Taxing Culture

Towards a Theory of Tax Collection Law

Ann Mumford

• Éditeur: Routledge
• Année: 2017
• ISBN:
  9781351895996
• Édition: 1
• Sujet: Jura
• Sous-sujet: Steuerrecht

The introduction of self-assessment for income tax collection in the late 1990s marked a striking moment of cultural convergence between the UK and the US. This book analyses the socio-political factors leading to and resulting from this fundamental change in the relationship between taxpayers and the Inland Revenue, using perspectives in comparative law and the new outlooks of modern tax and cultural theory. It will be of interest to those studying theories of compliance, cultural legal studies, and law and society.

1 Introduction

The objective of this book is to provide a cultural context for the laws of tax collection, within a comparative, UK/American structure. The comparative focus of this book has been chosen so as to enable its thesis to construct a cultural focus more clearly. Histories of collection, laws and enforcement – all will be considered so as to enable, at least the beginnings of, the stories of cultures of tax collection to be told.

Taxation is the appropriation of property by the state (otherwise than as punishment) for the purpose of paying for government. A culture of taxation can be found in the mechanisms which are deployed to collect taxes, and in the responses to them among public and media. The starting point for this book was the introduction of self-assessed taxation in the UK. Adoption of this US influenced and designed method of tax collection occurred in the UK after over 20 years of deliberation and consternation.¹ In the UK, income tax, for most employed taxpayers, is deducted at source, through a method quite similar to, but much more extensive than, the US system of federal withholding. Although some form of withholding has existed in the UK for centuries, the PAYE, or Pay As You Earn, system currently in use was devised during World War II as a method of sparing soldiers abroad the burdens of filing an income tax return.² The method proved so popular that it was expanded, to the point that, today, most employees simply do not need to interact with the UK version of the IRS, the Inland Revenue. Income tax is deducted from a pay cheque before the employee even sees it, and that is the extent of the interaction between taxpayer and government.

The system was different for self-employed taxpayers, who have been required to submit a form of declaration to the Inland Revenue, but this declaration never approached the level of detail, or mathematical expertise, required of the US taxpayer – indeed, they were not permitted to determine the extent of their liability.³ Touchstones of the American taxpaying experience – 15 April, audits (and Nixon’s infamous abuse of them),⁴ A1 Capone,⁵ Leona Helmsley,⁶ countless television shows recounting and creating the perceptions of power surrounding the IRS⁷ – have no meaningful equivalent in the UK.

Similarly, icons of the UK taxpaying experience have no equivalent in the US. Whereas the UK observer may have perceived the US tax system as operating under a guise of ‘rough justice’,⁸ such that a certain amount of state-sanctioned fiddling with loopholes was perhaps the payment from government to taxpayer for her performance of an unpleasant task, the Inland Revenue gave the impression that the system would collapse if even a penny of tax were underpaid. More intriguing was the suggestion that self-assessment was a by-product of Margaret Thatcher’s predilections for ‘privatizing’ previously state run industries, such as travel by rail. Self-assessment, the suggestion ran, was yet another effort by the government to make citizens perform tasks which the government should perform for them.

My project, thus, initially was to ask whether the UK would be successful in its efforts to create a parallel culture of self-assessment. A short and easy answer, only a few years after self-assessment’s UK introduction, is that, if the UK is to be successful eventually in this effort, it is unlikely to be immediately. If the Inland Revenue once had prided itself on the premise of collecting from every taxpayer exactly what she owed, then news reports of the Inland Revenue setting itself a target rate of 75 per cent accuracy with self-assessment – as an editorial in The Times complained, with the Revenue seemingly happily accepting that one in four taxpayers will be charged too much – could not have been met with much enthusiasm.⁹ While such reports are interesting, it was more the societal reaction to them, and to self-assessment as a concept, with which this project was concerned.

Starting questions included: why do American taxpayers self-assess, when theoretically they could demand that the IRS perform the tasks for them? Why have UK taxpayers preferred PAYE, when wide-scale deduction at source involves investing in the Inland Revenue such a large degree of trust? Why do American taxpayers tolerate exemplary prosecutions of taxpayers, or the use of the tax system to ‘get’ criminals who were otherwise immune (as with Capone)? The irresistible part of this project was that the two countries involved had intimately connected constitutional structures and histories, and that tax and its collection had played such a crucial role in their historical relationship. Suggested conclusions, I imagined, might involve the verdict that American taxpayers were sensitive to tax and its collection because of this country’s constitutional history and that, because of this sensitivity, self-assessment was the preferred method of collection as it affords taxpayers a sense of control, or choice, over this constitutionally charged action.

The failure of the ‘flat tax’ platform of US presidential candidate Steve Forbes notwithstanding, American tolerance for the power that self-assessment invested in the IRS had ebbed. The use of Taxpayer Bill of Rights II¹⁰ as an equal opportunity political platform for both the Democrats and the Republicans during the 1996 presidential election heralded that tax collection reform was afoot in the US. Only a few years later, these calls for reform seem to have produced relatively little in the way of substantive change, yet the rhetoric of this era persists, in both vehemence and importance for analysts of cultures of acceptance surrounding the collection of tax.

In the UK, self-assessment has experienced a significant number of teething problems, especially because of the overload of work now burdening tax inspectors. One of the most interesting responses to self-assessment’s introduction has been the commencement of the Tax Law Rewrite programme. Whereas a similar effort towards reform of tax legislation failed in the US,¹¹ the Rewrite programme proceeds apace in the UK, using the somewhat creaky foundations of self-assessment’s inception as its impetus.¹²

This book attempts to present three of the inferences that a comparative, critical, cultural consideration of tax collection cultures in the USA and the UK has produced. These findings include, first, that study of the usage of exemplary prosecutions for tax evasion in the US provides valuable insight into positions of classes of persons: in other words, that taxpayers selected for exemplary prosecution speak not merely to other taxpayers, but to the socioeconomic position of the class from which that person comes. The example of Leona Helmsley is discussed in this context, and with the suggestion that the manner of her prosecution presents feminist issues. Second, this book argues that analysis of the culture of tax and its collection must take note of the status of tax legal scholarship, and its historical failure to keep pace with developments in legal theory. As McCaffery argued relatively recently,¹³ and Cover implied,¹⁴ simple failure to consider tax critically can mean, or at least is symptomatic of, an inappropriate investment of power in the tax collection agency and government. Finally, this book suggests that critical cultural studies hold great promise for elucidation of this, at present, heavily criticized area of legal scholarship.

WHAT IS A CULTURE OF TAX COLLECTION?

Tax, as a field of legal, cultural research, still has to engage properly with the developments in arguing about law from principle and policy articulated by Dworkin, even less the insights of, for example, post-modernists.¹⁵ McCaffery argued for a move away from formalist arguments about the meaning of ‘income’ in the Code, and from the conduct of all discussions about taxation purely upon the basis of what he called the ‘egalitarian principle’, the formalist idea that if tax is levied upon the basis of equality of misery then somehow that is the best you can hope for, and that questions about the nature of the ‘equality’ (child care? aged parents?) are irrelevant.¹⁶ What McCaffery wants is for the interpretive turn to turn to tax. This text suggests that this interpretive turn should embrace critical comparative cultural studies.

COMPARATIVE CONTEXT

Such comparative work as has been done in taxation has been along the lines of the tradition which Nelken identifies as ‘comparison by juxtaposition’ (that is, involving comparisons between rules, such as, in jurisdiction A the basic rate of income tax is X per cent, in jurisdiction B the basic rate is Y per cent).¹⁷ This is not to suggest that these endeavours are, in fact, all useless, and indeed towards these ends Friedman argues the importance of identifying moments of convergence in transnational law.¹⁸

The question is, how might the doctrinal history of tax scholarship be challenged, or how might tax law engage, if not with the late 1990s and new millennium, then at least with the late 1980s, and with such questions as internationalization and comparison of legal cultures? Of course, even to talk of comparisons between cultures invites all sorts of objections – how do you know what you are comparing, how do you hold one jurisdiction still while looking at the other? — and this is a problem with which writers such as Raymond Williams have grappled. All this book claims is that these problems are no greater in the case of taxation.

This analysis occurs within a structural development which is currently taking place in Europe, which, in essence, focuses upon the development of a harmonized system of taxation. In the UK especially, what may only be described as the terrible spectre of direct taxation from Brussels is promulgated by the media,¹⁹ with striking resonance of early responses to the sixteenth amendment to the US constitution.²⁰ In Europe, the fear is that direct taxation will move far beyond ‘harmonization’ of the European economic communities and obliterate national identities and control.²¹ Whilst at present there is no plan for direct taxation of European member count...