Panorama and Tax avoidance

[JohnfromUK]

22 minutes ago, ferguson_tom said:

Moral obligation, are you lot being serious? Sorry but all you Noble warriors on your white steeds are nothing more than jealous of the rich. No one feels a moral obligation to pay tax and its quite simple the more you earn the more the government try to shaft you every which way they can.

Honestly if i was a millionaire i would be doing exactly the same thing. I would have no problem sleeping at night and if i did i would just have to drive 10 minutes down the road to the council estate to see how well my money is being spent because its so moral for people not to work and live off the state!

No, I'm not jealous of the rich.  But I do believe that being rich doesn't mean you should be able to avoid paying your fair share to society.

I agree entirely about the tax takings being very poorly spent - and it is every bit as 'immoral' to effectively steal from the state by laziness and claiming benefits and not working when one is capable as it is to avoid tax ........ but when both are legal - then I think both 'systems' are wrong. 

But I do believe that society in general does have a moral obligation to look after those genuinely in need such as the disabled, the elderly, the ill and injured - and everyone who can contribute to that should be doing so through the tax system - along with paying for our defence, our transport, the health service, and of course paying back the massive loans we have taken out.

[panoma1]

54 minutes ago, ferguson_tom said:

Moral obligation, are you lot being serious? Sorry but all you Noble warriors on your white steeds are nothing more than jealous of the rich. No one feels a moral obligation to pay tax and its quite simple the more you earn the more the government try to shaft you every which way they can.

Honestly if i was a millionaire i would be doing exactly the same thing. I would have no problem sleeping at night and if i did i would just have to drive 10 minutes down the road to the council estate to see how well my money is being spent because its so moral for people not to work and live off the state!

Down the pub, do you slope off to the gents when it's your turn to buy a round?......because that's what tax avoiders are in effect doing?

[poontang]

1 hour ago, AVB said:

Somebody one said, and I can't remember who, that nobody has any moral obligation to pay tax, only a legal one. I agree. If anybody wants to pay more because they have high moral values then feel free. 

This.

Funny to see that rancid rag The Guardian being part of the 'investigation'. They have short memories... https://blogs.spectator.co.uk/2016/04/will-the-guardian-now-investigate-its-own-tax-arrangements/

[AVB]

29 minutes ago, panoma1 said:

Down the pub, do you slope off to the gents when it's your turn to buy a round?......because that's what tax avoiders are in effect doing?

When you buy ‘your round’ you are paying more or less the same as your mates did. You don’t pay more because you earn more. Using that, poor, analogy why should anybody pay more tax than anybody else. 

[Jaymo]

6 minutes ago, AVB said:

When you buy ‘your round’ you are paying more or less the same as your mates did. You don’t pay more because you earn more. Using that, poor, analogy why should anybody pay more tax than anybody else. 

Think what he is saying is that when he buys a ‘round’ your going to only get ‘halves’, and when you buy he would like a double Malt and some pork scratching’s ( and no, that’s not a thread derail on Jeremy Corbyn with Diane Abbott)

[islandgun]

43 minutes ago, panoma1 said:

Down the pub, do you slope off to the gents when it's your turn to buy a round?......because that's what tax avoiders are in effect doing?

I think what Panoma 1 is saying is that, Tax avoiding is the equivalent of not buying your round when its your turn !

[Yellow Bear]

1 hour ago, JohnfromUK said:

No, I'm not jealous of the rich.  But I do believe that being rich doesn't mean you should be able to avoid paying your fair share to society.

I agree entirely about the tax takings being very poorly spent - and it is every bit as 'immoral' to effectively steal from the state by laziness and claiming benefits and not working when one is capable as it is to avoid tax ........ but when both are legal - then I think both 'systems' are wrong. 

But I do believe that society in general does have a moral obligation to look after those genuinely in need such as the disabled, the elderly, the ill and injured - and everyone who can contribute to that should be doing so through the tax system - along with paying for our defence, our transport, the health service, and of course paying back the massive loans we have taken out.

And what constitutes a fair share - why should some pay 20% some 40% and some 60%+ of their income as their income just because they get a bit more.  So why is it "FAIR" to pay a higher % just because you work and are successful.

[JohnfromUK]

Just now, Yellow Bear said:

And what constitutes a fair share - why should some pay 20% some 40% and some 60%+ of their income as their income just because they get a bit more.  So why is it "FAIR" to pay a higher % just because you work and are successful.

Simple - because you can afford to pay a larger share!  It really isn't any more complex than that - and you only pay the 40% on the earnings above a certain point anyway.  I paid 40% most of my working life, and don't begrudge that at all. 

Personally, I think the first £10K or so tax free, 15-20% ish on the next £20K or so - and 30-40% on above say £50 K is about right.  In other words, not a million miles from where we are now.

I am not advocating penally high tax rates on BIG earners, but I do think there is some argument for a higher rate still on say £200K plus.

[amateur]

In the 60's there were some very silly tax rates at the higher end, so the rich spent more time and money finding schemes to avoid paying.

At least Maggie made some sensible changes to reduce the need for the schemes.

 

[Lord v]

Tax avoidance: not paying tax you could pay.

Tax evasion: not paying tax you should pay. 

Very important distinction.

Technically child care vouchers, cycle to work schemes, pensions and stock ISA's are all tax avoidance.

[Yellow Bear]

39 minutes ago, JohnfromUK said:

Simple - because you can afford to pay a larger share!  It really isn't any more complex than that - and you only pay the 40% on the earnings above a certain point anyway.  I paid 40% most of my working life, and don't begrudge that at all. 

Personally, I think the first £10K or so tax free, 15-20% ish on the next £20K or so - and 30-40% on above say £50 K is about right.  In other words, not a million miles from where we are now.

I am not advocating penally high tax rates on BIG earners, but I do think there is some argument for a higher rate still on say £200K plus.

So in your book it is ok to tax  at 40% on income and then tax at a further 20-40% on any growth in savings from that taxed income?  where is the incentive to save and invest.

[ferguson_tom]

2 hours ago, JohnfromUK said:

No, I'm not jealous of the rich.  But I do believe that being rich doesn't mean you should be able to avoid paying your fair share to society.

So you have never paid cash or been paid cash for a private job to save the tax?

I think if you have enough money to benefit from these schemes you are probably putting on more than your "fair share" into the system.

[JohnfromUK]

2 hours ago, ferguson_tom said:

So you have never paid cash or been paid cash for a private job to save the tax?

I think if you have enough money to benefit from these schemes you are probably putting on more than your "fair share" into the system.

I've never really been in a position to be paid in cash.  Using cash to deliberately hide transactions and not declaring them would anyway be 'evasion', not 'avoidance'.  I don't believe anyone wants to encourage that.  Since I was 17 I've been in full time employment (I'm 60 now and retired) other than for a degree (full time education) and approximately 12 months self employed, when I was always paid by company cheque.

My 'gripe' is really that the major tax burden falls on the typical 'working family man'; the 'poor' and in some cases bone idle pay no tax.  The 'rich' avoid a good part of their tax through schemes with which you seem quite happy.  The normal 'basic rate and higher rate' PAYE and self employed taxpayers get hit hardest.  I think that wrong.

Edited November 6, 2017 by JohnfromUK

[panoma1]

1 hour ago, AVB said:

When you buy ‘your round’ you are paying more or less the same as your mates did. You don’t pay more because you earn more. Using that, poor, analogy why should anybody pay more tax than anybody else. 

Two completely different issues! How much the round costs is a purely financial matter, avoiding buying it using subterfuge is a moral issue.

 

[JohnfromUK]

19 minutes ago, Yellow Bear said:

So in your book it is ok to tax  at 40% on income and then tax at a further 20-40% on any growth in savings from that taxed income?  where is the incentive to save and invest.

It is what I have paid all my life. 

I'd love it lower, but there are bills to pay and those bills should be shared between those who can pay according to their ability to pay. 

In fact (by using your ISA allowance), the first 20K savings per year are not subject to CGT or income tax on dividends, so most people can save £20K a year tax free.  This is not 'avoidance', but every person's ISA allowance.  GGT on gains outside ISA has a reasonably generous allowance of no tax on first £11,300 gain in each tax year - and is above that taxed at 18% or 28% (not 20% and 40%) on growth over the £11,300.

If any person working for 40 years managed to save the full ISA allowance every year, they would have saved £800,000 completely free of CGT or income tax.  In reality, with growth it will be MUCH higher, and all tax free.  This is not tax avoidance by the 'rich', but allowances available to everyone.  Regrettably, few 'normal working households' are able to save £20K per adult per year.

[AVB]

There are clearly two camps here. Personally I have been a very high tax payer for the majority of my working life and have finally come to the conclusion that an effective rate of 47% on all of my income is obscene. Therefore I have gone 'self-employed' and using non-aggresive, HMRC approved, tax allowances will be aiming to pay no more than 20%. 

[JohnfromUK]

8 minutes ago, AVB said:

There are clearly two camps here. Personally I have been a very high tax payer for the majority of my working life and have finally come to the conclusion that an effective rate of 47% on all of my income is obscene. Therefore I have gone 'self-employed' and using non-aggresive, HMRC approved, tax allowances will be aiming to pay no more than 20%. 

I would also have been paying upper 40% if you include NI as part of 'tax'.  I agree it is a heavy tax, but we have a government that likes to spend, and it has to come from somewhere.  The political tide seems (unfortunately) to be swinging towards a government that would like to spend a great deal more (and borrow more as well).

I have no criticism of you using HMRC approved allowances etc.  If they are there and legal, by all means use them.  Whether they should be there is a different question. 

My view is that if you earn £100,000 a year, regardless if this is through PAYE, self employed, private company in the form of 'dividends', dressed up as a 'loan' from a company in the Caymans or by whatever means, £100,000 'take home' is still £100,000 however it is dressed up and should get broadly the same tax treatment by HMRC.  It is not right (in my view) that by paying an expensive accountant/lawyer you can avoid a fair share of tax

[SNS]

32 minutes ago, panoma1 said:

Two completely different issues! How much the round costs is a purely financial matter, avoiding buying it using subterfuge is a moral issue.

 

Couldn’t resist adding this

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.　
So, that's what they decided to do.
 
The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20." Drinks for the ten men would now cost just £80.
 
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody's share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.　

So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).　
Each of the last six was better off than before with the first four continuing to drink for free.　

But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," declared the sixth man. He pointed to the tenth man, "but he got £10!"　
"Yeah, that's right," exclaimed the fifth man. "I only saved a £1 too. It's unfair that he got ten times more benefit than me!"　

"That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"　

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.　

The next week the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important - they didn't have enough money between all of them to pay for even half of the bill!　

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.　
 
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

[JohnfromUK]

1 hour ago, amateur said:

In the 60's there were some very silly tax rates at the higher end, so the rich spent more time and money finding schemes to avoid paying.

At least Maggie made some sensible changes to reduce the need for the schemes.

 

100% agreed

[JohnfromUK]

4 minutes ago, SNS said:

Couldn’t resist adding this

.........
 
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

I understand and like the reasoning;  however if the 10th man says "actually gents, I'm not rich at all, the Rolls Royce and the big house are actually owned by a company in the Cayman Islands through a trust - and I'm actually very poor as I have no 'income' myself so I don't need to pay either like the first man" - then his pals won't want him as a drinking partner any more.

[panoma1]

7 minutes ago, SNS said:

Couldn’t resist adding this

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this...

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.　
So, that's what they decided to do.
 
The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20." Drinks for the ten men would now cost just £80.
 
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody's share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.　

So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).　
Each of the last six was better off than before with the first four continuing to drink for free.　

But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," declared the sixth man. He pointed to the tenth man, "but he got £10!"　
"Yeah, that's right," exclaimed the fifth man. "I only saved a £1 too. It's unfair that he got ten times more benefit than me!"　

"That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"　

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.　

The next week the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important - they didn't have enough money between all of them to pay for even half of the bill!　

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.　
 
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

So by your example, if the ninth and tenth richest men disappear before paying the £77 for their drinks..........consequently instead of paying the £23 for their drinks, the whole £100 bill for all the drinks must now be paid by the low to middle income four remaining men?.....including paying for the first four poorest men?  So the four low to middle income men must pay for the drinks of all ten men....including the two richest and the four poorest?

I think I understand that!....do you?

 

[Mungler]

In the book "Rich Dad Poor Dad" (and I really do recommend that everyone should read it) there is a cracking quote about taxation and it goes something like this:

Every government dresses up as some noble or moral obligation the purported duty of citizens to pay over their hard earned income through taxation and so as to provide those citizens with "services" they don't want, don't need, won't use and could purchase themselves at a fraction of the price they pay through taxes, and all the while the government will tell you what a wonderful job they are doing providing you with these substandard and over priced services which are delivered in the most expensive and inefficient way possible and all the while using your money.

His point was that if he actually got value for his tax money in what was being provided to him by the government then there could be a moral obligation, but when you work hard and are careful with your money, there can be no moral obligation to blindly hand that money over to a government who will inefficiently spend it and waste it in the course of providing sub-standard services.

I think he has a point. Why blindly hand over money for a government to hose up a wall?

There are lawful mechanisms to lawfully avoid tax, and that's the end of it; not breaking the law? Then fill your boots.

 

 

 

 

[JohnfromUK]

2 minutes ago, Mungler said:

In the book "Rich Dad Poor Dad" (and I really do recommend that everyone should read it) there is a cracking quote about taxation and it goes something like this:

Every government dresses up as some noble or moral obligation the purported duty of citizens to pay over their hard earned income through taxation and so as to provide those citizens with "services" they don't want, don't need, won't use and could purchase themselves at a fraction of the price they pay through taxes, and all the while the government will tell you what a wonderful job they are doing providing you with these substandard and over priced services which are delivered in the most expensive and inefficient way possible and all the while using your money.

His point was that if he actually got value for his tax money in what was being provided to him by the government then there could be a moral obligation, but when you work hard and are careful with your money, there can be no moral obligation to blindly hand that money over to a government who will inefficiently spend it and waste it in the course of providing sub-standard services.

I think he has a point. Why blindly hand over money for a government to hose up a wall?

There are lawful mechanisms to lawfully avoid tax, and that's the end of it; not breaking the law? Then fill your boots.

 

 

 

 

I entirely agree about spending;  I also have no complaint with using legal means to avoid tax .......... however I believe that these legal avoidance means (often called loopholes) by and large are discriminatory in that they are not readily available to all taxpayers equally - and so I don't believe they should be legal.  The idea that it is legal to set up (for example) a complex web of overseas shell companies with the sole aim of reducing tax is wrong in my book.

[Danger-Mouse]

2 hours ago, Yellow Bear said:

And what constitutes a fair share - why should some pay 20% some 40% and some 60%+ of their income as their income just because they get a bit more.  So why is it "FAIR" to pay a higher % just because you work and are successful.

Whoever said life was fair? Some of those people who earn huge amounts had vast benefits throughout their lives, they had rich parents, they went to great schools, they had advantages the average person couldn't imagine. True some will have hauled themselves up from far more lowly beginnings but those people are in the minority in that group. Some people are smarter, or great athletes, is that "fair"?  Not really but it's the way life is.

I pay two lots of NI every week, personal NI and company NI because I work through an agency that acts as an umbrella company. Is that fair? I don't particularly think so but that's the way my contract is structured and it's perfectly legal so I either suck it up and suffer paying it or find an alternative.

If you earn more you can afford to pay a little more to provide services for those less fortunate than yourself. Whether the current numbers are correct or not is debateable but certainly the moral argument falls in favour of those with more wealth contributing more to taxes than those who have less.

 

[Hamster]

You simply have to despair at the profoundly dimwitted who can't see avoiding or evading tax legally or illegally is one and the same. Those who make the immoral legal are in on the scam, daah.