The Beatles were right about taxes
19 February 2010 2:58am
BEATLEMANIA is back – or at least that is what it is starting to feel like when one reads the endless coverage of the proposed sale of the Abbey Road studios by EMI, Guy Hands’ troubled music giant. Let me join in: the current political climate reminds me increasingly of that described so beautifully in Taxman, one of my all-time favourite songs. Written by George Harrison, it was released as the opening track on the Beatles’ 1966 album Revolver, at a time when sky-high marginal tax rates were starting to trigger an exodus of talent out of the UK. For those of you who don’t remember, here are a few extracts to whet your appetite:
“Let me tell you how it will be
There's one for you, nineteen for me
Cos I'm the taxman, yeah,
I'm the taxman
Should five per cent appear too small
Be thankful I don't take it all
Cos I'm the taxman, yeah,
I'm the taxman
If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold, I'll tax the heat
If you take a walk, I'll tax your feet
Taxman! Cos I'm the taxman, yeah,
I'm the taxman…”
You get the idea; it’s a case of Liverpool’s boy band sensation meets F.A. Hayek and Milton Friedman. Not only was the song a brilliant restatement of the libertarian position on the relationship between individuals and the state, it also acts as a great reminder that the 1960s were far more complex a decade culturally than is usually understood. The lyrics go on to attack both Harold Wilson, the Labour prime minister at the time, and Edward Heath, the Tory leader who later became an equally useless prime minister.
Which brings us back to today and the new pro-tax political consensus in Britain. The present state of affairs isn’t as hostile to wealth creation as it was in 1966, even though the top rate of direct taxation is about to hit 51.5 per cent and despite a court ruling earlier this week which suggests that non-resident Brits are now being targeted for a shakedown.
This latest move is worrying as it is appears to be based on an arbitrary reinterpretation of tax law. Rupert Gaines-Cooper, who is based in the Seychelles, adhered to the rules stating that he shouldn’t spend more than 90 days in the UK to qualify as a non-resident (and escape UK tax). Yet he must now hand over £30m in back taxes because the UK remains “the centre of gravity of his life and interest”. Thousands of other business people may now have to pull out of the UK entirely or sell their assets if they are to escape crippling retroactive taxes. That would hardly do the UK economy any good.
But this is not just about the truly wealthy. Just as in the 1960s, there is a presumption today that all the money earned by individuals somehow belongs to the state (and that citizens should feel privileged to be allowed to retain some of their earnings). And there is a failure to understand that taxing the rich until the pips squeak gives them a great incentive to move themselves and their wealth elsewhere – and eventually impoverishes everybody, especially those on low incomes. If Harrison’s Taxman had any sense, he would understand that 25 per cent of a lot is better than 95 per cent of nothing.
Enough of that, however. Taxman is a brilliant song; every reader of this newspaper should buy the track – or better still, the entire album.
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