A Short Monograph in favour of the Taxation of Dead Cats


Copyright: Boris Johnson, 2013.


Here are some dead cats frequently cast onto your dining table by misbehaving businesses.

We comply with the law in all jurisdictions in which we operate. Unpacked, this merely means: “because it’s lawful, we do it.” Tax avoidance – even in its most egregious forms – is lawful. If it isn’t lawful, it doesn’t avoid tax. But that doesn’t mean it’s not morally questionable. If I avoid tax, I increase the burden on those who pay theirs. If I am a business and I avoid tax I can undermine those businesses who don’t avoid it. And the allegation that behaviour is not moral is not answered by the response: “it’s lawful”. If you don’t believe me, try it on the spouse you’ve been unfaithful to.

Look at all the other taxes we pay. Yep. You pay them because the law obliges you to. The lipstick applied to this pig is the technical terminology of TTC or Total Tax Contribution. It is absolutely true that businesses are wealth generators and make a critical contribution to our society. Out of economic self interest (it’s called the profit motive, Ladies and Gentleman), they employ staff who also pay tax, generate economic activity for other business who also pay tax, and so on. They also pay other taxes. But none of this stuff – important though it is – gives them a free moral pass when it comes to the moral imperative to pay their share of this tax too.

If MPs don’t like it they should change the law. This ignores the limited scope that our domestic Parliament, bound by a web of international tax treaties and EU law, has unilaterally to improve the law. Think Global Climate Change Summits with whistles. And whatever you’ve read, no Government is a fan of tax avoidance. It reduces its ability to achieve its real political goals: for this Government, for example, perhaps reducing the headline rate of income tax. On a whim (we’re strange creatures us tax lawyers) I traced back as far as a 1959 Manifesto political parties promising to “change the tax system to deal with the tax-dodgers”. Every Government ever has tried: the fact that none of them has succeeded might tell you something.


But why do I say we should tax these Dead Cats? And how should we tax them?

They add to the moral failing of tax avoidance a further moral failing of attempting to dissemble the first moral failing away. So when you see it, call it out. Tax it reputationally. #DeadCat


I don’t want to kid you.

Not all behaviour that avoids tax has a moral dimension. No one sensible could say that moral obloquy attaches to someone who avoids capital gains tax by buying shares through an ISA. Nor is there any principal – legal or moral – that obliges us to transact in ways that maximise the tax we have to pay. And there are many, many cases where it’s difficult to work out whether what we’re doing is consistent with what Parliament could have intended.

But none of this has as its consequence that – as some assert – there is no moral component to taxation. There is.


There is more work to be done in this field.

Recent Government initiatives have looked beyond the hard yards of purely legal solutions to these issues. They have sought to focus on the wide open spaces – identified by a number of thinkers in the field, including me – of risk management: both reputational risks for businesses and financial risks for Government. How can Government raise the reputational risks for businesses that engage in ‘bad’ tax behaviour? How can it keep at Gas Mark 9 the temperature under tax avoiders? How can it increase the pre-tax cost attached to behaviours that focus on improving post-tax returns? And how can it reduce the risks to public finances?

Thankfully, there is more to come.

16 thoughts on “A Short Monograph in favour of the Taxation of Dead Cats

  1. You can go back to 1955 at least – http://www.politicsresources.net/area/uk/man/lab55.htm – “we shall deal firmly with tax dodgers, and we shall see to it that a fairer share of the burden will be carried by those who get their money too easily through excessive profits, capital gains and the inheritance of large fortunes … and will use taxation policy to help productive investment”

    For the Conservatives, they were talking about blocking “corporation tax loopholes” in October 1974. http://www.politicsresources.net/area/uk/man/con74oct.htm

    Are there very many people saying there is no moral component in taxation at all? There are moral components in all human behaviour (and corporations are created by humans). There is a line between tax mitigation that is legal and works, and that which does not work. Some people don’t care too much about the line, others stay well away from the line, and most approach it to a greater or lesser degree. People can huff and puff about others paying less tax than they think they should (and people rarely say that that they themselves should pay more tax) but how much tax is actually due must be a matter for the law, not manufactured outrage in the court of public opinion.

  2. Thanks. I got bored in 1959 – not at all surprised about 1955 – you can probably go back earlier.

    There are quite a few actually, who say there is no morality. And your final sentence comes quite close to asserting it too!

  3. “Tax avoidance – even in its most egregious forms – is lawful. If it isn’t lawful, it doesn’t avoid tax. But that doesn’t mean it’s not morally questionable.”

    Of course. But I think you’re wrong when you say “Not all behaviour that avoids tax has a moral dimension. No one sensible could say that moral obloquy attaches to someone who avoids capital gains tax by buying shares through an ISA.”

    Just because not many people would criticise the ISA holder doesn’t mean there isn’t a moral dimension to even that modest form of tax avoidance.

    The implication of your broader point is surely that companies and individuals should pay more tax than the law stipulates. This would lead to the farcical situation where we ended up debating how much more than the required amount they should pay.

    Tax laws exist to make the system work, but also to take the element of morality out of the equation as far as possible. Since individuals are never going to agree about how much tax should be paid, it’s surely legitimate for avoiders to point to the tax code and say, “I comply with the law”. Blaming them for complying with the law is irrelevant, tedious and impractical.

    I don’t blame anyone – or any company – for avoiding tax. But neither do I have to associate or do business with them. There is as you say a moral dimension. Interestingly, companies like Amazon, Google and Starbucks continue to attract the custom even of those who deplore their tax arrangements.

    I find this baffling and annoying. I suspect that if we boycotted these companies they would soon change their ways. That even the bien-pensant are reluctant to do so suggests that we just don’t care enough, and that our outrage at avoidance is little more than virtue-signalling.

  4. Is mentioning the moral duty for companies to maximise shareholder value a #DeadCat? Because here’s the thing: companies are not people and they do not have morals. Only company directors can be held to account, morally, and their first duty is to the profitability of the company, not to governments. Is it not immoral for company directors to ignore their fiduciary obligations in exchange for not being written about in The Guardian?

  5. No one has a fiduciary duty to avoid tax. It really is that simple.

  6. Q. ‘Is mentioning the moral duty for companies to maximise shareholder value a #DeadCat?’

    A. Yes

  7. Interesting thought. When Labour put tax up to 50% our accountant suggest a – lawful – scheme by which some of the effects could be mediated. Think worse of me if you like (it cost HMRC money), but Q Would the accountant have been in breach of his professional duty if he had failed to mention the possibility?

  8. Depends on what it involved. And the terms of his retainer. But extremely unlikely he would have been.

  9. If I was employing an accountant to advise me on my tax affairs and there was a way of avoiding tax which he didn’t tell me about, I think I’d be pretty peeved.

  10. There will be about 60,000 people out there who were engaging accountants, who were told there was a way of avoiding tax, and are now facing Accelerated Payment Notices, some of whom will be bankrupted by them. So you might be peeved – but you’d be wrong to be.

  11. I couldn’t find a similar statement in the accessible manifesto texts before 1955, but I can’t guarantee there is not one somewhere!

    I’m sure we agree that tax and morality are not co-terminous. It is perfectly possible to do something that is legal (in this context, to avoid taxes in a way that works) but that is also immoral, and vice versa (adultery comes to mind as being immoral but not illegal; is the unlawful offering of a goldfish as a prize to a person under 16 years old immoral in any meaningful sense?).

    Are judges equipped to determine taxation disputes according to a moral code, rather than the law? Would you want your client’s cases determined by an artiber of morality rather than a judge applying the law? I fear we would be back to the length of the Lord Chancellor’s foot (or indeed the state of his digestion).

  12. Surely that depends on whether paying said tax is in the interests of the company. We can surely agree that paying more tax than necessary would be looked on unfavourably by shareholders? So as ‘voice of peason’ notes above, we then get into a debate about how much tax is too much. For a shareholder, I think that limit would be set at ‘any more than the legal minimum’. Perhaps with a side order of ‘but doesn’t lead to unfavourable media coverage’.

  13. Jolyon, aren’t you being a little disingenuous? I’m sure we could both think of perfectly legal examples of tax avoidance of which a layman would be unaware, but with which his accountant would deal with on a daily basis, which were not subject to revision and surcharges by HMRC.

    I would have thought failure to inform the client of the availability of such a scheme would constitute professional misconduct.

    As Tristan Jakob-Hoff observes above, a company director who didn’t minimise tax exposure would have some explaining to do to shareholders, a majority of whom would presumably prefer to get bigger dividends.

    All this seems to confirm that professionals up and down the land are busily (and lawfully) engaged in doing things which you can guarantee someone somewhere will think immoral (probably in the pages of The Guardian, that paragon which has never, ever engaged in tax dodging at any time. Except when they bought Emap, of course).

  14. Whose morals?

    Those of The Guardian (as expressed in its pages, rather then its activities) or those of The Daily Mail?

    Those of Mr. Corbyn or Mr. Cameron?

    Of Mr. Murphy, or Mrs Philip Green?

    Those who want to save the planet, or those who think it is wrong to put poor people into energy poverty so house and land owners can get wind and solar subsidies?

    Of the Catholic Church, or Stonewall?

    We are all likely to disagree, to some extent, on what is moral. We cannot disagree on what is written in the Tax Code (though it should, as far as possible, not be open to alternative interpretations).

    Which is rather the point of having a Tax Code, as opposed to relying on individual or corporate morality.

    Isn’t it?

  15. I am genuinely curious about this. Is it bad tax behaviour to “avoid” corporation tax by paying massive bonuses to employees in the form of share options? Is this really anything more than envy of someone else’s good fortune in working for a group of companies that have found a way of making large profits?

  16. Indeed. It is especially curious, as I mentioned above, that people would object to this when money paid out in this way is taxed at twice the rate of money set aside as profit. So better for the government as well as the employees.

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