One law for the rich, another for you...

Discussion in 'Politics, Religion, Social Issues' started by VulchR, Feb 13, 2015.

  1. VulchR macrumors 68020

    VulchR

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    #1
    The BBC just reported a story regarding a 'tycoon' who did not file UK taxes for more than 20 years in UK residence and yet was not prosecuted when his offshore accounts were discovered (see link).

    This is why I believe:
    1. That tax havens should be threatened with nuclear weapons if they are not forthcoming with information about large offshore accounts. OK, OK. Maybe not nuclear weapons, but they should be economically and diplomatically boycotted.
    2. That taxing income, rather than wealth or lifestyle, will always lend itself to loopholes that allow greedy rich people to avoid paying their fair share.
    3. That the only thing that trickles down in our current system is criminality from the top.
    4. That there is one law for the rich, and one for the rest of us. The IRS once went after my father because he was too demented to submit his tax return on time (admittedly the IRS is not a UK agency, but I'm sure that there are plenty of similar stories about average people in the UK).

    Remember this the next time you vote.
     
  2. Technarchy macrumors 603

    Technarchy

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    #2
    Money is sent offshore because the tax system in places like the UK and USA suck.

    We should be encouraging wealth to stay within our borders with a simplified and competitive tax system

    It's time for the Exchequer to realize that the economy is now global, the world is smaller and information moves faster.
     
  3. vrDrew macrumors 65816

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    #3
    US tax law is fundamentally different from British in that the US citizens are liable for taxes on their worldwide income.

    A US citizen needs to report and pay tax on any form of income he earns anywhere in the world. (Which is why Boris Johnson got a bill for the profit he made on selling a house in the UK.)

    For whatever reason, UK citizens who do not live in Britain don't have to pay UK income tax. This means that British investors, sports and entertainment stars, and international mercenaries go and establish residency in Monaco or some other low-tax location. The UK Govt. has rules about the maximum number of days such a person can actually be in the UK during the course of a given year. You can go spend Christmas with Granny - but you are considered "resident" if you are in the UK more than 181 days in any given year, or more than average of 90 days during any consecutive four year period. The actual rules are considerably more complicated, and this may be why this guy thought he could get away with not paying.

    Personally, I think the IRS here in the USA does a much better job of collecting taxes in this regard than does the British Inland Revenue.
     
  4. VulchR, Feb 14, 2015
    Last edited: Feb 27, 2015

    VulchR thread starter macrumors 68020

    VulchR

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    #4
    All I know is that I have seen people in my town in the UK go to jail for stealing £50 from a cash register, and another jailed for training an assistance dog while on disability benefits (How dare she? She's obviously capable and a 'benefit fraud' :rolleyes:), whereas the guy in this story was not prosecuted at all.

    I think that we are sliding backward. Over the past two hundred years or so, it seemed like we were moving toward a more equal society, with the expectation that while success would be rewarded that it is an even playing field. Now it seems like we're prepared to allow some people to be above the law, controlling everything from the top, while the rest of us become used to having less power. The truly odd thing about this is that people chose to express their disillusionment by not voting. I cannot imagine anything more stupid.

    EDIT: Rather than double-post:

    Or we should use military and financial force against the offshore tax havens to get them to be transparent. This has already been undertaken by the US, for foreign banks cannot operate in the US unless they release the details of large bank accounts held by US citizens. To some extent this is why the Swiss changed theirs laws.
     
  5. nebo1ss macrumors 68030

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    #5
    You are going to have to explain to me how this affects the way I vote.

    1. The Tax authorities are not the government and operate pretty independently.
    2. Tax avoidance and in other cases evasion occurs under every Government of whatever flavour.
    3. Lifestyle in the UK is already taxes with a 20 percent VAT rate.
    4. If the tax system was simpler and less onerous we would not have people moving to Monaco. We would also collect more tax in the process.
    5. In the last couple of days we had publicity about Mr Miliband (The socialist pretender) using a deed of variance when his father died to avoid "Death Duty"
     
  6. Eraserhead macrumors G4

    Eraserhead

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    #6
    We could staff them properly though, that's political:

    [​IMG]

    Well except for things like - http://www.bbc.co.uk/news/uk-31468781 and http://www.bbc.co.uk/news/uk-31173496 which show Labour seems a lot more serious about tackling this than anyone has before.

    The UK tax system isn't that overly complex. Filling in a tax return really isn't that hard, and if you are really rich you should just pay an accountant.

    You could make it a crime punishable by a long prison sentence for accountants to advise their clients to avoid tax.

    Which his mother organised, and which he still paid capital gains tax on in the end. Why are we blaming him for doing something his mother organised?
     
  7. zin macrumors 6502

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    United Kingdom
    #7
    You are confusing tax avoidance with tax evasion. Money will always be sent offshore through the use of loopholes in the system. This involves taking advantage of the tax system through legal means, albeit morally questionable to some people.

    The man in question filed false information with the Treasury with the intent of evading the legally required collection of taxes. This is lying and it is fraud, not simply "moving money offshore".

    The man deserves to be dragged to criminal court, sent to prison, and forced to repay every penny that he defrauded from the public revenue.

    We can talk about simpler tax systems after we've upheld the law.
     
  8. Macky-Mac macrumors 68030

    Macky-Mac

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    #8
    It isn't really about "loopholes"....money is sent offshore because the tax system has been intentionally structured to reward those that take their money offshore.....and as Technarchy said, certainly we should be encouraging wealth to stay within our borders.
     
  9. nebo1ss, Feb 14, 2015
    Last edited: Feb 14, 2015

    nebo1ss macrumors 68030

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    #9
    Yes I am sure his mother organised it all without advice from her two sons. Seems highly implausable. I think also you will find that death duty is 40 percent and capital gains is like 20 percent. Seems like tax avoidance to me.
    You will not find anyone who will try and argue that a "Deed of variance" is used for any purpose other than tax avoidance.
     
  10. Eraserhead macrumors G4

    Eraserhead

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    #10
    Why? I don't interfere with my parents financial affairs.

    Capital Gains tax is only paid at 20% if you aren't a higher rate tax payer. If like all MPs you are a higher rate tax payer it is paid at 40%.

    Well that is probably why she did it. Frankly I have no idea.
     
  11. nebo1ss macrumors 68030

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    #11
    Wrong 18 percent for a basis rate tax payer and 28 percent for a higher rate tax payer.
    https://www.gov.uk/capital-gains-tax/work-out-your-capital-gains-tax-rate
     
  12. AFEPPL macrumors 68030

    AFEPPL

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    #12
    The average person just wants a free ride on the back of those that are more wealthy.. Excluding the millionaires those paying the top rate of tax are getting more and more fed up and paying for everything.

    Seems acceptable to do this (avoid) if you're a race car driver for example living in Monaco, but if you work at a bank or in the city its not..
     
  13. Eraserhead macrumors G4

    Eraserhead

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    #13
    Actually before 2008 capital gains tax was higher than that, but there was also taper relief so he could well have paid less tax.

    Although if the will had been originally written to pass the property on to his sons in part then they would have also avoided paying inheritance tax in the same way.

    Additionally in 2007 the rules were changed so that spouses share their inheritance tax allowance, making what Milliband did pointless.

    All in all he probably did avoid tax, but it's in the same category as selling small numbers of shares every year to use up the capital gains tax free allowance, or using up your ISA allowance, rather than more extreme tax avoidance of having a Swiss bank account.

    ----------

    Anyone paying the top rate of tax of 45% and earning over £150,000 a year is practically guaranteed to be a millionaire.
     
  14. AFEPPL macrumors 68030

    AFEPPL

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    #14
    Utter rubbish, they are not guaranteed to be a millionaire because they pay 45% tax, not even close - what a crazy thing to say.

    If you want to talk about tax avoidance - how about lobbying apple to pay their fair share of tax to the UK government. they pay around 1%/year, thats simply immoral.
     
  15. nebo1ss macrumors 68030

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    #15
    It is a well established fact that they top 1 percent of Tax payers pay more tax than 90 percent of taxpayers.
     
  16. Eraserhead macrumors G4

    Eraserhead

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    #16
    You really think there are lots of people who earn £150,000 a year who aren't millionaires? Seriously? Even if they aren't millionaires at that point, they will be fairly soon.

    ----------

    If that's true that's because they have more income than 90% of taxpayers.
     
  17. AFEPPL macrumors 68030

    AFEPPL

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    #17
    I'm not a millionaire, none of my colleagues are millionaires, so yeah - absolutely no link between the two and yes, if you lived in a tent and didnt eat you could become a millionaire in 12 years. Don't forget over and above income tax you have about 6/7k worth of NI to pay too, so from a 150k top line you would be lucky to see 90k.

    Do you release what the amount of tax you pay every month when you hit the bracket... the tax level should be the same for everyone, regardless. be that 10%, 25% 40% or 45%, everyone should contribute the same %.
     
  18. grandM macrumors 6502a

    grandM

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    #18
    You're kind to the wealthy that's for sure...
     
  19. thekev macrumors 604

    thekev

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    #19
    Does it work the same way in the UK? In the US capital gains are taxed at a lower rate, and at the millionaire level that would be the majority of your income. Salaries aren't really taxed in brackets in the way I think you're suggesting. For example if you made 100k, and that encompassed several lower brackets, you would pay a certain percentage on the income up to the top of each bracket level, meaning you would pay less than your marginal tax bracket. I don't know if the UK is the same in that regard. Also past around $110k or whatever it is at the moment, you don't pay additional social security tax.
     
  20. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #20
    I'm not sure which, neither, or both, of the terms "tax avoidance" and "tax evasion" are legal/illegal in your terminology.

    I see nothing morally wrong about legally paying less tax rather than more tax.

    (I would certainly like to see the tax structure of the U.S. tax overconsumption by the wealthy at a higher rate.)
     
  21. TPadden macrumors 6502a

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    #21
    It isn't often noted that on the flip side capital losses not offset by gain can't be claimed over a very nominal $3K. If capital gains are taxed as income than capital losses should be deductible against income $ for $ ....
     
  22. thekev macrumors 604

    thekev

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    #22
    That is a good point, although I mentioned that mainly for completeness. They can't be claimed, but they can be carried forward and weighted against future gains in a different year. There are a couple situations where things that can be treated under most circumstances as capital gains are treated as income gains instead. Short term real estate flips come to mind.
     
  23. Macky-Mac macrumors 68030

    Macky-Mac

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    #23
    as thekev says, losses beyond $3K do roll over into future years until the whole loss is deducted
     
  24. TPadden, Feb 14, 2015
    Last edited: Feb 14, 2015

    TPadden macrumors 6502a

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    #24
    Not sure your point, the loss can't be taken in the year they are realized. Why can't we just roll over capital gains in excess of $3K that are realized to future years until the whole gain is taxed? :cool: :D

    My point was: Realized capital losses aren't treated the same as realized capital gains for tax purposes.
     
  25. Eraserhead macrumors G4

    Eraserhead

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    #25
    The average Briton earns about £2k/month after tax. You earn £7.5k/month after tax. You are still doing pretty well.

    And out of the £7.5k a month you should easily be able to save a substantial chunk of that, or be investing that in capital goods (e.g. by paying off the mortgage on your ~£1m house)
     

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