Blog/September 2016/Sep 2nd

September 2nd (See this week's devar torah)

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This week I won’t drone on about either politics or my business. Instead, I’ll drone on mainly about sports and taxes. Aren’t you pleased?

My father ob”m absolutely loved sports. He would watch one game on television while simultaneously listening to a different game on the radio. He tried to interest his sons — my brother and me — in sports, but the sporting gene was, alas!, not passed on to either of us. My sister ob”m, on the other hand, got the gene. She wasn’t content to watch sports, she liked to participate in them, and often did. Her son, my nephew Chaim, inherited the sporting gene from her.

While I (and my brother, and my daughters) have no use whatsoever for sports — my nephew not only enjoys them, he’s really good at them. So he’s currently off in Italy with the Israel American Football National Team (yes, it’s a thing), playing in the “European Championships” and representing his newly-adopted country, Israel. The sporting gene is strong with this one.

I “get” why people might like to participate in sports — even I have enjoyed playing racquetball — but I find it puzzling why anyone would want to watch them. Olympics, “World Series”, etc. — lots of spectating, and a lot of money expended by the spectators. I particularly find it difficult to understand why people (in the USA, anyway) are OK paying taxes to support for-profit sports-teams.

Which brings me to my next topic: taxes. All governments tax goods and services, and most also tax income in various ways. At the end of the day, the purpose of the taxation is twofold: first, to provide the funds the government needs to provide whatever services it provides. Second, and perhaps more important to many governments, is “social policy”.

Governments — or rather, the people who seek to hold power in them — make promises or statements about what they will provide or what benefits they will bequeath the hoi polloi. That is to say, they want you to agree to have your money “taxed” (e.g. taken from you by force of law, backed up by guns and jails) because you agree with the ultimate purpose of that taxation. In particular, governments often claim that they will “help the poor” by “taxing the rich” — taking on the role of Robin Hood. In this case, the term “hood” is most appropriate — because whether or not you agree to have your money taxed, taken away it most certainly will be.

But the actual effect of taxation is to remove liquidity from the hands of people who could use it. Most particularly, from the poorer segments of society. The very wealthy can afford to hire sophisticated tax accountants to avoid paying excessive taxes. The poor have no such recourse.

In the case of Israel (and Europe and many other places), there is in particular a tax called “VAT”. The idea is that whenever “value” is added to a good or service, a tax is paid the government. This allows the government to rake in heaps of cash. But at what cost?

In fact, VAT is a regressive tax. It disproportionately affects the poor, since it radically raises the prices of most everything. Every middleman has to pay VAT to the gov’t, so the price rises another 17% (here in Israel — it’s even worse in some European countries).

This results in extensive VAT fraud. All Israelis have heard the statement, “if you pay cash, the price is lower”. Since a 17% discount is very significant, many Israelis are willing to pay cash and forego getting a receipt. The merchant pockets the cash and doesn’t pay the VAT (or income-tax). The government, because of its excessive grasping, ends up holding less.

If the VAT were much lower, say 5% instead of 17% — the incentive to avoid it would be much smaller, fraud would be reduced considerably, and the government might even pull in more cash. But the real solution is for the government to reduce the amount it requires. Here in Israel, for instance, we could live quite comfortably without the 30 ministers and their staffs and cars. We could eliminate entire departments — the Ministry of Culture and Sport for an excellent example — which are expensive posts for lackeys, and which raise the cost of living for one and all.

Yes, the government does need to raise funds for defense and for any number of other things. But “sports and culture”? I don’t think so.

We had a busy week, and are looking forward to a quiet shabbat and the beginning of the month of Elul. The weather has been cooling down, and the forecast calls for continued cooling into next week. Yeah!

Next week we’ll return to our usual format; we are hopeful that we’ll have some good news to share, B”H.

This shabbat the three of us will enjoy:
baked chicken, butternut-squash soup, roasted yams, stuffed artichokes, egg salad, beet salad, tuna salad, homemade ḥalla, apple pie, fruit crumble, (oy! we still have ḥalvah. ה' יעזור!).

Until next time,
shabbat shalom and ḥodesh ṭov!

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