A story of two taxpayers

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Imagine the following situation: you and your friend work for different companies, you both work hard and for your efforts in very similar jobs have secured mid-tier positions with decent salaries and reasonable but not incredible bonus packages. The bonus packages, as is normal, are linked to the performance of the company overall; to incentivise you to go the extra mile at work.

In other words, you’re just like a large number of people in this country.

The end of the year comes and your firms announce their results. The headline figures are really good, everyone’s worked hard, and profits before tax are very healthy at both companies. You are looking forward to a nice bit extra to maybe pay off some debt, or take the family on a nice holiday.

But your company, unlike your friend’s employer, has bowed to the pressure put on the industry by Margaret Hodge, UKuncut, some press hacks and some left-wing tax ‘experts’. As such, your company has elected to pay more than its fair share of tax. It has not elected to take advantage of any of the perfectly legitimate tax loopholes designed to help companies in your industry. It has not structured its corporate arrangements to take best advantage of legal tax jurisdictions around the world. It has not paid an advisor to help it pay exactly its legal fair share of tax; instead, it has just paid a high headline rate and not sought to minimise this in any way. A large slice of the pre-tax profits go to The Revenue instead of into the bonus pool.

So your end of year pay packet is significantly less than that of your friend. In fact, because, as is normal, the bonus pool targets are industry benchmarked, you don’t get a bonus at all. Your friend, though, gets a lovely bonus. They choose to take the family off on holiday and let you know how nice it is with some pictures on Facebook.

When the companies’ annual results are announced to the market, it is clear that your company and that of your friend have both been really busy, with healthy turnover figures, but that your board of directors has chosen to pass the rewards of your hard work to HMRC, instead of in dividends to the shareholders who own the company.

The shareholders are absolutely livid. Some sell their shares in fury, making the share price go down. Others object at the AGM, causing chaos with the company brand as the shareholders are clearly at odds with their board of directors. Because of the this, the share price falls further.

As is usual, some of your bonus is paid in shares, to incentivise you to hang around longer at the firm. Now your share options are almost worthless. You only get a long term incentive plan payout if the shares rise in value. Instead of adding share value, your company is tanking. Your friend, however, is really pleased. Because of their post-tax results, their share options are worth a healthy sum. When they pay out, your friend pays off their mortgage early and moves to a big new house with a with a nice garden and a lovely new car on the drive. You can’t afford to do that.

But, you think, at least you work for an ethical company that chooses to act in a socially responsible manner. You can always feel good about that. Apart from that your employer now has much less cash in the bank so cuts back dramatically on non-core activity, such as its outreach, education and CSR programs. Your friend’s employer has increased all of their CSR, giving more back into the community, to support some social programs that the government austerity measures have axed. Your company’s extra tax paid for a little slice of Trident missile. You feel less worthy about that.

Your friend also likes being ethical and generously donated a large portion of their bonus to charity. You have had to cut back on your charity donations, because fuel has gone up, inflation is rife and frankly, bread is more important than roses. You really would love to help some worthwhile causes, but not this year. This year you’ll have to turn a blind eye & hope your need to heat the house doesn’t cost someone else too much. There’s always next year. Let’s hope that the government is spending that extra tax wisely on things that matter, like A&E departments.

Times are tough. People would love to vote with their money and shop ethically, but in these austerity years people are trimming back. They used to value the ethics of a brand but to be honest simply can’t always afford to do that any more. Instead, they buy the product from your friend’s firm, which because it pays only the legally required amount of tax, can afford to be a little bit cheaper than your company, but still maintain its bottom line. So your sales start falling. It doesn’t matter how hard you work, you’re just not as competitive.

If you even still have a job, that is.

In the mean time, politicians remain ignorant of the real-life effect that their proselytising has and continue to pass judgement on companies that follow the letter of the law, putting pressure on consumer focussed brands to pay more tax than they need to, making large employers uncompetitive.

But your employer was never doing anything wrong; and nor now is your friend’s employer. As the old adage goes, tax evasion is when you do something wrong; tax avoidance is when the government does something wrong.

Rather than change the law and maintain a level playing field between your employer and that of your friend, the politicians remain ignorant of the real-life effect that their words have and continue to pass public judgement on companies that follow the letter of the law, putting pressure on companies that are scared of the negative headlines to pay more tax than they need to. It is a hell of a lot easier for a politician or a hack to pick on the easy target than try to understand real tax law. Tax law is complex. Let’s just churn out sound bites about big brands. let mob justice rule, rather than do any hard work fixing the system.

By doing this, making the public focus on brands they know, they wilfully distract from little known companies like Stemcor, which pays only 0.01% tax. Stemcor, that is, that is owned by Margaret Hodge’s family.

The way to make things fair between you and your friend is to make sure that tax law is simple, that every company can easily pay a rate of tax that reflects their position in the economy, that gives incentives to certain industries and structures that as a country we have chosen to champion, that allows the companies to compete on a level playing field.

Then, when hypocrites like Margaret Hodge or the Guardian start spouting on about what is a fair amount of tax or not, you and your friend’s employers can both tell them to push off and focus on the people who can really make tax fair – the politicians.

Tax law is complex, unjust, and not accessible to all. The only way to fix this iniquity is to change the law. Not to give media time to hypocritical, narrow-minded ignoramuses. Next time someone attempts to lecture you as if they’re an expert on tax, be skeptical and make sure they are actually an expert on tax.

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Anarchaoke

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Over the weekend, in a pub with Giles, we decided to take traditional karaoke to the next level, with the politically charged anarchaoke.

This is a singing format where a lot of people choose to gather in an area and perform a direct action of singing pop tunes badly. The selection of singer and song are completely random, due to a rejection of the patriarchy of organised karaoke rules. The singer can then elect to abide by the traditional lyrics of a song or show their autonomy by singing whatever the hell they want. Mutual aid and cooperation can be demonstrated by other people choosing to join in if they desire.

There is no censorship of lyrics or coercion to take part if you don’t want to. Association is voluntary and there will be no fee for taking part because that would be capitalist.

There is an anthem for the anarchycokey. The lyrics don’t scan to the traditional rhythm because damnit, your expectations are just couched in imperialism and don’t allow the required freedom of expression.

We are designing a flag by committee. It is mostly red.

The anarchaoke-cokey.

You put your left wing in
your left wing out
In, out, in, out,
You shake the system up.
You do the anarchaoke through direct action
That’s what it’s all about…

[Chorus]
Woah, the anarchaoke-cokey,
Woah, the anarchaoke-cokey,
Woah, the anarchaoke-cokey,
Liberty, autonomy, ra ra ra!

You put your other left wing in
your other left wing out
In, out, in, out,
Encourage political disorder.
You do the anarchaoke and create lawlessness
That’s what it’s all about…

[Chorus]

You put your left leg in
your left leg out
In, out, in, out,
You reject public coercion.
You do the anarchaoke and remove paternalism
That’s what it’s all about…

[Chorus]

You put your other left leg in
your other left leg out
In, out, in, out,
You destroy the rights of rulers.
You do the anarchaoke and oppose authority
That’s what it’s all about…

All together now
[Chorus]

You put your whole self in
your whole self out
In, out, in, ooh, out, ooh
You cause a civil war.
You do the anarchaoke and have law and freedom without force
That’s what it’s all about…

Wait for it

[Chorus]

[Chorus]

And that’s the destruction of publicly enforced government

Iron Man 3 is shit

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I was never a huge fan of comic books – they’re just not my medium. I do, though, really enjoy the characters and plots that come from the genre. Like any good sci-fi, the method of slightly twisting the rules of the recognisable world is an easy way of exploring a thought experiment & having fun. Because of this, I really like comic book adaptations. Movies are a medium I enjoy and seeing these larger than life characters on a big screen with big bangs and explosions generally makes me a happy boy.

As long as they’re done well, that is; like Batman Begins, or Iron Man 1, or the 1978 Superman movie. As such, I have been excited for a long time about Iron Man 3, one of my favourite flawed characters, in a techy/geeky franchise – it appeals directly to me. I’d enjoyed Avengers Assemble and had high hopes for this latest Marvel film. Last night I headed out with my flatmate and another friend to see it in 3D.

It was not done well. In fact, it was so poor that they should now take Tony Stark’s silly suit, put the 1983 Superman in it, cover it respectfully with Batman’s redundant black cape & dump them all together in the Marianas trench with Optimus Prime.

If you haven’t yet seen Iron Man 3, this following post is full of spoilers; I would suggest that if you’ve not seen the movie to not read on, but as my recommendation is that you don’t see the film anyway, it won’t matter.

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