Last night I was reading the Evening Standard after a trip into London. I flicked through the pages to see if they had published any of my suggested articles.
Thinking that they may have insulted me by putting my philosophical musings in with the common readers’ letters, I saw that they Mike Truman, editor of Taxation magazine, had been humiliated by having his comments put there.
How I laughed.
Then, I broke my rule of listening to other peoples opinions and had a little read.
Mike seemed to think that members of the tax profession think that MPs appear to not understand how the law works. I then wondered if this was true so I took to the internet to see what tax professionals think of MPs understanding.
Well, I was shocked.
Almost all of them think that the MPs sitting on the Public Accounts Committee are morons. Some of them say it in a “diplomatic” way, but if you cut out their flimsy neoliberal cowardice, that’s obviously what they mean.
Clearly none of them understand tax like I do.
Now, this is not news to me. I have almost always known that I am more intelligent than other people, but I had never realised that it was by such a margin.
As I have explained a million times before, you are supposed to completely ignore what legislation says. Parliament obviously reserved the right to have the law interpreted in any such way so as to maximise the tax yield.
So when Margaret Hodge stood up and told Starbucks, Amazon and Google that they were immoral, they should have said “clearly we, our tax team, our tax advisers, our auditors and HMRC have misunderstood the law, we will amend all the years returns in question”.
Instead, they pretend that the law means something different and that is thought to help them arrive at the “correct” amount of tax. No, that’s completely wrong.
The “correct” amount of tax is 100% of turnover. The legislation concedes certain deductions so that people and businesses are incentivised to do stuff that’s useful, like give up smoking or convert to using an electric car. In recent years we have gone too far suggesting that people might be even more motivated if they get to keep a bit more for their own personal use, but that’s nonsense.
What pedantic neoliberals forget is that the banks should be nationalised and so The State would lend money to citizens as it saw fit. The State could then call in the debt through various means: public duties, conscription, information gathering services, harvesting organs, and so on.
This would mean that although personal debt is high, The State will recognise it as an asset.
Anyway, back to the law as it currently is.
When an MP does something, anything, that indicates how the law should currently be. For example, people forget that we were briefly at war with Iran over weapons of mass destruction because Gordon Brown got it mixed up with Iraq. He corrected himself five minutes later so, in effect, we never were at war with Iran. So people are right to forget that incident. I certainly don’t remember it.
Tax law works in a similar fashion. If an MP says that something should be so, it is and always has been. That is the “declarative” nature of the law.
So Margaret Dodge is not being hypocritical when she attacks Starbucks or Google for having high turnover in comparison to their tax liabilities, but not Stemcor.
She is actively altering the law by declaring that the law applies differently to the various companies. So Stemcor is morally legal and Starbucks or Google aren’t.
You have to remember that the law needs to be flexible enough to punish people we don’t like whilst not affecting those who we do like.
That’s why MPs have these special powers that mean that they needn’t ever have to read the legislation to understand it, they can make it up as they go. It is actually better if they never read the legislation and rely solely in their own opinions ad to what the law should be.
In this respect Margaret Hodge is an exemplary MP.