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by Neville Kennard, veteran preaching and practising capitalist

There is tax avoidance and there is tax evasion. Tax avoidance is legal. Tax evasion is illegal. The distinction can be difficult sometimes to discern and often it takes courts, sometimes several courts, to rule whether it is one of the other. The tax rules are so convoluted and complex that opinions from legal experts are needed on whether it is in the “avoidance” box and okay, or in the “evasion” category and thus illegal and subject to hefty penalties, gaol even.

We are told that we should pay our taxes, our “fair share” but no-one can tell us what is “fair”.

We know governments waste our money. Milton Friedman considered that when government functions were privatised or contracted out they could be done for about half the cost. This is bad enough but governments are far worse than this. Not only are their activities wasteful and inefficient, they are often downright damaging. They undermine personal responsibility, reduce competition, make people dependant. The unintended consequences of a government intervention is inevitably more damaging than the perceived problem the intervention was intended to alleviate.

Another wise quote from Milton Friedman: “Thank goodness we don’t get all the government we pay for!” Just as well they waste a lot or we would all be more severely hobbled and restricted.

There are a myriad examples of damage done by government intervention, using our taxes, but take one example – Child Care: the government takes so much of our money that both parents need to go out to work. Then the cost of child care (government licensed of course) becomes a burden; politicians rise to the occasion and propose subsidising child care. Of course with subsidised child-care there is more demand than supply and so the cycle goes on. Better by far to reduce taxes and let people work out their own child-care, or maybe with lower taxes some mothers, or fathers, may not need to work. And as for government licensing of child-care centres, parents are well able to sort the good from the bad and child-care centres will find it profitable to get private accreditation and to maintain standards.

Citizens know best how to spend their money. They know how to save, to invest, to learn, to spend. They make mistakes, of course; that’s life, that’s learning. If they can find ways to hang on to more of it and avoid giving it to the government to waste and misuse they will be better off. Our society too will be better off as it will be better spent, better saved on what individuals want and not what governments and bureaucrats think they should have.

Politicians and bureaucrats like to extract taxes, then to control, regulate and dispense largess. This is their whole raison d’etre. They must be seen to be “doing something”.

Politicians’ self-interest is to get into power and to stay in power for as long as possible. If they can demonstrate how important they are, how good they are at handing out goodies, then they will stay there. Some politicians manage to stay in their jobs for decades, sometimes in government and sometimes trying to get into government.

Bureaucrats like to be secure in nicely-defined roles, finding more and more to control and spend, building little fiefdoms. If they find “programs” (and they can be quite entrepreneurial in this) to create, develop, enhance then they climb up the civil-service ladder. One thing a bureaucrat doesn’t want is for a program to succeed, because that will reduce the need for that program. Better that a program gets a lot of attention but fails, which can of course be blamed on “inadequate resources” — meaning, “more funding needed”. A bigger budget is called for.

It always seems strange to me that governments trust its citizens to vote, and to pay taxes, but then don’t trust them to spend their money as they see fit.

The Eurocrats call for “Tax Harmonisation” so as to try to stem the flow of funds (and people) to low-tax regimes. These crats hate to have to compete, as we in business must, so they would like to legislate  “tax cartels” between compliant countries. But that will never work. (Funny that governments hate business cartels and monopolies, but like their own).

For an articulate explanation of the economic benefits of tax havens see this video:

I like the term “Tax Havenisation” — get the world competing to lower taxes, shelter income, protect assets.

We all like paying less tax, because we know we can use the money better than the government, and our priorities are our own.  So don’t worry about being labelled a “tax cheat”, just arrange your affairs as best you can to pay as little tax as possible, legally, and we’ll all be better off.

Tax Evasion is illegal and I would not recommend anyone illegally evade paying their proper share of tax, and if you can’t figure out what this is, then you should get expert help.

(in order of appearance on Economics.org.au)
  1. Welcome from Neville Kennard
  2. Think Tanks Don't Work
  3. "Market Failure": Just what the government ordered!
  4. The Tragedy of the Tax Pool Commons
  5. Corporate Welfare
  6. Citizenship for Sale?
  7. I Don't Vote
  8. Voting: Right or Privilege?
  9. Stockholm Syndrome and our Love-Hate Relationship with Government
  10. Civil Disobedience: The Rules of Engagement
  11. Should Respect for Law Extend to Bad Laws?
  12. Jaywalking as a Demonstration of Individuality
  13. Government Likes War
  14. Collusion is Our Right
  15. Why Not the Drug Olympics?
  16. Unconventional Wisdom
  17. Tiger Farming: An Alternative to Extinction
  18. Looking Backwards: Mont Pelerin Society Conference, Sydney, 2010
  19. Tax Avoidance is a Patriotic Duty
  20. Kennard Writes to IPA Review Editor
  21. Genocide by Welfare: A Tragedy from the Aboriginal Welfare Industry
  22. Separating Sport and State
  23. Your Home is Not an Investment
  24. Dick Smith, Celebrity Philanthropist
  25. A Libertarian's New Year's Resolution
  26. Extend Politicians' Holidays to Create Prosperity
  27. Entrepreneurs are Disruptive, and Bureaucrats Hate It
  28. What is a good Australian?
  29. Governments Like Employment But Hate Employers
  30. The Market Failure Industry
  31. Neville Kennard: The Tax Avoidance Imperative
  32. Wot if ...?
  33. The Tribal Chief and the Witch Doctor
  34. The Tannehills
  35. Democracy versus Property Rights and Prosperity
  36. Government Doesn't Work, and That's the Way They Like It
  37. Minarchy vs Anarchy
  38. Euthanasia and Self-Ownership
  39. The Right Policies to Fix a Depression
  40. Is Howard Our Best PM?
  41. Tax Producers vs Tax Consumers
  42. Where There's a Queue, There's a Business Opportunity
  43. Authoritarian Freedom
  44. Why Classical Liberals Should Debate Anarchocapitalists
  45. The Tyranny of the Majority
  46. If you could choose to whom you paid your tax
  47. Business Should Exploit Boat People
  48. The Immorality of Trade Unions
  49. "America" vs "The United States"
  50. Sweet Anarchy
  51. The Illusion of "Job Creation"
  52. Gold Is Money
  53. Guilty Capitalists
  54. Bureauphobia
  55. Prosperity vs Growth
  56. Capitalism vs Democracy
  57. More people = More fun
  58. Self-Ownership - the very idea!
  59. Government will murder Neville Kennard if he doesn't back away
  60. The Australian Dollar Has Been Cowardly and Criminally Devalued, Harming the Poor Particularly
  61. Is Taxation Theft and Government a Tax Cheat?
  62. My Journey to Anarchy:
    From political and economic agnostic to anarchocapitalist
  63. Government Needs Bad Guys –
    that's why they like wars
  64. What Is Obscene?
  65. Traffic Economics
  66. Wayne Swan stands on the shoulders of other intellectual pygmies
  67. Neville Kennard Obituary
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