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Author: Phil Bates
  • Video
  • 15 minutes

Moral obligations and following your passion

Updated Thursday, 18th July 2013
Jim Rogers, investor, discusses tax regimes and the importance of doing something you love.

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Talking to Phil Bates, investor Jim Rogers offers his perspective on the Chinese and American tax regimes, and answers the question of whether companies are morally obliged to pay more tax than legally required. They also discuss the importance of following your passion when it comes to career choice.

Jim Rogers and Phil Bates were talking after a recording of The Bottom Line.


Jim Rogers, thank you for talking to me today.  I just got back from my first visit to China and I know you know that country extremely well.  Some of the people I spoke to were talking about the need to develop greater social welfare provision and they were complaining that big companies in China weren’t paying enough tax to pay for that.  Do you think that as China develops they are going to need to develop Western-style tax regimes or is that actually something that will hold back China’s economic development?


Well let’s hope they don’t develop Western-style tax regimes.  I mean America’s tax system is absurd.  It’s hundreds of thousands of pages which nobody even knows anything about.  Keep it simple, please keep it simple or it will hold you back.  America has gone nuts with its taxes and its debt.  America is the largest debtor nation in the history of the world right now.  Will China develop more social safety nets?  Probably, because most countries as they get richer and richer more people demand more from their governments, but at the moment the Chinese have an extremely high savings rate.  They save over 35% of their income, partly because there is not much of a safety net, so they save a lot of money so they can take care of themselves their children and their parents.


Thank you.  As you say there have been lots of criticisms of Western-style tax regimes and Tim Cook of Apple described the US tax code as being designed for an industrial age and now operating in a digital era.  Do you think that it’s possible to update tax laws to take account of the way in which modern industries are operating?


I will disagree with Tim a little bit because the American tax system wasn’t designed for anything, it just happened piecemeal, piecemeal, piecemeal, you know.  Here’s a loophole, here’s a gift, blah-blah-blah, it’s absurd.  You certainly need, every country should have, totally scrap its tax system every once in a while and start over, and have new and objective people come in and simplify it and make it something that somebody can understand.  In America we spend billions of dollars every year on tax accounts, on tax lawyers, on trying to figure out our taxes.  I mean it’s staggering the amount of money we waste in America which could be used for schools, factories, lots of things.


Thank you.  Many of the big companies that were criticised for not paying enough taxes, Starbucks, Google, Apple, responded to that.  Some of them by saying that they were paying what they were legally obliged to pay; some of them like Starbucks agreed to make a voluntary donation to taxes.  Do you think that companies ever have a moral obligation to pay more than they’re legally required to pay or do you think it’s a matter of public relations?


Do citizens have an obligation to pay than they are more than they’re supposed to?  I mean some of the great court decisions around the world have been everybody should pay their taxes but nobody’s supposed to pay more than they are legally obligated to.  I mean there are six billion people in the world, should we all pay more than we are supposed to?  I suspect Phil that if you went and spoke to the six billion people, maybe a few of them would say yes I am going to pay more taxes, but I don’t think many of them are going to sit down and write a cheque.

In America we have a guy named Warren Buffett who says our tax rates should be higher.  I haven’t seen Warren writing extra cheques to send to the Government to make up for the fact that he thinks his taxes are too low.  No, nobody should pay more than what the law is.  They should pay what the law is, but they should not pay more than that.


Thank you.  You mentioned that large companies pay enormous amounts of money to armies of accountants, lawyers, financial experts to try and help them to minimise their tax burdens.  Many of our brightest students want to go into those sorts of industries.  You’ve suggested that perhaps financial expertise will not be the area in which young people should be directing their attentions for the future.  What would you advise bright intelligent young people who want to make their mark to do next?


Well the first thing Phil is only do what you yourself love.  Figure out what you love and that’s what you pursue.  Even if your parents and your friends and your professors say it’s absurd, especially if they say it’s absurd, that’s what you should do.  If you love finance sure go into finance.  I happen to think, I happen to know that throughout history we’ve had long periods when financial types were in charge, followed by long periods when the ones who produce real goods, the farmers, the lumberjacks, the miners, followed by long periods again when the financial types were in charge.  In my view it’s now the era of producing real goods.  Agriculture is going to be a very exciting sector for the next twenty or thirty years.  But if you can’t spell agriculture and you don’t like farming don’t go in to agriculture, and if you love finance go in to finance.


That’s great.  Thank you.


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