Taxation and the politics of covetousness, or why the British hate Jimmy Carr

The case of Jimmy Carr, the British comedian, has proved instructive in the mindset of modern Britain. As the story of Carr's tax minimization scheme broke, a storm of indignation erupted, from No. 10 all the way to the UK Twittersphere. The PM called the scheme "morally wrong", concluding that UK Citizens would be "appalled" at having to pay the UK's exorbitant taxes while rich people like Carr & Co. have their lawyers invent methods to minimize their tax exposure. 

This could well be true, but there are two deeper issues at stake here. The first, and most apparent, is that there is far too high a tax burden in the UK for the UK to remain competitive. This, of course, is not restricted to the UK, but is common throughout Europe. The truth is that in most jobs in the Talent Economy we live in, there are truly talented individuals, and those individuals will require very high salaries to attract them to UK companies. In order to stimulate economic growth in the UK, a concerted effort needs to be made to attract Foreign Direct Investment and to position the UK as an international business center again, in the model of Hong Kong or Singapore. One of the many conditions that need to be changed to achieve this end is the lowering of taxes across the board. Taxes in the UK are far too high, as is illustrated by the fact that a person earning a median wage of 30,000 Euros or GBP ends up with exactly the same amount after tax in Germany after pension contributions are taken from the salary (before pension contribution in the UK). This does not include the UK Council Tax, on average around £1000 per annum. As you earn more, the tax burden rises consistently. Earn over £150,000 and you pay 50% income tax in the UK, whereas you have to earn over €250,000 to pay 45% in Germany. Corporate tax is lower in the UK than in Germany (24% maximum versus 29% maximum actually), but still not low enough to compare with the 12.5% across the Irish sea.... These are not attractive numbers, especially when compared to the 15% personal and 16.5% corporate rates in Hong Kong!

The darker and less apparent issue is the tax "addiction" that is so prevalent in the UK. Why does the UK need so much tax income? Quite apart from the social welfare and NHS black holes, that drain the British state revenue like nothing else, there is also a societal psychology issue here. The British have become a nation driven by covetousness and hatred of success. To be successful in business (not in football), and therefore rich, is to be hated and despised in the UK. "Tax him" sounds the cry when a rich man is seen, with the "because he has dared and won, and I hate him for it" remaining strongly felt but unspoken. The silent hatred of the rich is a poison to British society, which will drive the talented and excellent away from the white cliffs faster than any economic downturn. To exacerbate the situation, the government foolishly panders to the popular hatreds, without giving thought to the economic consequences. Until the British learn to celebrate success, the outlook is grimmer than Shetland weather. 

Pray for day that the sentiment in the UK sounds as follows: "Ho, a rich man. Look what he has done, I would emulate him. Let me be about building the foundations to my success, as he did". Only when this becomes the national mood, the UK will begin the long climb to success again. You cannot be successful without first learning to celebrate and nurture success. Learn to admire the wealthy, for they are successful. Look to them, analyse how they succeeded, and plan how you will join them. 

The calm after the Greek storm

Now that it seems that the Greek election has been decided, the world's financial institutions and corridors of power overflow with jubilation. Hard Truths wishes to ask, at this very appropriate juncture, an uncomfortable question:

"Would it have been better had Greece withdrawn from the Euro?"

It is understood that if Greece had withdrawn from the Euro, the consequences for the single currency would have been severe, with a run on the Greek banks, plummeting Euro valuations and Eurozone bond rates exploding. The situation in the Eurozone would have worsened, and Greece itself would have landed in a mild depression for a decent period of time. The existence of the Euro itself would have been put in jeopardy by the market reaction. These outcomes have been prevented by the the victory of the New Democracy party. 

The question is, should they have been? The Euro is a flawed concept. It brings together economies in a single currency that in any normal, non-political circumstance would never have even considered a currency union. Germany, with its export-dependent, manufacturing-based beast of an economy, makes an extremely poor bed mate with economically anaemic, corrupt and inflexible Southern Europe. The dissolution of the Euro would be in the interests of both parties. The Germans and Eastern Europeans, with dynamic and vibrant economies, could continue in a currency union that would benefit all concerned. The Southern Europeans, at the same time, would be able to revert to their respective currencies and devalue them enough to jump-start their economies. They still would need to reform their ridiculous socialist socio-economic systems, but at least if they failed to do so they would not damage the functional economies in Europe. 

European leaders must begin to realize that blindly following an ideological position is a very dangerous strategy, and before Europe goes down an economically disastrous path, the leaders must consider if the Euro is a viable currency, and if such close union is desirable. Politicians should be calculating, focused and willing to do what is necessary. This does not describe the approach to the Euro taken by Eurozone leaders.

It is time for a moment of clarity, and the recognition of a hard truth!