Taxing Reading 2

Luke Bartholomew Economics 101

Our tax code is getting smaller. Well, sort of. The BBC reports that Tolley’s Yellow Tax Handbook, the complete guide to UK tax law, is going to be printed in a smaller font.

Back in 2001 the tax code 5,942 pages long. Oh how struggling small businesses must look back to those good old days when they only had to wade through a mere 6000 pages, because this year the tax code has grown to a whooping 10,500 pages. Well again, sort of. Actually, the tax code for 2007 is 9,866 pages long, and so can conveniently just about squeeze into four volumes. However, had the text been printed in the old format it would have run to 10,500 pages and required a fifth volume.

Apparently part of the explanation for the growth in the tax code has been the need to give space for the explanation required by our new tax laws. So let’s get this straight: because our tax code is so long and complicated it needs to made even longer and more complicated to explain its complexities… Furthermore, in an attempt to stamp out tax avoidance more legislation has been passed and added to the tax code. Whilst this move may conform to some bizarre bureaulogic, the rest of us know that by increasing the tax code they have simply made it more difficult and expensive for small businesses to translate and comply with the law, whilst big businesses will still find the loop holes as they have the resources to devote to this purpose.

The irony is that all of these goals – a tax code with which is easier to understand and harder to avoid – can be achieved with one simple step – flat taxes.

Luke Bartholomew

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I would like to add my voice to those who think our tax law is ludicrously complicated. So complicated in fact that the Inland Revenue can’t understand it.
Why is it so complicated? To hide stealth taxes and make the current government look good when in fact they are drowning businesses small and large.
http://ecforster.netfirms.com/Tax/Doc1.html ecforster

All but your final conclusion is correct. We should adopt a simpler tax system but not one including any form of income tax such as a flat tax. Why? Because all taxation is ultimately a burden on the consumer. It is the consumer who provides the income to wage earners and companies out of which tax is collected. Hence, it is the consumer who pays.
Since all the taxes, of whatever kind, in the end amount to a tax on consumption, the answer is to make the taxation of consumption explicit instead of implicit, deceitful, devious, convoluted and complex. Some politicians favour this confusion and complexity to conceal the colossal cost of the state. It is purported that it is only those with the means that pay tax. That is not true at all. Everyone pays tax in every purchase and that includes food.
Ah, you may say, but we are taxed twice once when we earn and now when we spend. But a tax on your earnings is really a sales tax on your services. It increases the cost of your employment and this extra cost falls on the consumer. Politicians also favour the current misapprehension of income tax because it designates “taxpayers” who can conveniently be milked, and the rest, whereas everyone is milked in proportion to spending. The retired are in an invidious position because taxes such as council tax cannot be offset by exploiting the demand for services as can a worker, thus loading the cost onto the consumer.
Explicitly and exclusively taxing consumption would expose the real cost of government, perhaps prompting a thought that the money might be better spent by ourselves. It would also end the delusion of some that someone else paying for the welfare state.