Let’s deprive the tax-dodging super rich of their power

It’s not enough to say tax avoidance is immoral. It’s time to do something about it, writes Daniel Iley-Williamson

Photo: Meghan Shea.

It’s no secret the UK is a deeply unequal society. The richest 1% own as much as the combined wealth of the bottom 55%. This year we learned that the UK is home to more billionaires than ever before and has record numbers of working people living in poverty.

It’s not a coincidence that things have been getting better for the super rich while getting worse for the rest of us. Since the 1980s, government policy has taken a decisive shift in the interests of the super rich. Under Margaret Thatcher’s premiership, their taxes were cut, they were sold industries at knock-off prices, and house ownership was redistributed in their favour: the power of their workforce was severely diminished.

It’s against the background of a deeply unequal society that we learn of the Paradise Papers, in which our own university played no small part. These papers, like the Panama Papers before them, show that the super rich engage in tax avoidance on an industrial scale. They use their privileged economic position to employ lawyers and accountants – whose services are inaccessible to the rest of us – to identify and exploit tax loopholes.

They register their businesses, shares, and savings beyond the reach of UK tax authorities, further enriching themselves and depriving the UK public purse of much needed tax revenue, tax revenue that could be used to help fund our  hospitals, schools, and other vital services. Much of this is legal – it’s tax avoidance, not tax evasion.

Defenders of the super rich are quick to come to their aid, and there are two arguments they tend to deploy. The first says that because tax avoidance is legal, it is beyond criticism: people are acting within the law and therefore no one can reasonably complain.

This is a clearly flawed defence: the case against tax avoidance is not that it is illegal, but that tax avoidance is morally wrong and ought to be prevented. After all, simply because something is legal does not mean that it is moral.

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Furthermore, there are plenty of acts whose moral impermissibility are good grounds for legal impermissibility – murder, for example, is and ought to be illegal because it’s immoral. This shows that the legality of tax avoidance does not establish the moral permissibility of it and the case for the moral impermissibility of tax avoidance is straightforward.

The super rich use their economic privilege to sidestep the rules that apply to everyone else in order to further benefit themselves, and they thereby disadvantage everyone else. This appears patently unfair, and it sounds like strong grounds to prevent tax avoidance.

The second common defence of the super rich is that given the opportunity, everyone would engage in tax avoidance. After all, people tend to act in their own interests – that’s just what people are like. Hence, it’s mere moralising – perhaps even an expression of envy – to condemn those who avoid tax.

This is false, but it does hint at an important truth. It’s false because it’s not true that everyone who can exploit others for their own benefit will do so, and to say otherwise is a straightforward self-serving alienation of agency: the super rich can refrain from engaging in tax avoidance, it’s just most of them choose not to.

However, the important truth this defence hints at is that, waved on by the cheerleaders of greed, the super rich tend to exploit circumstances for their own benefit. This truth isn’t important primarily because of what it says about the moral character of the super rich, but because it needs to be remembered when we’re thinking about our social institutions.

It helps to explain precisely why the opportunities to avoid tax exist in the first place. The super rich, in virtue of their wealth, have massive political power – they fund political parties, lobby parliament, sponsor think tanks, dominate influential professions, control media outlets.

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How do they wield this power? As many on the right are so keen to argue, like many people they tend to act in their own interests. It’s just that when the super rich act in their  interests, they exert massive political  influence. They use it to create and maintain offshore tax havens, protect the non-dom tax status, and find loopholes in tax law.

But the political power of the super rich doesn’t just  explain  tax avoidance, it explains how society functions more generally. From legislation regarding media ownership to the funding of political parties, trade union legislation and the operations of the arms industry – none of this is left untouched by the political power of the super rich.

In all these instances, the super rich tend to use their power to advance their own interests. The revelations in the Paradise Papers are a symptom of extreme inequality. To end tax avoidance we need to do more than tinker with tax regulations. Instead, to prevent the super rich from wielding their power to rig the economy to serve their own interests, we need to deprive them of that power. As it stands the country’s power and wealth is concentrated within a select few. We shouldn’t merely accept this state of affairs, but instead criticise it with increased fervour.

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