The tax advisor had just read the story of Cinderella to his four-year-old daughter for the first time.
The little girl was fascinated by the tale, especially the part where the pumpkin turns into a golden coach.
Suddenly she piped up, “Daddy, when the pumpkin turned into a golden coach, would that be classed as income or a long-term capital gain?”
It’s a joke but it does raise a serious point about the complexities of a capital gains tax – ambiguities and complexity create loopholes.
I’m not against a CTG in theory but I am opposed to Labour’s proposal for very good reasons:
We should be aiming at a reduction in taxes not an increase.
Complicated taxes cost too much to administer and divert time, energy and money from productive activity to avoidance strategies.
We need to remove compliance costs and other barriers to productivity not increase them.
Those with sympathy for Labour’s proposal should the truth behind these jokes:
The difference between simple and complex taxes is clear: If you have simple ones the government gets your money. If you have complex ones, the tax advisor gets your money.
For every tax problem there is a solution which is straightforward, uncomplicated and wrong.
How do you know you’ve met a good tax accountant?
S/he has a loophole named after her/him.
A fine is a tax for doing something wrong. A tax is a fine for doing something right.
And anyone swayed by the results of the Herald DigiPoll survey which shows 16.5% of peole strongly in favour and 21.4% moderately in favour oc Labour’s CTG should consider the words of Geroge Bernard Shaw:
The government that robs Peter to pay Paul can always depend on the support of Paul.