According to this article http://business.smh.com.au/aussies-top-super-rich-list/20080201-1piq.html?sssdmh=dm16.300553, “Australians are the world's richest superannuation holders, thanks to a stronger domestic currency and the previous government's decision to allow people a one-off contribution of up to $1 million tax free into their retirement savings”. I guess that’s one way of looking at it, but since we are not the richest country in the world, you might wonder why people would do that? And thus why people from other countries are not? Who is smarter?
I suspect people thought the government decision to cut the 3-times taxation of super as a government intent on reducing tax. But think again – they can just as easily re-apply those taxes if they are short of money. Consider the issues:
Australia’s revenues are tied to commodities, so as long as commodity prices are strong, people have nothing to worry, the government is making a killing on capital gains, consumption tax, etc.
When the economy soars where are they going to go for tax dollars – the rich – so super will likely to targeted. I personally never liked money I don’t control. I dont even monitor it, in fact as I hsve not even updated my address with my super fund from years ago.
Just because a government rescinds a tax does not mean they cannot re-apply it. They can re-apply it without new legislation.
Australians on an average have $63,794 invested in managed funds at the end of the last financial year, up by an impressive 32.4%. By comparison, the value of American managed funds climbed by 8.5% to $43,458 and UK funds rose by 23.2% to $17,515. I dare say the smaller US and UK contribution highlights the same distrust that I have with government. The Australian government gives me no reason for more confidence.
The big increase in Australian super was because the law was relaxed to allow people to put up to $1 million tax-free into their super savings. It strikes me as a carrot dipped in poison. Also why would you want to invest in super since you lose your capacity to leverage that money since super investments cannot be leveraged. Isn’t it a model for paying more tax. No doubt the banks who manage most of the super funds love the scheme, and no doubt they will reciprocate with more party contributions. At a time when fund managers are paid options to gamble with your money… I say no thanks! You are better off investing in your own home which is tax-free and leveraged.
Thursday, January 31, 2008
Rationalised justifications for taxation
Some people assert that we should pay tax since we are obliged or forced to do other things, and that these obligations are part of living in a western, modern society.
I am sure that people also reach this conclusion because its how they were raised as children. ie. "Do as you're told, or I'll come in and belt you". Some of you might argue that I was not belt enough. True enough, because I didn't need belting. I didnt need discipline. I have always had a good attitude, always self-motivated, and that is a reflection of the positive values I developed or picked up in youth. But what lessons or values are conveyed by the political system, and your begrudging acceptance of it.
The reality is that you dont bludgeon people into accepting argument. A club, threat, gun is not an argument. It does not win agreement, it gets submission. I agree with the argument that if you beat your child you are teaching them that violence is a valid means of communicating with your child. For the same reason I dont think people should accept threats of tax audits as a basis for accepting tax expropriations. The implication is that if you accept that governments have a valid justification for taking from you, you are resigning yourself to the possibility of making the same rationalisation in many areas of your life. Where does it end? Well it might end with the mixed economy, or in less secure times like the Great Depression it might breed attitudes like Adolf Hitler "You are nothing, your people are everything".
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Andrew Sheldon www.sheldonthinks.com
I am sure that people also reach this conclusion because its how they were raised as children. ie. "Do as you're told, or I'll come in and belt you". Some of you might argue that I was not belt enough. True enough, because I didn't need belting. I didnt need discipline. I have always had a good attitude, always self-motivated, and that is a reflection of the positive values I developed or picked up in youth. But what lessons or values are conveyed by the political system, and your begrudging acceptance of it.
The reality is that you dont bludgeon people into accepting argument. A club, threat, gun is not an argument. It does not win agreement, it gets submission. I agree with the argument that if you beat your child you are teaching them that violence is a valid means of communicating with your child. For the same reason I dont think people should accept threats of tax audits as a basis for accepting tax expropriations. The implication is that if you accept that governments have a valid justification for taking from you, you are resigning yourself to the possibility of making the same rationalisation in many areas of your life. Where does it end? Well it might end with the mixed economy, or in less secure times like the Great Depression it might breed attitudes like Adolf Hitler "You are nothing, your people are everything".
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Andrew Sheldon www.sheldonthinks.com
How many people get away without paying tax?
I have a very good idea of how many people are 'getting away' without paying tax, but I would suggest its very few. Do I really believe the government is so efficient, or that people are so compliant. No! It just know that no one benefits from living in a 'slave state', and I think the price you pay for living in such a society goes far beyond the 20-40% tax you pay for 'services rendered'. People dont appreciate the price of such distortions. Look at Russia. That is the practical consequence of a state that enslaves people. In Russia, 40% of government revenue comes form vodka sales. Thats the type of paralysis you get from a 'total' slave state. Western societies are just a lesser compromise.
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Andrew Sheldon www.sheldonthinks.com
What is a better system of support?
I personally am I not opposed to 'user pay' charges for services that I use, but I regard as an imposition any legal requirement to pay for services I dont support. I dont want to support subsidies for people who can look after themselves (like business), the financial burden of an inefficient, unaccountable government, the financing of poorly conceived, politically motivated, wars and other projects. I actually do support the provision of basic welfare services, say a dormitory for the poor and meals, however I think it should be privately funded by charity. I believe a privately funded program would be well-supported if it was well-conceived. I think if welfare was less generous, there would be far less requirement for it. I say that because poverty is a great motivator. Poverty does not solve problems, but it does give you a perspective on what is important, and anyone living on welfare has a poorly conceived list of priorities. More importantly, surviving on poverty gives you a powerful motivator to get out of those circumstances, and the basis for developing a sense of personal efficacy that poverty can only take away from you.
Someone might make the point. If welfare is so bad, why have welfare at all? Because people do genuinely make mistakes, fall on hard times, and find themselves in places they didn't expect, nor provide for. The idea of people privately giving to charity will not create a sense of obligation or entitlement, but rather of generosity and appreciation. I think to some extent everyone is a victim, if only of a poorly conceived political system, but some were born into better circumstances for dealing with their issues.
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Andrew Sheldon www.sheldonthinks.com
Someone might make the point. If welfare is so bad, why have welfare at all? Because people do genuinely make mistakes, fall on hard times, and find themselves in places they didn't expect, nor provide for. The idea of people privately giving to charity will not create a sense of obligation or entitlement, but rather of generosity and appreciation. I think to some extent everyone is a victim, if only of a poorly conceived political system, but some were born into better circumstances for dealing with their issues.
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Andrew Sheldon www.sheldonthinks.com
Why do people pay tax?
There are a number of reasons why people feel compelled or indifferent to paying tax:
1. Poor thinkers: Most people are not raised with great thinking skills. They dont readily make the connections between concepts such as ethics and their practical lives. That lack of mental efficacy tends to motivate them away from thinking rather than improving their thinking. The issue thus does not get addressed in their minds, and the implication is that they tend to adopt the opposing position in defence of taxation.
2. Poor thinking: Even if one decided to improve one's thinking, one would be fighting a battle against poorly argued inferences. The psychological l implication is that you are not rewarded for your insights, you are more likely to be loathed, distrusted or castigated. Why? Because you had integrity where most do not. People dont want to compare themselves negatively with others. For people with an intransient respect for reason or objective reality, there really is no choice.
3. Security: A great many people benefit from taxation by virtue of its hand-outs and not just the poor. The richest people in the country are in the best position to benefit from compliance. Why? Because they can make so much more from option schemes, and their interest deductions, so they are in a better position not to pay tax than anyone. The implication is that taxation & the government it supports, helps those that dont deserve it, as a result of their duplicity with corrupt government or unwillingness to take responsibility for their lives. The problem goes peoople. Some people believe they have to earn their worth, whilst other people think they have a birth right.
4. Safety: There are a great many people who feel threatened by governments and the consequences of not paying taxation. The implications of not paying tax are 'lawful' imprisonment or expropriation of money from your account. For this reason, there are very few people who are untouchable. That threat is likely to discourage alot of people.
5. Generosity: Another big reason why people pay tax is that they are successful, and they are happy to share their prosperity with others. The flipside is that alot of people earn alot of money as a result of government favours, but there is nothing wrong with charity, though I would argue financing government is the worst possible way to extend your charity. You would be better off giving to a private charity.
You might ask - If its so hopeless - why do you fight it? The answer is simply I can't accept a contradiction - even if everyone else can. Its not the way I have ever conducted my life. I dont lie to others, but more importantly I dont lie to myself.
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Andrew Sheldon www.sheldonthinks.com
1. Poor thinkers: Most people are not raised with great thinking skills. They dont readily make the connections between concepts such as ethics and their practical lives. That lack of mental efficacy tends to motivate them away from thinking rather than improving their thinking. The issue thus does not get addressed in their minds, and the implication is that they tend to adopt the opposing position in defence of taxation.
2. Poor thinking: Even if one decided to improve one's thinking, one would be fighting a battle against poorly argued inferences. The psychological l implication is that you are not rewarded for your insights, you are more likely to be loathed, distrusted or castigated. Why? Because you had integrity where most do not. People dont want to compare themselves negatively with others. For people with an intransient respect for reason or objective reality, there really is no choice.
3. Security: A great many people benefit from taxation by virtue of its hand-outs and not just the poor. The richest people in the country are in the best position to benefit from compliance. Why? Because they can make so much more from option schemes, and their interest deductions, so they are in a better position not to pay tax than anyone. The implication is that taxation & the government it supports, helps those that dont deserve it, as a result of their duplicity with corrupt government or unwillingness to take responsibility for their lives. The problem goes peoople. Some people believe they have to earn their worth, whilst other people think they have a birth right.
4. Safety: There are a great many people who feel threatened by governments and the consequences of not paying taxation. The implications of not paying tax are 'lawful' imprisonment or expropriation of money from your account. For this reason, there are very few people who are untouchable. That threat is likely to discourage alot of people.
5. Generosity: Another big reason why people pay tax is that they are successful, and they are happy to share their prosperity with others. The flipside is that alot of people earn alot of money as a result of government favours, but there is nothing wrong with charity, though I would argue financing government is the worst possible way to extend your charity. You would be better off giving to a private charity.
You might ask - If its so hopeless - why do you fight it? The answer is simply I can't accept a contradiction - even if everyone else can. Its not the way I have ever conducted my life. I dont lie to others, but more importantly I dont lie to myself.
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Andrew Sheldon www.sheldonthinks.com
Thursday, January 10, 2008
Legal defences for not paying taxes
That is a hard question to ask because we all come from different jurisdictions. Its safe to say that if the law saids you are required to pay taxes, you face the threat of consequences if you dont. Having said that lawyers are very good at finding ways at avoiding taxes.
Have you ever wondered why legal loopholes constantly seem to appear in the tax system? Why the tax acts for each country continue to get increasingly complex, requiring pages and pages of legislation to defend? There is a simple explanation.....
TAXATION is IMMORAL!
The more complex answer is that government fears retribution for applying taxation. They dont want to state as a matter of principle what they are doing - forcing people to pay money. The reason they dont want to do that - as a matter of principle - is that there are no facts of reality to support the notion that you should pay tax. But more importantly, there is no principle to defend them if you dont, and they are worried that you could hold them accountable for forcing you to pay tax. Or perhaps its just an ego thing? They just dont know how to answer the question, so in their minds they just dont deal with it, so if you asked the question, they would pass off an answer which evades the question.
That is why you get the argument....everyone is legally required to pay taxes... which is actually not true for certain taxes in the United States.
But you never hear government officials, whether politicians or bureaucrats, arguing that "It is a moral obligation for people to pay taxes". At least I have never heard it, and I think it would be a political slip that no one will make....if they are smart. Why?
The relationship between morality and the law is not clearly demarcated. Morality has always had its legitimacy in religion rather than science and logic. People have always accepted the religious tenets that its moral to give, thus practical to take. But how do you reconcile the morality of giving, but a practical market economy based on taking. Of course people can rationalise that we give and take, and rationalise the fact that the 'virtue' lies in giving, and the 'practicality' lies in receiving. Whilst that might neatly compartmentalise the issues, and create a comfortable dichotomy for some, the reality is that, if we dont receive in the capitalist market economy, we dont give. So as society embraces the practicalities of science and logic, and the humanities slowly get their act together, moral arguments are going to start to sound more compelling than the religious tenets which seem less relevant than ever. See my 'Ridiculing Religion' Blog at http://relig-i-diculous.blogspot.com. There will also be some pertinent arguments at http://shouganai.blogspot.com/.
Its interesting when you see patterns of thinking across different sectors of the government, and you develop insights into how people's thinking works and why. Take taxation. It shares some common attributes with accounting. Have you ever wondered why accounting is so bogged down in rules....there are heaps of them. Its all for the sake of taxation. I studied accounting...and I didnt much enjoy the number-crunching, but I loved the idea that accounting is based on principles. There is a logic to it. I was studying philosophy (logic, ethics) at the time...which I am sure most accounting undergraduates dont do, so I think thats why I embraced it. I think most undergraduates just change their majors rather than deal with it. :)
So what is wrong with accounting, or what taxation has done to accounting. Well its replaced principles with arbitrary rules. Since arbitrary rules have no basis in reality, you get tax loopholes that need to be filled, which require new rules, resulting in new loopholes. Asked why the accounting code is getting so complex, some accounting professionals or politicians argue that its because 'Life is complicated', that 'Life is not simple', But it could be....if they would embrace principles. But they dont do that because principles need to have some basis in reality, and they are adamant that principles will not serve their interests. So you will get some accountants (like me) posing the question, why doesn't accounting just apply the principles and hold them in the context of reality, like common law. The reason is - they would be accountable. So I now see a link between the way accounting is treated, and the way the tax act is treated. You get arbitrary definition of terms, requiring a complicated interpretation of the law. Because the law is always 10 days ride from the last village in the parlance of Jessy James, which translates to 'legislation is 18months behind the tax office', it means the tax office is one of the most dangerous institutions on earth, wrecking havoc on people's lives.
Its so contradictory when you get a telephone audit by the tax office and they have some a friendly, upbeat voice, whilst I am of course begrudgingly down tempo, yeh I was a non-resident that year, thats why I didnt pay Medicare Levy....according to our records you were a resident...Well I dont have the information, that was 3 years ago. Is it OK if we bill you for that...Well OK, I'll just pay it, I dont want to deal with it. On that occasion fear overtook me, and resignation to the fact that I really just dont want to deal with them. Its easier just to pay the money. Kind of like being pulled up for doing 120kmph in a 60kmph zone. But officer, the law is not logical. This stretch of road is freeway quality, I am ascending so I can brake easy, so there is less threat to human life than the manouvre you made to catch up to me. And you had me watching my rear-view mirror all the time when I should have been focused on the cars around me. Officer, you are a safety hazard! I swear I am not going to give in to these people again. The adage that 'speed kills' is just a plackard. Life is not so simple? Well its not if you dont act in accordance with principles. I should have argued the case. But who is ready at the time for an ethical debate? I guess there was the opportunity later, but who wants to go to court for $160. To fight for the principle? Would it change anything...nope. Only if I can change people's minds. Only if I can organise opposition to taxation.
Have you ever wondered why legal loopholes constantly seem to appear in the tax system? Why the tax acts for each country continue to get increasingly complex, requiring pages and pages of legislation to defend? There is a simple explanation.....
TAXATION is IMMORAL!
The more complex answer is that government fears retribution for applying taxation. They dont want to state as a matter of principle what they are doing - forcing people to pay money. The reason they dont want to do that - as a matter of principle - is that there are no facts of reality to support the notion that you should pay tax. But more importantly, there is no principle to defend them if you dont, and they are worried that you could hold them accountable for forcing you to pay tax. Or perhaps its just an ego thing? They just dont know how to answer the question, so in their minds they just dont deal with it, so if you asked the question, they would pass off an answer which evades the question.
That is why you get the argument....everyone is legally required to pay taxes... which is actually not true for certain taxes in the United States.
But you never hear government officials, whether politicians or bureaucrats, arguing that "It is a moral obligation for people to pay taxes". At least I have never heard it, and I think it would be a political slip that no one will make....if they are smart. Why?
The relationship between morality and the law is not clearly demarcated. Morality has always had its legitimacy in religion rather than science and logic. People have always accepted the religious tenets that its moral to give, thus practical to take. But how do you reconcile the morality of giving, but a practical market economy based on taking. Of course people can rationalise that we give and take, and rationalise the fact that the 'virtue' lies in giving, and the 'practicality' lies in receiving. Whilst that might neatly compartmentalise the issues, and create a comfortable dichotomy for some, the reality is that, if we dont receive in the capitalist market economy, we dont give. So as society embraces the practicalities of science and logic, and the humanities slowly get their act together, moral arguments are going to start to sound more compelling than the religious tenets which seem less relevant than ever. See my 'Ridiculing Religion' Blog at http://relig-i-diculous.blogspot.com. There will also be some pertinent arguments at http://shouganai.blogspot.com/.
Its interesting when you see patterns of thinking across different sectors of the government, and you develop insights into how people's thinking works and why. Take taxation. It shares some common attributes with accounting. Have you ever wondered why accounting is so bogged down in rules....there are heaps of them. Its all for the sake of taxation. I studied accounting...and I didnt much enjoy the number-crunching, but I loved the idea that accounting is based on principles. There is a logic to it. I was studying philosophy (logic, ethics) at the time...which I am sure most accounting undergraduates dont do, so I think thats why I embraced it. I think most undergraduates just change their majors rather than deal with it. :)
So what is wrong with accounting, or what taxation has done to accounting. Well its replaced principles with arbitrary rules. Since arbitrary rules have no basis in reality, you get tax loopholes that need to be filled, which require new rules, resulting in new loopholes. Asked why the accounting code is getting so complex, some accounting professionals or politicians argue that its because 'Life is complicated', that 'Life is not simple', But it could be....if they would embrace principles. But they dont do that because principles need to have some basis in reality, and they are adamant that principles will not serve their interests. So you will get some accountants (like me) posing the question, why doesn't accounting just apply the principles and hold them in the context of reality, like common law. The reason is - they would be accountable. So I now see a link between the way accounting is treated, and the way the tax act is treated. You get arbitrary definition of terms, requiring a complicated interpretation of the law. Because the law is always 10 days ride from the last village in the parlance of Jessy James, which translates to 'legislation is 18months behind the tax office', it means the tax office is one of the most dangerous institutions on earth, wrecking havoc on people's lives.
Its so contradictory when you get a telephone audit by the tax office and they have some a friendly, upbeat voice, whilst I am of course begrudgingly down tempo, yeh I was a non-resident that year, thats why I didnt pay Medicare Levy....according to our records you were a resident...Well I dont have the information, that was 3 years ago. Is it OK if we bill you for that...Well OK, I'll just pay it, I dont want to deal with it. On that occasion fear overtook me, and resignation to the fact that I really just dont want to deal with them. Its easier just to pay the money. Kind of like being pulled up for doing 120kmph in a 60kmph zone. But officer, the law is not logical. This stretch of road is freeway quality, I am ascending so I can brake easy, so there is less threat to human life than the manouvre you made to catch up to me. And you had me watching my rear-view mirror all the time when I should have been focused on the cars around me. Officer, you are a safety hazard! I swear I am not going to give in to these people again. The adage that 'speed kills' is just a plackard. Life is not so simple? Well its not if you dont act in accordance with principles. I should have argued the case. But who is ready at the time for an ethical debate? I guess there was the opportunity later, but who wants to go to court for $160. To fight for the principle? Would it change anything...nope. Only if I can change people's minds. Only if I can organise opposition to taxation.
The history of tax collection
I am really interested in this question. Why would people accept the idea of subjugating themselves to a system of governance that reduces their rights and choices. Did they make such a choice? Did they understand the implications for their actions?
That question - still to be answered
That question - still to be answered
The lowest taxing countries
Some countries are better than others when it comes to reducing your tax burden. You can't just look at the stated policies of a country to determine whether they are low-taxing nations or not, just as you cannot simply look at income tax rates. eg. Consider the following countries:
1. Australia has quite high personal & corporate tax rates (30%) but it offers generous deductions for expenses.
2. The Philippines has high tax rates but the government does a poor job at collecting the profits because most businesses understate income. Importers pay bribes to customs rather than pay import taxes, which are very high. As a consequence, there are 2 economies, one that rewards the 'cheats', and one that penalises the 'compliant'. The question is - who are the defenders of objective morality. Who is more practical in this context? Its easy to get away with it. Some people dont 'cheat'. Why? Because they are cowards? Or maybe they dont believe in breaking the law. Maybe because they are collectivists and paying tax is consistent with their ethical view. The idea of sacrificing your life in service for others is a central theme in most philosophies and religions.
So who is the lowest taxing nation? Perhaps its Hong Kong? The low income tax rates there likely result in high rates of compliance. Maybe it is China, where tax rates might be high but you need only bribe an official to evade it. But you would need to earn alot to make it worthwhile for you and the corrupt official.
I dont know the lowest taxing nations yet - but I will find out.
1. Australia has quite high personal & corporate tax rates (30%) but it offers generous deductions for expenses.
2. The Philippines has high tax rates but the government does a poor job at collecting the profits because most businesses understate income. Importers pay bribes to customs rather than pay import taxes, which are very high. As a consequence, there are 2 economies, one that rewards the 'cheats', and one that penalises the 'compliant'. The question is - who are the defenders of objective morality. Who is more practical in this context? Its easy to get away with it. Some people dont 'cheat'. Why? Because they are cowards? Or maybe they dont believe in breaking the law. Maybe because they are collectivists and paying tax is consistent with their ethical view. The idea of sacrificing your life in service for others is a central theme in most philosophies and religions.
So who is the lowest taxing nation? Perhaps its Hong Kong? The low income tax rates there likely result in high rates of compliance. Maybe it is China, where tax rates might be high but you need only bribe an official to evade it. But you would need to earn alot to make it worthwhile for you and the corrupt official.
I dont know the lowest taxing nations yet - but I will find out.
Why people dont pay tax?
The reasons that people don’t pay taxes are not simply opposite to why they pay:
- Righteousness: Some people have developed a moral framework for their opposition to taxation. They act without state sanction, challenging the legal framework that renders their acts as defiant and reprehensible. This is a very courageous act, some would say futile because it will not change the system, and it might land in them in prison. But in their minds, they know they are doing the right thing, and they don’t want to support an unethical system. Some of these people act defiantly under the auspices of a tolerating government. At some point government will decide to reign in defiant people, supported by the majority and mainstream media.
- No income: Given that most countries have consumption taxes, its getting more difficult to live in the real economy and not pay tax. The only tax evaders are likely thus to be street and forest scavengers. Even drug dealers pay consumption tax (on their consumption). Maybe some deal in drugs because it’s the only tax-free job.
- Practicality: Some people don’t apparently act on principles, but instead just evade tax because they can. This seems to be the case in Asia, where people just pay a nominal amount of tax. Eg. The Philippines. People are actually quite honest about their acts of defiance.
- Resentment: I think some people don’t bother to rationalise their opposition to taxation, they just know that on some level its wrong and ineffective, so they act with impunity.
Tuesday, January 1, 2008
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’Global Warming Misconceptions - View the table of contents!
Governments this year have ramped up their global warming propaganda, but in truth, just how certain is global warming. In the process of preparing a consulting report, we undertook some research and were startled by government policy. We will show that the propaganda being financed by government is shamelessly creating hysteria for the sake of political expediency.
