Monday, June 25, 2012

Jimmy Carr Opens the Book on Tax Morality

A satirical comedian who makes his living out of jokes about bankers bonuses and fat cats has been caught out as a tax dodger. He's going to earn a lot of money, went to his accountant going what do I do with it, and gets told he can legally pay 1% on it with a K2 arrangement.

So who's in the wrong? Jimmy Carr? His accountant? The companies that pay into his company knowing it's bound to be dodging tax as it has a Jersey address? The law makers who allowed this loophole?

Jimmy is taking all the personal flak but there's another 1000+ people abusing the scheme, including folks like the lovely Gary Barlow, who need to share the public wrath. It's not turning out too bad for Mr Carr. He's held his hands up, admitted it's an error in judgement and pulled out of the scheme. The twitterati are certainly largely forgiving of him.

If he earns a similar amount to last year that'll mean he'll pay more income tax in 3 months than the average British worker will pay in their whole 40+ year working life. Does that square things up? What about his charitable giving. Does denying the treasury the choice of where to spend a large chunk of his money cause less upset because he chooses good causes to give some of it to instead?

Individual choices are poor when it comes to the common good. That's why we have a system of laws in the first place. The laws on income are clearly faulty as it doesn't capture all income for liability to income tax. The tax code is amazingly long and wasteful. The amount of human energy and resources that goes into both exploiting and enforcing complicated tax rules is shameful. It needs to be kept simple so morality is off the table and all this effort can be redirected to something more useful. 

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