Lower and simpler taxes would be 'morally right History often repeats itself, but seldom this quickly. Earlier this year, David Cameron and George Osborne watched as their interventions over Fred Goodwin's knighthood and Stephen Hester's bonus prompted a wave of banker-bashing that damaged Britain's reputation as a business-friendly country. Undaunted, the Prime Minister has again set out his thoughts on monetary ethics, claiming that the tax arrangements of Jimmy Carr, the comedian, were not just ill-advised but "morally wrong." For any Tory leader, this is difficult terrain - let alone one whose family has had intimate knowledge of tax minimisation techniques. If any of his peers, MPs or donors prove less than squeaky-clean, he risks being accused of hypocrisy. And while it is true that it was silly and wrong of Mr Carr to castigate Barclays for paying roughly 1 per cent tax while doing the same thing himself, perhaps the more pressing issue is how such a scheme could meet with the taxman's approval. It is Mr Cameron's mention of "morality," however, that goes to the heart of the issue. His position is that citizens have a duty to share their income with the state, so that it can supply the services that they and others use. The tax system should therefore be designed to lay claim to that money as efficiently as possible. This was precisely the justification for lowering the top rate of tax from 50p to 45p: that it would extract the maximum amount of revenue. But there is another question: why does the state have a right to our money in the first place? It is not just that it wastes so much of what is contributed. It is that people should be able to enjoy the fruits of their own efforts. For the individual, there is more of an incentive to work hard if one can keep the money oneself. For companies, there is the ability to hire more workers and invest more. Generally speaking, lower taxes both increase economic growth and attract investment from overseas - as George Osborne has recognised with his cuts to corporation tax. Yet while we certainly need lower taxes, we also need simpler ones. At the bottom of the scale, the Coalition is commendably committed to taking the lowest-paid out of tax altogether. Yet middle earners are being relentlessly squeezed, with more and more trapped in the higher-rate 40p band. The Treasury appears to be hoping that we will not notice its attempts to convert this into the normal rate for the middle classes, with a 45p supertax above. Yet it is hard not to, given that the number of higher-rate taxpayers has trebled since the Eighties, and will almost double during this parliament alone. To add insult to injury, those subject to such swingeing taxes see those above them getting more lenient treatment. As part of Gordon Brown's efforts to lure the international super-rich, there was a tacit acceptance that the real rate of tax for such individuals, and for multinational companies, would be far below the nominal figure. The authorities have tried to crack down, but often find themselves bamboozled: attempts to close the loopholes merely make the system (already ferociously complex) that bit more muddled. Mr Osborne claims that he is doing what he can; great hopes are pinned on a new general presumption against tax avoidance, which will examine the spirit of schemes rather than the letter. Yet a recent bottom-up re-evaluation of the tax system by the Institute of Directors and the Taxpayers" Alliance showed quite how much scope there is for radical simplification. Mr Osborne will argue that this is impossible within the constraints of the Coalition, not to mention politically tricky, since such action always creates losers as well as winners. But it is worth asking a simple question: what would Michael Gove do, were he in the Treasury? Or Iain Duncan Smith? There is a sense emerging that the Conservative part of the Coalition is divided: on the one hand are ministers who make the case for robustly Tory measures, confident that they will be vindicated by events. On the other, there is an element hamstrung by caution and compromise, ducking out of fights rather than making the case for what it knows to be right. The truly moral course is not to castigate those such as Jimmy Carr, but to create a simpler, flatter tax system in which such behaviour is not just impossible, but unnecessary.