# Irrational Attitudes to Taxation?



## amgd28 (15 Apr 2008)

Somethings been bothering me for a while about our atitude to taxation and tax dodgers in this country, which often occurs to me when browsing this site.

If you post as a landlord, there is an almost deafening cacophony of (excellent) advice to ensure best taxation avoidance measures are taken *while fully meeting taxation obligations*
If you post as beneficiary in a will, there is great advice on how best to minimise your tax bill, _*while fully meeting your taxation obligations*_
If you post as a company owner, you can get great advice on making sure your company are keeping straight with the revenue, and that as a director or sole trader, you are staying within taxation rules
and so on.......

YET

If you post as a person building a new house, or doing renovations, you get many posts such as the following


> got a quote yesterday for our three storey house (just under 3,000 sq feet) and a garage (25ft x 33ft) for 13,000 euros (cash).



_*and no-one bats an eyelid*_

Why is it that instead of the common myth of "tax being only for the workers", it is generally the middle-income and high-earners in the state that are paying their full whack of tax, and anyone in the building trade has carte-blanch to completely bypass the tax net. And worse thing is that the same people who object to the Taoiseach and other politicians engaging in tax evasion, the very next day, their agreeing cash deals with builders.......

I'm not immune to this, but sometimes I think crikey - the very people not paying tax (e.g. construction workers doing cash-only deals) would be first in line to criticise the health service, state of the roads, etc etc

Am I just having a bad day or does anybody else find this situation odd?


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## mathepac (16 Apr 2008)

amgd28 said:


> ..Why is it that instead of the common myth of "tax being only for the workers", it is generally the middle-income and high-earners in the state that are paying their full whack of tax...


Statistics produced by the CSO from tax-figures supplied by the Revenue certainly bear this out. These figures show, and were the subject of lots of comment at the time, that the more you earn in this lovely little country of ours, the less tax you pay, with the result that the highest earners essentially pay zero tax on their incomes. In other words they do pay their full whack, which is nothing, but do draw child benefit and other entitlements, which we pay for.

I'll look for a reference and post it here later.


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## Dee101 (16 Apr 2008)

I agree with you Mathepac, the highest earners in this country pay little or no tax - sure FF have it set up that way for them, isn't it a grand little country we have!. I'm not condoning tax evasion , but the way I see it if the "ordinary joe soap" can benefit a little from some loopholes, similar to those available to the rich or whatever they may be, then I say good luck to them.
In my opinion, we pay far too much tax in this country and get relatively little benefit.


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## ubiquitous (16 Apr 2008)

amgd28 said:


> Am I just having a bad day or does anybody else find this situation odd?



Probably both! 

For what its worth, the building trade, and the construction industry in general, is subject to the strongest and most severe Revenue regulation, of any occupational sector in the country. Anyone who knows anything about Relevant Contracts Tax will confirm this. 

The problem from the State's point of view is that Relevant Contracts Tax, by its nature, can only be effectively applied to business-to-business or more particularly contractor-to-subcontractor transactions and cannot be properly applied to contractor-to-householder deals. 

That is why householders and contractors can conspire between them to defraud the Exchequer on a massive scale, in terms of VAT evasion by the householder and evasion of other taxes by the contractor.

This "elephant in the room" has been tolerated for too long in this country on the basis of a number of myths that continue to be peddled on a widespread basis:

1. the myth that responsibility for tax compliance, and the imposition of penalties for evasion, should solely be a matter for the business and self-employed sectors and not for private individuals.

2. the myth that the only tax being paid in this country is by "hard-pressed" PAYE workers.

3. the myth that high-earning individuals pay little or no tax.
eg 


mathepac said:


> Statistics produced by the CSO from tax-figures supplied by the Revenue certainly bear this out. These figures show, and were the subject of lots of comment at the time, that the more you earn in this lovely little country of ours, the less tax you pay, with the result that the highest earners essentially pay zero tax on their incomes. In other words they do pay their full whack, which is nothing, but do draw child benefit and other entitlements, which we pay for.


The "statistics" cited here are nothing of the sort. It came to public attention some years ago that very small numbers of very wealthy people were abusing tax relief and exemption schemes and paying very little tax as a result. The numbers of people doing so were statistically insignificant in the context of the numbers of high-earning taxpayers as a whole. The loopholes that permitted such abuses were swiftly and effectively removed by the Minister for Finance and this phenomenon is now a thing of the past. 

(By the way, every time I read someone using the expression "this lovely little country of ours", its always in the context of a rant about tax and the rich. Gene Kerrigan has a lot to answer for  )

4. the myth that it is okay for ordinary individuals to defraud the state individually on a small scale but collectively on a massive scale because "we all know that the big guys are paying no tax"

eg



Dee101 said:


> I'm not condoning tax evasion , but the way I see it if the "ordinary joe soap" can benefit a little from some loopholes, similar to those available to the rich or whatever they may be, then I say good luck to them.
> .


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## shnaek (16 Apr 2008)

The attitude to tax is the same whether one is rich or poor - nobody likes it! Nobody has ever liked it, whether it was the government, the king, or the local lords doing the collecting. There may be a small percentage who are of good conscience when it comes to tax matters, and who would not seek to lower their tax liability for the good of the country. Michael O'Leary still pays his tax here, even though he could live abroad and pay a lot less. U2 move certain royalty payments to Holland so they can avoid paying higher tax here. There are more people on the U2 side of the fence than there are on Michael O'Leary's. It is just human nature.


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## ClubMan (18 Apr 2008)

amgd28 said:


> If you post as a person building a new house, or doing renovations, you get many posts such as the following
> 
> 
> > got a quote yesterday for our three storey house (just under 3,000 sq feet) and a garage (25ft x 33ft) for 13,000 euros (cash).
> ...


Plenty of people here have drawn attention to suspected, actual or imminent tax evasion such as this but often get their heads bitten off for their troubles...


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## amgd28 (18 Apr 2008)

Touché - I've noticed you staying out of such issues in the last while!

Ubi's post is very informative and confirms a lot of my suspicions about commonly held misperceptions on taxation.

....but I've had a better day today so I'm not as upset about it


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## Brendan Burgess (18 Apr 2008)

Hi Ubi

Great post. But there are a few other myths:



> In my opinion, we pay far too much tax in this country and get relatively little benefit.


 
We have comparably very low income taxes and social security taxes in this country. 

We get little benefit? There is, of course, some waste of money. But overall we get reasonable value for our taxes. 



> There are more people on the U2 side of the fence than there are on Michael O'Leary's.


 
Don't forget that Ireland is a tax haven for artists and authors and companies. I suspect that we have got a lot more from tax immigrants than tax emigrants. 

I don't have problems with people arranging their tax affairs legally, to minimise their tax. I do object to the likes of Bono doing so and then telling us we should be giving more to the Third World. But that is debated elsewhere on AAM.

Brendan


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## Purple (18 Apr 2008)

Great post Ubi, I completely agree.
Brendan also makes good points. When I started work on a pound an hour I paid about 25% of my income in tax. I now earn quite a bit more than that but I still only pay about 30% in tax. In many ways the rates of direct taxation are too low and the rates or indirect taxation are too high. This means that middle income earners, who have well used up their tax credits, have the heaviest tax burden.
I have never worked in a cash industry so I have never been paid in cash. Because of that I have never got a cent that was not above board. Therefore I could get all moralistic about people who evade tax but the truth is that I have never been exposed to temptation so it was easy for me not to dirty my bib. 
That said I regard tax evasion as stealing and see no difference between someone who evades VAT by paying cash and someone who steals cash from a till in a shop.
As citizens we have rights but we also have obligations. One of the main ones is to pay our taxes.
I also thing that people should place more value on their integrity.


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## Vanilla (18 Apr 2008)

I think too that in general attitudes have changed in relation to tax in the last twenty years. When I started work in earnest in the early 90's ( before that as a student ) there was still a fair bit of that cash culture around. Nowadays it is most unusual to have a client suggest they pay their bill in cash so as to get both a reduction and also avoid the VAT but you do still get the odd one or two- needless to say it's an offer I would never take up. But in the early 90s and presumably before that it was rife. Although ( pinning my colours to the mast) I am not a fan of Fianna Fail it is because of this that I have some sympathy for Beverly Cooper Flynn and other unmentionable personages...if everyone who was working in the 80s and early 90s were completely honest I feel there would be very very few who didnt see something going on of this nature. Perhaps as an employee but without the balance of power to do anything about it.


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## GeneralZod (18 Apr 2008)

ubiquitous said:


> 3. the myth that high-earning individuals pay little or no tax.
> eg
> 
> The "statistics" cited here are nothing of the sort. It came to public attention some years ago that very small numbers of very wealthy people were abusing tax relief and exemption schemes and paying very little tax as a result. The numbers of people doing so were statistically insignificant in the context of the numbers of high-earning taxpayers as a whole. The loopholes that permitted such abuses were swiftly and effectively removed by the Minister for Finance and this phenomenon is now a thing of the past.



Can you provide any evidence to back up this being a thing of the past? I've heard of loopholes being closed but nothing on this feeding through to a substantially reduced number of high earners managing their tax bill down to near zero. Could you provide a link to the evidence that the measures taken have been effective in reducing the already statistically insignificant (relative to the total tax take) figures down further. I'd like to see that they or others in different sectors haven't found new loopholes to exploit so that the numbers of people involved are not roughly the same as before.


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## Brendan Burgess (18 Apr 2008)

When the statistics were published, it was clear that the vast majority of big earners were paying a lot of tax. Of course, the media and the opposition focused on the few who were paying very little. 

I disagree with Ubi's use of the word "abused". They used tax planning to minimize their tax. There were mainly property incentives which were designed to help urban and rural regeneration. They did very well out of it, and I don't agree with these incentives. But, I would consider "abuse" to be evasion, not avoidance.


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## Ghodadaba (21 May 2008)

Purple said:


> That said I regard tax evasion as stealing and see no difference between someone who evades VAT by paying cash and someone who steals cash from a till in a shop..


 
How is this tax evasion? Paying in cash money, the nation's legal tender, for building works (the OP's gripe) isn't illegal. If the contractor doesn't declare it and keeps the VAT foregone, that's illegal of course. But paying in cash is a million miles from stealing. It is up to the builder to hand over the tax, not the customer.


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## ubiquitous (21 May 2008)

Ghodadaba said:


> How is this tax evasion? Paying in cash money, the nation's legal tender, for building works (the OP's gripe) isn't illegal. If the contractor doesn't declare it and keeps the VAT foregone, that's illegal of course. But paying in cash is a million miles from stealing. It is up to the builder to hand over the tax, not the customer.



Its evasion on the part of the consumer if/when the consumer requests a cash price meaning a price that is discounted to exclude VAT on the basis that no VAT is being remitted to the Revenue. Its by no means unknown for consumers to expect/demand such discounts from service providers.


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## Purple (21 May 2008)

Ghodadaba said:


> How is this tax evasion? Paying in cash money, the nation's legal tender, for building works (the OP's gripe) isn't illegal. If the contractor doesn't declare it and keeps the VAT foregone, that's illegal of course. But paying in cash is a million miles from stealing. It is up to the builder to hand over the tax, not the customer.


If you get a quote with 21% VAT included but you agree to pay cash for the figure less vat then you are complicit in tax evasion. You will probably get away with it but it's no less wrong.
I find people who engage in such activities and then criticise other tax evaders, or worse the idiots who criticise Irish people who live and pay tax in another jurisdiction for not paying tax here, utterly hypocritical.



_Post crossed with Ubi_


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## z103 (21 May 2008)

> That said I regard tax evasion as stealing and see no difference between someone who evades VAT by paying cash and someone who steals cash from a till in a shop..


My opinion is that tax is theft. 

I would not agree that we get good value for money. How could we? - We have to support a disproportionately large public sector. There's only about 4.4 million people living here.


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## Purple (21 May 2008)

leghorn said:


> My opinion is that tax is theft.
> 
> I would not agree that we get good value for money. How could we? - We have to support a disproportionately large public sector. There's only about 6 million people living here.



No country would function if the payment of taxes was discretionary 
It does not follow that a large public sector is necessarily bad value for money, but I agree that the public sector is inefficient (and there are only 4.1 million people here).


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## z103 (21 May 2008)

> It does not follow that a large public sector is necessarily bad value for money, but I agree that the public sector is inefficient (and there are only 4.1 million people here).


We have to pay more tax, because there are fewer tax payers to support our public sector. Why isn't this bad value for money, compared to other countries?

(I wrongly included the North in my 6 million figure, but wasn't quick enough to rectify it.)


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## Purple (21 May 2008)

leghorn said:


> We have to pay more tax, because there are fewer tax payers to support our public sector. Why isn't this bad value for money, compared to other countries?


OK but that still doesn’t explain why you think taxation is theft. Do you think that transport infrastructure, policing, the legislature, the judiciary, the armed services, civic amenities and state regulatory bodies etc should be privately funded? If not then how do you suggest they be funded?


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## z103 (21 May 2008)

> OK but that still doesn’t explain why you think taxation is theft.


Simply by its method of collection. An arbitrary amount is taken, with menaces, whether you agree with what it is spent on, or not. This, in my mind is theft.

If someone robs me at knifepoint, and gives the money to charity, it's still theft.


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## Purple (21 May 2008)

leghorn said:


> Simply by its method of collection. An arbitrary amount is taken, with menaces, whether you agree with what it is spent on, or not. This, in my mind is theft.
> 
> If someone robs me at knifepoint, and gives the money to charity, it's still theft.



So how do you think it should be collected?
The system we have now is the one the majority of people want, as expressed through our democratic government.
Do you think I should pay and you shouldn't or do you think we should all decide how much we should give (no prizes for guessing where that would end up)?

Your views are understandable but when the implications of their mass acceptance are examined they are illogical in that they would result in a negative impact on everybody.


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## z103 (21 May 2008)

> So how do you think it should be collected?
> The system we have now is the one the majority of people want, as expressed through our democratic government.


Ah, the old democracy chestnut! What about people that don't want to vote, or partake in the democratic process? I have my doubts that it even is what the majority want.



> Your views are understandable but when the implications of their mass acceptance are examined they are illogical in that they would result in a negative impact on everybody.


Would they? - how do you know?


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## Purple (21 May 2008)

leghorn said:


> Would they? - how do you know?


I have already outlined what taxes pay for and by extention what would happen if they were not collected and you have ignored my points.


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## z103 (21 May 2008)

> I have already outlined what taxes pay for and by extention what would happen if they were not collected and you have ignored my points.


Yes, the problem is obvious - how do we pay for fire engines etc.

The current system of taxation is grossly unfair, there must be a better system of paying for public services. I don't know what it is, but that doesn't mean the solution is not out there. Until we adopt a better system, in my view, tax is still theft.


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## Purple (22 May 2008)

leghorn said:


> Yes, the problem is obvious - how do we pay for fire engines etc.
> 
> The current system of taxation is grossly unfair, there must be a better system of paying for public services. I don't know what it is, but that doesn't mean the solution is not out there. Until we adopt a better system, in my view, tax is still theft.



I think the system we have is very fair. Those who can pay do pay and the funds are used to provide public services, public infrastructure and to encourage social and economic equity. The way these things are delivered (or the efficiency of how they are delivered) is a different issue.

There is, in my opinion, too much indirect taxation. I dislike this as I regard it as socially inequitable, with poorer people paying proportionately more, but that’s hardly theft.

The attitude that “they” need to come up with better rules (but you can’t think of what they are) and ‘till then you will use emotive language like “theft” is, quite frankly, juvenile.
 The state needs money to run the country. If you don’t like the way it gets it now then suggest a better method but don’t use meaningless sound bites to put a moral blanket on theft.


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## InfoSeeker (22 May 2008)

Finance Act 2006 introduced a restriction on the amount of specified reliefs that could be claimed by high earners, this only applies to individuals earning >250k but in essence it should ensure that people earning over this amount will be subject to an effective tax rate of close to 20%.

FA07 introduced more amendments to this area.


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## z103 (22 May 2008)

> I think the system we have is very fair. Those who can pay do pay and the funds are used to provide public services, public infrastructure and to encourage social and economic equity. The way these things are delivered (or the efficiency of how they are delivered) is a different issue.
> 
> There is, in my opinion, too much indirect taxation. I dislike this as I regard it as socially inequitable, with poorer people paying proportionately more, but that’s hardly theft.


You first describe the system as 'very fair', and then go on to illustrate that it is 'socially inequitable'. Which is it to be?



> The attitude that “they” need to come up with better rules (but you can’t think of what they are) and ‘till then you will use emotive language like “theft” is, quite frankly, juvenile.


Some people might accept that the current system of taxation is the best system available. Maybe the government is happy with this because of the power it gives them. I'm suggesting that there are better systems that haven't been explored. (I'm also pretty sure there's cure for AIDS out there, but I don't know what that is either.)

Describing my choice of language as 'juvenile' is adding nothing to this discussion.


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## Purple (22 May 2008)

leghorn said:


> You first describe the system as 'very fair', and then go on to illustrate that it is 'socially inequitable'. Which is it to be?


 OK, I’ll clarify. I think the current PAYE system is very fair.




leghorn said:


> Some people might accept that the current system of taxation is the best system available. Maybe the government is happy with this because of the power it gives them. I'm suggesting that there are better systems that haven't been explored. (I'm also pretty sure there's cure for AIDS out there, but I don't know what that is either.)
> 
> Describing my choice of language as 'juvenile' is adding nothing to this discussion.


 You did not say that the current system is theft, you said 





> My opinion is that tax is theft


 You then expanded by saying that the method of collection was what rendered it theft. You did not at any stage question the morality or fairness of how the burden is spread; simply it’s method of collection. Making such statements without offering any alternative is hardly conducive to an informative or thought provoking debate.


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## shnaek (22 May 2008)

I don't think you could argue that tax is theft - rather it is the charge to live in a particular country. We are lucky these days in that we can choose, to a large extent, the country in which we live. If we like the services they provide (health, roads, police, education etc) we can choose to live there, but must contribute to those services in the same fair manner as everyone else.
If we wish to change how we contribute to those services in the country in which we live, then we can vote to change government, stand for election on a different taxation platform, or arrange with a large group to overthrow the government and install some kind of communist (or not) dictatorship. 
Our taxes in Ireland are reasonably fair at present. I would hate to see the tax burden increase to fund public sector pay and pensions - and if the increase were large enough then I may choose to move my domicile. But I cannot accept that the taxation (or increase) is theft. There has to be money to run the country, and it has to come from the people.


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## z103 (22 May 2008)

> OK, I’ll clarify. I think the current PAYE system is very fair.


In my opinion it isn't. For example, someone who decides to set up a limited company and become an 'S' class director, suddenly gets their tax credits halved. (These people could be on very low pay while they try to set up the company, and the majority of start up companies will fail.) What's fair about that?



> You did not say that the current system is theft, you said  	Quote:
> My opinion is that tax is theft
> You then expanded by saying that the method of collection was what rendered it theft. You did not at any stage question the morality or fairness of how the burden is spread; simply it’s method of collection. Making such statements without offering any alternative is hardly conducive to an informative or thought provoking debate.



Not sure I'm following you here. Yes, I said all of the above. 

With regards to making a statement without offering alternatives is how research and debate begins. Someone comes up with a problem, and others try to find a solution. Recognition of the problem is the first step.



> I would hate to see the tax burden increase to fund public sector pay and pensions - and if the increase were large enough then I may choose to move my domicile.


The way the economy is being handled, you may be moving sooner rather than later!


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## Purple (22 May 2008)

leghorn said:


> Not sure I'm following you here. Yes, I said all of the above.


 You have been clear that you have an issue with the fact that tax collected (and how it is collected).
I have pointed out that no country can function without funds being collected by government.
If you have a problem with value for money or the way the tax burden is spread that’s a different issue.


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## z103 (22 May 2008)

> You have been clear that you have an issue with the fact that tax collected (and how it is collected).


Yes.


> I have pointed out that no country can function without funds being collected by government.


Yes, you have pointed this out. However, you have not backed up this claim. I am suggesting that there are alternatives that need to be researched.


> If you have a problem with value for money or the way the tax burden is spread that’s a different issue.


Yes, I do have a problem with this as well, and it is a different issue.


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## Purple (22 May 2008)

leghorn said:


> Yes, you have pointed this out. However, you have not backed up this claim.


Yes I have, I have pointed out that government needs funding and shown what this funding is required for.



leghorn said:


> I am suggesting that there are alternatives that need to be researched.


 You have not suggested any alternatives. Without such suggestions your argument is pointless.



leghorn said:


> Yes, I do have a problem with this as well, and it is a different issue.


 Good


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## z103 (22 May 2008)

> Yes I have, I have pointed out that government needs funding and shown what this funding is required for.


There are two parts to your claim;
1. Governments should collect the funding.
2. All countries need such funding to operate.

You've highlighted what Ireland uses the funding for.
You haven't considered the following;
 - how did countries operate before the tax system was intoduced? - what problems were there? - can these problems be addressed with modern technology?
 - why should governments collect funding? - are there any other means of doing this, like pay for what you use etc?
 - some jurisdictions do not have income tax, how do they operate?
 - is there an alternative to currency?



> You have not suggested any alternatives. Without such suggestions your argument is pointless.


I've suggested that there is a problem that needs to be addressed by further investigation and study.


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## Purple (22 May 2008)

leghorn said:


> how did countries operate before the tax system was intoduced?


 Taxes were always paid in one from or another. They also had barter and war and plunder. I don't think that would suit us.



leghorn said:


> can these problems be addressed with modern technology?


 No



leghorn said:


> why should governments collect funding?


 I’ve covered that.



leghorn said:


> are there any other means of doing this, like pay for what you use etc?


 Who pays to put the things you use there in the first place? What happens if, for example, a child’s parent’s die and that child has no living relative? Does that child then starve? Who pays for prisons? Who pays for the police?



leghorn said:


> some jurisdictions do not have income tax, how do they operate?


 Indirect taxes. These benefit the rich and are socially inequitable.



leghorn said:


> is there an alternative to currency?


 Not in a developed market economy.



leghorn said:


> I've suggested that there is a problem that needs to be addressed by further investigation and study.


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## z103 (22 May 2008)

You seem to have closed your mind to this and accepted that there are no alternatives to taxation, and the current system of collection. You've written off all alternatives, that might be proposed by Anarcho-capitalists, Classical Liberals, Objectivists and many politics and ecnomics scholars.

You won't even accept that there could be viable alternatives. That's most unfortunate.

Most of your post above is largely incorrect, and I'm not going to bother to dissect it.


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## rmelly (28 May 2008)

Prior to glasnost & reforms etc (i.e. up to late 70's/early 80's), did the Soviet Union levy income taxes on its workers? Given that most/all industry was privately owned, and most employed people were state employed? *

How did the taxation system work?

Actually, I'm probably going to go off and try to find out, but if any one has a one or two line answer in the mean time...

* Am I overstating state control & involvement?


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## BillyNoMates (12 Jun 2008)

We have government in our society, as a consequence of having government we have taxation rules. These rules evolved to their current state in the presence of democracy under the supervision of elected governments. They represent the current best compromise between all known viable alternatives. There may be unknown alternatives or alternatives not widely understood by large numbers of people; but any viable alternative has to stand up to critical analysis and have to gain acceptance by enough people to change our current rules. 

Our government is not perfect but its imperfections only reflect the imperfections of its people.
Our government will evolve and change in the future to better meet the needs of our society.

"Taxation is theft" is lazy thinking. 

Compared to all the human beings that have ever existed we are extremely fortunate to live in the type of society that we do. We have economic freedom (property rights & capitalism) and intellectual freedom (science, technology, art, writing etc.) These freedoms have made our society prosperous. These freedoms have been hard won over history. Our democracy has chosen the type of government it has and our democracy has chosen the taxation rules it needs to achieve that government.

I believe the taxation we pay as citizens is a small price to pay for the enormous benefits that come from being a citizen of our society.


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## Purple (12 Jun 2008)

BillyNoMates said:


> We have government in our society, as a consequence of having government we have taxation rules. These rules evolved to their current state in the presence of democracy under the supervision of elected governments. They represent the current best compromise between all known viable alternatives. There may be unknown alternatives or alternatives not widely understood by large numbers of people; but any viable alternative has to stand up to critical analysis and have to gain acceptance by enough people to change our current rules.
> 
> Our government is not perfect but its imperfections only reflect the imperfections of its people.
> Our government will evolve and change in the future to better meet the needs of our society.
> ...


Couldn't have put it better myself


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## potnoodler (15 Jun 2008)

Brendan said:


> Hi Ubi
> 
> 
> We have comparably very low income taxes and social security taxes in this country.
> ...



While our direct taxation in the form of PAYE etc may be low, it is all the other form that make Ireland expensive such as VAT, stamp duty,DIRT, TV licence , credit card & ATM ,car the list goes on. 
On the lines of value look no further than the health service and the never ending hole that it is.
It really annoys when the politicians use that term "low taxation economy"


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## darag (18 Jun 2008)

> Indirect taxes. These benefit the rich and are socially inequitable.


I disagree strongly.

Indirect taxes almost exclusively mean consumption taxes.  Lowering VAT and raising income tax discourages (productive) working, punishes saving and investment while encouraging consumption.  This is bad for the economy generally.

I'm not sure why anyone thinks people who have lower incomes are disadvantaged by a system which leaves them with nearly all their income (by taxing lower incomes extremely lightly) but which taxes consumption allowing them, if they wish, the opportunity to save.  Unless you feel people on lower incomes are too stupid not to go out and spend all their money on fags and booze.


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## shnaek (18 Jun 2008)

darag said:


> Indirect taxes almost exclusively mean consumption taxes.  Lowering VAT and raising income tax discourages (productive) working, punishes saving and investment while encouraging consumption.  This is bad for the economy generally.
> 
> I'm not sure why anyone thinks people who have lower incomes are disadvantaged by a system which leaves them with nearly all their income (by taxing lower incomes extremely lightly) but which taxes consumption allowing them, if they wish, the opportunity to save.



Well said.


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