Tax avoidance intermittently comes into the spotlight in contemporary political debate. The left decry businesses dodging tax as immoral, whereas the right generally disagree. A common view among libertarians is that we must emphasise the difference between tax avoidance and tax evasion. The former is legally minimising the amount of tax you owe, whereas the latter is actually breaking the law to pay less tax. As usual, this means libertarians think they can draw a definitive line as to where policy should be and embrace a purely logical belief system, while their opponents are just moralising. And, as usual, this isn’t the case – turns out libertarians just have a different value system embedded beneath their argument.
The line between tax avoidance and tax evasion is whether or not the methods used are legal. Hence, the only way you can believe tax avoidance is OK while tax evasion isn’t is if you believe law is the appropriate moral benchmark by which to judge whether actions are ‘right’ or ‘just.’ But this is a completely anti-libertarian position: why should the guy with the bigger gun be able to tell someone else what to do? Or the tyrannical majority? Surely laws should be judged based on what they achieve or symbolise, rather than just being accepted because they are laws?
As it happens, I agree with this position; laws can be unjust (apartheid, slavery) and given the opportunity to disobey an unjust law, people should, whether individually or en masse. So if people/institutions are not morally obliged to obey the law just because it’s the law, surely the question of paying tax becomes a judgment call? This puts libertarians right where they don’t want to be: in the hazy world of morality. And the only position I can see them endorsing is that one should pay as little tax as possible.
So, whereas most people’s value systems tell them that if a corporation pays £8.6m over 14 years to a country where it made £3bn in sales over the same period, that’s unfair. Libertarians make out – perhaps because they really believe - that these people are just being emotional and illogical But really the difference is not one of nature, but merely of degree.
P.S. readers may notice a big similarity between this post and my post on Milton Friedman and corporations. In fact, similar problems can be found throughout libertarianism – it seems they do believe strongly in the rule of law with laws they approve of. In this way, many libertarians actually have a strong authoritarian bent.