A philosophical look at why we actually pay taxes - Lynn Bijlsma explains!

Why do we pay taxes?

"The Netherlands is a tax paradise and multinationals evade taxes," is the cry on TV. There you sit with your bowl of chips and a beer, wondering why we (poor students) actually have to pay so much tax when we live in a tax haven. Philosophizing, you ponder, "what is actually the point of paying taxes?" Good question! Lynn Bijlsma explains it to you!

"The Netherlands is a tax haven"

Many more Dutch people believe that multinationals can evade taxes too easily. It's been all over the news. You've even started thinking about your cup of coffee from Starbucks. It all doesn't sound so fair. MEP Paul Tang (PvdA) is a big proponent of cracking down on our attractive tax haven. But is the Netherlands actually a tax haven? And how does that work? Are we going to pay less tax?

"Tax evasion is of all times."

The Netherlands is indeed very attractive to multinationals. Low rates, low taxes, good infrastructure, highly educated population and easy working conditions. Sounds all very nice. If you were a big international company, you would have known it too. Despite being in the news a lot lately, tax evasion has been going on for some time. This is what Gerard Meussen says during a lecture at Radboud University that tax evasion. He says it is something of all times. Meussen believes that tax evasion has become so accessible because we all approve of it in the Netherlands. But it can't be that simple, can it?  How could you tackle this yourself? Apparently there is a very long history behind this. Ugh, this sounds like an article by Danique van der Molen. According to Indra Römgens, tax evasion is very common among CEOs, "some are even proud of it" she says. This seems very contradictory to our thinking. Why do we actually make it so attractive to these companies?  This is because of two factors:

1.       Global competition among countries and;

2.       The tax lobby in our country.

Every country would like a large multinational to come to its country, this is because it creates new jobs and that means more tax revenue and fewer benefits for the government. Taxation is often used as a tool to get multinationals to come to a particular country. This is because low taxation means lower costs for companies and therefore more profits. As countries compete with each other, the tax simply becomes very low for multinationals, and thus sometimes zero (also called the race to the bottom). In addition, the tax lobby has a great influence on politics because it is supported by many large corporations. And well, we simply live in a capitalist society.

"If they don't pay taxes then I don't either."

You might think so argues Bruno Verbeek, who looks at the philosophical thinking behind this. Tax only works one way and that is when everyone wants to pay taxes, he says. It is a kind of prisoner's dilemma; what is the optimal strategy? Suppose we poor students have to pay a lot of taxes on our daily expenses, but a company like Shell doesn't have to. How fair is that? Actually you cannot compare, we are in a very different tax system than the big companies like Shell or Starbucks. It's like comparing apples to oranges. In addition, Verbeek also argues that we "think too much in our own favor." By this he means that we don't see the big picture. Basically when you evade taxes you say to the government, "I am no longer participating." This may be because you can't pay it or perhaps because you disagree with the government's spending.

Same if you buy a gift for your friend with all your mates, but it's already another package full of special beers. Yes dág, that is really a worthless gift, you would rather give that friend of yours a nice trip to the zoo or festival. So you decide not to participate, you don't pay the 5 bucks. You don't participate anymore. Suppose your friends don't buy a beer package but do buy a ticket to Into The Woods for your friend. This aligns with your gift vision, but you decide on principle not to enter even though you agree. Then you are just being antisocial and your friend is left without a gift. This comparison is of course very simple, but you get my point.

Back to government spending for a moment. Well, that's often for your own benefit anyway. The idea behind paying taxes is that everyone contributes a little to our society. In our heads, of course, this idea clashes with the low or non-existent tax for multinationals. That's why you have people like Paul Tang who are therefore fiercely against this. You might wonder if this makes sense, because as was mentioned earlier, it's a bit like comparing apples to oranges. You might think, "okay, if we can't compare, make better rules!" Suprise suprise, these already largely exist in European legislation, even though there is always room for improvement. And this has also been noticed by Paul Tang. It is very good to look critically at rules and laws, but also try to see the big picture. Perhaps that multinational that does not pay taxes contributes to government revenue in other ways. The key question remains: What does it actually benefit us, as a whole society? That remains a difficult question, but for now: just pay your taxes, because the reasoning "I don't participate anymore" is obsolete.

Is the big picture really big for you?  Don't worry, Jan the Tax Man is also happy to look at your own taxes and help you with this. In this way you can do your bit, but also make sure that this bit does not become a large stone. Saving money is always nice. So start the chat!

If you've warmed up a bit and are yearning for more, check out our other articles on the history of taxes or the top 7 crazy taxes.

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