Admit it – you don’t understand tax

In April 2014 Donald Rumsfeld sent a letter to the US Internal Revenue Service atop his tax returns for the year.

He told the taxman: “It is important for you to know that I have absolutely no idea whether our tax returns and our tax payments are accurate.”

He noted that he paid an expensive accounting firm to prepare his accounts.

He added: “I do hope that at some point in my lifetime…the government will simplify the US tax code so that those citizens who sincerely want to pay what they should, are able to do it right.”

Rumsfeld’s point was that if he – a former White House chief of staff, Secretary of Defence and US Ambassador to NATO – couldn’t understand the tax system, how could anyone else.

Perhaps politicians and business people who get in trouble over their tax affairs should nod to Rumsfeld and admit they find it all baffling.

People will say that if you don’t understand tax law you shouldn’t be a CEO or a government minister, but I don’t think that’s true.

Tax is a specialist subject all of its own. My own tax affairs are a total mystery to me.

Like Rumsfeld, I hire quite expensive accountants to prepare them . And like Rumsfeld, and Angela Rayner, I have no idea if they are accurate or not.

Since I’m a financial journalist this could be an embarrassing admission, but I don’t think it is.

In Rayner’s case, the details were complex. There were trusts and at least two properties.

There were children, one of whom is disabled. She got it wrong and paid the price.

It seems harsh to me.

There was some sympathy for her in unlikely places. A column by retired senior accountant Mike Warburton in The Telegraph had him admitting even he doesn’t understand our “impenetrable” tax rules.

Back in 2002, President George Bush was mocked for saying in reference to a business scandal: “All I can tell you is that in the corporate world, sometimes things aren’t exactly black and white when it comes to accounting procedures.”

That’s clearly true.

It might be this much. Or it might be that much. It just depends.

This goes wider than individual tax affairs.

Politicians routinely set themselves fiscal rules on tax and spending in order to demonstrate that markets can trust them.

Then something crops up which means they have to break their own rules.

It was good to hear Louise Haigh, once a Labour bright spark, criticise the government for having “excessive deference” to the Office for Budget Responsibility (OBR) and for adhering to “arbitrary fiscal targets”.

Sadly, Haigh had to quit as transport secretary last year after a decade old fraud involving a mobile phone surfaced.

It looked like an innocent mistake. But they got her anyway.

It’s tempting to blame a mean-spirited press for this “gotcha” environment. But it’s the public’s fault too.

If we expect our business and political leaders to be that much purer than the rest of us, we’re just asking to be disappointed.

MPs and their taxes will be in the news until at least Christmas.

Please send candidates for press release of the day to:

Simon.english@roxhillmedia.com