Recently, the Times of London carried a large, bold headline that practically vibrated with moral indignation: THE TAX AVOIDERS. It headed a story about wealthy people who use a loophole to avoid almost all of their income tax, paying only 1.25 percent instead of nearly 50 percent. The government revenue supposedly lost annually was about $7 billion.

The scheme, for the moment legal, allows the rich to pay their income into a trust established in Jersey, an offshore island completely independent of the British government (though a possession of the British crown). The trust then returns the money in the form of a loan which, strictly speaking, could be called in—but since the trustees are the accountants whom the rich pay $64,000 per year to administer the scheme, it’s unlikely that they ever would be.

High rates of taxation are to accountants what anabolic steroids are to athletes: they stimulate performance. Or, as one accountant said: “It’s a game of cat and mouse. The Revenue closes one scheme, we find another way round it. It’s like a sat-nav. I’m driving, get a message there’s been a smash, press the button to re-route. That’s all we do with tax avoidance. The Revenue puts a block in, we just go round the block.”

Whether this is the finest use to which formidable intelligence can be put may be doubted; but in high-tax regimes, it is all but inevitable. The British chancellor of the exchequer, popularly though unjustly criticized for having been born with a large trust fund, said that he found the tax-avoidance scheme “morally repugnant,” thus establishing his credentials as a man of the people. Could he be a member of the same government, I wonder, whose head, David Cameron, is reported on page 12 of the same newspaper—after several pages of almost undiluted indignation at the conduct of the rich—to have offered financial asylum to the French who want to flee President François Hollande’s proposed 75 percent tax on incomes greater than $1.25 million? WE WILL ROLL OUT THE RED CARPET FOR FRENCH TAX REFUGEES, SAYS CAMERON, the headline read. Not since the Revolutionary Terror or the expulsion of the Huguenots have there been so many French refugees in London, and that was before Hollande’s proposed tax increase.

There is surely something inconsistent about a government that welcomes foreigners fleeing their own country to avoid tax, but excoriates its own citizens who do everything legally possible to do the same. The inconsistency can, perhaps, be explained by the fact that 50 percent of the population is now dependent, directly or indirectly, on the government for its income. That is why the government will never draw any general conclusion from this paradox.

As a more fitting subject for the moral indignation of members of Cameron’s government, I suggest the following question: How and why is it that, after 11 years of compulsory attendance at schools, at a cost to the taxpayer of $80,000 per head, more than one-fifth of British children leave state schools barely able to read or write?


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