Tuesday, February 12, 2008

How do tax authorities enforce compliance?

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The tax authorities are really not happy about enforcing the tax code. Who could be happy enforcing slavery? They are in effect accessories to a crime - at least by moral standards. Any happiness they have comes from the sense of security they get from being part of an organisation that has committed to paying their loyal disciples huge benefits.

Staying happy means treading a line line between meeting the funding requirements of their taxpayers and extorting funds from them. This is not an easy tax as you can imagine because taxpayers have very different concepts of what is fair. Some think 10% tax is enough, others think no limit should be applied.

Tax authorities realise that they are managing a public relations 'basket case'. If people dont think the system is fair, then they are inclined to move, or stop paying tax. Its actually very difficult to avoid not paying tax because of our reliance on the banking system for payments and revenue transactions. It does not make it easy that the banks are complicit with slavery, and by no means is such complicity new. It dates back to the time of the Far East Trading Companies that exhorted revenues from people under the sanction of the British monarchy.

Public relations were rather crude then. They would whip and beat you. But breaking the will or killing a citizen is not the best way to enlist a taxpayer. It encourages defiance. You want to enlist them by appealing to ethical principles that have no basis in reality, you want to make them feel apart of something great, so its encumbent on the tax collectors to speak in friendly tones. But if you dont do the same, they have legions of police to enforce court orders. Judges of course are paid under the same system as tax collectors, and thus they also have the same conflict of interest.

They need to make an example of those who breach the rules because it serves the enforcers to preserve the system. The more high profile you are, the more compelling the reasons for making you pay tax. If you are a small taxpayer, your contribution makes little difference. Havind said that, there are several reasons why everyone is a target for enforcement:
1. Bureaucrats tend to be systematic rather than commercially motivated, so they will 'cross the t's and dot the i's for the sake of being systematic.
2. Bureaucrats often focus on enforcing the tax code with smaller taxpayers so they dont have to worry about ending up in court.
3. Bureaucrats dont want to intimidate business owners because they are inclined to take their business offshore if tax authorities are too aggressive.
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Andrew Sheldon www.sheldonthinks.com
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