car maker chooses to build a factory in that country and not another, so reduces its overall tax bill.

5. A government in an otherwise resource poor country wishes to encourage companies to register in its country (so that it gets registration fees). It sets its rate of company tax very low. As a result, an organisation chooses to set up its main branch in that country and reduces its tax bill in other countries.

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Cod
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quote:
Originally posted by Demas:
Here are some concrete tax avoidance scenarios:

1. A government wishes to encourage donations to charities, so it gives donors a tax break if they donate. A company donates to charity and reduces its tax bill.

Not tax avoidance.

quote:
2. A government wishes to encourage saving for retirement, to reduce the future pension cost, so it sets up a special type of account which doesn't tax interest. A person saves money using this type of account and reduces their tax bill.
Not tax avoidance.

quote:
3. A government wishes to encourage local films, so puts in place a tax deduction where a local company makes a film. A filmmaker sets up a new company, makes a film, and then gets a tax deduction.
Not tax avoidance.

quote:
4. A government wishes to encourage local car manufacture, so sets in place a tax reduction for companies with local car factories. A foreign car maker chooses to build a factory in that country and not another, so reduces its overall tax bill.
Not tax avoidance.

quote:
5. A government in an otherwise resource poor country wishes to encourage companies to register in its country (so that it gets registration fees). It sets its rate of company tax very low. As a result, an organisation chooses to set up its main branch in that country and reduces its tax bill in other countries.
...not tax avoidance.

Notwithstanding your use of the word "government", in every scenario you describe it is implied that the tax provisions have been used according to their legislative intent.

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Jay-Emm
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quote:
Originally posted by Cod:
quote:
Originally posted by Demas:
Here are some concrete tax avoidance scenarios:
1. A government wishes ... if they donate. A company ... and reduces its tax bill.

Not tax avoidance.

Would (almost) concur [and as another of the sections targetted], it's not quite "finding what how much you owe Caesar", but it's (as described) not the avoidance that's being criticised.

However I think all of them have been (or could be) used in a more avoiding way.
1) "Charities which then give the money back",
2) "pension saving with a free loan back",
3) as described is almost "working out what you need to pay", if a non-film made a film that required a working factory or something then...
4)
5) definitely is skimming depending on whether they set up their main branch there and build the roads they need or if they just declare it and then use the roads of another country.

[ 04. July 2013, 06:31: Message edited by: Jay-Emm ]

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ExclamationMark
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Always remember another side to this debate. In the UK the HMRC (Tax Authorities) can bill you for whatever amount they might think you owe.

This may bear absolutely no relation to the actual figure - it's often way too high, even a multiple of the real bill. They don't have to prove you owe it, you have to prove you don't.

In the eyes of the tax authorities you have to prove your innocence which sits rather uneasily in English law where you are presumed innocent and have to be proved guilty.

Is this the HMRC's counterpoint to tax avoidance and/or evasion? [Avoidance is legal until the loophole is closed, evasion isn't].

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Alan Cresswell

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quote:
Originally posted by Cod:
(I note as an aside, that the real losers as countries without financial centres, and third-world countries in particular).

Given the campaigns of Christian Aid, and similar organisations, over the last few years I would be surprised if the bishops comments about the morality of tax avoidance were not substantially related to the impact on tax revenues for developing countries.

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Alan Cresswell

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quote:
Originally posted by ExclamationMark:
Always remember another side to this debate. In the UK the HMRC (Tax Authorities) can bill you for whatever amount they might think you owe.

This may bear absolutely no relation to the actual figure - it's often way too high, even a multiple of the real bill. They don't have to prove you owe it, you have to prove you don't.

In the eyes of the tax authorities you have to prove your innocence which sits rather uneasily in English law where you are presumed innocent and have to be proved guilty.

Can you verify that? It sounds very urban mythy to me.

Certainly when they got my tax code wrong last year all it took was a phone call to say "this isn't right", and it was sorted out.

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Gee D
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Leorning Cniht, you talk of "the spirit of the law" Can I ask how that's to be divined? Only by the application of the normal rules of statutory interpretation. To do otherwise would lead to great uncertainty on the part of taxpayers and of governments. That of course leads to the letter of the law.

BTW, I can assure you that under the relevant tax law here, you can have only 1 principal place of residence, and to escape any capital gains tax liability, you have to live there for at least 3 consecutive years.

To those who say that the actions of Google and others is immoral: would you be prepared to pay a higher price for any goods and services on the basis that the tax minimisation schemes were outlawed? Companies are separate legal persons, but their profits become the income of all sorts of people: your neighbours perhaps. or your pension fund, or even your church.

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Cod
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quote:
Originally posted by ExclamationMark:

In the eyes of the tax authorities you have to prove your innocence which sits rather uneasily in English law where you are presumed innocent and have to be proved guilty.

Is this the HMRC's counterpoint to tax avoidance and/or evasion? [Avoidance is legal until the loophole is closed, evasion isn't].

You are wrong. No one has to "prove their innocence" of a tax assessment. Furthermore, I expect the average person gets assessed for an odd amount, it's because that person has failed or refused provide a return and accordingly has been default-assessed. No-one's fault but their's.

It is more accurate to say that a taxpayer who disputes an assessment has to prove the assessment is wrong on the balance of probabilities. Given that tax assessments are based on information provided by taxpayers themselves, this is entirely appropriate.

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Adeodatus
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quote:
Originally posted by moonlitdoor:
quote:

originally posted by Adeodatus

Continually to ask, "Is this a sin ... or is this? - Can I get away with this but not this? Can I put my foot this close to the line without being called on it, and how far can I bend this rule without being deemed to have broken it?"

Asking myself "is this a sin ... or is this ?" is how I go about deciding what is right and wrong. It's about what action I am comfortable with rather than what I can get away with. ... [L]ooking at individual actions to see whether they cross my line is how I choose what to do.
Good grief! How do you ever get anything done?

And anyway, that wasn't what I was saying. The mindset I was trying to illustrate is more akin to the kind of mindset that decides someone needs to die, and then spends time calculating exactly how far they can go in "arranging" an accident, without being charged with murder.

I can imagine the analogous discussion, given some of what's been said here. "Yes, but if I only left the butter on the top stair, rather than spreading it ...".

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Erroneous Monk
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quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by Mere Nick:
quote:
Originally posted by Alan Cresswell:

Put simply, if the archbishop needs that much knowledge to discuss the morality of taxation then by rights this thread should sink to the bottom of Purgatory as no one else here has the right to comment on the morality of taxation. And, all other threads in Purg would do the same if we apply the same level of "must have a working knowledge of specialist subject" criteria.

If he is going to use his position and authority to speak on a matter then, yes, he should only use that position and authority to speak about things about which he actually has a clue.
The thing is, to me it seems he does have a clue. He knows, for example, that several multinationals use legal means to move money around such that they a) reduce their total tax burden and b) pay more of that tax in nations where the government has less need for the revenue (naive assumption being if they needed more revenue tax rates would be higher).
Yes, this is very naive. See the governments of the world as competing to get investment, jobs, trade etc, by offering the lowest tax rate they think their electorate will stand. And as the Laffer curve (not perfect, but still a pretty solid view) demonstrates, a higher tax rate does not equal more tax revenue. The question is what is the optimum rate - one that maximises investment, jobs, trade and therefore maximises the quantum of tax take, if not the percentage rate? In Ireland, they clearly think the optimum rate (i.e. one that will attract more investment and jobs) is lower than the UK rate. So they're undercutting us.

The idea that a country with a higher tax rate needs the money more (and therefore it is morally superior to be incorporated/resident for tax purposes) there is just... wrong, I would say.

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Erroneous Monk
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If it were possible for us all to agree on what falls into the category of "legal but dodgy", we could have three terms:

"tax efficiency" for what is legal and "undodgy"
"Tax avoidance" for what is legal and dodgy
"Tax evasion" for what is criminal.

The trouble then is that some seem to think that anyone legally taking advantage of a tax inducement from the government for reasons other than adopting the behaviour the government is incentivising them to adopt is inherently immoral. I'm not sure that always (ever?) follows.

The government uses both tax and spending to try to change our behaviour. Do you feel as strongly that people who take advantage of the government's *spending* without changing their behaviour in the way the spending is intended to incentivise them to do are immoral, as you do when it is someone taking advantage of tax break without changing their behaviour? (In both cases, assume the taking advantage is legal)

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moonlitdoor
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quote:

originally posted by Erroneous Monk

The question is what is the optimum rate - one that maximises investment, jobs, trade and therefore maximises the quantum of tax take, if not the percentage rate?

In fact the optimum might not even be what would maximise the total tax take. Taxation generally lowers the level of economic activity, as some transactions that would take place in the absence of tax do not do so when the tax is there. For example if the most I am prepared to pay for a cup of tea is 50 pence, and someone can produce it for 50 pence, a sale will take place. But if there is a 50 pence tax on every cup of tea, no sale will take place as the price will be a pound and I am only willing to pay 50 pence.

A reduction in economic activity will typically mean more costs for the governemnt, for example because more people will be out of work, and these costs might outweigh the extra tax revenue.
This is one reason why heavily indebted governments such as most of Europe have not attempted to address their situation by large tax rises.

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Cod
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quote:
Originally posted by Erroneous Monk:
If it were possible for us all to agree on what falls into the category of "legal but dodgy", we could have three terms:

"tax efficiency" for what is legal and "undodgy"
"Tax avoidance" for what is legal and dodgy
"Tax evasion" for what is criminal.

I think this is a very good categorisation.

The problem we have with tax law generally is that no effective distinction is made between tax efficiency and tax avoidance. Traditionally, there was no distinction at all: the only question was whether the taxpayer had complied with the letter of the law. Even now, distinguishing between efficiency and avoidance is fraught with difficulty, legally speaking.

quote:
The trouble then is that some seem to think that anyone legally taking advantage of a tax inducement from the government for reasons other than adopting the behaviour the government is incentivising them to adopt is inherently immoral. I'm not sure that always (ever?) follows.
Leaving aside other moral issues not directly related to tax (e.g. whether the inducement itself is to do an immoral thing such as employ sweated labour) I agree.

quote:
The government uses both tax and spending to try to change our behaviour. Do you feel as strongly that people who take advantage of the government's *spending* without changing their behaviour in the way the spending is intended to incentivise them to do are immoral, as you do when it is someone taking advantage of tax break without changing their behaviour? (In both cases, assume the taking advantage is legal)
I don't think so, as long as the recipients are complying with the law.

I say this because, once again, I think it is the responsibility of governments to get the tax system right and fair. It is not the responsibility of multinationals to avert their eyes from tax-minimisation strategies and disadvantage themselves against their competitors.

Similarly, I don't see that it is the responsiblity for the beneficies of Gvt spending to do more than the law requires. Why should it?

The British and the Dutch rule tax havens. Ireland, along with certain US states, impose beggar-my-neighbour rates of corporate tax. And - crossing the line into criminality, Switzerland, Luxembourg and Liechtenstein have banking secrecy, and in the US (or so I'm told) banks are required to sight so little in the way of ID, that it is impossible for the taxman to conduct proper audits. These are the things that need to be got right.

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Mere Nick
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quote:
Originally posted by Cod:
...not tax avoidance.

Notwithstanding your use of the word "government", in every scenario you describe it is implied that the tax provisions have been used according to their legislative intent.

Those are all tax avoidance, Cod. But what's wrong with any of it?

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DouglasTheOtter

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Morality?

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Cod
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quote:
Originally posted by Mere Nick:
quote:
Originally posted by Cod:
...not tax avoidance.

Notwithstanding your use of the word "government", in every scenario you describe it is implied that the tax provisions have been used according to their legislative intent.

Those are all tax avoidance, Cod. But what's wrong with any of it?
It isn't.

Not any more than a decision to take a pay cut is tax avoidance.

Nor do I think there is anything wrong with those scenarios, as my previous posts ought to have illustrated.

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Mere Nick
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quote:
Originally posted by Cod:
It isn't.

Yes, it is, since tax avoidance is nothing more than the use of legal methods to lower the amount of income tax owed. Since those items in the list do that, those are tax avoidance strategies.

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Cod
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Such as taking a pay cut for example.

It is better to stick with the conception of tax avoidance as defined above, e.g. the use of legal means to minimise tax albeit not in accordance with the policy intention behind those laws.

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Mere Nick
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quote:
Originally posted by Cod:
Such as taking a pay cut for example.

It is better to stick with the conception of tax avoidance as defined above, e.g. the use of legal means to minimise tax albeit not in accordance with the policy intention behind those laws.

I don't see any reason to change the definition.

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ExclamationMark
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quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by ExclamationMark:
Always remember another side to this debate. In the UK the HMRC (Tax Authorities) can bill you for whatever amount they might think you owe.

This may bear absolutely no relation to the actual figure - it's often way too high, even a multiple of the real bill. They don't have to prove you owe it, you have to prove you don't.

In the eyes of the tax authorities you have to prove your innocence which sits rather uneasily in English law where you are presumed innocent and have to be proved guilty.

1. Can you verify that? It sounds very urban mythy to me.

2. Certainly when they got my tax code wrong last year all it took was a phone call to say "this isn't right", and it was sorted out.

Yes it does sound like it doesn't it but sadly it's true. I can verify from personal experience and from helping others in the same boat - in fact, most self employed people can.

The wildest extremes happen when HMRC seem to think you aren't declaring something - that's usually followed by an investigation where they ask for bank records etc and put you to proof of income. In one case I helped with, the guy had received £100 cash for his birthday from his family but because he couldn't prove it, it was treated as income and he was taxed on it. They wouldn't take the family's word they needed hard proof. All because as a taxi driver his income suddenly dipped one year and they thought he was on the fiddle - in fact he was off work for 6 months, sick.

[By the way HMRC has a database that records the income ranges for most uk occupations. Your details are compared to this, on the fly, as your tax return is entered. Exceptions and variations are reported and decisions made to investigate on the usual kind of sampling bases based on likely costs and potential returns].

The minimum I advise is photocopying all cheques you credit to your account and keeping a record of every payment in with hard copy evidence should you have an investigation. A sample of Uk taxpayers is taken each year for such purposes and you will be asked for all your records and an assessment made as to whether you've paid enough tax. Oh, if your employer has got it wrong - it comes to you first and you have to sort that out too!

{Live Example: my dad's employer sent his P60 off as normal: unfortunately being hand written and having a missing carbon in one part of the form it looked like he'd been paid but paid no tax on HMRC's copy, though his was correct. He got a demand for a whole year's tax from HMRC who told him (and me) it was up to him to check ALL submissions].

Yes it's happened to me too - the revenue demanded £5200 tax - even though they KNEW I'd only been self employed for 3 months, hence owed about £1300. They were unapologetic about the mistake and pointed out in almost the same words I used, that it was down to me to prove what I earned. At times they get it seriously wrong - in my case accompanied by a breach in data protection - but there is no recourse.

A complaint to the Information Commissioner resulted in recognition of an error on a "technical fault" but were HMRC fined as the law requires? You bet not!

What you also have to bear in mind is that HMRC apply differential standards on record keeping. They don't log work in and out (if you have a tough query it keeps going to the bottom of the pile)and there's no way of discovering who's amended your file or made a note on it, as I discovered when I made a request for copies of all the records they held on me. It was impossible to track down who had made a mistake on my records, as well as more seriously, releasing information to an outside body.

Small wonder that some people decide to get one back on HMRC where they can. In my case the ultimate victory was hollow: they sent me a cheque for 0.01p because they couldn't legally prove to me that they were allowed to round up for tax calculation purposes. It got that petty.

2. Point taken but how many codes remained wrong in HMRC's favour? Why did they do it in the first place when they had all the information available? Why do we have to sort out their computer glitches which was what this was?

I am not advocating avoidance at all but sad to say as a result of personal experience in a number if instances, I don't trust HMRC at all - to get it right or to even know their own law. Once I gave them the benefit of the doubt, now I don't I claim for every single penny I can and fight every dispute down to the wire.

Time and again on behalf of my own affairs and those of others (many of them extremely vulnerable) I have found HMRC to be unhelpful, on occasion bullying and worst of all, on at least 2 occasions excluding my own records, to be liars.

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Adeodatus
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quote:
Originally posted by Mere Nick:
quote:
Originally posted by Cod:
It isn't.

Yes, it is, since tax avoidance is nothing more than the use of legal methods to lower the amount of income tax owed. Since those items in the list do that, those are tax avoidance strategies.
You really haven't read the thread title, have you?

Let me spell it out, once and for all:

Legality
is
not
the
issue
here.

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Gee D
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Adeodatus, what you (and others) have so far failed to show is why it is immoral to pay the tax you are required to pay, no more and no less.

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Adeodatus
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quote:
Originally posted by Gee D:
Adeodatus, what you (and others) have so far failed to show is why it is immoral to pay the tax you are required to pay, no more and no less.

A number of posters have addressed that question perfectly adequately. My own argument begins from the premise that Scripture instructs us to obey the civil authorities.

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Marvin the Martian

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quote:
Originally posted by Adeodatus:
My own argument begins from the premise that Scripture instructs us to obey the civil authorities.

Indeed. And ours begins from the premise that if you're not breaking the law then you are obeying the civil authorities.

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Adeodatus
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Adeodatus:
My own argument begins from the premise that Scripture instructs us to obey the civil authorities.

Indeed. And ours begins from the premise that if you're not breaking the law then you are obeying the civil authorities.
And then you get into the pharisaical mindset of picking over the letter of the law to find out just how far you can go. And I've dealt with that too: as an attitude, Jesus didn't like it, and said so.

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Doc Tor
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quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by ExclamationMark:
Always remember another side to this debate. In the UK the HMRC (Tax Authorities) can bill you for whatever amount they might think you owe.

This may bear absolutely no relation to the actual figure - it's often way too high, even a multiple of the real bill. They don't have to prove you owe it, you have to prove you don't.

In the eyes of the tax authorities you have to prove your innocence which sits rather uneasily in English law where you are presumed innocent and have to be proved guilty.

Can you verify that? It sounds very urban mythy to me.

Certainly when they got my tax code wrong last year all it took was a phone call to say "this isn't right", and it was sorted out.

Try being a self-employed artist, whose income varies, sometimes wildly, from year to year.

The HMRC are currently taxing me at a marginal rate of around 90% (via 'payment on account'). Okay, so I'll get a lot of that back when I submit this year's tax return, but that money is last year's money which I couldn't spend last year - because I knew I'd get hammered for this year's tax, and I couldn't spend this year, because they still have it.

So I'll be drawing down income next year I earned last year - effectively waiting three years to get paid.

EM's point mostly stands. They base next year's payment on the previous year's income. You can pay less if you choose, but if you get it wrong, you get hosed on both fines and interest.

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moonlitdoor
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I recently faced a choice about whether to take part in a way of reducing taxes. It is what I was thinking of when I gave Adeodatus the impression of general indecisiveness on my part.

The company I work for has a pension scheme. I can pay in up to 8% of my salary, and the company will match my contributions. So I pay in 8% and they pay in 8%. They came out with the proposal that they would reduce my salary by 8% and pay all the pension contributions themselves. So the same amount would go into the pension scheme, but because of the lower salary, both they and I would pay lower National Insurance contributions. I describe this as applied to me but this is a big company, so it applies to thousands of people.

The company encouraged us to do this but it's by no means compulsory, you can opt out of it.

On the one hand, this scheme seems to be entirely legal. As far as I can find out many companies are doing it, and the Revenue and Customs have not challenged it. On the other hand, reducing tax is clearly the whole point of it. One could not describe the reduction in tax as a by product of a decision made for other reasons.

I found it quite difficult to decide whether to take part in it. I don't have any general principle that it's better for more money to go to the government than my company or vice versa. But I wouldn't like to do anything I regarded as essentially dishonest.

Trying to decide whether this was ok or dishonest did involve thinking in a way that might be described as Pharisaical as I was comparing this arrangement with other things that I thought definitely ok, and things that I thought definitely not ok, to see which it more nearly resembled.

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DouglasTheOtter

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Just thinking out loud here, but what would happen if the money yoi saved went to a charity?

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Gee D
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quote:
Originally posted by Adeodatus:
quote:
Originally posted by Gee D:
Adeodatus, what you (and others) have so far failed to show is why it is immoral to pay the tax you are required to pay, no more and no less.

A number of posters have addressed that question perfectly adequately. My own argument begins from the premise that Scripture instructs us to obey the civil authorities.
A number of posters have indeed dealt with that, but I don't agree with your assessment that their dealing has been adequate. The comments starts with the 3rd post on this thread. Jade Constable said:

Of course tax avoidance is a sin - it is a way of loving money above loving God and one's neighbour that ensures that the rich get richer, and the poor get poorer.

but she did not grapple with the question - just assertions. And this approach has continued since.

Your post of 8.23 pm again says that the approach which I, and many others, have taken is pharisaical. But picking over the law is a matter for Caesar and his descendants. Now, in Biblical times, collection of taxation left a lot to be desired, but our present day Caesars go to considerable length to spell out what they require by way of tax. How is it pharisaical to read the edict and pay what you are required to, and how is that immoral?

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Adeodatus
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quote:
Originally posted by Gee D:
Your post of 8.23 pm again says that the approach which I, and many others, have taken is pharisaical. But picking over the law is a matter for Caesar and his descendants. Now, in Biblical times, collection of taxation left a lot to be desired, but our present day Caesars go to considerable length to spell out what they require by way of tax. How is it pharisaical to read the edict and pay what you are required to, and how is that immoral?

It's not. To read the edict and then spend a great deal of time and effort working out how to comply with its letter while utterly ignoring its spirit is pharisaical and immoral. It is the precise modern equivalent of "tithing mint and dill and cumin", while "ignoring the weightier matters of the law".

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Gee D
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How do you determine the spirit of the tax or any laws? I would say by traditional and accepted methods of statutory interpretation, as that leads as closely as possible to certainty for both parties. Otherwise, we're left with how you see the spirit and I see it.

And of course, when Christ spoke against the Pharisee, he was not talking of Caesar's petty edicts, but of God's great laws. Indeed, he clearly (at least to my eyes) drew that distinction.

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Adeodatus
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quote:
Originally posted by Gee D:
How do you determine the spirit of the tax or any laws? I would say by traditional and accepted methods of statutory interpretation, as that leads as closely as possible to certainty for both parties. Otherwise, we're left with how you see the spirit and I see it.

And of course, when Christ spoke against the Pharisee, he was not talking of Caesar's petty edicts, but of God's great laws. Indeed, he clearly (at least to my eyes) drew that distinction.

That's precisely how you don't discern the spirit of the law. Rather, you look at such broad moral principles as what is taxation for? If you find yourself using words like justice, fairness, and helping the weak and disadvantaged, I'd say you're on the right lines. If instead you say something like "it's something that exists for me to participate in as little as I possibly can without actually getting prosecuted", then I'd say you need to spend your tax savings buying yourself a new moral compass.

Your point about the civil vs. the religious law is irrelevant. If the Romans hadn't been occupying Judaea, the religious law would have been the civil law.

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Mere Nick
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quote:
Originally posted by Adeodatus:
My own argument begins from the premise that Scripture instructs us to obey the civil authorities.

That's my argument, as well.

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cliffdweller
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Adeodatus:
My own argument begins from the premise that Scripture instructs us to obey the civil authorities.

Indeed. And ours begins from the premise that if you're not breaking the law then you are obeying the civil authorities.
But the civil authorities do not compel us to minimize our taxes. And Scripture exhorts us to do much more than just merely comply with the law-- that's a minimal, not a maximum, expectation. So again, the whole question of "is it legal?" is irrelevant to the discussion here.

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Marvin the Martian

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quote:
Originally posted by cliffdweller:
But the civil authorities do not compel us to minimize our taxes.

Neither do they compel us to maximise them. They compel us to pay the amount the law demands - no more, no less.

quote:
And Scripture exhorts us to do much more than just merely comply with the law-- that's a minimal, not a maximum, expectation. So again, the whole question of "is it legal?" is irrelevant to the discussion here.
Which brings us back to the question of how much voluntary tax you pay on top of what your government demands. An extra couple of hundred bucks a month, perhaps?

[ 05. July 2013, 15:20: Message edited by: Marvin the Martian ]

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cliffdweller
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by cliffdweller:
But the civil authorities do not compel us to minimize our taxes.

Neither do they compel us to maximise them. They compel us to pay the amount the law demands - no more, no less.

quote:
And Scripture exhorts us to do much more than just merely comply with the law-- that's a minimal, not a maximum, expectation. So again, the whole question of "is it legal?" is irrelevant to the discussion here.
Which brings us back to the question of how much voluntary tax you pay on top of what your government demands. An extra couple of hundred bucks a month, perhaps?

Yes. It brings us back to the lengthy, complex questions we have been dealing with here on this thread. Complicated questions-- as all moral questions are. The simplistic "is it legal?" or even your equally simplistic "how much is enough?" are really irrelevant. It's the deeper questions about the role of government, and how Christians are/are not called to invest in that work and for what purposes, are the relevant issues here.

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Mere Nick
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quote:
Originally posted by cliffdweller:
It brings us back to the lengthy, complex questions we have been dealing with here on this thread. Complicated questions-- as all moral questions are. The simplistic "is it legal?" or even your equally simplistic "how much is enough?" are really irrelevant. It's the deeper questions about the role of government, and how Christians are/are not called to invest in that work and for what purposes, are the relevant issues here.

I could just as easily say that Sentamu and the like are being simplistic. Actually, it is far easier.

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Mere Nick
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quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by cliffdweller:
[qb]But the civil authorities do not compel us to minimize our taxes.

Neither do they compel us to maximise them. They compel us to pay the amount the law demands - no more, no less.


In a sense they do compel us to minimize our taxes for the simple reason we will have to pay more if we don't.

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cliffdweller
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quote:
Originally posted by Mere Nick:
quote:
Originally posted by cliffdweller:
It brings us back to the lengthy, complex questions we have been dealing with here on this thread. Complicated questions-- as all moral questions are. The simplistic "is it legal?" or even your equally simplistic "how much is enough?" are really irrelevant. It's the deeper questions about the role of government, and how Christians are/are not called to invest in that work and for what purposes, are the relevant issues here.

I could just as easily say that Sentamu and the like are being simplistic. Actually, it is far easier.
Well, you can say pretty much anything, doesn't make it true.

I think we have demonstrated here pretty clearly that it is a viable moral dilemma-- something with a lot of interesting and complicated aspects to it. Whether you ultimately decide that Sentamu was right or wrong in his moral assessment, based on the discussion we've seen here, it clearly is not as simple as you are trying to make it out to be.

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"Here is the world. Beautiful and terrible things will happen. Don't be afraid." -Frederick Buechner

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Gee D
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quote:
Originally posted by Adeodatus:
quote:
Originally posted by Gee D:
How do you determine the spirit of the tax or any laws? I would say by traditional and accepted methods of statutory interpretation, as that leads as closely as possible to certainty for both parties. Otherwise, we're left with how you see the spirit and I see it.

And of course, when Christ spoke against the Pharisee, he was not talking of Caesar's petty edicts, but of God's great laws. Indeed, he clearly (at least to my eyes) drew that distinction.

That's precisely how you don't discern the spirit of the law. Rather, you look at such broad moral principles as what is taxation for? If you find yourself using words like justice, fairness, and helping the weak and disadvantaged, I'd say you're on the right lines. If instead you say something like "it's something that exists for me to participate in as little as I possibly can without actually getting prosecuted", then I'd say you need to spend your tax savings buying yourself a new moral compass.

Your point about the civil vs. the religious law is irrelevant. If the Romans hadn't been occupying Judaea, the religious law would have been the civil law.

But when Christ spoke those words, the Romans were the occupying power.

At one level - the most basic - you're right about statutory interpretation. It is a valid method to look at the overriding purpose of a piece of legislation. By that means, you can see that a particular piece of legislation has some ameliorative intent. The Uniform Consumer Credit Act was introduced to protect consumers in credit transactions. Accordingly, if a particular section could be interpreted so as to give 2 different results, it is proper to adopt that which is more favourable to consumers.

But at a more detailed level, looking to the general intent is of little use. We can say that the intent of the taxation acts is to raise money for the government to spend on a range of activities. It is not just "justice, fairness, and helping the weak and disadvantaged". That does not mean that in the interpretation of a particular section, any reading more favourable to the government is the one to be adopted. Each section must be interpreted in its context to determine the proper meaning. Now, if that meaning is that the capital gain on my own house is not taxable, should I still hand over an appropriate sum to the government? Is it immoral not to? I think not.

A major difficulty in your approach is that it introduces great uncertainty. There used be a saying "as long as the Chancellor's foot". In modern terms that is the answer to the question "how long is a piece of string". A Chancellor would decide each case on how he (they were all male and normally clerics) saw the particular merits. But the length of his foot could vary in all sorts of circumstances, especially if it were trodden on heavily. The equity law he applied became just as codified as that in the traditional courts. And one of the great complaints about the Star Chamber was that its decisions were capricious. Some modern judges have thought that they have some great ability to "do right". Their's are not the decisions referred to in later years as useful precedents.

Think of the Motor Traffic Act and the regulations made under that. It's easy to say that a lot of that act is concerned with road safety. If were to apply your method of interpretation, speed limits and so forth could be abolished and replaced with a single edict: you must always drive safely. That would be extremely difficult to apply.

To go back to yur opening words: what I said is precisely how you should interpret particular pieces of legislation. Note that I have said "interpret".

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cliffdweller
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quote:
Originally posted by Gee D:

Now, if that meaning is that the capital gain on my own house is not taxable, should I still hand over an appropriate sum to the government? Is it immoral not to? I think not.

OK, but why? Pretty much everyone who has argued this side has done precisely that-- stated it as a fact, then referred to legality and/or popular opinion/practice as justification. But that's what the OP is asking. The OP is asking us to engage in moral reasoning-- not a legal argument, not a public opinion poll. So that means making a statement like the above-- "I think it is not immoral" and then backing it up with some sort of reasoned argument. I see none here, nor any forthcoming from that side.


quote:
Originally posted by Gee D:
A major difficulty in your approach is that it introduces great uncertainty.

Just because one cannot come up with an inflexible legalistic rule does not mean it's not a good moral argument. In fact, I would argue that real ethics (as opposed to legislation, which you go on to discuss in defense of this statement) are generally devoid of such simplistic rules. Moral reasoning means being willing to wade into the complex, subjective, imprecise morass of intent, motivations, intended and unintended consequences and potential consequences/risks. It will, yes, inevitably introduce "great uncertainty". That may be problematic in a court of law, but again, that's not what this thread is about.

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"Here is the world. Beautiful and terrible things will happen. Don't be afraid." -Frederick Buechner

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