Tuesday, September 30, 2008

Tax Office research into non-compliance

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My GF knows I’ve been having trouble doing my tax. Being a slave to government just doesn’t come easy to me. My GF knows this, and sent this to me. It’s a study of taxpayer attitudes to paying tax. The difference between me and these people I guess is that they were screwed over by the Australian Tax Office (ATO) because their “aggressive tax planning” was deemed unhelpful to the ATO. Just as the ATO is able to make arbitrary rules to allow certain schemes, so it is able to make arbitrary rules to disallow them. This of courses all types of stress to those affected. But its all OK because the Australian government has a mandate on slavery.
If you would like to read “An examination of taxpayers’ attitudes towards the Australian tax system: Findings from a survey of tax scheme investors” (Nov 2004) by Kristina Murphy. This research was of course taxpayer funded, as is the institute, so don’t expect any objective insights. That is my role, as I pick this paper apart.
“The Centre for Tax System Integrity (CTSI) is a specialised research unit set up as a partnership between the Australian National University (ANU) and the Australian Taxation Office (ATO) to extend our understanding of how and why cooperation and contestation occur within the tax system”.
The paper investigates the increase in aggressive tax planning during the 1990s. The CTSI asserts that this aggressive financial planning “poses a serious threat to the integrity of Australia’s tax system”. This is of course a load of crap. The ATO has no integrity. It’s principles are entirely arbitrary just like the legislation created by our parliament. How can they speak of integrity when there is no moral framework for it. Thus there can be no framework for integrity – only the same obedience demanded by every fascist government. The Australian Tax Code sits juxtaposed against Common Law, which actually does have a basis in reason.
Incidentally the Internal Revenue Code in the USA is contrary to the US Constitution. I invite you to view Aaron Russo’s movie ‘Fascism in America’.
So what does the ATO do when people ‘aggressively’ seek to minimise their tax? They have a crackdown. There are no guns like with Hitler, but rest assured they are never too far away, and of course they would have them if you did.
In order to deal with the problem, the Australian the ATO’s crackdown on aggressive tax planning in 1990 when it issued amended assessments to 42,000 Australians who invested in mass marketed tax schemes. The majority of the scheme investors resisted the Tax Office’s attempts to recover scheme related tax debts. The reasons for the resistance were:
1. The ATO changed the rules, having been very slow to make any ruling on these schemes, and actually approved them. The other problem was the ATO’s administration of the schemes.
2. The poor manner in which the ATO dealt

According to survey data those who invested in tax schemes are more disillusioned with the tax system, are more hostile and resistant towards the ATO, and thus more likely to resent paying tax as a result.
The author says “In an ideal world, all taxpayers would voluntarily pay their taxes and comply with all of their tax obligations willingly”. This is a sweeping statement that needs consideration. If you accept this statement then we would be living in a socialist state. The reason why people don’t like being forced is clear enough. It disempowers, it demotivates, it alienates people. I would argue that the notion that a single government agency can fairly collect and that another agency government can ‘ideally’ distribute money is much greater fiction. I would also argue that capitalism has done a far, far better job at ‘voluntarily’ redistributing wealth, and that is within the confusion of a ‘mixed economy’. There is no reason to think that a capitalist economy based on freedom to negotiate and ‘user pays’ principles could not work, afterall people have a choice. Capitalism constrained by a mixed economy tends to manage 3% gains in productivity a year, whereas the taxing state charges more for less, without even reducing the tax burden.
So what is aggressive tax schemes? It is "non-compliant or fraudulent activity that could be most appropriately described as tax evasion (for example, creating false expenses or shifting money offshore). There is also a third type of strategy used by some taxpayers that falls somewhere between these two extremes". These are the tax avoidance strategies that the Tax Office commonly refers to as aggressive tax planning strategies.
This all begs the question of why is it wrong to avoid paying something you don’t support? Why is slavery an appropriate? People might say that you are paying for services rendered. But in fact most people never asked for those services. In fact they serve politicians to preserve a pretence that they are needed as ‘middlemen’. Why would one want to comply with a dictator if one could avoid it? The only reason is fear, which is why I never get any response to my blogs. People are scared? Yes, this is a fear-based system like Nazism.
The reason for the crackdown is that during the 1990s “an estimated $4 billion in tax revenue was lost as a result of 42, 000 Australians claiming deductions for their mass marketed tax schemes”. Well it has to be recognised that these schemes emerged because:
1. Many Australians don’t like to pay tax, or excessive amounts of tax
2. The ATO survives on the basis of arbitrary law. The problem with arbitrary law is that its easy to find an arbitrary basis for ‘loopholes’.
3. The taxpayer appreciates that the parliamentary or democratic process gives them no basis to impact tax laws. There is no court you can go to overturn unethical laws. There is an ombudsman, but he can only advise the tax office or government, and he is a paid appointment by the government, so don’t expect any favourable consideration there.

The other problem of course is that Australians have no sense of justice. Occasionally they go overseas to fight for democracy, but its really some nebulas ideal to them that they never really had to define. This was always ‘The Lucky Country’. Well I can tell you, from my experience it feels much better:
1. Not having to pay so much tax (and that it be based on a ‘user pays’ formula)
2. Not having to observe the insanity of how the government spends it
3. Not having to jump over the ATO’s arbitrary rules or hurdles like a lap dog
4. Not having to observe that the government is using your proceeds to help people who are more fortunate than you (e.g. Corporations) and less entitled.

‘Scheme related tax deductions were found to increase from $54 million in 1994 to over $1 billion in 1998’. Let’s remember that it was the ATO’s arbitrary rules that opened up those ‘windows’ and subsequently closed them down. You might ask why the ATO actually allows deductions at all. They are a nightmare for individuals and small businesses to administer, as is the necessity to set up a separate tax entity – a corporation, thus requiring a person to prepare two tax returns and employ an accountant.
The implication is that the government wants you out there working hard, but not for your own sake, but theirs. People, that is fascism. You empower them by being scared of them.
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Andrew Sheldon www.sheldonthinks.com
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