Why tax avoidance is like porn

I know it when I see it.

I know it when I see it.                                                                                                                                                        

Justice Potter Stewart of the US Supreme Court gave one of history's least fulfilling answers when he was asked to define "hard-core pornography"; but the grain of truth contained within is important.

The same temptation to throw one's hands up at the difficulty of defining complex phenomena is everywhere. The Economist's Daniel Knowles, for instance, suggests that it applies to poverty while the Sorites paradox – a close relative – attaches the problem to bald men and heaps of wheat.

It also applies, pretty much perfectly, to tax avoidance.

We all know it when we see it. Take, for example, Polly Toynbee's column from the Guardian today:

The big sell is trusts, special ones devised for this company's clients, guaranteed to protect almost all your wealth from inheritance tax. They are right, it can be done easily. Put all moveables and all cash and investments into a discretionary trust, and it passes to your heirs without tax as soon as you die, not even waiting for probate. It counts as a gift so the beneficiaries need pay no tax either. Called a "discretionary trust", as technically St James's are the legal trustees, the discretion in fact remains in all but name with you: the company will do whatever you ask, so you still control the fund and you can still take money from it. But for reasons that defy basic tax fairness, it avoids all inheritance tax. Why?

Or this example from the New Yorker back in March:

Since New York City tax laws don't apply to people who are deemed to be nonresidents, even if they own a residence in the city and work there, Robertson was allowed to spend no more than half a year – a hundred and eighty-three days – in New York City. This exile was self-imposed. If he had paid New York City tax, which in the top bracket reaches a rate of 3.6 per cent of taxable income, he could have spent as much time in the city as he wished...

Friday nights were particularly risky, since Robertson or his wife often had social events scheduled in the city. In order to "earn a tax day," as he put it, he usually left town on Friday before midnight, even if his wife stayed at the apartment. Robertson's driver had to be on alert: as long as they crossed the Queens border en route to Locust Valley by midnight, Robertson didn't have to "waste" a Saturday as a New York day. Even one minute of a day spent in the city counts as a day of residence. (Exceptions are made for people who are in transit from one destination outside the city to another – from Newark airport to Long Island, for example, or to LaGuardia for a flight.) Robertson said he never missed the midnight deadline, although when he couldn't get his driver or a limousine service in time he occasionally had to hail a cab. On one occasion, Robertson came back from a trip and found himself crossing into Manhattan at 11:45 P.M. That mistake cost him a full New York City day, which he could have avoided by whiling away fifteen minutes at the airport.

Or the three multinationals hauled up in front of the Public Accounts Committee, about whom Richard Murphy writes:

For Amazon things were much worse. Their rep could not justify how an order made in the UK for a product in a UK warehouse, shipped by UK staff through the UK post and with a bill enclosed printed in this country could somehow have anything to do with Luxembourg when so very obviously it hasn’t. Despite this he had the gall to claim tax must be paid where the economic substance of the deal is – even though Amazon does nothing of the sort…

Google tried harder but they had created one insurmountable obstacle for themselves. Their argument was profits should be taxed where they are earned and they said US technology drove their European profits. But for their admission that the payments made from Europe for that technology never reach the USA and instead get parked in tax-free Bermuda ended whatever shred of credibility they’d tried to create.

All of these things are as clearly tax avoidance as Reader's Wives is clearly pornography. The problem comes when you try to come up with a definition which encompasses all of these examples while not also covering whatever the taxation equivalent of Last Tango in Paris is.

You can try to define it as acting to deliberately minimise your tax take – but then, what is taking out an ISA? That is an action which is performed for no other reason than the tax benefits, but it's clearly not tax avoidance.

There must, then, be some definition of the spirit of the law. Loopholes in tax are put there for a reason, but sometimes that reason is tricky to specify completely. So, for example, the loophole that investment income in taxed less that earned income exists to encourage people to invest their money (which is good for growth) – but when hedge fund managers are payed through "carried interest", that gets classed as tax avoidance, because it is technically investment income, but hasn't actually required any investment from the people benefiting.

Unfortunately, that definition doesn't work either. The absence of VAT on books, for example, is to promote an educated, well-read population; but even though 1001 reasons Britain is shit doesn't do that, we don't call it tax avoidance.

The problem persists even if you just look at specific examples of avoidance. Multinational corporations, for instance, sometimes headquarter themselves in of tax havens. Other times, they leave their headquarters where they are, but manipulate their accounts so that it looks like all their profits come from tax havens. Tempting as it is, it's very tricky to come up with a catch-all definition of avoiding behaviour in this situation.

Is it "not paying tax where you are headquartered"? Or is it "not paying tax where the money is earned"? Or is it a third, "pretending money is earned in one place, when it's really earned in another one"? Or a fourth, "paying tax in a tax haven"? Or even just "operating out of a tax haven"?

Perhaps the real solution is to just stop trying. Call out egregious examples of tax avoidance, but resist the lure to dictate a full definition of the term. Make clear to those who set policy that building a tax code which is easily abused will result in protest, and that avoiding tax will result in bad press. But save definitions for the courts, because it's a fight which seems nearly impossible.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Coders for Corbyn
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Can emojis win elections?

Jeremy Corbyn has claimed his campaign's use of technology would be the "path to victory" in 2020. But can emojis play a meaningful part? 

When photographic campaign badges were first unleashed in 1860, a Facebook commenter posted on Abraham Lincoln’s wall: “What is this? Today’s youth are doomed” and then, a moment later, “You call this news?”*

It might be tempting to react in a similar way to the fact that Jeremy Corbyn emoji – or rather, Jeremoji – are now a thing. Small digital stickers of the flat-capped Labour leader expressing joy and sadness might seem like the End Of Serious Political Campaigning As We Know It, but are they really that different from the multitude of deft and daft political campaign buttons throughout history?

Well, yes. Because there will be a marrow.

Beyond the marrow, however, Jeremoji aren’t actually that revolutionary. Before Kim Kardashian crashed the App Store with the 9,000 downloads a second of her Kimoji in December 2015, we here at the New Statesman created a much-needed Yvette Cooper emoji. Around the same time, Bernie Sanders supporters released BerniemojiThe slightly-less pleasing to the ear Hillarymoji were also unveiled by Hillary Clinton campaigners two months ago, though none of these apps were officially endorsed by their respective candidates.

“We’re not affiliated, we’re totally independent,” says Gregory Dash from Coders for Corbyn, the group behind Jeremoji, and a wider online volunteer toolkit for Corbyn supporters. “A lot of us have social links with the campaign and we ran ideas past them and got feedback but as an organisation we’re totally independent and all volunteers.”

Dash reveals that a variety of professional and amateur artists contributed to the emoji and that unfortunately, as the marrow design is currently being finalised, it won’t be in the first version of the app. Once the app has been approved by Google Play and the App Store, it should be available to the public in the coming weeks.

“Mainly they’re just fun but we’re also hoping we’ll be able to communicate some of the main message of Jeremy’s campaign,” says Dash.

But are Dash and other developers misguided in their attempts to promote sexagenarian politicians via a communication tool favoured by teens? Hillary Clinton has already been mocked for her attempts to capture the youth vote via memes, and has proven on multiple occasions that trying to be “down with the kids” can backfire. Corbyn’s own digital manifesto was met with scorn by some yesterday.

“To be very honest, the emojis are pretty cringy,” says Max Rutter, a 17-year-old from Oxford. “I know that they are targeted towards teens but politics isn't something most teens talk about on social media, and these emojis could only be used in a political conversation. Corbyn doesn't need emojis to get teens on his side, he just needs to stick to his guns and keep telling it like it is.”

A 2013 London School of Economics study on Youth Participation In Democratic Life supports Max’s assertions. The final report found that although in theory young people wanted politicians to use social media more, in practice it led to more negative perceptions of politicians and “an increased perception of the gap between political elites and the young.” Moreover, teens exposed to a social media campaign were less likely to vote than those who only received political flyers.

Jeremoji, then, may not ultimately capture the youth vote, and nor are they likely to make lifelong Conservatives pause and say, “On second thoughts, yes. This Corbyn chap is the man for me.” So what will they achieve?

“We’re hoping to do some emojis around Corbyn’s ten pledges and allow people to share them that way,” says Dash. The app already contains emojis affiliated with the Orgreave Truth and Justice Campaign, a society seeking justice for miners after the Battle of Orgreave in June 1984. Dash also hopes to get emojis supporting the No More Blacklisting campaign and Save Our Steel.

“We want to have it so you go to the Orgreave campaign and you click the emoji and it will give you a little bit of information about the campaign as well,” Dash says. “Emojis then become a tool to communicate all these different campaigns that are going on. There are amazing things going on that the wider Labour membership may not know about.”

Coders for Corbyn seek the approval of each of these campaigns before creating the emoji, as they don’t want to seem as if they’re exploiting campaigns to make themselves look better “like Owen Smith did”. But despite their current affiliation with Corbyn, the group plan to rebrand as Coders for Labour after the leadership election.

“I’m not sure there would be the same demand for Owen Smith emojis, but we'd definitely still be producing Labour themed emojis for people to use,” says Dash, when I ask what he’d do if Smith won.

Dash tells me when iOS10 launches in the autumn, emojis will be available at three times their current size, and will be more like stickers. This means they can communicate complicated messages from various campaigns, and may also lose any potential stigma associated with the word “emoji”. In the late 20th century, campaign buttons like Lincoln’s were replaced by cheaper disposable label stickers. It makes sense for these in turn to be replaced by digital stickers. Even if emoji can’t win elections, they may still prove powerful in raising awareness.

The UK’s currently most used emoji is the despairing crying face. Personally, I see no problem with it becoming a marrow.

*May not strictly be true 

Amelia Tait is a technology and digital culture writer at the New Statesman.