Did Glenn Wheatley evade tax because he read a CIS discussion paper?
The people at Catallaxy are understandably unimpressed with the reasoning in today’s Clive Hamilton op-ed. Hamilton’s argument (such as it is), using the jailing of tax-evading music promoter Glenn Wheatley as a news hook, is summarised in this passage:
Despite their crimes, some of the tax cheats may feel a sense of grievance — because for some years our public culture and our political leaders have provided justification for tax shirking.
While the Federal Government has said that it will crack down on tax cheats, for years it has actively undermined public confidence in the legitimacy of taxation. Each time the Treasurer or the Prime Minister says he wants to cut the “burden” of taxes to put money back in the pockets of those who have worked hard to earn it, he buttresses the widespread view that governments are out to rip off the poor old taxpayer.
Conservative ideologues go even further, reinforcing the idea that taxation is theft. The Centre for Independent Studies, an influential right-wing think tank favoured by the Government, ceaselessly promotes the view that government is inherently hostile to individual interests and set on exploiting the taxpayer for no good reason.
…If you take this view of the government as a hostile force why would you pay your taxes? If taxation is theft, tax evasion is not only defensible in itself but a blow against an oppressive force.
According to Clive:
These arguments form part of a sustained shift away from thinking of ourselves as citizens with responsibilities to the public interest and towards thinking of ourselves as individuals with responsibilities to no one but ourselves and our families.
Hamilton’s argument is, on a moment’s reflection, very weak - even if some level of taxation is necessary for the ‘public interest’ he provides no evidence, not here or anywhere else, that the current level is necessary. Even the Australia Institute’s Christian Downie last year had a paper out arguing that tourism subsidies were a waste of money (hear, hear). There is no systematic evaluation of whether or not government programmes are value for money, or indeed whether they achieve anything worthwhile at all.
It is implausible to allege that calling for a change in the law is equivalent to calling for the law to be broken, and still more implausible to imply that people evade taxes because they read CIS discussion papers, rather than because they want the money for themselves. I think history will show us that people dodged the taxman for many centuries before the CIS was established in 1976.
But this op-ed is classic Clive. Not so much the guilt by association as the credibility by association. As I argued in my review of Hamilton’s Affluenza, he deeply dislikes modern society, but since his first book of social criticism, The Mystic Economist, he has learnt to sugar-coat his radical ideas with propositions that don’t seem terribly controversial, at least at first glance - we shouldn’t be materialistic, we should have work-life balance, too much debt is not good, or in this case tax evasion is bad.
There is an ascetic authoritarianism underlying Hamilton’s worldview, in which high taxation would be used to stop people indulging their frivolous desires for material goods, and transferred to an all-powerful state that would organise society along Clive-approved lines. He gets quite upset when accused of being an authoritarian. But there is more reason to infer that from his critique of modern society than there is to read a call for law-breaking into an argument for tax cuts passed by Parliament.
July 23rd, 2007 20:39
“Hamilton’s argument is, on a moment’s reflection, very weak - even if some level of taxation is necessary for the ‘public interest’ he provides no evidence, not here or anywhere else, that the current level is necessary.”
But he’s not arguing about levels, he’s responding to a climate of opinion manufactured by the likes of the CIS, that government is bad and taxation is theft. So he responds on a similar level with the quote that taxes are “the price we pay for a civilised society”. I’m sure he would agree with you that there are areas where governments should spend less. But in this piece he’s not arguing about levels of taxation.
July 23rd, 2007 21:15
Russell - There is not really an argument of any kind in Hamilton’s piece, in the normal sense of providing evidence and reasoning in favour of a proposition. Nothing to show that tax evasion has become more common in the Howard era - in fact the top 25% have paid an ever-larger share of the ever-increasing income tax bill, so their evasion efforts are not coming to much - or that people have become more negative towards taxation - in fact they have become more in favour.
July 23rd, 2007 21:42
I don’t see how Hamilton’s criticism really affects anything I have said in my CIS paper on taxation:
1. Hamilton approvingly cites Holmes saying that taxation is the price of something. That suggests that Hamilton agrees that taxes impose a welfare cost. So what is Hamilton’s estimate of this cost? Nothing? If it is nothing, it doesn’t make much sense to say that taxation is “the price we pay for a civilised society”, because if taxes don’t cost us anything, no price is being paid, and Holmes’ quote is wrong.
2. Hamilton also argues that taxation has an indirect benefit, because revenue can be used to supply things that are in the public interest. Fine - just spell out exactly what those things are, how large their benefits are, and then we can compare the benefits with the costs in (1) above.
July 23rd, 2007 21:44
Has Clive ever eaten British beef?
July 23rd, 2007 23:37
It’s good to know the CIS gets under Clive’s skin. Surely that’s a raison d’etre if ever there was one.
July 24th, 2007 09:24
I think the mistake in Clive’s reasoning (such as it is - thankyou Andrew!) is that he confuses the CIS’ arguing in favour of lower taxes with an argument against taxation in general. I don’t think that the CIS has ever advocated the abolition of government and taxation on the grounds of their being evil.
Arguing that you want to reduce the burden of taxation is very different to questioning the legitimacy of taxation itself.
As for taxes being the price paid for civilised society: I can run off a list of names of very uncivilised societies who earn their revenue through taxation. I think there is a reasonable argument to be made in favour if the proposition that, the more civilised a society is, the less need it has for taxation.
This isn’t rocket science - it’s essentially Logic 101. One for the amateur sociologists out there: why is it that intellectuals - such as Clive and his supporters - and others with higher degrees commit some of the most spectacular and obvious ‘thinking malfunctions’?
July 24th, 2007 09:34
Jeremy - I wrote a paper many years ago on the standard rhetorical strategies of people against economic rationalism, one of which was to take any idea to its extreme. So a call for lower taxes = a call for no taxes; a call for less regulation = a call for no regulation (or ‘law of the jungle’, a favourite in the past). When I did a survey on what had been written on the size of government question, the most radical proposal I could find would have taken us back to the size of government at the start of Whitlam’s term in office, ie still big by historical standards.
July 24th, 2007 11:34
“It’s good to know the CIS gets under Clive’s skin”
Perhaps it does, perhaps it doesn’t.
But Clive Hamilton sure does get under the skin of the classical liberals and libertarians in the blogosphere.
The major contributors to this blog, and especially Catallaxy, are obsessed with him. He must pose a major threat to all that you hold near and dear.
July 24th, 2007 11:42
Spiros - Though this op-ed was silly, the Australia Institute does produce original and well-marketed research, which in my view lays the groundwork for a far more interventionist and authoritarian government than we have today. It’s the kind of thing we should argue with.
July 24th, 2007 11:50
“It’s the kind of thing we should argue with.”
Andrew, arguing with the ideas is one thing - and to your credit, you play the ball more than the man - but at Catallaxy in particular they are obsessed with Hamilton personally. Who else from the Australia Institute gets mentioned by name over there?
And over here Rajat has just said he likes the idea of the CIS getting under Hamiton’s skin, a comment that is both personal and juvenile.
July 24th, 2007 12:02
Compared to other think-tanks, a lot of The Australia Institute’s work is by or co-authored by one person, Hamilton. The co-authoring system means that they can use his brand power to leverage more publicity than they might otherwise get, but the price is that other people don’t build their own profile in the ways they might otherwise do.
Also, as there is no real career structure in think-tanks few people stay full-time for long, which gives them too little opportunity to build a brand. Hamilton is everywhere these days, but it took him years to get to this position.
July 24th, 2007 12:20
“The Australia Institute’s work is by or co-authored by one person, Hamilton … other people don’t build their own profile”
Really? Here’s a counter example, taken from today’s News Ltd website. No mention of Clive Hamilton.
Is Andrew Macintosh going to be subject to the same personal attacks?
——
HIGH income earners are rorting the health system by some $230 million a year by obtaining cheap and inadequate health insurance to merely avoid paying the the Medicare Levy Surcharge, the Australia Institute says.
The analysis, using unpublished Australian Bureau of Statistics data, says an elaborate market has been created to service high income earners to enable people to avoid the surcharge.
“Almost all registered health funds now offer low-cost products that provide very little in the way of health cover and seem to have been created primarily for the purpose of reducing people’s tax burden,” the institute’s Deputy Director Andrew Macintosh said.
He says this practice is not providing the offsetting benefit of reduced pressure on the public health system, which is the object of the surcharge policy.
“The evidence suggests the practice of using substandard polices to avoid the surcharge and gain a tax benefit is widespread, with almost 220,000 families and couples, and 160,000 single taxpayers in the high income category obtaining private health insurance to avoid the Medicare Levy Surcharge or to gain some other government benefit in 2004/05,” Mr Macintosh says.
The report estimates that the practice of using low-cost hospital insurance products to avoid the surcharge resulted in tax losses of between $110 million and $250 million in 2004/05, with a best estimate of $230 million.
“The Federal Government needs to reduce the scope for this tax rort by tightening the rules on the eligibility of private health insurance products and ensuring high-income earners with private health insurance use the policies when they obtain services in public hospitals,” he said.
July 24th, 2007 12:32
Spiros - I said a lot of, not all. There are others - Macintosh, Emma Rush, Christian Downie, Richard Denniss, Michael Flood are names that spring to my mind, but I suspect the minds of few others. On a quick look at their website, they have issued 18 press releases this year, 11 of which were from Hamilton or included Hamilton. There has also been his book Scorcher and his co-edited book Silencing Dissent, so I’m sure Hamilton’s media mentions would be a large proportion of the media mentions of all Australia Insititute staff.
July 24th, 2007 12:34
Hamilton’s argument is, on a moment’s reflection, very weak …
Alas, poor Clive. His arguments are often thus - and I say that as someone with more sympathy for his world-view than most commenters here. But that’s the usual fate of people who prefer getting a headline to doing solid research and analysis.
On Andrew Macintosh’s more impressive argument, I’d get rid of the bloody subsidy entirely. It’s both regressive and inefficient.
July 24th, 2007 13:37
I’m no fan of Clive, but may I say in his defence that I find the CIS’ regularly drawing attention to ‘Tax Freedom Day’ one of the most vacuous contributions to public debate imaginable. The arguments put forward at that time (that the money you pay in taxes goes to ‘the government’, as if the government is a black hole that sucks things in and gives nothing in return) are frequently as puerile as anything Clive has ever said. There is no person in this country who doesn’t get at least some of their tax back either in payments or services, and the majority get more than they pay in.
Clive ain’t the only one who says childish things to get a headline.
July 24th, 2007 13:52
Glenn Wheatley evaded tax because he thought he could get away with it, and because he thought his money was better spent on some accountant from the Channel Islands who promised more than he delivered - rather than, say, a nurse at that big hospital near your place who does the reverse.
July 24th, 2007 14:04
“There is no person in this country who doesn’t get at least some of their tax back either in payments or services”
Every single person in this country gets the benefit of our intelligence services who protect us from terrorists, and of the police who protect our property, and of our legal system that protects our property rights.
All these things cost.
July 24th, 2007 14:06
Tax Freedom Day is a gimmick, but in the CIS’s case backed up with far more detailed critiques of tax and spend. It’s true that people receive as well as pay, but much of what the CIS says is arguing against public delivery of services people could purchase for themselves if taxes were lower.
July 24th, 2007 14:13
“Every single person in this country gets the benefit of our intelligence services who protect us from terrorists, and of the police who protect our property, and of our legal system that protects our property rights.
All these things cost.’
Spending on these things is just over 1% of total Commonwealth spending - would be higher in the states.
So far as I am concerned it’s beside the point - beyond a few anarcho-capitalists, nobody thinks the state can be abolished. The question is whether it needs to be as big as it is.
July 24th, 2007 14:29
“Spending on these things is just over 1% of total Commonwealth spending”
Add defence and you are starting to talk real money.
“The question is whether [the state] needs to be as big as it is.”
Indeed it is. You chaps haven’t had a lot of success in rolling back the state in nearly 12 years of conservative government. Can you imagine what it’s going to be like when the unionbosses-socialists-greenies-luvvies-welfarists come to power.
It’ll be the USSR and Venezuala and Sweden rolled into one! What a nightmare!
July 24th, 2007 14:41
I take it you’re not interested in public finance statistics either Leopold? why publish those? why oblige our governments to tell us anything on Budget night?
how is publishing this data in an accessible form (i.e. how long it takes us to work to pay our taxes) and tracking this over time a gimmick? why are people so afraid of information? something to hide?
July 24th, 2007 14:52
Spiros
care to mention where in my piece I have ‘personally attacked’ Hamilton or do you follow the same MO as Clive? The only time I even mentioned his name in the blogpost is to say that he wrote the piece in question!! Is that not allowed now?
As for the commenters, JC was upset because he appeared to lump in people who were legally avoiding tax with people who were illegally evading it (and appeared not to recognise the distinction at all). As JC noted, this verged on the slanderous. If I really wanted to make an issue out of Clive’s character I could have mentioned it but I didn’t.
I admit to having called Clive ‘Hairshirt Hamilton’ a few times, happy to take pride in that but that’s about as vicious I get. So everyime I even attribute a piece authored by Clive as Clive’s that’s a ‘personal attack’? Does that mean the Left are embarrassed by him?
July 24th, 2007 14:53
“You chaps haven’t had a lot of success in rolling back the state in nearly 12 years of conservative government. ”
That’s why the CIS has gone back to this issue in the last few years. I don’t think it it will be much different under Rudd. They’ll spend what current tax rates bring in, as Howard has done.
July 24th, 2007 15:29
“It’ll be the USSR and Venezuala and Sweden rolled into one! What a nightmare!”
Yeah right.
July 24th, 2007 15:41
Jason, unlikely as this may sound, I wasn’t thinking about you when I wrote about Hamilton being personally attacked at Catallaxy. Since when were you synonymous with that blog? I was thinking about your commentators, not just on this occasion, but on many others. Check your archives.
Just what is it about Hamilton that gets you people so riled up? Is it that he has appropriated the name Australia for his institute? The publicity he gets? His bald head?
July 24th, 2007 15:46
“They’ll spend what current tax rates bring in, as Howard has done.”
That’s probably right. But they could get a lot more in tax, and so spend a lot more, by cutting out a lot of unjustified tax breaks, like deductions for giving money to CIS.
July 24th, 2007 15:54
“Just what is it about Hamilton that gets you people so riled up? ”
To start with, it was just that the strayed into areas I knew about but used the research to reach illiberal conclusions. Plus he was a more sophisticated target, who was more interesting to critique, than the people I had been going after like Michael Pusey - all I had to do with him was catalogue his factual errors.
But unlike Pusey, who I think is an amiable incompetent, I came to think that Hamilton is a slippery character who conceals his real agenda, and shifts ground as it suits him - for example, in his reponse to my critique of his What’s Left essay he had a go at me for making an argument he made himself in Growth Fetish.
July 24th, 2007 15:55
“cutting out a lot of unjustified tax breaks, like deductions for giving money to CIS.’
Which would get us to tax freedom day a nanosecond earlier.
July 24th, 2007 16:07
” - “Spending on these things is just over 1% of total Commonwealth spending”
Add defence and you are starting to talk real money.”
Spiros, total spending on defence comes to around 7.4% of general government expenditure.
That, and Andrew’s 1%, leaves 91.6% of Commonwealth expenditure unexplained.
July 24th, 2007 16:09
Sorry, I miscounted: defence expenditure is expected to be 7.8% of general government expenditure in 2006-07, with an estimate of 8.4% in 2007-08.
July 24th, 2007 16:39
So if we agree that under 10% of the federal budget covers national defense as well as “our intelligence services who protect us from terrorists, and of the police who protect our property, and of our legal system that protects our property rights.” then we could cut government spending in half and still easily have national defence, intelligent services, police and a justice system to maintain civilization.
So any argument that we can’t have lower tax rates as well as civilisation is clearly spurious.
The services and transfers provided by the Howard government costs us at least 34% more* than the equivalent Keating services and transfers on a real per capita basis. If they had maintained the Keating spending levels we could have almost elliminated income tax by now.
* http://alsblog.wordpress.com/2007/05/10/howard-govt-costs-34-more-than-keating-govt/
July 24th, 2007 17:10
I also have real per capita spending calculations here.
July 24th, 2007 17:25
Once more for emphasis: “we could have almost elliminated income tax by now!!!!” And all they had to do was spend like Keating.
July 24th, 2007 18:35
“Which would get us to tax freedom day a nanosecond earlier.”
Every nanosecond counts. Besides, it is a matter of principle.
“Hamilton is a slippery character who conceals his real agenda”
Which is what? Care to share?
July 24th, 2007 18:50
Terje - I’m hearing you, but - are you sitting down? OK, prepare yourself:
Some people don’t want to eliminate income tax. They actually can’t imagine a world without it.
July 24th, 2007 19:44
“Every nanosecond counts. Besides, it is a matter of principle.
If we abolish all deductions for research and advocacy bodies - universities, charities in so far as they engage in R and A, political parties, I am with you.
“’Hamilton is a slippery character who conceals his real agenda”
Which is what? Care to share?’
There are some examples in my reviews of Affluenza and Growth Fetish, both on the CIS website, but he is slippery partly because he won’t spell out in any detail the implications of his critique.
July 24th, 2007 20:21
It’s not the bald head that upsets people, Spiros. It’s the baldhead emoting about buying a winter coat, telling us we’re not happy but supported with sloppy thinking, showing a public face to his pretty obvious emotional issues and expecting us to share , telling us we’re consuming too much when he to all intents and purposes is doing the same thing (if he wasn’t he be living the life of Ted Kezcinski as a hermit), slandering dead people because they can’t sue, accusing firms of being sexual predators, informing us that we need to cut emissions by 90% in 13 years.
In other words it’s the deceit and the neo-authoritarianism he espouses.
Think about it Spiros, the only way we could achieve his utopia is through the jackboot. There would be enough of us who wouldn’t want to live that way. What would the Cliverster do to us if he was leader and we chose not to?
I take the view that when you see totalitarian thinking you repel against it and carry a high level of disdain for the individual doing so. There is nothing the Cliverster is saying that old dinosaur totalitarians or cult leaders haven’t said before in different ways but will usually lead to the deepest part of hell.
July 24th, 2007 20:30
That needs fixing. It’s a vision thing.
Imagine a world where you keep 100% of your pay cheque and the government still delivers all the government services that we had in Keatings day. Imagine a world where the plumber can trade with the cook almost without tariffs. Imagine a world where individuals within local communities have more funds to enable society. Imagine a world without tax returns. Just for a moment stop and imagine. Now imagine that all this is actually possible, because it actual fact it is all actually possible.
July 24th, 2007 21:17
Andrew Norton wrote:
To start with, it was just that the strayed into areas I knew about but used the research to reach illiberal conclusions.
Now that is the funniest thing I’ve read in a while. Do you re-do your research when you accidentally reach an “illiberal” conclusion? Is this an admission that you’ve got your conclusion before you do the research, then selectively pick the stats that back that conclusion up?
July 24th, 2007 21:37
I understand there’s a more sophisticated position behind the stunt, Mr Norton. Merely noting that the ‘right’ is not above saying very silly things to get attention.
And I agree with you about Hamilton. Not by any measure an honest participant in public debate.
Mr Soon
I’ve got no objection to a serious discussion of taxation and spending. Happy to engage from the egalitarian perspective at any time.
But Tax Freedom Day is a very silly stunt. It really is on the same level as talking about WorkChoices being ’serfdom’ etc. And the associated rhetoric often implies a) tax money is going into some black hole, not back to the people who pay it and/or b) fixing churn is a simple and painless procedure. Those are both demonstrably (I use the word with precision) untrue. I know there are more sophisticated papers on this topic, but this post is after all about an op-ed piece not an academic paper. Some CIS op-eds on this topic have been equally silly.
July 24th, 2007 22:16
David - Your capacity to misread things again. Hamilton started writing about subjective well-being research, which I had been reading for a decade, and recycling critiques of consumer capitalism, which I had been reading for more than a decade. His choice of subjects caught my attention, especially his attempt to synthesise them. I think trying to apply modern evidence to old theories is interesting. But his anti-growth conclusions were not in my view supported by the evidence - which I pointed out at in my writing about Growth Fetish at the time.
While I dislike Hamilton’s basic worldview, I have some respect for him. He writes rubbish sometimes - yesterday’s op-ed for example - but a lot of his stuff is at least interestingly wrong.
July 24th, 2007 22:39
Tax Freedom Day is a mechanism for simplifying a complex issue into a format that is easily understood by the masses.
It is not silly. It is in fact a rather smart way to package a concept. And that concept is that some places pay vastly more tax than other places. And that at some points in our history we paid vastly less tax than we do today. Tax Freedom Day is one of the few meaningful way in which to make make such comparisons without getting stuck on the minute technicalities of how taxes are levied in different jurisdictions at different times.
And it is not a stunt. It is not merely something flashy to get attention. It’s purpose is to distill an issue to it’s essence. It is not to provide something showy that is unrelated to the issue and merely there to gain attention. It is integrally relevant to discussions about the size of government, historical trends and international comparisons.
July 24th, 2007 23:43
This is an absurd conversation. Since it was Andrew Norton (not me) who first used the term ‘gimmick’, I suggest you direct further arguments as to why it isn’t at him.
July 25th, 2007 00:03
Leopold
What’s wrong with recognizing tax freedom day? It in no way comes close to matching the dishonesty of outcomes from the opponents of workchoices as it offers clarity- as per the example you used.
Are you against it because it is a US derivative?
Tax freedom day tells us at the point of the year when our toil no longer is the property of the government.
In a way it’s little like house budgeting. We know after meeting all our expenses there is a some of money left we can save.
People should realize just how much they have to work before they start owning what they earn. This is a good thing.
There is a much better way however for people to really understand the actual cost of government that may actually do away with tax freedom day altogether.
I propose that we simply keep all our pay, save something like super and cut a cheque at the year end. I’m sure we can call that day anger day and no one will mind. It will certainly focus the mind.
July 25th, 2007 01:12
Did Glenn Wheatley evade tax because he read a CIS discussion paper?
As a “CONSTITUTIONALIST” lets first attend to the intentions of the Framers of the Constitution;;
Hansard 16-2-1898 Constitution Convention Debates (Official Record of the Debates of the National Australasian Convention)
Mr. ISAACS (Victoria).-
In the next sub-section it is provided that all taxation shall be uniform throughout the Commonwealth. An income tax or a property tax raised under any federal law must be uniform “throughout the Commonwealth.” That is, in every part of the Commonwealth.
Hansard 22-2-1898 Constitution Convention Debates (Official Record of the Debates of the National Australasian Convention)
Mr. BARTON.-I am saying now that I do not think there is any necessity for clause 95 in its present form. What I am saying however, is that it should be made certain that in the same way as you provide that the Tariff or any taxation imposed shall be uniform throughout the Commonwealth, so it should be provided with reference to trade and commerce that it shall be uniform and equal, so that the Commonwealth shall not give preference to any state or part of a state. Inasmuch as we provide that all taxation, whether it be customs or excise duties, or direct taxation, must be uniform, and inasmuch as we follow the United States Constitution in that particular-in the very same way I argue that we should protect the trade and commerce sub-section by not doing anything which will limit its effect. That is the real logical position.
Now, we have former Members of parliament getting jobs for the boys with tax free incomes, such as Peter Reith, even so it is unconstitutional. We had the so called one million dollar man the former AWB chairman to Iraq with a tax free income, again I view unconstitutional.
And there is more a lot more see my blog at http://au.360.yahoo.com/profile-ijpxwMQ4dbXm0BMADq1lv8AYHknTV_QH and my website at http://www.schorel-hlavka.com
Now, I view that Glenn Wheatley is innocent of any wrongdoing as taxation laws not uniform, as they are not by excluding certain persons of taxation while others having the same are paying a lot of tax;;
Hansard 3-3-1897 Constitution Convention Debates (Official Record of the Debates of the National Australasian Convention)
Mr. ISAACS (Victoria).-What I am going to say may be a little out of order, but I would like to draw the Drafting Committee’s attention to the fact that in clause 52, sub-section (2), there has been [start page 1856] a considerable change. Two matters in that sub-section seem to me to deserve attention. First, it is provided that all taxation shall be uniform throughout the Commonwealth. That means direct as well as indirect taxation, and the object I apprehend is that there shall be no discrimination between the states; that an income tax or land tax shall not be made higher in one state than in another. I should like the Drafting Committee to consider whether saying the tax shall be uniform would not prevent a graduated tax of any kind? A tax is said to be uniform that falls with the same weight on the same class of property, wherever it is found. It affects all kinds of direct taxation. I am extremely afraid, that if we are not very careful, we shall get into a difficulty. It might not touch the question of exemption; but any direct tax sought to be imposed might be held to be unconstitutional, or, in other words, illegal, if it were not absolutely uniform.
Mr. BARTON.-We were inclined to the opinion that “uniform” would not apply so as to prevent the graduating of a tax. I am glad to have the suggestion from the honorable member, because the committee will be going into the matter again.
I am not suggesting people are not to pay taxes but neither would I suggest people pay taxes in relation to laws that are unconstitutional;
The general misconception is that any statute passed by legislators bearing the appearance of law constitutes the law of the land. The U.S. Constitution is the supreme law of the land, and any statute, to be valid, must be in agreement. It is impossible for both the Constitution and a law violating it to be valid; one must prevail. This is succinctly stated as follows:
The general rule is that an unconstitutional statute, though having the form and name of law, is in reality no law, but is wholly void, and ineffective for any purpose; since unconstitutionality dates from the time of its enactment, and not merely from the date of the decision so branding it. An unconstitutional law, in legal contemplation, is as inoperative as if it had never been passed. Such a statute leaves the question that it purports to settle just as it would be had the statute not been enacted.
Since an unconstitutional law is void, the general principles follow that it imposes no duties, confers no rights, creates no office, bestows no power or authority on anyone, affords no protection, and justifies no acts performed under it. . .
A void act cannot be legally consistent with a valid one. An unconstitutional law cannot operate to supersede any existing valid law. Indeed, insofar as a statute runs counter to the fundamental law of the land, it is superseded thereby.
No one is bound to obey an unconstitutional law and no courts are bound to enforce it.
Sixteenth American Jurisprudence
Second Edition, 1998 version, Section 203 (formerly Section 256)
July 25th, 2007 08:50
Mr Schorel-Hlavka,
Maybe it’s time to set up a fighting fund and take your argument to the High Court.
I suspect hundreds (are there still hundreds?) of Little River Band enthusiasts will gladly donate to the cause.
July 25th, 2007 11:24
“I suspect hundreds (are there still hundreds?) of Little River Band enthusiasts will gladly donate to the cause.”
Jeremy, you are confusing Glenn Wheatley with Glenn Shorrock.
July 25th, 2007 11:41
[...] Nortion has a thoughtful critique of Clive Hamilton’s op-ed on the jailing of tax-evading music promoter Glenn Wheatley. Jason [...]
July 25th, 2007 11:41
[...] Nortion has a thoughtful critique of Clive Hamilton’s op-ed on the jailing of tax-evading music promoter Glenn Wheatley. Jason [...]
July 25th, 2007 11:54
“Imagine a world without tax returns. Just for a moment stop and imagine. Now imagine that all this is actually possible, because it actual fact it is all actually possible.”
It certainly is actually possible - as I remember, neither my neighbours in the village in West Java, nor my colleagues in the work group in China paid any income tax, or filled out tax returns. Of course we had to walk along muddy tracks, boil the drinking water, and if you got really sick, die. I trudged through the mud and boiled the water, but I didn’t die when I had appendicitis because the Australian taxpayers paid for me to go a nice hospital in Jakarta (just for the rich) and be properly looked after.
July 25th, 2007 14:02
Russell,
Now imagine no income tax and the level of services that we had when Paul Keating was PM (which is what I refered to). That is clearly possible and it does not involve ripping up all the bitumen roads.
In any case most impoverished nations generally suffer from too much tax that forces most producers into the informal sector of the economy. They ring fence production and then wonder why there is so little production to tax.
Regards,
Terje.
July 25th, 2007 14:25
It’s easy to do.
Sorry.
July 25th, 2007 14:53
Terje,
I guess I’m just a tax-and-spend kind of person … I prefer to imagine the idea of no GST, and much higher/progressive income/wealth taxes. Glenn Wheatley, “imposed an unfair burden on honest citizens who pay their taxes” by not putting in his fair share. Australians expect people to do a fair day’s work for their paycheck, and also expect people to put in their fair share to provide community services. What is a fair share and how it’s contributed is a subject for debate - where Clive is on one side and the CIS on the other.
July 25th, 2007 19:45
You want them to tax and spend just because they can?
July 25th, 2007 22:12
Terje, I think Russell would tax as much as he could, and then decide to allocate the revenue, whereas you and I (and, I suspect, some other readers) would prefer first to identify the services that the government needs to provide, and then set the level of taxes accordingly.
For me, and I think for you too, taxation is purely functional. For others, it seems to be a moral imperative. Hence Clive Hamilton’s linking of taxation to our ‘thinking of ourselves as citizens with responsibilities to the public interest’.
July 25th, 2007 22:51
Jeremy,
Clive would say we’re “citizens with responsibilities to the public interest” because he’s a real intellectual, whereas I would have said that we’re people with responsibilities to each other, because I operate more and more from emotion. I don’t know what else to do when I hear that there are people who can’t afford dental treatment, or get the special ed their child needs, or watever, other than hope that the government will provide. How else will they get what they need?
But I am despairing about how governments go about their business. As union rep at the last agency I worked in I went through cycles of EBA negotiations representing the staff, though I actually felt that never had so many, produced so little, for so few, as my colleagues. I watched that agency mismanaged into a state of utter dysfunction - I think a lot of government departments are like that. I just don’t know how else ‘things’ will be somehow looked after, if governments don’t do what they do.
I don’t like big government - during those golden Whitlam years when I was at uni I was as much influenced by the hippies and yippies as by Marcuse. And by the thrifty habits of my parents. But looking back it all seems to have been so simple then, and so complex now.
July 26th, 2007 08:53
Russell,
In the same breath you said that we have a responsibility to other people and then you infered you were going to do nothing about dental care because the government should use it’s coercive powers to make somebody fix it. This seems to me to be an abdication of the very responsibility you are asking for. It also seem willfully blind to the overall efficacy of coercion.
Regards,
Terje.
July 26th, 2007 11:14
Terje,
No, I have paid taxes in order that the government help those people, and the government has a surplus, so why can’t they use it to subsidise dental treatment for people who can’t otherwise afford it?
July 26th, 2007 11:43
Fun and games on this issue over at catallaxy.
In proposing that we cut taxes radically and privatise infrastrucutre and services to trusts to which local landholders and citizens may own shares which are gifted to them, I’ve been accused of advocating socialism and crony capitalism.
I actually would appreciate some intelligent feedback or criticism, not like what I am putting up with now.
July 26th, 2007 13:13
Why can’t it increase the tax free threshold so that more people can pay for such services themselves? We have a tax free threshold of only $6000 which means that people on Aged pensions and people on the minimum wage are all paying income tax. Why not focus on putting more money in their pockets via an increase in the tax free threshold so that people can themselves deal with the multitude of unexpected expenses that come their way?
July 26th, 2007 13:48
Good idea, but still wouldn’t make enough of a difference. Being a pre-flouride baby-boomer I’ve already spent more than $4000 on remaining teeth this year - I’ve passed the limit health insurance allows, so even I am starting to notice the bills!
July 26th, 2007 14:10
“We have a tax free threshold of only $6000 which means that people on Aged pensions and people on the minimum wage are all paying income tax.”
While it is true that people on the minimum wage pay tax, I wish the same was true of age pensioners (at least those who have as much income as someone on the minimum wage). One of the most profligate things this government has done, in my opinion worse than churning money back to taxpayers with children, is to bring in huge tax breaks for retired people, so that very few of them pay tax. When it comes to conventional notions of capacity to pay, it is hard to argue that a retired person who owns their own home, has long since given up supporting children and has no work-related expenses doesn’t have a much greater capacity to pay tax than someone on the same income with kids, a mortgage and the costs of going to work every day.
July 26th, 2007 14:18
Russell,
I grew up on rainwater from a tank because we lived on a farm. Hence no flouride. I’m personally in the middle of a string of dental proceedures expected to come in at about $2000 all up. A few months back my father had all his teeth pulled out because they were beginning to go down hill. Such is life.
Forcing people to pay my bill (or my fathers) does not amount to taking responsibility for eachother. And given your current dental expenditure it seems likely that your policy prescription based on emotion (your claim not mine) are probably as much about helping yourself as any notional altruism towards others.
Regards,
Terje.
July 26th, 2007 14:19
Backroom girl - fair point. Although with less incentive to work it probably makes some sence to give this group a low tax threshold.
July 26th, 2007 14:23
p.s. My personal health insurance does not cover dentistry so I pay the bills directly.
July 26th, 2007 14:48
and so you should. I don’t want subsidised dentistry because I can pay. (I don’t really want to pay for the vast tank of tropical fish in the waiting room, or the TV on the ceiling, but anyway …). Don’t run away from the point - you know I’m talking about people who need their teeth fixing, and can’t afford to have it done.
July 26th, 2007 14:59
“Although with less incentive to work it probably makes some sence to give this group a low tax threshold.”
I’m not sure which group you mean Terje - the oldies or the workers on minimum wage. I have to say I’m not all that convinced of the usefulness of trying to provide people with increased incentive to work by fiddling with their EMTRs or whatever. I suspect that people who work past retirement age are of two kinds - people who need the money because they can’t live on the age pension, and people who enjoy working for its own sake. I suspect both of these groups would work regardless of the carrots dangled in front of their noses, whereas the people who have just been hanging out waiting to retire are unlikely to be enticed back into work, whatever you do.
In the case of super tax breaks (pun intended) for oldies, I suspect its pretty much a case of simple electoral bribery. But increasingly expensive to undo and very unfair to other taxpayers, no matter which angle you look at it from. Unless of course you think that anyone paying less tax is a good thing
July 26th, 2007 23:31
Since when did having a Macleans Smile become a human right?
People should all pay the same tax rate regardless of their age, their income, their circumstances. The law works best when its consequences are impersonal and completely driven by the personal choices of people. I’d even go so far as to say that all Australian citizens should pay the same total tax. Australian citizenship and all its rights and protection, that will be $10,000 please. Income tax as a flat tax to a maximum would be as fair as you could get. People don’t pay doctors or grocers according to their ability to pay, rich or poor, for the same level of service, Australians pay the same. Why not government services?
Tax minimisation is national pastime, and an expensive one a that. Hoards of lawyers and accountants would be unemployed if income tax free day was the same as Federation Day, not to mention many of the bloodsuckers in the ATO.
July 27th, 2007 09:56
BRG,
Change happens at the margin. If you don’t think straws can ever break camels backs then I think you are denying logic. Each of us have thresholds beyond which our behaviour will change. And obviously many people can carry a lot more additional burden before they will alter course. Whether it’s the “bullshit from the boss” threshold (or too much shit from the employees) or the “too much tax to bother” threshold. Sometimes it is just a matter of timing with some people putting up with the extra burden for a few years whilst some will tolerate it only for a few months. However if we deal with people in aggregate these things add up.
Those that argue for more government services readily argue that families are at “breaking point”, so the logic that marginal changes do have an impact is hardly an isolated idea.
You are probably right that older Australians are getting a pretty sweet deal on tax relative to many other groups in the community. It’s time the tax free threshold was raised for everybody across the board.
Regards,
Terje.
July 27th, 2007 11:44
Terje - indeed, I agree with you that the effects of policies of one kind or another on behaviour are only at the margin. But that means that most people’s behaviour remains unchanged - but all of those people benefit from the policy as well. And among a group who might be expected to have a fairly strong preference for leisure, increasing their disposable income by reducing their tax might even have the perverse effect of encouraging them to work less. So you need to work out whether the marginal benefits from the policy (ie increased labour force participation by the few) outweigh the deadweight costs of lowering taxes for all the better-off oldies whose behaviour doesn’t change or changes in the wrong direction - extremely unlikely I would have thought.
I would be more than happy to see the tax threshold raised across the board - all I was saying was that I can’t think of any really persuasive argument for giving old people a huge tax break relative to everyone else, who are likely to be doing things much harder overall.
July 27th, 2007 13:13
BRG - I fail to see anything perverse about allowing people to work less. Any policy that deliberately requires people to work more by taking away some of the fruits of their labour should more reasonable be considered to be the perversion.
July 27th, 2007 14:40
I was only using the word perverse in a technical sense (as in unintended), not to indicate that I personally think there is something wrong with people working less. But I think you will find that one of the public justifications for the special tax treatment of retirees is that it will encourage them to stay in the workforce longer. (In these times of population ageing, no government is going to admit that the purpose of a policy change is to encourage people to retire or work less - god forbid.)
My argument was never about whether tax is a good or bad thing per se, just about whether it is justifiable for one group in society to pay so much less tax than other groups.
July 27th, 2007 16:39
BRG, the margins I think Terje (please correct me if I’m wrong) is referring to are at the margins of people’s behaviour, not the marginal people. Acceptance of overtime, a promotion, a new job by an individual will be weighed up against multiple factors, called an oppurtunity cost. This affects everyone, just not a few hard working souls at the coal face who love their job.
I’m glad you don’t see anything perverse in people having the freedom to use their time as they please, be it working or whatever.
July 27th, 2007 20:27
Brendan - yes that is a fair summation of what I was saying.
Most people don’t run the numbers like an actuary might. However most people via a process of trial and error, observing what other people do, and simply in seeking life satisfaction and minimal personal pain will alter their behaviour to seek an optimal personal outcome given the policies that prevail.
July 29th, 2007 09:13
BG, I assume you are unhappy about the new super tax breaks rather than the pre-existing tax breaks? My take on the new tax breaks is that they won’t benefit too many (existing) oldies. The previous “reasonable benefits limits” were high enough to ensure most oldies did not have to pay super exit tax - after all, most of them haven’t accumulated much super. The real beneficiaries of the changes are people with lots of super. There are some oldies in this category, but by far the largest group will be (assuming the policy remains in place or is at least grandfathered) young people on high incomes who can afford to salary sacrifice large amounts. For them, their top rate thresholds have effectively risen by about $36k (that’s the $50k deductible contributions limit less the max employer super guarantee contribution of about $14k). Given that most young people on $200K+ are raising families and buying bigger houses as a result, one could argue that the biggest beneficiaries will be (presently) young high-income childless people. Perhaps I should not complain so much about transfer payments to families? It’s only poor childless people who get screwed all round.
On the work incentives, the new super system means that people over 60 basically don’t pay any tax. Presumably that will increase workforce participation on the margin, albeit at a high ‘cost’ to the Treasury.
July 30th, 2007 10:42
“Presumably that will increase workforce participation on the margin, albeit at a high ‘cost’ to the Treasury.”
Again, that is the claimed objective of making super non-taxable from 60. But as I said, I’m not all that convinced that there will be a net increase in workforce participation (for example, if the people who work less because they are more easily able to achieve their target income outweigh those who work more because they get to keep a higher proportion of their income.)
You see, I think people obsess about EMTRs altogether too much - I’m not really convinced that they are such big drivers of people’s behaviour. Have you ever noticed that all of those people complaining about how highly their overtime is taxed are actually working the overtime anyway (presumably because they think they ‘need’ the money)? I accept that there must be a point where an EMTR is so high that there is no point working, but I don’t know how you would determine what that is and of course it is different for everyone.
But in the end, I think that most people are focused on whether they have ‘enough’ money in their pockets, not how much tax they are paying. And it’s their idea of how much is enough that motivates them to work more or less, rather than the EMTR.
Just to clarify something, I didn’t originally have the superannuation tax changes in mind, but just the very generous Senior Australians tax offset - the super changes are just icing on the cake for a small subset of senior Australians. And what motivates me is the idea that policy should be ‘fair’ - in this case between different demographic groups.
And I would agree with your observation that it is ‘poor’ childless people who get screwed around - as a group they are on the bottom of the pile for both sides of politics. But on the other hand, they are paying very little in tax, by definition, so they can’t really complain about that side of things.
July 30th, 2007 13:41
I guess my priors were that most retirees would not be in the ‘target income’ camp given that most don’t have a lot of super and would not just be working to support themselves day-to-day but also to put more money aside for their futures.
July 30th, 2007 19:39
BRG,
EMTR’s affect the transition from unemployment to employment harder. They are called effective marginal tax rates because they combine the tax rate that people pay on income earnt and the loss of benefits. They are real and they do affect people’s choices.
The EMTR of overtime is simply your marginal rate of taxation, unless you are also receiving other means tested welfare. If your marginal tax rate is 45 cents in the dollar compared to 40 cents (or 40 cents compared to 30), you have to work that little bit longer to get the same reward. People are working to earn the extra net income, not the extra gross income. How much more overtime will be a function of the reward, with decreasing utility as the time required to earn it increases.