Our tax system in America is an absurd nightmare, but at least we have some ability to monitor what is happening. We can’t get too aggressive (nobody wants the ogres at the IRS breathing down their necks), but at least we can adjust our withholding levels and control what gets put on our annual tax returns. The serfs in the United Kingdom are in much worse shape. To a large degree, the tax authority (Inland Revenue) decides everyone’s tax liability, and taxpayers have no role other than to meekly acquiesce. But now the statists over in London have decided to go one step farther and have proposed to require employers to send all paychecks directly to the government. The politicians and bureaucrats that comprise the ruling class then would decide how much to pass along to the people actually earning the money. Here’s a CNBC report on the issue.
The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer. The proposal by Her Majesty’s Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid. …George Bull, head of Tax at Baker Tilly, told CNBC.com. “If HMRC has direct access to employees’ bank accounts and makes a mistake, people are going to feel very exposed and vulnerable,” Bull said. And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said. …the cost of implementing the new system would be “phenomenal,” Bull pointed out. …The Institute of Directors (IoD), a UK organization created to promote the business agenda of directors and entreprenuers, said in a press release it had major concerns about the proposal to allow employees’ pay to be paid directly to HMRC.
This is withholding on steroids. Politicians love pay-as-you-earn (as it’s called on the other side of the ocean), largely because it disguises the burden of government. Many workers never realize how much of their paychecks are confiscated by politicians. Indeed, they probably think greedy companies are to blame when higher tax burdens result in less take-home pay. This new system could have an even more corrosive effect. It presumably would become more difficult for taxpayers to know how much government is costing them, and some people might even begin to think that their pay is the result of political kindness. After all, zoo animals often feel gratitude to the keepers that feed (and enslave) them.
[…] tax police in England have floated a proposal to have all paychecks go directly to the tax authority, which would then decide how much gets forwarded to […]
[…] And this is a government that is brainwashing kids into becoming servile snitches, and is even considering a system that would have employers send paychecks to the state and then the government would decide how much to send to taxpayers. […]
[…] examples are just the tip of the iceberg. The U.K. government also has proposed a scheme that would require employers to send employee’s paychecks to the tax police, giving the folks at Inland Revenue the authority to then decide how much can be sent to hapless […]
Dan, you could make the same point about VAT in the UK versus sales tax in America. Sales tax in most American states is added on top of the published purchase price of consumer goods, so that the consumer is constantly aware of how much tax they are paying when they make purchases as they can note the difference between the advertised price and the price they pay at the checkout. This seems to vary between 5 to 10%. In the UK, VAT of 20% is disguised in the shelf price of retail goods. VAT is also paid at each stage of the sales chain, of course, from factory to wholesaler, wholesaler to regional wholesaler, regional wholesaler to retailer and retailer to consumer. This is one reason why the cost of living in the UK is so absurdly high.
[…] UPDATE: Dan Mitchell calls it “Orwellian.” […]