12 March 2012

Clapping Clegg's condemnation of economically rational behaviour?

A line in a speech sometime makes me sit up and think twice about it and/or whether the politician really meant what he said - like this from Nick Clegg's speech to the Liberal Democrat Spring Conference over the weekend:

"Let me tell you, there are few things that make me angrier as the unemployed struggle to find work, as ordinary families struggle to make ends meet, as young people struggle to get on the housing ladder: the sight of the wealthiest scheming to keep their tax bill down to the bare minimum is frankly disgraceful" (about 50 seconds in):

The line in bold got me wondering whether it was fair comment or a rather too easy way to get some much needed applause - to which my answers are "no" and "yes".

If "scheming" means consulting accountants and if the advice they give you is legal, what exactly is it that's "frankly disgraceful" about anyone keeping "their tax bill down to the bare minimum"?

Or is Mr Clegg suggesting that we should all be volunteering to pay more tax than we should?

Of course we can sympathise with people struggling to find work, to make ends meet or to get on the housing ladder. But is this an adequate reason, excuse or justification for condemning the wealthy for their economically rational (and perfectly legal) behaviour?

Is this a new version of 'liberal economics' - or am I missing something?


Guy Clapperton said...

I agree 100 per cent. If the tax system needs changing then fine - by all means say so. Demonising people for employing accountants and advisors to ensure they work within the law, though, is plain daft in a crowd-pleasing way.

Chris said...

And only last week I paid some money into an ISA. I feel SO ashamed.

Natalie M said...

This is one of the few occasions where I agree with Clegg. It's one thing putting money into ISAs or private pensions or for business owners to use expenses to reduce their tax bill, much of which is encouraged by the government, and quite another for the very wealthy who can afford teams of accountants to put satellite businesses in their spouse's name or send money offshore or to campaign for their earnings to be classified as capital gains in order to reduce their tax bill, sometimes by enormous amounts.

Or to take someone who wields power in HMRC out to lunch.