Everything Is Tax Avoidance Now; And Everything Is Illegal – Totalitaria is Here.

Though not my most read post, I still believe one of my most important was on how our Commonwealth (classical liberal) Westminster Principle in taxation has been destroyed over modern times in New Zealand by a philosophically bereft, airhead judiciary which has no regard for property rights and thus liberty. That post started out on the importance of classical liberalism as the foundation of a Free West:

… it is worth remembering our birth right in the West, paid for by blood, was classical liberalism; that philosophy of limited government and liberty of individuals: freedom of speech, markets, religion, assembly, of thought and intellect, and a free press (free to criticise and oppose, without fear of retribution) - the state as servant of the individual, protecting their person and property, not the state as tyrannical master, plunderer by force of property and liberty.

It was this ideal that the ANZACs were fighting for, and died for: men and women. And incalculable more men and women have died trying to escape the state tyrannies they were born in, be it the Soviet Union, Cuba, China, North Korea, et al, to be perhaps capable of the chance of living free lives.

The post then explained the Westminster Principle, the importance of it as regards a classical liberal ethic, and why it has been destroyed:

Within this philosophy the very notion of a compulsory taxation does not sit well, frankly, although if we must have such compulsion forced on us by the state, voted for by a mobocracy looking for the illusory free lunch, then Commonwealth countries have had in legal precedent since the 1930’s a landmark classical liberal principle, referred to as the Westminster Principle, that gave the individual some small degree of liberty from the all-powerful state in its taxing operations, which is the operation of the authoritarian surveillance state:

Every man is entitled if he can to arrange his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure that result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. (IRC v Duke of Westminster [ 1936 ] AC1 (HL)).

That is, the individual can arrange their affairs vis a vis structuring, estate planning, et al, according to their own rational self-interest - so long as 'artificial' (non-commercial, non-market) steps are not taken to 'avoid' tax - and not pursuant to supplying the maximum revenue, necessarily, for the coffers of the redistributive larceny conducted from the Fortress of Legislation: the individual ascendant, not the state.

It is a disgrace that in New Zealand even this principle has over the last decade been destroyed, and destroyed utterly, in the very courts that were meant to be the individual’s buffer against the tyranny of state. I’ve explained why on this post: the minds of our children have been captured in the classroom, generation after generation, and immured on the treacherous reef of belief in a statist theocracy; 95% of our secondary school teachers belong to that hard Left union, the PPTA, with a similar percentage of primary school teachers signed up the NZEI. These teachers preach the forced sacrifice of the individual’s liberty on that's tyrant's call, the bloodied altar of the common good, and the state as redistributor of private property in a morality turned on its head. Our School Curriculum Document imposes this Soviet ethic into the basis of our very curriculum.

And so this week the logical conclusion whereby the almighty authoritarian state in New Zealand reaches that point where it has, per my previous post, fraudulently legislated itself outside the rule of law, able to rule over us unhindered and unfettered. Compare the civilising effect of the Westminster Principle, with its proper positioning of the individual over the state, to this comment from last week’s KPMG Taxmail newsletter, regarding yet another public draft from IRD on what it considers tax avoidance; the specific cases are unimportant, the conclusions are enough – (my highlighting):

Briefly, the Commissioner considers these are tax avoidance arrangements because there are alternatives which create taxable income. The Commissioner’s analysis is that the avoidance of these alternative tax liabilities was not contemplated by Parliament. 

The Commissioner’s analysis raises a fundamental issue. The basic proposition is that a taxpayer can no longer have due regard to the tax consequences of their actions when determining what to do. In fact, it suggests taxpayers must take the course of action which results in the highest tax payable. That is the most concerning feature of the draft QWBA as it is a significant change in approach.

There is an opportunity to provide comment on the draft QWBA. It should be taken in a real effort to persuade the Commissioner that her conclusions are invalid. Otherwise urgent law changes will be required to allow these transactions to proceed.

Regarding that last paragraph, I surmise, as submitters on the dreadful implementation of the US surveillance program known as FATCA found out, that making a submission will be pointless. Can any accountant reading this remember the last time IRD had to back away from such a position? I can’t, and why would they when they have had compliant, statist-worshipping Ministers of Revenue over the last fifteen years, from Peter Dunne to the current Minister McClay, whom both believe an individual’s income belongs to the state – the horrifying aspect being the first minister only last week was tweeting he was a classical liberal – you moronic buffoon Peter – and the second represents the political party that supposedly represents small government – (insert maniacal laughter here).

And so in New Zealand every business and estate structuring and transaction that doesn’t involve paying the maximum amount of tax is tax avoidance, no matter you may be trying to achieve ends that have nothing to do with the tax take. It’s that point where the pragmatism of IRD bureaucrats mindlessly pursuing their job descriptions, plus judges and politicians who don’t believe in property rights or the Free West anymore, as George Orwell wrote at the end of his nightmare novel 1984, becomes like a boot kicking the face of our liberty forever.

Over the course of writing the above piece, an apt quotation has been posted on Café Hayek, from Bertrand de Jouvenel’s 1951 The Ethics of Redistribution:

The role played by the state in transferring incomes evidently entailed some increase in the volume of public encashings and payments, but this volume has grown out of all proportion to the needs of this function.  Such growth has encountered only the weakest opposition; my argument is that a change of mind toward public expenditure has been induced by redistributionist policies, the greatest gainer from which is not the lower-income class as against the higher but the State as against the citizen.

 What we once almost achieved as that wonderful peak of human cooperation and innovation, the classical liberal, capitalist Free West, where the state was our servant, is no more: there has been a war of ideas, and those totalitarian ideas have won, yet again. Because for there to be the ruling ethic that every transaction is tax avoidance if deemed so by the state, then it must be true that, as John Stossel shows so ably in the below clip, it’s the world where everything is illegal, if deemed so by the state; thus individuals can be corralled and controlled in everything they do like livestock. A few minutes into this clip a man states in such a world ‘show me the man, and I’ll show you the crime’; well IRD can do that also, of late often retrospectively against law once known and followed in good faith, but deemed in this age of authoritarianism avoidance by dint of not taking the highest tax route: that particular evil dripping darkness descends on us from the Soviet Unions, the North Koreas and the Cubas, of the world, not from what millions of men and women fought the last world war for: an individual’s freedom, and particularly freedom from a command state acting beyond the same rule of law its citizens are subject to. Shame.