The Annals of Taxation

I’m lecturing at the University of Essex and going from office to office chatting with people about their research. This is hard physical labor — I repeatedly go down one or two flights of stairs in this rabbit warren, walk down a hall, up the stairs in the adjoining building, then back down another hall. What a waste — why?

The answer is that the British government imposes a value-add tax on building extensions, so that if the buildings are joined on each floor, the extension is heavily taxed. To avoid this, the University struck a deal with the taxman to allow one internal door between adjoining buildings, allowing what is merely an extension to be treated as a new edifice and to escape taxation. The only problem is that, as usual, taxes create a dead-weight loss, as my well-exercised, tired knees that feel like dead-weights now illustrate. I doubt the building’s planners considered the cost of this loss when they agreed to this tax-avoiding subterfuge. (HT: SP)

Chris Holmes

From the perspective of your health and wellbeing, it is a fantastic bit of tax incentivisation as it builds additional physical activity into your everyday routines. This is precisely the area where we have lost a great deal of historical physical activity and represents one of the contributing factors to the obesity epidemic that will challenge the future viability of important social institutions such as the NHS.

As always it is the perspective you are looking at something from that matters.

Mike B

That is why I can't stand value added taxes. They get you at every corner. Just take it off the top via an income tax or at a single point like a sales tax. It's much less annoying.


I'm not sure why, but it seems that the older, whiter, and wealthier you are, the more you complain about taxation.

I know that it's not a hard and fast rule, but I don't think I know anyone who breaks it.

Eric M. Jones

I don't think such "Taxation-Inspired" architecture is rare. In Mexico (I was told), you start paying property taxes only when the house is finished. You might imagine that the houses keep get bigger, but no; you see a lot of concrete columns with decorative steel rebars sticking out of the top.

A friend used to build tool sheds. One inspector demanded that--unless the shed was could be classified as "portable"-- the owner would be taxed. My friend grabbed a set of wheels off a kid's wagon and nailed then to the shed. Case closed.

Jordan Boyd-Graber

As far as I know, such laws do not exist in the US. However, there are a number of buildings that try to emulate that style (many entrances to segments of a building with now internal connection), particularly in universities.

For instance, the "Hovses" at Caltech or lecture halls at Princeton all share this property. They were both explicitly trying to emulate venerable British universities.


@Justin: Your take is a little uncharitable, maybe? I don't read the post as a complaint about bearing one's fair share of taxes. Rather, it's a wry observation on distorted behaviors engendered by tax avoidance (and on decreasing stamina as one's age advances).

Peter Andes

Well, at least they got rid of the Window Tax

Sam Adams

To Justin:

Most people who complain about 'taxation' actually are not complaining about 'taxation' itself; what they are really expressing is frustration over the fact that they see so little value in return for the taxes they pay.

Also your characterization seems a bit of a non-sequiter, perhaps a bit disingenuous? I think anyone who works hard learns the value of hard work and how it is exchanged for money. No one wants to see the fruits of their hard work squandered. I know I feel annoyed when I throw away groceries that spoiled because we did not use them on time. It is the waste that bothers me; I guess frugality and responsibility and stewardship are important values to me and I expect similar respect for those values from others as well. This tradition goes back to Benjamin Franklin at least.

If I felt I were getting fair value in exchange for the taxes I pay, I would not mind so much. However, if you are going to assert that a significant amount of public money is not squandered on wasteul boondoggles, I'd have to ask you how well ethanol is working compared to what it was advertised to do, or why we need a Jack Murtha Memorial Airport in Pennsylvania that handles two or three planes a day, or why career politicians are scrambling to name new public buildings after themselves while essential infrastructure crumbles from neglect.



@Justin: I don't know about older or whiter, but of course wealthier people complain more about taxes. If you don't pay taxes you wouldn't complain about them.


The VAT rule is a little more complicated. VAT is imposed on all construction except but charitable buildings are "zero-rated," meaning there is no VAT due. I assume the university buildings are themselves zero-rated as charitable. The rules do get weird if you're adding on but the requirements don't need a deal with the tax collector. You need to build an "annexe," meaning the new part has its own main access and it can function independently.

I don't defend the oddity of the rule that requires a minimal connection - to make an annexe instead of an extension - but it's not just that a tax is imposed on additions. It is rather that all building is taxed unless it is zero-rated for charity or something similar. In other words, they didn't pay any tax on any of the building's construction.


Justin - I have to disagree. When I was younger and poorer, I complained about taxes because my after-tax income was insufficient to support my desired lifestyle. Now that my after-tax income is more than I care to spend (and has been long enough to build up a comfortable savings), my complaints are more those of #8. Most of what I see appears to be wasted, or even used negatively.

Jane W

VAT @ 17.5% of the full cost of the build is well worth avoiding but the British Govt is hell bent on improving people's health and welfare which is why they tax unhealthy spending. Such as underwear, fruit juice and sanitary towels.
The Cameron Govt is currently attempting to assess national happiness so probably there'll be a tax on smiling soon, not that people will have much to smile about when the re-rating (annual tax) of homes with proposed increases for the number of lavatories, streetlights and the view come online.


In defense of Justin, I have to agree with his overgeneralized statement. As Sam said, their complaints might be valued by dissatisfaction. I take it to be a lack of perspective. Many people complain about taxes, not realizing all the ways they benefit. The roads you drive on, the police who protect your home, the fire fighters who keep you safe... none of that is free. And the people on top, who often claim that their tax burden is disproportionately high, ignore all the ways in which the current structure of our social, political, legal, and economic system have allowed them to achieve the success they have. Absent the protections and support that is in place (which many of them are completely ignorant of), they likely would not be as wealthy as they find themselves today.

We all benefit from taxes in ways we don't realize. Many food prices are artificially low because of farming subsidies. We can afford the mortgages we have because mortgage interest is tax deductible, though this requires the difference to be made up elsewhere.

I'd prefer a system without these complications, with lower taxes for all, and a truly free market. But that is not what we have now. And to complain about the faults of the system without the perspective of the positivies is disingenuous.



Why on earth aren't calling people and asking them to come to your office (one walk for each of them, vs. many walks for you), or even better, just calling or using email / IM to talk to them?

Sam Adams

to BSK,

I think we are agreeing in general while emphasizing different perspectives. Most of the value you describe is provided by municipal and county government, and I do not resent paying my property taxes that much, though I am abhorred by some of the scandalous assessment practices that occur. I fully value those services and in fact in other forums, I have developed the only argument I know about that makes estate taxes sensible and not merely punitive (the 'problem' with this argument is that most estate tax revenue should devolve to municipal and county government based on the same rationale that you is not the estate tax per se but the fact that it is imposed by the Federal government that makes it is so objectionable! If the Feds merely collected it and then dispersed 90% of it back to municipalities as you suggest, then people probably would feel quite differently about it, and a major argument against it would be removed.).

However, I pay far more in federal income tax than all other taxes combined, and except for military protection, air traffic controllers, and food and drug inspection, I see far, far, far less value in return for that money on a relative basis.

Instead I see bloated congressional staffs, way too many government departments (why do we have HHS, Commerce, Education, Energy, Interior, and Agriculture as separate departments when each one is an off-shoot of a single more basic central 'service'?), and far too much intrusion into everyday life (I guess if you don't run a business you are blissfully unaware of the various regulatory bodies that must be satisfied, no matter how draconian or tangential the rule). Most elections are between parties with little to distinguish them from each other except a desire to control the allocation of the 'spoils' to their favored constituencies at the expense of the common good. Frankly, I am surprised that people see much to distinguish the Dummycrats from the Repugnicans; their 'arguments' sound like those of the Lilleputians about which end of the egg properly to crack open.

It seems like the more local your government, the better the service and the lower the tax; while the more remote the government, the higher the degree of parasitical behavior relative to the whole. Monuments to living politicians' egos are particularly offensive to me.

To echo # 9 Brad, I'm willing to bet that young successful professional black women complain to their friends more about the level of their taxes than older white men living in trailer parks; it's just that those conversations occur in private rather than the New York Times editorial section. I recall when my daughter received her first 'real' paycheck she was astonished that 30% of it went to various taxing authorities, she had been accustomed to little or no tax based on her part-time work before then.



The architecture you describe may also be a remnant of the original design back in the 1960s when it was intended to be one of the largest universities in Britain. The design was that of interconnecting modular blocks that could be built a piece at a time, eventually taking over most of Wivenhoe Park. Sadly the architectural theme chosen can best be described as "drab concrete and glass". Then in the 60s and 70s student unrest took over and the university became radicalized by the extreme left. The university became nothing more than an outpost of the Socialist Workers party and an embarrassment to the British government. Their plans for expansion were soon abandoned as part of their master plan for expanding the higher education system.

Even in the mid 1980s I recall striking coal miners taking over the student residences, hosted by students, protesting Thatcher / Regan policies.

The reputation of the place seems to have improved since the early days, but you have to understand the history of the place.

Oh and did you check out the Paternoster Lifts in the Library? You get on and get off whenever you want and it never stops.



Mr. Hamermesh, of course they considered this tax on your knees in the planning stage. The architects are presumably competent, and know a bad layout when they draw one.

The tradeoff here is funding. They have a fixed building budget. They can make a good layout for a certain sum, paying the VAT. Or they can have more floor area, offices, etc. for an inferior layout. 9 times out of 10, people choose more floor area.

Just think, it is entirely possible that your position at the University is directly affected by how many offices are available for visiting professors. I challenge you to broaden your thinking on building planning before you assume incompetence.


@jonathan VAT on building in the UK is worse than that. New building is zero-rated, but anything else, such as repairs or extension is fully rated. So it is cheaper in terms of tax to build a new house than to repair or refurbish an existing property. This applies to the materials too. So if you go to a DIY store and buy timber to repair a floor, you pay VAT. But if you buy timber to lay a new floor in a new building, no VAT.

@jane w - VAT in the UK is now 20%, courtesy of the joys of the US mortgage crisis. Curiously, it went up under the previous Tory government from 15% to 17.5% for just one year, when the Poll Tax was introduced. Well, they said it was for one year, but strangely, the Tories forgot to put it back down to 15%.



Interesting points. However, we can't ignore the ways in which the federal government subsidizes local governments. One reason (among many) states rarely operate with the type of deficit that the fed does is that pretty much every member of Congress negotiates payments from the Fed to his/her state to keep them in the black.

Your point comparing successful black women to white guys in trailers is a bit off base. The original point was about rich white guys.

All-in-all, I understand your point and think there is a lot of legitimate arguments in favor of lowering taxes at every level for all people. I don't mean to engage in class warfare. But it is frustrating to hear people who have uniquely benefited from our current structure bemoan that structure because they so lack perspective.

Sam Adams


Your comment that the federal gov't subsidizes local gov't seems an example of the thinking that might be considered problematic. The feds take money from people, run it through their bureaucracy, and then give less of the very same money back to people?

Why take it in the first place?

The same principle applies to many other programs. I have a neighbor down the street who needs temporary assistance preparing food. Once upon a time, I'd merely go and help her. Now, the feds take money away from me by force, run it through their bureaucracy, and give her less help with more strings attached than I'd have provided.

As a society we seem to forget that gov't is merely one social organ out of many. I lived in a town that had very gew gov't services yet no one was wanting. The Catholic church ran the food drive, the Protestant church ran the clothing drive, and the LDS provided shelter. Someone knew someone who knew someone so that whomever needed help got it.

Gov't is an economic entity just like any other economic entity and its first priority is its own well-being. People have become obsessed with using gov't as a tool to gain leverage over each other and ignore how this is a negative sum game. Most of the things we ask gov't to do are done better by using other social institutions rather than gov't.

Because people do not trust they insist upon compulsion, and compulsion always engenders resentment and opposition, no matter how 'worthy' the motives.

No political party can possibly deliver the reforms we need because they are too indebted to entrenched economic interests.