Is tax avoidance morally wrong? (Part II)

In a previous post (scroll down) I looked at the UK’s tax rules and suggested they might be unfair. But even if I am right, it does not follow that we should criticize people for avoiding tax. So, can people be criticized for doing something perfectly legal?

The state cannot legitimately fine or imprison lax-abiding citizens but neighbours or friends may be entitled to criticize. For instance, while the state should not mandate attendance at your children’s school plays, you should go to them and you are open to criticism if you do not. Is tax avoidance like this?

Let’s start with train fares. Is it morally wrong to avoid paying your train fare? The answer here cannot be ‘yes, because it is illegal’. I presume that most people who think that we should pay our train fares don’t believe this only because the law says so. If the law changed, they would not automatically become fare dodgers.

Surely whether others can criticize you for failing to pay your train fare depends on the circumstances. Some stations are unmanned and their ticket machines don’t work. If you travel between two such stations you have to seek out ways of paying your fare. Only the very virtuous would traipse up and down a train seeking high and low for a ticket inspector. And if you give up after a minute or two you are surely not at fault for getting a free ride.

Then there are the times in which you fully intend to pay at your destination but, at the last minute, you see open barriers. You go through. Naughty yes, but there was no plan to cheat.

Finally, there are cases that require effort: inventing a story about a conversation with a ticket inspector on the train (‘he said it would be OK…’); or crawling through a gap in a fence. We can even nuance this last possibility: you may calculate that the costs of the snags to your coat are smaller than the savings in ticket fares. Only real rotters would go this far I suspect.

It seems that our criticism of people who don’t pay train fares is dependent on the effort required either to pay or avoid the fare. We can use this analogy to think about tax avoidance. But how might we measure the ‘effort’ tax avoidance requires? It may involve little more than Gary Barlow saying ‘yes’ to his accountant. But, as Aristotle said, money is the measure of all things. How long does it take for high net worth individuals to earn the money to pay their accountants?

For instance, it might cost UK comedian Jimmy Carr a week’s gigs to pay his accountant’s fees. This makes him sound quite a lot like someone who crawls under a fence to avoid paying a train fare. Seldom do people say ‘I didn’t realize’ when told they had just done a week’s work.

We might apply a similar method to large corporations. How many extra employees could Google fund from the amount it spends on its tax advisers? How much extra growth could be expected from these additional employees?

This is quite speculative and I simply do not know how much actual tax avoidance is like crawling under a fence at a train station. But if anyone has the time and inclination I have outlined a rough method of how they might find out.

1 thought on “Is tax avoidance morally wrong? (Part II)

  1. Sowmya

    Dear Mr. Dean Machin,

    I’ve been exploring questions relating to morality of tax avoidance for my dissertation and it would be great if I could hear the ‘rough method’ that you’ve outlined above. I was facing challenges relating to how to locate this moral duty to pay the tax within the framework of the law, is the starting point of this moral duty the law or something more? Happy to discuss this further with you.

    Would be great to hear your thoughts!

    Like

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s