Monday 13 April 2015

Birth and taxes

Last week I received a tax demand from HM Revenue and Customs. I could get angry, but I won't.

In HMRC's estimation I underpaid tax in a previous year. Now they want me to pay up, plus a 5% interest fee. I blame my previous employers, who were meant to be paying tax on my behalf and seem to have got their sums wrong.

As far as I can tell HMRC's figures are correct, so there's not much point in appealing, and I intend to pay them. I won't go into details, but let's just say it's a substantial amount. It won't cause me any immediate hardship, but it's a significant hit to my savings.

Image source: Daily Telegraph

My baby son was born on 24 December last year. This has brought many new expenses, with a lot more to come. Childcare alone will cost a small fortune. In the long run, I want to help pay for his first steps as an adult: Driving lessons, housing, most likely a university degree. The money I'm paying in backdated taxes would be very, very useful for all these costs, or to have on hand for unforeseen emergencies.

All the same, I'm not angry.

Make no mistake, I'm not pleased either. I would rather have this money than not have it. If HMRC had overlooked the tax owed, that would be perfectly fine with me.

Before getting angry, I think back to the night my son was born. The delivery had some minor complications; thankfully nothing too serious, and afterwards mother and baby were completely safe and well. All the same, alongside the happiness and excitement, it was a deeply scary experience. A minor complication can very quickly become a major one.

I didn't have to worry about the cost. Not for one second. The two most important people in my life would receive world-class medical care at an NHS maternity hospital. Highly skilled professionals were working on Christmas Eve and Christmas Day to keep them safe. No matter how much or how little was needed, we would not be charged a penny.

I'm proud to live in a country where that is the case. None of it comes for free; the NHS is funded by taxes paid by myself and others.

In our maternity ward was a couple whose son had been born a few days before ours. The parents were overjoyed, but didn't have much money to spare. We overheard a midwife encouraging them to get a car seat, to transport their son home in safety. It was painfully obvious that £100 or so for the seat was a lot of money to them. 

Their baby might not have an easy time growing up, but at least he will have whatever medical care he needs at no cost to his parents. One day he might be a doctor who saves lives, or an artist or inventor who touches the lives of millions, or simply a decent person who works hard and is kind to others. His life is worth no less than anyone else's, and he has the same rights to medical care.

I'm paying taxes not just for myself and my family, but for these strangers and millions of others I will never meet. Quoting Oliver Wendell Holmes, Jr.:

Taxes are the price we pay for a civilized society.

I'm going to transfer some money from my bank account to HMRC. In what sense is this money mine? It was paid to me by my employer. I worked hard to become qualified for my job, and I continue to work hard in exchange for my monthly salary. In that sense, I earned the money.

However, my employer, my job, my bank account, and the things I would like to spend money on only exist as part of a wider society. I can only be said to own anything because the law protects my right to hold property. Public services are a vital part of the country where I make my home.

If I have underpaid tax, then as a matter of law, the money isn't "mine" at all. From a moral standpoint, it might be "mine" if I think the relevant tax rates are unreasonably high, but I don't believe that to be the case. This thought makes it easier to sign over a large sum to HMRC -- although it's still a little painful, because it's cash leaving my bank account and I'm only human.

I ask for two things in return. The first is for the government to raise taxes fairly and spend them well. There will be some waste, mistakes, and policies I disagree with, because that's inevitable for something the size of the British government. I just want them to make a reasonable effort to avoid stupid and wasteful actions. (Of course, this very modest demand is not always met.)

Second, I want everyone to follow the same rules. In particular, I have no patience at all for wealthy tax evaders. Nobody says they have to enjoy paying tax, but it's part of being a responsible member of society. If I can do it, and accept it as fair and necessary, someone on ten or one hundred times my income can do so as well.

Update: Ian Welsh has some very similar thoughts on taxation: It's Not Your Money

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