I have a rule, which I use to guide my moaning: only whinge if you have a solution in mind. Generally, I stick to this rule because it's marginally less depressing than the alternative, but recently I've found myself whining about high profile cases of tax avoidance, unable to offer any intelligent suggestions as to how matters might be better arranged. The problem is this: billion-dollar businesses see it as their duty to shareholders to pay the legal minimum amount of tax in each country in which they operate. Consequently, it makes logical sense for them to spend large amounts of money on the very best tax attorneys and accountants in order to maximally exploit opportunities to avoid paying tax, however exotic or unanticipated these methods might be. In fact, the only real constraint on their spending is that they should claw back more in savings than they spend in avoiding tax in the first place. On the other side, governments want to collect as much tax as possible, but it is politically inexpedient to offer equivalent salaries to attract the wiliest of tax experts in order to rewrite laws or at least plug some holes; taxpayers do not like million dollar salaries. To make matters worse, in most cases governments must allow companies to trade freely across borders and in countries where they have no ability to control tax, thus forcing them to take into account not only their own system but those of dozens of other nations.
So what's to be done? I think we can draw a reasonable analogy between tax avoidance and computer hacking and perhaps even exploit a similar solution to that currently being used by companies who make internet browsers. Pwnium, is a competition run by Google, where hackers are invited to find methods of compromising Google's internet browser Chrome. Anyone who can successfully exploit a weakness in Chrome is given a cash prize in return for the details of their technique. Knowing the details of the exploit, Google can then patch Chrome ensuring that their browser is safe for its users whilst incentivising other hackers to spot problems in a constructive way. And there's the point: could governments not use a similar scheme to spot potential loopholes in their tax systems before anyone gets the chance to exploit them? Using this approach they could avoid competing on salaries and instead open a competition to the masses. There are certainly plenty of aggrieved accountants at small firms who would be more than happy to stick it to big business and get a tasty prize into the bargain.