Crocodile Dundee vs Australia's Tax Police

Here's a Reuters story about the Australian Tax Office harassing Paul Hogan, better known to Americans as Crocodile Dundee, because of a tax dispute. The grinches at the tax office took advantage of Hogan's return for his mother's funeral to hold him hostage, refusing to let him leave the country until he coughs up some cash. It appears that the tax police in Australia are just as politicized and above the law as the IRS. Hogan has never been charged with tax evasion and there are plenty of signs that the bureaucrats want to make him a high-profile victim to justify the amount of money that has been squandered in a probe of supposed offshore evasion.

Actor Paul Hogan, star of the "Crocodile Dundee" movies, has vowed to continue fighting the Australian tax office which has barred him from leaving Australia until he pays a massive bill, saying he's victim of a witch hunt. Hogan, 70, was served with a departure prohibition order 10 days ago while in Australia to attend his 101-year-old mother's funeral which has prevented him from leaving to return to Los Angeles where he lives with his wife and son. The Australian Tax Office refused to comment on reports of seeking tax on A$38 million ($34 million) of allegedly undeclared income from Hogan, saying it cannot give details of individual taxpayers. But the actor went public in the Australian media this week to put forward his side in his five-year row with the tax office, saying he had done nothing wrong and the tax office was on a witch hunt for a high-profile case. ..."If I was a tax evader, which I'm not, I must be the dumbest one in the world to keep coming back here instead of fleeing to a tax haven ... I know they're absolutely desperate to nail some high-profile character with money to justify the expense to the taxpayer." Hogan, who was once a painter on the Sydney Harbour Bridge, is under investigation as part of Australia's biggest probe into offshore tax evasion, Operation Wickenby. The operation is budgeted to cost at least $300 million. The tax office has claimed he put tens of millions of dollars in film royalties in offshore tax havens, a claim that he has denied. He has never been charged with tax evasion.

This story is symbolic of a bigger issue, which is the the unfortunate tendency of governments to create ever-more oppressive and misguided laws in response to failures of existing policy. We see this in the failed War on Drugs, which leads to trampling of civil liberties and erosion of privacy. We see it in the failed War on Poverty, which leads to more redistribution that further traps people in dependency. We see it in the failed government-run education system, which wastes more money every year as outcomes remain stagnant and children from poor and minority communities suffer.

In the case of tax policy, politicians impose high tax rates and punitive forms of double taxation. As anybody with a modicum of common sense could predict, this bad tax policy undermines economic performance and drives economic activity to jurisdictions with better tax law. The politicians then have two ways to respond. They can lower tax rates and reform tax systems, an approach that simultaneously would boost growth and improve compliance. Or they can tighten the thumbscrews on taxpayers, trample their rights, and conspire with other high-tax nations to punish the jurisdictions that do have good policy.

Not surprisingly, most politicians choose the latter approach. And the attack on low-tax jurisdictions is a particularly loathsome part of their response. As this video explains, tax competition is a liberalizing force in the world economy and the effort by high-tax nations to penalize so-called tax havens is driven by a statist impulse to prop up decrepit and inefficient welfare states.

When Billionaires Attack!

Here's a cheerful story I saw linked on Drudge, which shows that sometimes rich people are not guilt-ridden statists and instead stand shoulder to shoulder with ordinary people to fight bad government policy. In Australia, the leftist government wants to impose a class-warfare tax on the mining industry, but the scheme is backfiring as opponents point out such a levy will undermine national competitiveness.

It was, by any measure, a most unusual rally. Many of the placard-waving protesters gathered in a Perth park wore suits and ties, and impassioned speeches were delivered from the back of a flat-bed truck by two billionaires, including Australia's richest woman. Gina Rinehart's pearls glistened in the sunlight as she bellowed through a megaphone: "Axe the tax!" Ms Rinehart has a personal fortune of $4.8bn (£2.7bn). Andrew Forrest, in monogrammed worker's overalls, told the well-mannered crowd that Australia was "turning Communist". Mr Forrest is the country's fourth richest person, worth an estimated $4.2bn. ...Now Kevin Rudd's Labour government is planning to levy an extra tax on the mining industry, and the industry is furious. The issue has dominated the political agenda for weeks, and is even threatening to torpedo Mr Rudd's chance of being returned to power at an election due to be held before the end of this year. Labour, which had an unassailable lead over the conservative Liberal-National Party coalition six months ago, is now trailing by six percentage points, according to a poll this week. If that were translated into votes on election day, Mr Rudd would become the first prime minister for nearly 80 years to lose office after just one term. ...the mining companies, led by the multi-nationals BHP Billiton and Rio Tinto, claim the tax will reduce their competitiveness and threaten thousands of jobs. Amid much fanfare, they have already shelved a number of projects. They have also launched a major advertising campaign. The government has responded with its own advertisements, using $38m of public money. Before coming to power, Mr Rudd promised to curb taxpayer-funded advertising on political issues. So far, the miners appear to be winning the argument. A poll commissioned by the industry, and conducted in nine marginal seats, found 48 per cent of people opposed to the super tax, with 28 per cent in favour. Nearly one in three said they were less likely to vote for Labour because of it.