I learned taxation at my father’s knee. Quite literally; as a youngster, my father enlisted me to proofread various of his works on the UK tax system, so I was more conversant with things like Schedule D, director’s emoluments and capital gains tax than your average child.
Taxation is fascinating because it documents important things about a society: what it thinks of as the right way to live, and how that can be measured. The difference in how taxation is understood and applied can itself be a demonstration of the assumed characteristics of the country; the Singaporean tax code is simple, concise and efficient, the British tax code is complex and requires experts to interpret it, and the German tax code is monolithic and documented in such a way that there is no room for interpretation.
A tax system doesn’t necessarily say what a society does not like; the penal code might be better understood to stand for that. But a penal code is mostly only implicit in its judgments of what the good life is, and generally via negations: don’t be a thief, don’t be violent, don’t be homosexual 1
In tax codes, it’s much easier to see what’s being classed as desirable2. Here’s a few examples:
The US: You should be married. Well, this is more complicated than I first thought. If you are in a relationship with somebody with a lower income than you, it’s usually advantageous to be married than not – from a taxation perspective, anyway. If you both earn exactly the same amount, there is no benefit from filing jointly as opposed to filing separately.
But: is this because the tax system assumes that there’s a single breadwinner, and then a homemaker? Because as there’s no benefit for people who cohabit but aren’t married, you could infer that the US doesn’t think you should be living in sin. Put a ring on it, and preserve an additional 10% of your income from the taxman?
[If both of you earn more than $323,925 per year, then suddenly it is better to file separate again, but then as Fitzgerald said, the rich are different from you and me. They have more money, for a start. If you both earn more than $323,925 and you’re reading this, good on you – but you’re such a small fraction of the US population that we should assume you’re filed under ‘things that break the rules of the standard game’]
The US: You should have a mortgage. As pointed out in The Atlantic, deducting mortgage interest payments from tax liabilities is an example of the government subsidising the rich (mortgagees with income large enough to make use of those deductions) in a way that privileges them over those who pay rent: “a 15-story public housing tower and a mortgaged suburban home are both government-subsidized, but only one looks (and feels) that way.”
Compare with the Republic of Ireland until 2017, when you could claim a tax credit for the rent you paid.
To my mind, this is horribly regressive, but does that make me a hypocrite if I use it to reduce my own income tax liability?
Singapore: You need to look after yourself. There is no capital gains tax for Singaporeans. The government will not take any of the rewards from you for speculating in the stock market, selling property or intangible assets. It’s not taking money from you for this, in order to reward you for working to enrich yourself independent of others. You are taxed on the money your employer pays you.
1 In the UK, until the Sexual Offences Act 1967.
2 And it’s also fun to argue about some of these interpretations.