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Panorama: The Truth About Tax – tonight on BBC1

The BBC’s Panorama programme tonight is on tax avoidance – tune in from 8.30pm on BBC1 or catch up on BBC iPlayer.

Richard Murphy (who features in the programme) noted in his blog that the pre-programme publicity features a “major new tax avoidance story”, the documentation for which he saw some time ago.

Click here to read Murphy’s blog on the TV show.

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"A race to the bottom"

That quote at the end just about sums it up, encouraging large companies to pay less & less tax whilst telling the rest of us that avoidance won't play a part, but it does, expecting us, the plumbers, electricians and those dreadful benefit cheats to make up the difference.

Inequality continues to prosper and drive the system.....Vive la Revolution

 

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I agree Paul

... and when there is no NHS to keep their workers healthy, and the public are too financially squeezed to buy their goods/services, and the transport system fails due to lack of funding, etc, they will blame the government for not helping them, when in reality the government seems dead set on helping those that least need it!

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Look closer at home

Perhaps we should have a look in the mirror? HMRC can go after all the addicts or target the dealers. 

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Hmm ... dare I comment?

Not having seen the programme yet (I may get it tomorrow) I can't directly comment except to say that the BBC is widely perceived to be left-wing and Panorama to be itself very left-wing.  That isn't to say that their programmes are not worth watching.

It's interesting that the first two comments are not "how interesting, I wonder if there's anything I've seen that I can apply to reduce my clients' tax bill" but rather (and I really don't mean to be rude) the politics of envy and socialism.   

For what it's worth (nothing I hear you cry), if the Government tried a few truly radical ideas the country might recover much faster ...  A taster for Thatcher Mk 2 (Boris perhaps)

1. Introduce flat rate tax at, say 20% (Income, Corporate, VAT, CGT, IHT etc) with the aim to reduce all to 12.5% or 15% over time.

2. At the same time abolish all allowances except a flat personal allowance of say £15-20k.  

3. Abolish all benefits except a single "National Assistance" to keep people just above the breadline. (and as part of that, the unemployed to take the first job offered or lose all benefits)

4. Turn NI into a true insurance system with the option to opt out (as is practised in many other successful countries)

Coming back to the programme, it should be understood that there are several places (not only Luxemburg) which offer attractive tax rates to re-domicile and/or holding company regimes, and trying to stop it is akin to King Canute's advisers telling him he could stop the tide ... it cannot be done.  The same goes for over-regulation ... Banks like HSBC (who didn't get taxpayers cash in 2008) could easily re-domicile to for example HK (Corporate rate 16.5%, or Singapore - top corporate rate 17%).

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Nostalgia is not what it was

In the good old days, when top income tax rates exceeded 80%, one of the arguments for lower rates was that tax avoidance would wither and die away once tax rates were lowered.

Oh, well . . .

RM

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It's all about incentives, even perverse incentives

runningmate wrote:

In the good old days, when top income tax rates exceeded 80%, one of the arguments for lower rates was that tax avoidance would wither and die away once tax rates were lowered.

Although corporation taxes have come down considerably, there will never be a point where evasion is zero, because for very large corporations the corporation tax will be many millions or billions of pounds even on very low rates.

Given that EU law was specifically designed to allow a company to be domiciled in any part of the EU and service the entire EU, then it is hardly surprising that many companies (especially non-EU companies), domicile themselves where it is cheapest, for example Amazon being domiciled in Luxembourg.

If you look at the FTSE 100 for example, although the vast majority of these companies are domiciled in the UK, they are truly international businesses with 60%+ of their earnings coming from overseas.

Although a race to the bottom has always been threatened and remains a possibility, many of these companies have remained UK domiciled. Equally, only a small number of companies have actually left the UK recently and most of those have only done so under protest due to the 50% income tax rate on individuals which placed an unfair burden on senior executives (i.e. the most highly mobile individuals).

http://www.accountancyage.com/aa/news/2038007/22-companies-left-uk-tax-purposes

A bigger concern for me is how many large international companies were thinking of domiciling in the UK and didn't due to the 50% income tax rate?

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Yes, and it worked

runningmate wrote:

In the good old days, when top income tax rates exceeded 80%, one of the arguments for lower rates was that tax avoidance would wither and die away once tax rates were lowered.

Oh, well . . .

RM

 

And indeed, when rates were reduced avoidance dropped so much that the tax paid at the lower percentage was considerably greater than the previous take from the higher percentage. Other countries followed the UK in this with the same result.

It isn't rocket science. If you set the rate for the rich at 100% of income you'll collect nothing. If you set the rate at 90% you'll collect very little. Likewise if you set the rate at 10% you'll also collect very little (but a lot more than you'd collect at 90%). Somewhere in the middle is a sweet spot where you collect the most from the rich for the least effort, if that is your aim. My gut feeling is that above around 40% most people start to think that they're being unfairly milked for their success, so the recent rise to 50% and reduction held at 45% are probably counterproductive if the desire is to raise money rather than be spiteful towards the rich. Obviously there is room for debate about where the sweet spot is.

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Change the system
Whilst I don't agree with big business' not paying their fair share I understand why they look for ways to keep their cash within the business. I do think (whilst I don't agree with it) that the governments approach to striking deals is much better than not seeing any money at all.

The programme was very interesting.

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Missed the point?

Whilst I agree with Hansa that trying to stop such practices is unworkable, I think the programme missed a golden opportunity to get across to the public just how unfair the current tax regime is.  They could have drawn comparisons with how much tax some of the UK's small companies/businesses/pensioners actually pay as a proportion of their annual income and I think that would have had much more impact.  It seems to me that the bigger/richer you are the less you pay (proportionately) purely and simply because the larger plc's and HNW individuals have the means to fund tax saving alternative lifestyles (could not think of a better way of putting it!) should they wish to do so, and let's face it - wouldn't you if you were in their position?  But not everyone can afford to up sticks and relocate to Luxemburg or any other tax haven and as a result our Joe and Jane Bloggs plumber, electricians, contractors, hairdressers, shopkkeepers, pensioners, etc are all taxed disproportionately and that in my opinion is one of the largest factors hindering the UK's economic recovery and that is what is so unfair about the fact that with the relaxation of the CFC rules the UK government appear to be condoning these practices.  I know there is a fear that the large plc's will take their business elsewhere if the tax regime is too hard on them, but we are not getting much from them anyway, one example quoted brought in less than 0.5% tax to the UK, another example who are going to set up HQ in London are leaving their workers and staff in USA so no real conribution to the UK economy there - UK will just end up a hollow holding company site with no real employment or growth prospects.

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Perhaps missing another point...

Jimess wrote:

...another example who are going to set up HQ in London are leaving their workers and staff in USA so no real conribution to the UK economy there - UK will just end up a hollow holding company site with no real employment or growth prospects.

Yes - I also have seen an example of this, where a UK based company is being operated in rotation by US employees.

The reason for this was that had the individuals concerned been resident in the UK (as was their preference), then due to their high salaries they would have paid tax at 50% + Employees NI as well as the company covering Employers NI.

As the operation was in effect the European Sales office of a US software company, the employee tax burden was deemed excessive and the US staff would only relocate on the basis of this difference in taxes being made up by the company, again more costs.

So although the UK company exists and is wholly owned by the US parent company, the only employee is a financial administrator, with everyone else flying in-and-out as needed.

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I'm not sure a comparison should be made...

... between large corporates and everybody else. For any legal person you need to consider their total effect on the economy.

There's too much focus on direct taxes.  If large corporates aren't paying much tax on their profits, that might be the price that needs to be paid for the employment that they create (on which they will pay Ers NI - to the extent that they cant avoid it!) and their contribution to exports.

If they all upped and left tomorrow, we'd resemble Greece.

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Succinctly put!

Steve Kesby wrote:

...  If large corporates aren't paying much tax on their profits, that might be the price that needs to be paid for the employment that they create...

If they all upped and left tomorrow, we'd resemble Greece.

I quite agree:

I also think governments are beginning to see this as whilst personal tax rates rise, corporate rates are falling almost everywhere.

There is a certain illogicality about corporate taxes

(1) Ultimately, commercial entities are all owned by real people (whether directly or through pension/investment funds)

(2) Those real people are already subject to personal taxation on the dividends paid by the corporates, and on income earned in the case of employees.

(3) Therefore corporate taxes ultimately double tax commercially generated income, and/or reduce the reserves of those companies thus reducing investment.

Perhaps the answer is to treat all companies as LLP's and NOT tax corporate profits.

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@ Steve Kesby

Steve Kesby wrote:

... between large corporates and everybody else. For any legal person you need to consider their total effect on the economy.

There's too much focus on direct taxes.  If large corporates aren't paying much tax on their profits, that might be the price that needs to be paid for the employment that they create (on which they will pay Ers NI - to the extent that they cant avoid it!) and their contribution to exports.

If they all upped and left tomorrow, we'd resemble Greece.

Yes some large companies do contribute to the economy - but a huge amount are migrating their production abroad - just last week a large pharmaceutical production company announced they were closing their plant that has been in my local area for over 150 years and moving it over to Belgium - a loss of nearly 1000 jobs in the UK, in an already very hard pressed area. The examples quoted in the program just showed hollow shell holding companies in the UK and no real trading activity here - so there is no real contribution to the UK economy in such cases. 

I am sorry to burst your bubble but the reality is that they are already upping and leaving - I hope you like moussaka!

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Moving to Belgium...don't count me in...

Jimess wrote:
Just last week a large pharmaceutical production company announced they were closing their plant that has been in my local area for over 150 years and moving it over to Belgium - a loss of nearly 1000 jobs in the UK, in an already very hard pressed area.

I can understand companies relocating to the continent, but BELGIUM?

How long were they without a government?

How high are their tax rates? - I vaguely recollect around 34%, but maybe I'm wrong?

I can't imagine that this relocation was tax motivated, but please explain...

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@Jim

Jimess wrote:

The examples quoted in the program just showed hollow shell holding companies in the UK and no real trading activity here - so there is no real contribution to the UK economy in such cases.

If there's no real economic activity in the UK, what exactly is it that people want to tax?

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Uniform tax rate

Not being an accountant (could never understand why a credit is a negative), I have often wondered why there isn't just a blanket tax rate - VAT, PAYE, Corp Tax etc.

Then there is no advantage in taking salary as dividend and all the other schemes that get dreamt up. Bound to be unworkable in practice but it seems simple in my head (no need to respond to THAT part of my comment).

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Accountancy - explained in a sentence

Peter Bonetti wrote:

Not being an accountant (could never understand why a credit is a negative),

If you add up all the debits and all the credits the grand total is zero.

So who cares anyway?

RM

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Negative?

Peter Bonetti wrote:

Not being an accountant (could never understand why a credit is a negative), I have often wondered why there isn't just a blanket tax rate - VAT, PAYE, Corp Tax etc.

Then there is no advantage in taking salary as dividend and all the other schemes that get dreamt up. Bound to be unworkable in practice but it seems simple in my head (no need to respond to THAT part of my comment).

Sales are credits and they are not negative.

You are thinking of how banks call a credit balance on a bank account. That is because they owe you money.

At the end of the day we have a system of double entry bookkeeping so every debit has a credit it just depends how you are looking at it.

 

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Hansa

I too have often wondered about the merits and reality of a flat rate of tax and high initial exemption (for people & companies).  But then so have thousands of others and if you do any research you'll see that there's a stalemate of opinion and, more importantly, any government thinking of experimenting would probably have to be guaranteed 25 years in office to see it through.

I have no real axe to grind one way or the other but, away from theory and politics, both here and around the world, the vast majority, who are faced with high levels of uncertainty, unemployment or just plain poverty, are being expected to suffer longer and deeper whilst they see the minority avoiding the same obligations.

Your "politics of envy" explanation for the response to this state of affairs is unworthy. Inequality, imposed or engineered by the few on the many, is just plain unfair and, whilst many will just see that as just the way of the world, doesn't mean that a civilised society shouldn't try to find a way to break the circle.

But then, I suppose, my idea of "civilised" could be at odds with yours?  This is best illustrated by your:

"Abolish all benefits except a single "National Assistance" to keep people just above the breadline. (and as part of that, the unemployed to take the first job offered or lose all benefits) "

Or, to cut out all the long words, "keep the buggers in their place"?  I too support the welfare state but if you impose a "just above the breadline" determinant for the poorest then surely it's only fair to impose a "only as much as you need" limit on the wealthiest?

This debate (capitalism v equality) has been running for 150ish years and so it's good to see the mystery being dispelled by this sort of programme and, whilst you may see their approach on this topic as left wing (how could you see it as anything else), many will view it in the same way they view their expose of care home violence and the atrocities of honour killing, ie impartial and matter of fact.

 

 

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Well said, Paul

When I was younger, I remember being told that the single great advantage of capitalism over any other economic system was that it worked for everyone. ie. everyone would benefit from the rewards of production.

We are not seeing this now. Capitalism is really working only for the selfish political and corporate elite and at the expense of the majority who are all consumers and therefore an essential part of the equation - as essential I might suggest as the producers!

This state of affairs is not sustainable and while a revolution is not on the cards, increasing civil disturbance is (especially when the weather gets warmer).

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Employment costs instead of corp tax???

It has been mentioned that large corporations contribute to the economy by providing employment, and the assocated NI, and this is a good enough reason for them to pay less CT overall.

Is it not true that the majority of employment in this country is provided by small business? Overall, they employ far more people than the large corporations, so why should they pay over the odds to benefit the large corporations? Possibly because they cannot threaten to go abroad. The large corporations have far too much influence and power, in my opinion.

Maybe we need to rethink the whole kit & caboodle? Reduced taxes for companies that export to other countries, increased tax for those companies that import from other countries? I know there would need to be far more to it than the basics I mention, but this would give a distinct advantage to those employing UK labour and a disadvantage to those importing goods but getting the sales in Britain.

I suppose there is some legislation to stop us doing this but it would be fairer to tax those companies who make their profits from selling in the UK.

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An excellent idea...

ShirleyM wrote:
Reduced taxes for companies that export to other countries, increased tax for those companies that import from other countries?

However, somewhat defeated by the fact that any company undertaking substantial imports (and therefore subject to a higher tax regime) would simply relocate to a more tax-friendly jurisdiction for corporation tax within the EU while doing the same thing.

The reason that the FCC rules have been effectively defeated is that EU law takes precedence.

Unless you think we should also leave the EU, but remain in the European Free Trade Association, but then again you don't seem like a member of UKIP.

Until we stop the EU from ruling our lives, the EU will continue to rule our lives.

Don't blame me, blame Ted Heath!

All is a tale told by an idiot, full of sound and fury, Signifying nothing.

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Capitalism & commerce
Just in case there are some ready to jump on me as a communist (Hansa mentioned the S word but he got away with it) I should just qualify my views by saying that I have nothing against trade & commerce or even the accumulation of a safe & valuable level of wealth to see businesses through the hard times and give a degree of comfort and confidence. This, in one sense, is what makes the world go around.

The banter between commerce & capitalism has gone on for a long time but obviously hotted up in the mid 19th century and from that time on "capitalism" has been seen by many as the unacceptable face of commerce. I'm no economist but for me the unhealthy side comes from greed and the wish to make wealth for wealth's sake, to accumulate far beyond the point of need or sustainability. This distinction was summed up in something that I read recently which set out that profit for one, that arises solely from the loss to another, is unhealthy and ultimately destructive to a society as is wealth that is removed from society and held by people who have nothing constructive to do with it.

All a bit simplistic I know but I've only recently been able to cut down my reading about tax & accounts in favour of far more interesting topics.

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@ paul scholes

"Profit for one that arises solely from loss to another" is an apt description of theft (and possibly also taxation) but it is not an apt description of capitalism and commerce generally.

Theft is indisputably unhealthy and destructive for society but that capitalism and commerce also are is a much more dubious suggestion.

Bill Gates built up personal wealth way beyond needs and possibly sustainability also but, given the jobs and wealth he created for others as well, it is not obvious that his example of capitalism and commerce was harmful to society. And there are many other such examples.

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interesting program last night...

Paul and shirleym have got my backing in regard to the points raised so far....

 

Sometimes its the perception more than reality that is key.  The 5% drop makes negligible difference in tax take (we are led to believe), and actually looking at some of the figures last night I am not sure they make that much of a difference (sure it is 100's of millions, but to be fare our MPs (whichever side) find it very easy to spend billions on things we never use or are not fit for purpose when complete (military hardward....computer systems etc).

 

Having stated 'we are all in it together' the perception (whatever contributions are made by big business and rich individuals) is that we are not - this comes at a time when we need to be all pulling in one direction.....

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Belgium

I don't know what motivated the move to Belgium.  The company had been a major employer in the area for around 150 years.  They were taken over by a large pharmaceutical multinational and three years down the line the production is being moved out of the UK and all that will be left here is effectively a large warehouse. Huge economic impact when you take into consideration the loss of work to the thousands of tradesmen and sub-contractors supplying the plant not to mention the 1000 jobs lost.  Thousands more people on the unemployment register, loss of tax and NI from employee wages - do I need to go further?

@ Steve Kelsby - I think what you have posted just underlined my point exactly - there is nothing to tax here ergo the UK is losing out - we need the production centres here to provide jobs and commerce in the UK, not the shells. 

 

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betrayal

it seems acceptable for the chancellor to claw back benefits in this country and turn a blind eye to all company(whether orginally uk such as boots and vodafone) effective tax rates even though 9/10 times he is inherently destroying the uk tax base along with all those entities who choose to "offshore" such as Amazon and JPmorgan and barclays and aviva to name a few .

Having stated 'we are all in it together' the perception (whatever contributions are made by big business and rich individuals) is that we are not - this comes at a time when we need to be all pulling in one direction 

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Perverse incentive
Interesting radio programme on Radio 4 last night in the "All in the mind" series with an item on the psychology of incentives for doing things: intrinsic ("for its own sake") and extrinsic (for a reward eg a bonus).
It suggested that monetary rewards in some cases can skew behaviour so as to focus on the reward rather than on the job.

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@mikewhit

Recent history proves your comments are correct.

Remember all the misselling (and fraud) that took place when the power companies were privatised, and the salesmen were on commission. They misled people to get them signed up, and even signed up people who had declined.

The banks have turned their counter staff into sales staff, and maybe there is no commission but they have sales targets to meet and their prospects go down the drain if they don't meet the targets. This attitude is rampant in our society.

Too many people are chasing money they don't need, and they don't care if their greed causes other people severe hardship, and selfishness takes priority over consideration towards others. It is now a dog eat dog world, and those with social consciences who don't join the pack are actually labelled as lazy, unambitious and 'envious'!!!!!

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Ethical Business

@v k ratliff - yes, at its extreme, bad business practice can result in theft & fraud, I'm not talking about that, I'm talking about a whole spectrum of unethical behaviour, the worst elements of capitalism, that are a result of greed and money for money's sake, that ultimately does more harm than good. Given our professional experience I'm sure most of us can think of many activities that are designed to result in a profit for A at a loss to B.

There is also no rule over timing in acting ethically, as with the Victorian philanthropists as well as Bill & Melinda Gates, and even that rabid capitalist Warren Buffett, they generate wealth over a period then make good use of it, ie better late then never.

@Shirley, don't give up hope, if you turn the clock back 100+ years you could have maintained yourself, both materially & financially from ethical Quaker businesses such as Huntley & Palmer, Fry, Cadbury, Clarks shoes and even Barclays & Lloyds banks!  These and other ethical businesses were operated under Christian morals that determine that you think of others rather than just yourself when doing commerce and I'm sure the same morals were and are dictated by other religions and spiritual beliefs.

My personal position is that, whilst I'm glad for their leadership in this, you can operate ethically AND sustainably without religion and, just like most things in life the pendulum will swing back in that direction.  But we can all do a bit to help, how about moving to an ethical bank?

 

 

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Better later than never ...

I've finally seen the programme and so can comment on it's content rather than general principles.  It has been interesting reading the comments of others (including in some cases what amounts to their personal manifestos!).  On this point I was obviously mistaken as I had always thought that whilst "we all know" that lawyers tend to be politically "pink", accountants were by comparison "true blue" Telegraph readers to a man.  Clearly not!

Back to the programme.  I (and many others) have always considered Panorama to pretty left wing and this episode confirmed that.  Very little hard fact and lots of speculation (coupled with silly games like knocking on doors without an appointment with cameras in tow).  Interviews with Richard Murphy ("progessive" (read socialist) economist of the Tax Justice Network and and darling of the left) in which the word "fair" was used and abused etc. etc.

He (and his supporters) may choose to recall the following: -

"Over and over again courts have said there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands; taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant..." 

(United States Judge Learned Hand in Commissioner vs. Newman. 159 F.2d 848 (1947))

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True - it isn't illegal

But the law could have been changed to prevent that particular dodge.

Also, claiming benefits isn't illegal, but many would change that ... given opportunity.

One law for the rich, another for the poor? Or should I say one less law for the rich, but a few more for the poor?

ps. I don't agree with the current benefit system, but equally, I don't agree with taking from the poor to give to the rich.

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Apples & Pears

There is a recurrent theme that there is somehow a link between the rules for the "rich" and those for "the poor" without considering that in the former case, it is the amount one wishes to extract from them by way of taxation, and in the latter case the "entitlement" believed to be due to the poor.

I fundamentally disagree with the prevailing Robin Hood view on life.

First: Income Tax/NI ... Using approximate current rates ...

Mr X  earns a salary of £200k and keeps £114,536 (or 57%) of that.

Mr Y earns a salary of £20k and keeps £16,132 (or 80%) of that.

If Mr Y suffers deductions at an effective 20% of his gross, why should Mr X suffer 43%?  

If the rate were an overall 20%, Mr Y would see little change (a bill of £4,000) but Mr X would  pay £40,000 - still 10 times more.  Is this not perfectly fair?

Second: "Benefits"

Why should Mr A (who used to earn a decent salary but lost his job) have the expectation that the millions of Mr X's and rather fewer Mr Y's should support his decision not to take the first available job, but rather wait until something comparable to his old job is offered? 

Mr B suffers a "bad back" and genuinely cannot continue to work as a roofer.  Why should the X's & Y's of the UK pay his invalidity benefit when he could re-train to do something else?

Both sets of examples are simplified and are merely a snapshot (rather than being representative), nevertheless there is an "Occupy Wall Street" mood about which thinks in terms of "rights" and "entitlements" and "punishing the rich".  These "rights" do not exist in any objective sense, they are simply expectations built up in the post-war years (in truth, on borrowed money) and which need to be dramatically revisited.

For an example (far worse than the UK) look at Greece.  Expectations built on a false premise (the fiddling of statistics) led to an unsustainable boom and a bloated state sector (which recent austerity measures have done little to redress) ... Now the population have voted for the impossible being retention of the Euro but no more austerity.  

To conclude; fairness is a measure to be applied to all citizens equally.  What people make of their lives is their decision (or series of) not the state's.  For the state to attempt to "equalise" is simply socialism by another name.

 

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Indeed @Hansa

Everyone pay 20% - that is a pipedream but for different reasons to those you put forward.

Corporation tax is being gradually reduced for large corporations but many still dodge out of it using artificial tax avoidance and this costs our country billions. Business owners have some scope for avoiding high rate personal tax. The ones that suffer the most are the employees.

Where do you think the tax is going to come from to make up for that lost by aggressive tax avoidance?

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Introduction of Flat Taxes also mean tough enforcement...

ShirleyM wrote:

Everyone pay 20% - that is a pipedream but for different reasons to those you put forward.

Corporation tax is being gradually reduced for large corporations but many still dodge out of it using artificial tax avoidance and this costs our country billions. Business owners have some scope for avoiding high rate personal tax. The ones that suffer the most are the employees.

Where do you think the tax is going to come from to make up for that lost by aggressive tax avoidance?

ShirleyM - For many years, I have considered the regime of taxation in this country to be too complex. I don't know if you've seen the 2013 edition of Tolley's Tax Guide, but rather than measuring it in pages, we're soon going to have to start measuring it in pounds (or kilogrammes for those that way inclined).

The amount of time and money wasted on legal and accounting interpretation of the UK tax code must run into many billions of pounds each year, very little of which is making a genuine contribution to UK GDP. Its just haggling over how much is subject to tax and what clever tax specialist can get through in avoidance. This nonsense is doing nobody any good at all.

This is why I and many others have for years advocated a massive simplification in the UK tax code, getting rid of all of the complex rules and allowances (mainly special pleading from corporates over the years) and replacing them with a single flat rate of tax. The reason why we often say 20% Corporation Tax, 20% Income Tax and 20% Capital Gains Tax is that this makes income switching pointless as well.

However, this would mean that the energies of HMRC could then concentrate on enforcement, and if that means that those Chief Executives trying to dodge tax get thrown in jail rather than a slap on the wrist, back taxes, penalties and interest then no one will be happier than I.

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Jail?

Let's be clear that if people who are not paying their fair share (which begs a question of course) of tax are to be thrown in jail then they must be convicted in a criminal court first.

Conviction for tax evasion requires the prosecution to prove beyond reasonable doubt not only what was done but why the alleged offender did it (i.e. dishonestly to evade tax).

In the high profile cases of Harry Rednapp and (some years ago) Ken Dodd the issue was not what had been done but why it had been done.  I do not suppose there was any lack of resources devoted to these cases by HMRC yet they were unable to satisfy the jury in either case that a crime had been committed.

In short my point is that HMRC devoting more resources to tax evasion would not automatically result in bus loads of unpopular chief executives and bankers going to prison.

David

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There will always be avoidance

This is why tax is so complex. Whatever you do, there will always be high earners and large companies NOT paying what is morally due. Even 20% wouldn't be low enough would it? They want zero tax, and they work damned hard (and spend a lot of money!) to get it that way, and if the country goes belly up they will move abroad, or go bust because their customers can no longer afford their good/services.

Paying a mere 10% (or less) is doing damage to the country, the workers that make them those profits, and the other taxpayers who are their customers. It is a very short sighted view.

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What does "morally due" mean?

ShirleyM wrote:

... NOT paying what is morally due.

What does that mean?  Tax has nothing to do with morals, as I quoted earlier it is a "forced extraction" and thus paid under protest and under duress.

... or is it being suggested that YOU pay enough, but that others should pay more?  This suggests cant rather than morals!

 

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Back to the same old !!!!

A personal attack?

YOU - you mean me ???

I am not an employee. Have I been a naughty girl for worrying about those who can't dodge taxes and have to pay the price for those who do dodge tax?

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Not particularly

ShirleyM wrote:

A personal attack?

YOU - you mean me ???

I am not an employee. ...

Personal attack?  No, read what I said again (including previous posts in this thread).  I am generally questioning the current obsession with "avoidance" and why the "rich" (of which I am not one) are being attacked and expected to have some nebulous moral obligation to pay more.   It is this which is cant.

Did I mean you? - No, not specifically - I was responding to the suggestion, not the respondent (hence the passive voice).  However, if the cap fits, please feel free to wear it!

Employee - who mentioned employees? I didn't suppose that you are an employee, nor do I have any interest in the matter... 

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??

You may have misread my post of 8:42am!

The YOU (in capitals) as a response to my post made me believe it was a personal attack.

Pay more? I would be much much happier if the large companies and high earners did not pay a lower rate of tax than the employee on £20K but as you have no interest in how this affects employees I assume you are quite happy for them to pick up the tab.

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No, I didn't misread your post!

ShirleyM wrote:

I would be much much happier if ...  high earners did not pay a lower rate of tax than the employee on £20K ...

Really, and which high earners (being UK resident and on a PAYE salary or receiving dividends)  do you know who pay a lower rate than the man on £20k (around 20%) ?

Again I refer you to earlier posts in which I put forward a flat 20% tax with no allowances (except a decent personal allowance at around 60% of average pay to take the lowest paid out of tax altogether).

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Thin end of wedge ?

"with no allowances (except"

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Actually, I'd prefer true flat rate but ...

mikewhit wrote:

"with no allowances (except"

Point taken (and I generally agree) but:

To avoid admin costs in the collection of very small sums due in tax, it is historically quite normal to have a tax free allowance.  Maybe the word "allowance" is what caused your "question", let's rephrase and call it the income tax floor. ...better?If one is going to have an income "floor", below which state benefits/assistance is payable, it would be logical that no-one in receipt of those benefits is subject to tax.

Incidentally, the quite large number of countries which operate flat rate taxes - much of Eastern Europe, Hong Kong etc all have a lower floor at which tax is not payable ... doesn't seem to cause much of an ideological problem for them!

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and the preceding words?

"... or is it being suggested that.... "  (passive)

rather than

"...or are you suggesting that ..."  (direct) 

 

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Lol - a grammar lesson

Thank you. I have always been crap at grammar and missed the subtle difference :)

May I refer back to moral duty? I do feel that everyone has a moral duty to contribute to the welfare of the country, and its citizens.

We need the NHS for the health and welfare of the employees that generate profits for businesses.

We need roads so that the goods produced by businesses can be transported to where they are needed and the employees can get to work.

We need education so that businesses get a future workforce that can read.

We need defence so that the businesses don't lose it all to a foreign bully.

We need police to prevent businesses having all their money stolen and to stop employees from rioting due to low pay & high taxes.

Everyone, individuals, and businesses alike benefit from the taxes paid (ok ... some more than others), but this is why we have a moral duty to make a contribution.

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My views

I don't think a society is "civilised" if it takes money from hard working people to give to people who don't want work.

I don't see why we have child benefit. If somebody wants a child they should pay for them.

My view of the massive salaries paid to some executives is that it is a criminal conspiracy. I would think there are talented people who would be happy with £500,000 per year. Anything over that received in the form of employment income could be taxed at 80% or 90%. This would mean that entrepreneurs could still be rewarded fairly for what they do if they are sole traders, partners or shareholders.

I would scrap the minimum wage. It just ensures that people who are willing to work are not allowed to.

I watch a TV programme about a company who had factories in the UK and China. They had employed people in China but the workers wanted more and this made the boss decide to give more work to British people. The company had problems because the UK workers were leaving the company, This wasn't because they didn't want to work. It was because they could find better paying work which was also easier to do. This is the free market in action.

I think that money should be spent on police, health, military, education, government, infrastructure and I am sure there are a few more things. I would give benefits to the mentally and physically disabled but not to people who weren't working because the market would decide wages and everybody would be able to get a job.

I wouldn't have council homes in perpetuity. If people had a problem with accommodation they could live in council homes for three months until they found somewhere else.

I don't see why we spend so much money on prisons. If we made prisons very basic the sentences could be shorter. I've spoken to many foreigners and the main thing they have noticed is how much this country pampers criminals. Career criminals usually have to be found guilty of 30 or more offences before a judge apologises for considering a custodial sentence.

Why not encourage sport at school and after school? Increase taxes on cigarettes, alcohol and unhealthy food.

If taxes were lower then people would see the benefits of working hard and starting businesses.

If we ensured schools were effective then employers would want to employ the graduates of these schools. It would appear that there is very little desire to raise standards within schools given the outcry about them being unable to wheel out the charade of a school you would like to see for a few hours when an inspector books an appointment. Afterwards they can go back to the usual lazying about and cheating in exams.

I think the problem with society today that nobody is willing to take the decisions and actions needed to improve society. There seems to be  a collective stupor that nothing can be done and we have to spend money on anything that is not doing us any good for fear that people would see that with determination and effort society would be transformed into something useful. Read books all you want but until people make the effort to change the present blundering along things will only get worse.

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the Baltic States and Hong Kong have landvaluetax too

Although no country has a system that collects all of the LVT it could the Baltic States and Kong Kong use LVT as a significant element of their tax systems. Arguably it is this that enables them to have a flat tax regime on income taxes and high personal allowances such that many, or perhaps most, working people pay no income tax at all. The Baltic States had the advantage of a clean slate and no landowner interest (although, regrettably, they probably have one now as they only have a partial LVT).  Hong Kong had the advantage of a technocratic elite consciously setting up a business friendly jurisdiction at a great distance from the UK's landed interests at a time when Henry George and LVT were topical and popular among those interested in political economy. Neo-Classical Economics has done a great job of burying George over the last 100 years as it's landowner patrons required it to (see Mason Gaffney).

Personally I want to agree with Georgist "single taxers" (the original ones not the IoD and Taxpayers Alliance inspired nonsense we heard about the other day) and impose an as high as possible landvaluetax, say 95%  (leaving just enough to make land ownership/management a profitable business) and then see if any other taxes are even necessary (apart from sin and nudge taxes which society may mandate and whose main purpose will not be revenue raising per-se, e.g. tobacco, alcohol, carbon, pollutants in general etc etc...).

Abolish NI, Income Tax, Corporation Tax, Stamp Duty, Rates, NBR, VAT, Inheritance Tax and any others which I can't think of right now.

landvaluetax.org -  Henry George - Progress and Poverty. Mason Gaffney - The Corruption of Economics.

I also like positivemoney.org

 

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