Earlier this week, the British government announced that Barclays
PLC, one of Britain’s oldest and largest banks, was facing an $800
million penalty for engaging in a tax avoidance scheme. Barclays had
been exploiting loopholes in legislation in order to avoid paying a
higher tax rate, and the government is now drafting legislation to close
Hang on a sec. Full stop.
If the government has to pass legislation in order to ‘close the
loopholes’, then the loopholes right now are obviously legitimate. Hence
Barclays tax avoidance practices that were perfectly legal.
After all, that’s what tax avoidance is– legally avoiding taxes by exploiting loopholes and legitimate deductions in the tax code. Tax evasion, on the other hand, is willful misdirection or underreporting of income that violates tax code. Barclays engaged in the former.
How is it that the Treasury can penalize Barclays for having done
something that is perfectly legal? Technically, it can’t. That’s why the
legislation being proposed to close these tax loopholes is going to be RETROACTIVE.
In other words, since the British government can’t
legitimately penalize Barclays, they’re going back in time to change the
law to make what Barclays did illegal… all to collect some extra dough.
In related news, the Treasury...