Thread: Taxes and the rich - do whatever you can to not pay Board: Oblivion / Ship of Fools.


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Posted by no prophet's flag is set so... (# 15560) on :
 
The recent disclosure of 40 years of of records of a Panamanian company that as much as $32 trillion is hidden in offshore accounts, has me absolutely puzzled. First that it is happening and has been going on for many decades. Second, that we have allowed the economic system to degrade itself so far. Third, that we don't see more revolts - may be they are coming? Fourth, whether we can still jail some of the banker criminals and politicians from the 2008 melt down (okay that was naive, so was my third point; okay so probably being surpised at all is naive).

Al Jaz: Data Leak reveal world wealthy hide money - including sitting poltiicians.

CBC: world leaders are doing it including Russian, Icelandic, Pakistani. I suspect we'll learn of many more.

[ 04. April 2016, 16:52: Message edited by: no prophet's flag is set so... ]
 
Posted by Brenda Clough (# 18061) on :
 
A generation ago Leona Helmsley said that paying taxes was for the little people. Clearly she was not alone feeling that way.
 
Posted by mousethief (# 953) on :
 
quote:
Originally posted by Brenda Clough:
A generation ago Leona Helmsley said that paying taxes was for the little people. Clearly she was not alone feeling that way.

Yes, the vampire class would like to suck all the money out of the economy, and out of our pockets, and ideally give nothing in return. They are a boil that needs to be lanced. And will be if things do not change.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by no prophet's flag is set so...:
The recent disclosure of 40 years of of records of a Panamanian company that as much as $32 trillion is hidden in offshore accounts, has me absolutely puzzled. First that it is happening and has been going on for many decades. Second, that we have allowed the economic system to degrade itself so far.

The rich have managed to capture many regulatory bodies as well as the media, and are able to keep power by employing the votes of useful idiots - via appeals to meaningless phrases like 'small government'.
 
Posted by Curiosity killed ... (# 11770) on :
 
Current regulatory bodies to be sold off include the Land Registry and the dissolution of the Animal Welfare inspection body.
 
Posted by rolyn (# 16840) on :
 
While eyebrows may raise at the scale of fraud and tax evasion by sections of the illite, I doubt if many are massively shocked or surprised.

Capitalism works after a fashion, it isn't being rejected by the voting populace. There wasn't much sign of backlash or uprising in the two UK Elections since 08.
Tax evasion by the extremely rich is the ultimate manifestation of a system where everything can be bought, even, as seen here and other areas of public life, the Law.
 
Posted by Enoch (# 14322) on :
 
Yebbut. There's a strong element of pompous, self-righteous sanctimony about this. The story has been broken by investigative journalists who appear to have hacked a law firm's IT system to get their hands on the data. They must have committed crimes to do this. They may well have persuaded others to commit crimes to help them. And not everyone in the world lives in the sort of country where the taxes that the state collects are spent for the general benefit of its citizens.

If you were a successful business person, in the sort of country where political and regulatory life is 'so different, so very different from the home life of our dear queen', could I, or anyone, really condemn you for salting away part of your fortune somewhere where a change of regime couldn't get at it? Or for providing services to enable you to do so?

There's been a tendency in recent years to criticise the Swiss because their principles on banking secrecy enabled some Nazis to get their money out of Germany in 1945. We're rather less critical - and rightly so - that the same principles enabled some Jews to get some of their wherewithals out of Germany before that.
 
Posted by Soror Magna (# 9881) on :
 
At the same time, the IRS has badgered Canadian banks into releasing data on their account holders so they can find USA citizens who are "evading" taxes in Canada. I just got a letter from "Integrity Services" from Revenue Canada asking me to clarify a $60 discrepancy (in THEIR favour) from 5 years ago. And it's been well established that bank executives and stockholders* that launder money for drug dealers don't go to jail; only they guy selling $10 rocks and his customers should go to jail. [Roll Eyes]

It's really quite appalling, but the reality is that government revenue services don't have the resources or expertise to go after the best of the criminals and tax evaders, so they focus on Ordinary Joe who fudged his medical expenses to get a bigger refund. To paraphrase Leona Helmsley, only little people pay taxes, and only little people get caught for not paying their taxes.


*Yeah, stockholders. If a corporation commits a crime, the stockholders literally own a criminal enterprise and the board and executives operate it. But that's the beauty of the corporation - all rights and no responsibilities.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Enoch:
Yebbut. There's a strong element of pompous, self-righteous sanctimony about this. The story has been broken by investigative journalists who appear to have hacked a law firm's IT system to get their hands on the data.

Actually not true, they appear to have been given a bunch of information by an anonymous whistleblower.

And [to proceed down the godwin trail] presumably you are rather less critical of the actions of Christoph Meili.
 
Posted by no prophet's flag is set so... (# 15560) on :
 
The problem I have with this is the complete lack of equality with taxation, the complete lack of integrity within the system, and what must collusion at worst, unjustifiable lack of knowledge at least, with this happening at all.

Because it dates to 1977, we really should consider the collusion between governments and these tax avoiders.

I just dropped off personal income tax information last week and will send corporate tax info this week. Perhaps I should find out how to provide large payments to an off-shore shell company and declare no corporate income this year. [Projectile]
 
Posted by Belle Ringer (# 13379) on :
 
Puzzled - what part of the news report is the slightest bit surprising? Haven't we all known since forever the rich pay large fees to planners to find ways to reduce taxes and hide money?

Meanwhile the poor buy and hide silver coins off the books, and they barter services to keep transactions hidden from tax authorities (most barter of value for value between unrelated people is a taxable transaction), and anyone in USA who buys something on line and doesn't pay sale tax on the transaction at the time of purchase owes "use tax" to their state of residence but I have not met anyone who files a use tax statement.

People look for ways to hide wealth and to avoid taxes. That's been going on since the invention of taxes. It's why the yard guy and the tree man and house cleaner want to be paid in cash.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Belle Ringer:
Puzzled - what part of the news report is the slightest bit surprising? Haven't we all known since forever the rich pay large fees to planners to find ways to reduce taxes and hide money?

Because we have the means to find out how much, what and where (for a small proportion of what went on).

There's a difference between information in the abstract and that in the concrete.
 
Posted by Brenda Clough (# 18061) on :
 
It is always good to shine light into the darkness. Even if the many-legged critters and the red-eyed rodents scuttle into some other dark nook, at least they've been forced to run.
 
Posted by Gramps49 (# 16378) on :
 
Just finished my Tax Returns. Will have to pay $1,000 more. Better than last year when I was short $4,000.

Discovered the reason for coming up short was they are not withholding taxes on Social Security and a very small church pension.

In rankles me that I can't figure out a way to set up an off shore shell company where I can avoid paying taxes. Can't speak for any foreign government, but I do hope the United States government will go after what it is owed.

Meanwhile, Trump is bragging how he will eliminate $19 Trillion in debt in eight years. This is from a guy who has filed Chapter 11 bankruptcies four times. Impossible. Trump claims the US is headed for a major recession again. That is what would happen if he tried to eliminate all the debt in such a short period of time.
 
Posted by Boogie (# 13538) on :
 
quote:
Originally posted by Brenda Clough:
It is always good to shine light into the darkness. Even if the many-legged critters and the red-eyed rodents scuttle into some other dark nook, at least they've been forced to run.

Well said.

When I think how scrupulous ordinary people have to be with their tax returns, or an instant fine.

As always, the rich can buy anything - especially political influence. They can also buy any services they want/need - so have no social conscience. It was always so.
 
Posted by la vie en rouge (# 10688) on :
 
quote:
Originally posted by Enoch:
There's been a tendency in recent years to criticise the Swiss because their principles on banking secrecy enabled some Nazis to get their money out of Germany in 1945. We're rather less critical - and rightly so - that the same principles enabled some Jews to get some of their wherewithals out of Germany before that.

Interestingly, the Swiss are starting to come in from the cold. The French government managed to get an agreement with Switzerland a couple of years ago that all French tax residents who have Swiss bank accounts must pay tax on them (income tax and/or wealth tax, as appropriate).

Cue lots of French tax residents getting a letter from their Swiss bank telling them that if they didn’t do the necessary to declare their account to the French tax authorities that it would be closed.* The French government created a sort of amnesty where for a certain period of time people could declare their account and only pay the tax, without having to pay all the fines for hiding the account in addition. The statute of limitations is six years IIRC, so that’s the amount of tax to be paid.

You’re right that most of the money left France shortly before the war. It’s been sitting round in Switzerland ever since, and to be frank, 70 years is really long enough to return it to the French economy and pay taxes on it.

The French treasury has made a killing out of this. I think they’ve been rather surprised by their own success; the backlog for processing regularisation files is huge. I don’t think they anticipated just how much money was squirreled away around in Switzerland.

I think the French are probably going to go after Luxembourg next.

*Telling the bank “go on then” is a rather dangerous route to go down. French banks are subject to money-laundering regulations that mean that if a very large sum unexpectedly arrives in an account, they have to find out where it came from. The only two viable options for Swiss account holders were regularise the account or transfer the money to another tax haven.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by Enoch:

If you were a successful business person, in the sort of country where political and regulatory life is 'so different, so very different from the home life of our dear queen', could I, or anyone, really condemn you for salting away part of your fortune somewhere where a change of regime couldn't get at it? Or for providing services to enable you to do so?

This is a good point.

On the other hand, the countries I've seen named are Australia, Iceland, the UK (in the case of Mr Cameron's father*) Russia and China. And whereas I can in principle understand Russian and Chinese taxpayers being wary of the intentions of their respective regimes, the individuals concerned seem to be quite prominent within those regimes.


* Allow me to say that despite the many bad things one can say about Mr Cameron, I think holding his father's sins against him is unfair. Ezekiel 18 and all that.
 
Posted by simontoad (# 18096) on :
 
This is the sort of stuff that makes me think that taxes on consumption are the way to go, despite their ugly regressive problems.
 
Posted by Brenda Clough (# 18061) on :
 
There is also the point that masses of people in quite ordinary countries get up and scream that they are being oppressed, that their taxes are being abused, and that anything they do to evade them is okay. Leona Helmsley is the poster girl for this, and can you really persuade me that Cameron's father was a victim of a regime? At some point these squawks of protest must be ignored, otherwise no taxes would be collected at all.
 
Posted by andras (# 2065) on :
 
And Cameron has refused to say if the family still has money in a tax haven.

He says it's a private family matter. Oh no it isn't!
 
Posted by Schroedinger's cat (# 64) on :
 
quote:
Originally posted by andras:
And Cameron has refused to say if the family still has money in a tax haven.

He says it's a private family matter. Oh no it isn't!

Precisely. My tax affairs are not a private matter - they have to be revealed to the government. As a public figure, Cameron should be transparent in his affairs.

As when he says "I am too busy running the country to deal with that", claiming it is a private matter suggests to me that he still has a shit-load of money there. That he is still avoiding paying tax on many many millions.

Hypocritical knob.
 
Posted by Curiosity killed ... (# 11770) on :
 
I cynically wondered if those stocks are in Samantha Cameron's name. He very carefully said 'I' not 'we' throughout that speech.
 
Posted by Doc Tor (# 9748) on :
 
quote:
Originally posted by Curiosity killed ...:
I cynically wondered if those stocks are in Samantha Cameron's name. He very carefully said 'I' not 'we' throughout that speech.

You and me both. I'd be all over that global search like a rash. Especially in her maiden name.
 
Posted by andras (# 2065) on :
 
... or a trust for the kids, or in Sam's mother's name, or...

The old Tory grandees like Macmillan would have thought this sort of conduct beneath them. Not the present lot.
 
Posted by Marvin the Martian (# 4360) on :
 
quote:
Originally posted by Schroedinger's cat:
My tax affairs are not a private matter - they have to be revealed to the government.

But not to the whole world. And even if they were, I doubt you'd be expected to tell everyone about your father's arrangements.
 
Posted by no prophet's flag is set so... (# 15560) on :
 
I hope that this data dump might actually result in something. But I also saw the movie "The Big Short", mentioned in the link below. Makes me consider will there ever be a wall? Not Trump's wall, or Israel's, but the one of revolutions?

"The shills for the people who really run the world have been pulling all-nighters, crafting avowals in the casually arrogant language of the ultra-entitled." (from the link below, CBC)

Massive data leak is only the latest of many signs that the ultra-rich are playing by different rules.
 
Posted by Oscar the Grouch (# 1916) on :
 
To start with David Cameron - I think that the only way forward would be to have an independent examination of all of his (and his family's) financial affairs. Such an investigation doesn't need to expose all his financial affairs to the public eye - but it needs to be rigorous enough that any conclusion can be trusted by the public at large.

I have to say, though, that I don't think it will happen. The chances are that he will resign after the EU referendum (regardless of the outcome) and then he will be given a free pass. But it all makes a mockery of the "we're all in this together" line he keeps trotting out. Like buggery, we are!

Looking to the future, I would suggest that all senior politicians in future (ie Cabinet level) should undergo independent financial examination. With great power comes great responsibility - and part of the responsibility is to be more open and transparent about your finances than the average member of the public. If people don't want to have their financial affairs scrutinised in this manner, then they shouldn't be in positions of senior government.

(My evil side wonders (hopes?) if Boris Johnson's name might soon be linked to this. He's just the kind of person who wouldn't think twice about using any and every means to pay as little tax as possible. He is very quiet at the moment. Could it be because....???)
 
Posted by Alan Cresswell (# 31) on :
 
On wonders whether the Registers of Members Interests that records the financial interests of MPs "which others might reasonably consider to influence his or her actions or words as a Member of Parliament" could be extended to include off-shore assets. Certainly, anyone who currently has, or has previously benefited from, cash invested in off-shore low-tax funds who subsequently makes speeches about, or organises summits to regulate, such accounts would be covered by such a register. After all, who wouldn't consider that such financial arrangements could influence them?
 
Posted by Curiosity killed ... (# 11770) on :
 
Listening to Cameron's statement yesterday, my thoughts were that he had made sure he could stand this scrutiny in advance. He listed his assets and earnings: "I own a house which we do not live in currently, I have my earnings as PM," etc. Which, when Samantha Cameron is also earning and there is no mention of what she owns, smells of organising his affairs for these eventualities.
 
Posted by TonyK (# 35) on :
 
Heaven knows I have ceased to have much respect for Mr Cameron and his cabinet, but 10, Downing Street have now issued a statement ( BBC news item, for those who can read it!)

Basically it says that the Prime Minister, his wife and his children, do not benefit from any offshore funds. Mrs Cameron does hold property shares, which are declared in her income tax return. (Mr Cameron had previously said that he doesn't own any shares).

As the commentator observes, this does not establish whether or not the Prime Minister and/or his immediate family have had such benefits in the past.

And, of course, we can hardly blame a man for what his father did/does!

Why Downing Street, rather than Mr Cameron himself, made the statement is open to conjecture!
 
Posted by mdijon (# 8520) on :
 
quote:
Originally posted by TonyK:
As the commentator observes, this does not establish whether or not the Prime Minister and/or his immediate family have had such benefits in the past.

Especially if the past includes the few hours between the PM's statement and the Downing Street communication.
 
Posted by Marvin the Martian (# 4360) on :
 
quote:
Originally posted by TonyK:
As the commentator observes, this does not establish whether or not the Prime Minister and/or his immediate family have had such benefits in the past.

And, of course, we can hardly blame a man for what his father did/does!

Depending on your definition of "in the past", these two comments seem to be incompatible. He would surely have benefitted from any dodgy dealings of his father's while he was a child, but it would hardly be fair to blame him for that fact.
 
Posted by mdijon (# 8520) on :
 
quote:
Originally posted by Marvin the Martian:
He would surely have benefitted from any dodgy dealings of his father's while he was a child, but it would hardly be fair to blame him for that fact.

And there in a nutshell we have an acknowledgement of and defense of the privileges of class in our society.
 
Posted by Marvin the Martian (# 4360) on :
 
quote:
Originally posted by mdijon:
quote:
Originally posted by Marvin the Martian:
He would surely have benefitted from any dodgy dealings of his father's while he was a child, but it would hardly be fair to blame him for that fact.

And there in a nutshell we have an acknowledgement of and defense of the privileges of class in our society.
So are you saying that David Cameron should be considered guilty of tax avoidance even if he hasn't actually avoided any tax, on the grounds that his father has?

If someone's father was a thief - and therefore as a child they benefitted from said theft - would you say they should be considered guilty of theft now that they are an adult? Of course not! So why would it be any different if we replace "theft" with "tax avoidance" in that question?
 
Posted by Penny S (# 14768) on :
 
If he is where he is because of being able to attend Eton and Oxford, and form the contacts he has used in adult life there, surely he has benefitted, and to our cost twice over.

Once because we didn't get the benefit of the taxes which could have been paid in the past, and twice because he is incapable of seeing the harm his policies are doing and goes on doing them. Where someone else might act differently.
 
Posted by mdijon (# 8520) on :
 
quote:
Originally posted by Marvin the Martian:
So are you saying that David Cameron should be considered guilty of tax avoidance even if he hasn't actually avoided any tax, on the grounds that his father has?

No I'm not. I don't have an answer, it just struck me that the question you raise about this particular instance could be seen as a metaphor for wider forms of hereditary privilege that act through advantage, patronage and financial well-being in a capitalist society. That's all I was commenting on.
 
Posted by Alwyn (# 4380) on :
 
quote:
Originally posted by Marvin the Martian:
So are you saying that David Cameron should be considered guilty of tax avoidance even if he hasn't actually avoided any tax, on the grounds that his father has?

For what it's worth, I would not say that.

Speaking of politicians being held responsible for their parents, I compared the Daily Mail's coverage of this story ("As Prime Minister he has spearheaded efforts to make global finance more transparent. He has spoken out repeatedly against tax avoidance and is hosting a major summit on the issue next month") with their coverage of another story involving a politician being held responsible for a parent ("Red Ed’s in a strop with the Mail. Doubtless, he’s miffed that his conference was overshadowed by the revelations of his former friend, the spin doctor Damian McBride, serialised in this paper, which exposed the poisonous heart of the Labour Party. [...] what has made him vent his spleen [...] is a Mail article by Geoffrey Levy on Saturday about the Labour leader’s late father, Ralph, under the arresting headline ‘The Man Who Hated Britain’").

For some reason, the approach of this newspaper to Mr Cameron seems a bit different to their approach to Mr Miliband.
 
Posted by Brenda Clough (# 18061) on :
 
In the US most of the serious contenders for the presidency have released their tax returns. (Donald Trump not, unsurprisingly.) This does not preclude howls of special interests. Nor does it prevent blatantly dodgy people (yeah, him again) from becoming serious contenders. So although light is helpful, it is not perfectly cleansing. For that you need laws. Or, following the example of Jesus, a whip.
 
Posted by Boogie (# 13538) on :
 
quote:
Originally posted by Penny S:
If he is where he is because of being able to attend Eton and Oxford, and form the contacts he has used in adult life there, surely he has benefitted, and to our cost twice over.

Once because we didn't get the benefit of the taxes which could have been paid in the past, and twice because he is incapable of seeing the harm his policies are doing and goes on doing them. Where someone else might act differently.

I agree.

Someone who never had need of public services (because they can pay for any services they need) are unlikely to make fair decisions about how tax is raised and spent.
 
Posted by Doublethink. (# 1984) on :
 
I find the tenses of Cameron's statement rather suspicious. He is a millionaire, he was a millionaire *before* his father died - how exactly is a career politician going to become a millionaire prior to inheriting from his parents ?

The question is not so much did he benefit from his father's wealth and tax arrangements, but rather, at what point did he drastically simplify his financial arrangements and were they legit / ethical before he did so ?

And, moreover, what was he saying publically about tax at the time.
 
Posted by Doublethink. (# 1984) on :
 
FYI Ian Cameron's business dealings were already known: http://www.theguardian.com/politics/2012/apr/20/cameron-family-tax-havens - David Cameron inherited £300,000 from his father. This still doesn't explain how he became a millionaire.
 
Posted by Doc Tor (# 9748) on :
 
Cameron inherited £300k from his father's UK will. Nothing is known about how much he inherited from the offshore holdings, the Jersey stash, or another possible account in Switzerland.
 
Posted by Doublethink. (# 1984) on :
 
Daily Mail in 2009 is mildly interesting: http://www.dailymail.co.uk/news/article-1191155/Claims-David-Cameron-30m-fortune-sit-uneasily-taxpayers-So-truth-money.html

I love that being a millionaire is considered being "comfortably off". Personally, I'd describe that as rich.
 
Posted by Penny S (# 14768) on :
 
When I bought my house I had to explain where all the money in my bank account came from to the solicitor. 1. My Dad's estate. 2. My savings accounts. I needed to show the source statements, I think, as well as my current account.

Perhaps Cameron inherited from other people in the family. Perhaps gifts were made before seven years before his father's death. (That's quite usual, isn't it?) Perhaps he should show his workings, too.
 
Posted by sharkshooter (# 1589) on :
 
quote:
Originally posted by rolyn:
...
Tax evasion by the extremely rich ...

Actually, most of what will come to light here will be tax avoidance, not tax evasion. There is a significant difference in that the former is technically legal (if immoral - it goes against the spirit of the law while abiding by the letter of the law) while the latter is illegal and may result in criminal charges.

But then, how many of the middle class have paid cash for something to avoid paying a sales tax? (Tax evasion)

Of course, there are many reasons for hiding assets, and only one of those is tax related.

Let's only hang the guilty.
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by sharkshooter:


Let's only hang the guilty.

I'd be happy to see a few squirm in the dock.
 
Posted by sharkshooter (# 1589) on :
 
quote:
Originally posted by Sioni Sais:
quote:
Originally posted by sharkshooter:


Let's only hang the guilty.

I'd be happy to see a few squirm in the dock.
It is one of my pleasures in life.
 
Posted by lilBuddha (# 14333) on :
 
quote:
Originally posted by Brenda Clough:
In the US most of the serious contenders for the presidency have released their tax returns. (Donald Trump not, unsurprisingly.) This does not preclude howls of special interests. Nor does it prevent blatantly dodgy people (yeah, him again) from becoming serious contenders. So although light is helpful, it is not perfectly cleansing. For that you need laws. Or, following the example of Jesus, a whip.

If you'd not noticed, American rich are conspicuously absent. This is because the rich in America pay considerably lower taxes than other first-world nations. And the justification is entrenched in the culture.
 
Posted by Stercus Tauri (# 16668) on :
 
quote:
Originally posted by Brenda Clough:
A generation ago Leona Helmsley said that paying taxes was for the little people. Clearly she was not alone feeling that way.

The Canada Revenue Agency feels that way too. A few years a go I started a small business and made the grand total of $40 on the first year's operations. That earned me a tax audit that involved having my house searched for signs of concealed sources of income. I wasted three days while their little troll squatted in the house going through every last scrap of paper that he could find, and it must have cost the other tax payers thousands (he didn't find anything objectionable). My former employer routinely cooked the books, faking project cost overruns to look like R&D expenses that would be tax deductible. Yes - the people with the biggest tax liabilities seem less likely to end up paying, and I doubt that will ever change.
 
Posted by Uriel (# 2248) on :
 
Regarding Cameron, the following points have been made by Richard Murphy of Tax Research UK:

1) Cameron has made no statement regarding his father's actions. While he is not responsible for anything his father has done, he must have a view on it. He could have said that much as he respects his father, much as he loves him and much as he is grateful for what he did for him he has to disagree with him on the use of offshore. That Cameron has not said this implies that he is not prepared to condemn egregious tax avoidance, and is something that he should clear up immediately.

2) Cameron has given assurances that he is not currently benefitting from any offshore trust, nor will he, his wife or children do so in the future. The statement about the present is probably correct, he should know his own finances. But he cannot say about the future. Cameron carefully did not mention his mother in the statement about current or future benefit. It is probable that Cameron's mother inherited the bulk of his father's estate in 2010, and when she passes it is probable that he and his children
will inherit. Cameron cannot therefore give any cast iron guarantee that he will not gain from his father's offshore setup.

3) He has given no assurance that he has not benefitted from these arrangements in the past. He was at one point very clearly dependent on his father, who was in turn dependent on these offshore operations for his main source of income. So again, Cameron has dodged the question, implying that he has something to hide. If his only gain was when he was a child (e.g. school fees) then he has nothing to hide, those were decisions that he didn't make. But if he was supported as an adult, for example while establishing his political career, that is another matter.

Cameron needs to come clean on this - what happened to his father's offshore money, where is it now, where could it go in the future. And most importantly, does he agree or disagree with his father's actions in denying the Treasury large sums of tax revenue.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by lilBuddha:
If you'd not noticed, American rich are conspicuously absent. This is because the rich in America pay considerably lower taxes than other first-world nations. And the justification is entrenched in the culture.

As I understand it, it's also because US citizens have their own even less transparent and shell-company-friendly jurisdictions, such as Delaware. Why shop abroad?
 
Posted by Uriel (# 2248) on :
 
The Panama papers reveal only part of the worldwide tax avoidance and evasion industry. Documents from one legal firm in one country. If similar leaks were made across law and accountancy firms in Delaware, Cayman Islands, Switzerland, Luxembourg, the Channel Islands, Gibraltar, Cyprus, etc. etc. a lot more would be brought to the surface, including American citizens ducking their responsibilities.
 
Posted by Doublethink. (# 1984) on :
 
I realise that this is almost certainly not as straight forward as it appears - but I feel rather well disposed to this guy http://www.bbc.co.uk/news/business-35984355

When was the last time you saw that happen ?
 
Posted by no prophet's flag is set so... (# 15560) on :
 
quote:
Originally posted by Doublethink.:
I realise that this is almost certainly not as straight forward as it appears - but I feel rather well disposed to this guy http://www.bbc.co.uk/news/business-35984355

When was the last time you saw that happen ?

November 2015.
 
Posted by Doublethink. (# 1984) on :
 
It would be nice if we could reach some sort of critical mass.
 
Posted by Doublethink. (# 1984) on :
 
quote:
Originally posted by Doublethink.:
I find the tenses of Cameron's statement rather suspicious. He is a millionaire, he was a millionaire *before* his father died - how exactly is a career politician going to become a millionaire prior to inheriting from his parents ?

The question is not so much did he benefit from his father's wealth and tax arrangements, but rather, at what point did he drastically simplify his financial arrangements and were they legit / ethical before he did so ?

And, moreover, what was he saying publically about tax at the time.

http://www.bbc.co.uk/news/uk-politics-35992167

Clearly, I am psychic. Now do we think the multimillionaire son of a stockbroker David Cameron had shares in only one off shore fund ? Stares into her crystal ball ...

[ 07. April 2016, 19:59: Message edited by: Doublethink. ]
 
Posted by Boogie (# 13538) on :
 
We knew it all along.

[Roll Eyes]
 
Posted by TonyK (# 35) on :
 
What makes me really cross (and further diminishes my trust in politicians generally) is the way Cameron (please note I've dropped the honorific!) lets this information out drip by drip. Is he not astute enough to realise that it's all going to come out eventually and that this way he adds to the suspicion that he's hiding further disclosures.

And as for the promise that he will publish his tax returns - surely the point of offshore trusts and similar is that they don't appear in tax returns!!

Who I'm going to vote for next time is a real quandary - I wouldn't trust any of them to tell me the time of day unless they'd first stolen my watch.
 
Posted by Eutychus (# 3081) on :
 
I agree it is terrible communication to reveal this now, but I'm not so sure it's actually evil.

£30k (the total amount redeemed) is a lot of money, but not an awful lot in wealth management terms; and the appropriate UK tax was paid on it when it became income. That doesn't sound like a scheme to dodge tax to me.

I also think there is a confusion being voluntarily maintained between "offshore" and "tax evasion". Not all the reasons for holding funds offshore are illegitimate, either legally or ethically. I wouldn't be surprised if many of shipmates' various savings schemes involved some offshore investments; that doesn't make us all tax dodgers.
 
Posted by Eutychus (# 3081) on :
 
Having said that and read this morning's internet, more than doubling your initial investment over 13 years is, to my mind, arresting.
quote:
Downing Street said Mr and Mrs Cameron bought their holding in April 1997 for £12,497 and sold it in January 2010 for £31,500.

 
Posted by Curiosity killed ... (# 11770) on :
 
It's terrible communication, not helped by his first statement making it entirely obvious, from the careful phrasing, that he had arranged his financial affairs so he could say he was clean, but left a lot of hanging questions about when and how he had achieved this.

It also leaves him open to suspicion about other offshore funds he may have benefited from. He's only put his hands up to this fund.
 
Posted by Beenster (# 242) on :
 
My bigger problem with this all - there is the morality of it which sucks.

But, these schemes are legal. And to me that's where the problem lies. We've had incident after incident where folk have been hammered for off-shore accounts - quite legit. There was one recently with pop stars - I can't remember who got nobbled.

Ethically, Mr. Cameron is wrong wrong wrong wrong wrong. Legally, I think it's a different matter (happy to be corrected).
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Eutychus:
Not all the reasons for holding funds offshore are illegitimate, either legally or ethically. I wouldn't be surprised if many of shipmates' various savings schemes involved some offshore investments; that doesn't make us all tax dodgers.

I have (to me) substantial funds in a Japanese bank and pension fund. This is because I work part time in Japan. I also have shares in a Spanish bank (having received shares in a British building society that demutualised, subsequently merging with said Spanish bank). Because I have overseas income I had to file a tax return for the first time this year, on which the overseas income was declared.

If I elect to hold some money in Japan after the end of my contract I won't need to declare the value of those savings - just the income I would get from those savings. Which is the same for my money in UK banks and investments, we don't declare the value of those, just the income on them.
 
Posted by Eutychus (# 3081) on :
 
That's precisely the sort of thing I had in mind.

If we are doing our own Ship version of coming clean, I must confess I had current and deposit accounts in Jersey for several years. This was because it was the only way my historic UK bank would let me (as a non-UK resident) continue to hold a sterling account.

Coincidentally, by holding it in Jersey the UK tax deduction at source on the (puny) interest was not applied, quite legitimately since I pay tax in France, where I declared the interest.

I have now found a UK high street bank that is happy to hold my accounts in the UK. This makes me feel all righteous, except for the fact that the very same bank is one of the worst offenders in international money-laundering.

All of which is to say, Beenster, that the ethics of it all are complicated. Ensuring one's investments are wholly "ethical" is a nightmare in my view.

Back in my student days everyone was enjoined to boycott Barclays because of their investments in apartheid South Africa, but as I recall the only difference was that the other high street banks were investing there under other names.

I think the real damage in this story, apart from Cameron's squirming, is that it points up the huge disparities between the rich, in government, and the poor, with nothing at all to invest.

[ 08. April 2016, 06:47: Message edited by: Eutychus ]
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:
That's precisely the sort of thing I had in mind.

If we are doing our own Ship version of coming clean, I must confess I had current and deposit accounts in Jersey for several years. This was because it was the only way my historic UK bank would let me (as a non-UK resident) continue to hold a sterling account.

This kind of thing is true to an extent. There are reasons other than tax evasion for having offshore accounts or even other than tax avoidance. Historically there are other reasons as you suggest - primarily being an expat or because of currency controls. Most of these historic reasons have now disappeared.

Furthermore, from a tax point of view there is no difference between the various havens. There isn't anything you can do from HMRC/IRSs perspective in Panama that you couldn't do in Jersey/Bermuda/the Caymans etc (often a lot easier because of the historic ties these countries have with banks in various locales). The advantage of Panama is the ability to create structures with opaque ownership.
 
Posted by Arethosemyfeet (# 17047) on :
 
quote:
Originally posted by Eutychus:
Having said that and read this morning's internet, more than doubling your initial investment over 13 years is, to my mind, arresting.
quote:
Downing Street said Mr and Mrs Cameron bought their holding in April 1997 for £12,497 and sold it in January 2010 for £31,500.

Even more suspicious in the eyes of many is how close the profit made is to the CGT threshold. It's almost as if the Camerons cashed out exactly the right amount of their stash to avoid paying tax. The usual buy-in was reportedly almost 4 times the reported purchase price which raises further questions. Had they, for example, been playing this same game in previous years? We're the rest of the shares simply transferred to other family members or trusted friends? Remember these are "bearer shares" with ownership record beyond who has them in their hand at a given moment.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by chris stiles:
Furthermore, from a tax point of view there is no difference between the various havens. There isn't anything you can do from HMRC/IRSs perspective in Panama that you couldn't do in Jersey/Bermuda/the Caymans etc (often a lot easier because of the historic ties these countries have with banks in various locales).

I'm not sure that's true. It's often claimed by Channel Islands jurisdictions that they fulfil more internationally agreed anti-money-laundering criteria than the UK.

France, however, has in the wake of this just put Panama back on its blacklist of non-cooperative tax jurisdictions: the Channel Islands are not on that list.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:
quote:
Originally posted by chris stiles:
Furthermore, from a tax point of view there is no difference between the various havens. There isn't anything you can do from HMRC/IRSs perspective in Panama that you couldn't do in Jersey/Bermuda/the Caymans etc (often a lot easier because of the historic ties these countries have with banks in various locales).

I'm not sure that's true. It's often claimed by Channel Islands jurisdictions that they fulfil more internationally agreed anti-money-laundering criteria than the UK.

Even if this were true in the case of the Channel Islands, the fact remains that there are numerous jurisdictions that are easier to use than Panama. The main reason for using Panama remains one of privacy/opaque ownership.
 
Posted by Uriel (# 2248) on :
 
More telling is Cameron's statement that he was proud of his father and his father's activities. When you are responsible for UK tax law you shouldn't be proud of people using tax havens, you should be clamping down on them. You certainly shouldn't (as Cameron did in 2013) step in to shield trusts from a clampdown on tax avoidance.
 
Posted by Oscar the Grouch (# 1916) on :
 
quote:
Originally posted by Uriel:
More telling is Cameron's statement that he was proud of his father and his father's activities. When you are responsible for UK tax law you shouldn't be proud of people using tax havens, you should be clamping down on them. You certainly shouldn't (as Cameron did in 2013) step in to shield trusts from a clampdown on tax avoidance.

I'm surprised that no-one has really picked up on this. It's one thing to love your father and be proud to be his son. It's quite another thing to be proud of his achievements if said achievements consist mainly in running a tax avoidance scheme for the rich and powerful.

As it stands, Cameron's statement suggests that he sees nothing wrong in what his father was doing. Therefore, he can hardly be relied upon to take the lead in ending the kinds of schemes that his father was using (unless he is taking the rather despicable attitude of "we've made our money already, so screw the rest of you").

Either tax avoidance is morally wrong (as Cameron himself said about the likes of Jimmy Carr) and should be denounced as such regardless of who was doing it, or else you think it is a perfectly valid form of financial planning and you defend it as such.

Cameron's position at the moment is illogical in the extreme.
 
Posted by Sioni Sais (# 5713) on :
 
I'm sure that our tax havens have been justified as a means of keeping funds in the British sphere of influence, rather than having them go elsewhere. Even if they do have economic benefits, they are very highly concentrated in the hands of very few people.

That's a lot less "fair" than the welfare reforms that Cameron's government has pushed through.
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Eutychus:
Coincidentally, by holding it in Jersey the UK tax deduction at source on the (puny) interest was not applied, quite legitimately since I pay tax in France, where I declared the interest.

And, if you were paying tax in the UK you would declare the interest to HMRC. I was required to file a tax return because I have non-UK income, and to declare that income. As I found when I mistakenly put that income in the wrong section, HMRC are quite willing to tax overseas income if tax had not already been paid on it.

Which raises the question. If someone has money in a "tax haven" where that income is not taxed then presumably they are required to declare that on their tax returns, and HMRC would tax it. So, for the tax haven to work either they do not need to declare it to HMRC (in which case, how come the rest of us have to declare overseas income?) or HMRC won't tax it (in which case, how come the HMRC will tax my income if it hadn't already been taxed?).
 
Posted by Eutychus (# 3081) on :
 
In practice, I think domestic tax authorities becoming aware of offshore earnings usually depends on you declaring them. If they are suspicious, they can check with a cooperative jurisdiction, but they have to have probable cause first (they can't go on a fishing expedition). If your offshore revenue never ends up where you are tax domiciled, this idea can (in theory) be extended.

This is related to the concept of becoming a perpetual traveller and the "three/five flags" principle also mentioned in that article.

I am not recommending this idea; the person from whom I learned about it was in prison at the time...

[ 08. April 2016, 21:27: Message edited by: Eutychus ]
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Eutychus:
In practice, I think domestic tax authorities becoming aware of offshore earnings usually depends on you declaring them. If they are suspicious, they can check with a cooperative jurisdiction, but they have to have probable cause first

Basically, tax authorities require people to be honest. And, by extension, people who fail to declare offshore income (or, for that matter UK income) are essentially being dishonest. And, if there is a legal requirement to declare all income accurately then not only is failing to do so dishonest, it's illegal. Which would make the statement that "it's legal" nonsense.

So, all the government needs to do is pass legislation that requires, by law, all UK residents with more than just PAYE income to file a tax return declaring all income as accurately and truthfully as possible. Failure to do so would be a criminal offense, it may be an offense that is difficult to detect, but it would make non-declaration of income a criminal offense.
 
Posted by Sioni Sais (# 5713) on :
 
From the government's own pages about income tax on foreign income.

Somewhere the relevant tax form from David and or Samantha Cameron ought to exist.
 
Posted by ExclamationMark (# 14715) on :
 
quote:
Originally posted by Sioni Sais:
Somewhere the relevant tax form from David and or Samantha Cameron ought to exist.

The form wont exist but if you're lucky there might - just - be a record on computer file perhaps even a scan.

It's a very interesting exercise to ask HMRC for their copy of your file. It pretty much sends them into a panic: they will first try to argue that it is prohibited information (it isn't). Then they will fob you off with a computer print out - but there's also a paper file (Data Access covers all records). Then, they won't do it within the timescale set by the Data Access Regulations and you'll probably have to take up a case with the Information Commissioner - which you will always win. A pyrrhic victory as the IC will class it as a "technical breach" and do nothing - still its enough to annoy them and cost them more.

Finally you'll get your file which contains all sorts of things including HMRC staff's written opinion of you "Mr Mark is a very difficult and querulous man who questions everything and feels the need to know the last detail" (Too right sunshine, you want that too - it works both ways). Finally you'll have to battle to get the errors put right - data about address, workplace but also supposed records of phone conversations that never happened and which provably didn't (out of the country at the time).

You might be luckier than I in this process but at least you'll know what they have on you. Far far more than you think or ever dreamt possible. Always copy any correspondence to your MP.

My own policy is to keep records of absolutely everything as far as HMRC are concerned (even keep copies of cheques given for birthdays and Christmas). If the HMRC turn you over as they did me (out of revenge - the note was on file), they will tax you on all credits to any account. They are pretty shot to bits when you produce the hard copy evidence to disprove them. I bet Sammy and Cammy wont get that .... but perhaps a few movers and shakers ought to, to see what we ordinary people can go through over a few quid no multi millions.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by Eutychus:
I'm not sure that's true. It's often claimed by Channel Islands jurisdictions that they fulfil more internationally agreed anti-money-laundering criteria than the UK.

France, however, has in the wake of this just put Panama back on its blacklist of non-cooperative tax jurisdictions: the Channel Islands are not on that list.

AIUI you can use tax havens for three separate things: firstly to hide income received from criminal enterprises, secondly to hide your income so that you're not taxed on it, and thirdly as a place for companies to funnel legitimately gained and openly acknowledged income so that they pay Luxembourgeois rather than British rates of corporation tax on it.

AIUI the Channel Islands let you do the third of these but not the other two.
 
Posted by Curiosity killed ... (# 11770) on :
 
Those Panama papers, according to the FT also confirm that buying property in London is a good way of achieving the first of your list Ricardus.

And the Government is trying to sell off the Land Registry at the moment.

[ 09. April 2016, 08:45: Message edited by: Curiosity killed ... ]
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by Ricardus:
AIUI the Channel Islands let you do the third of these but not the other two.

Yes, that's my understanding too, although they usually phrase it as "providing a major source of liquidity for international financial markets".
 
Posted by rolyn (# 16840) on :
 
quote:
Originally posted by Sioni Sais:

Somewhere the relevant tax form from David and or Samantha Cameron ought to exist.

Or more precisely it ought to have existed. But whether or not, like the Conquerer's log , it still exists is a rather different prospect.
 
Posted by Penny S (# 14768) on :
 
There was a sketch on the Now Show today on the idea that people should only benefit from services they have contributed to. The Fire Brigade turns up at some offices, ask which floor, spot that the firm is registered in the Caymans, and refer the owner to the phone number for that place's fire service. When informed that the floor above is catching, refer them to the Luxembourg service, commenting that at least it's closer. When informed that the top floor is catching, they get the hoses out, since that one is registered here, and say that the floors below will benefit from - you may be able to see this one coming as the punch line - the trickle down effect.
 
Posted by Doublethink. (# 1984) on :
 
Boris Johnson has taken this opportunity to demonstrate his keen grasp of the public mood: http://www.independent.co.uk/news/uk/politics/boris-johnson-says-super-rich-are-put-upon-minority-like-homeless-people-and-ir ish-travellers-8946661.html

Does anyone still believe he'd be an effective prime minister ?
 
Posted by Cod (# 2643) on :
 
I can't say I'm particularly excited by Cameron's promise to publish his tax returns. I have never had to fill out a UK tax return, but I imagine that if I had been the recipient of a tax-exempt distribution from an offshore trust that distribution would not have to be itemised in my return.

So it's not what's in them but what's not in them that would be of most interest to me.

Unfortunately, the income tax system is broken. It cannot be right that individuals can escape their responsiblities so easily. More seriously, it cannot be right for transnational companies ot be able to undercut local competition by resorting to tax avoidance mechanisms. Yet this is routinely accepted as a fact of life across the Western world.

Because of the rather ineffable nature of what income is, collecting tax on the basis of income requires a gigantic legislative code constantly in need of amendment even just to stop things from getting any worse. I feel that most countries face a choice - either abandon the principle of progressive taxation and rely on flat-rate consumption taxes like VAT or bring in a wealth tax - something I doubt I will see in my lifetime.

[ 10. April 2016, 03:48: Message edited by: Cod ]
 
Posted by Baptist Trainfan (# 15128) on :
 
quote:
Originally posted by Cod:
I have never had to fill out a UK tax return, but I imagine that if I had been the recipient of a tax-exempt distribution from an offshore trust that distribution would not have to be itemised in my return.

So it's not what's in them but what's not in them that would be of most interest to me.

Indeed. I also have a question: if one is super-rich, why does one feel the need to avoid/evade tax? Surely one has enough anyway to "get by"? And, in any case, doesn't it cost them a lot in payments to all those fancy financiers and accountants?

Having said that, I do think that there is a genuine difficulty in collecting taxes (or, rather, in working out where they should be paid) in today's globalised world. The problem is that IMO international companies and individuals are taking advantage of this.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by Baptist Trainfan:
if one is super-rich, why does one feel the need to avoid/evade tax? Surely one has enough anyway to "get by"?

I think this approach runs the danger of hypocrisy. The BBC papers page reports this comment:
quote:
"There is something very British" writes Anne McElvoy in the Observer, in papers "doing over Cameron because of offshore funds and yet also having avidly read 'money' sections"
'Tax planning' is something everybody does as soon as they have any money at all that can be taxed. Even if that is no more than shopping in a duty free zone or choosing a savings scheme with tax-free interest in preference to one that's taxed.

I don't think there's anything ethically wrong with this. The only alternative is to deliberately set out to pay as much tax as possible!

The real issue here is the disconnect between the amount of disposable income Cameron has, the amounts the majority have to get by on, and his perceived disregard for the latter.
 
Posted by Chamois (# 16204) on :
 
Originally posted by Baptist Trainfan:

quote:
I also have a question: if one is super-rich, why does one feel the need to avoid/evade tax? Surely one has enough anyway to "get by"? And, in any case, doesn't it cost them a lot in payments to all those fancy financiers and accountants?
In our western capitalist culture nobody ever has enough, by definition.. The economists measure the "health" of our national economies in terms of growth. Growth requires inflation. Inflation requires an ever increasing income to maintain the same standard of living. The days are gone when people could live comfortably and face the future with confidence on a fixed income. That's what they tell us. So we all need more, More, MORE. And if we don't need it, our children do. And if our friends, colleagues, neighbours and media celebrities are getting more, More, MORE - well, we've got to keep up, haven't we?

In the face of this disease a person has to be seriously counter-cultural to accept all the risks that are trumpeted daily in the media and trust that they have enough.

In the case of the super-rich, making more money is often the whole purpose and aim of their lives. So they will be in the forefront of the more, More, MORE madness. Their financiers and accountants are no doubt a tax-deductible expense.
 
Posted by Baptist Trainfan (# 15128) on :
 
quote:
Originally posted by Eutychus:
The real issue here is the disconnect between the amount of disposable income Cameron has, the amounts the majority have to get by on, and his perceived disregard for the latter.

No, the real issue is surely the fact that Cameron wriggled and squirmed when asked. Everyone knows he's a rich man and expects him to have investments ... so why risk credulity, especially at such a crucial time in his political career?
 
Posted by Baptist Trainfan (# 15128) on :
 
quote:
I think this approach runs the danger of hypocrisy. The BBC papers page reports this comment:
quote:
"There is something very British" writes Anne McElvoy in the Observer, in papers "doing over Cameron because of offshore funds and yet also having avidly read 'money' sections"
'Tax planning' is something everybody does as soon as they have any money at all that can be taxed. Even if that is no more than shopping in a duty free zone or choosing a savings scheme with tax-free interest in preference to one that's taxed.

There's truth in that (says I, just having made sure that I've made use of this tax year's ISA allowance).

[ 10. April 2016, 08:12: Message edited by: Baptist Trainfan ]
 
Posted by mr cheesy (# 3330) on :
 
It seems to me that there are two intertwined issues here which are being confused.

The first is a moral issue. The Tories like to suggest that it is perfectly moral for the individual to find ways to avoid paying tax.

The second is practical. The tax code system is extremely complicated and bizarrely subjective. And the British (and presumably other) governments have set in place systems which nudge use particular public inclinations to lead to "desirable" outcomes.

Hence we have the whole tax-free savings system - which sounds great but in an environment of low interest rates almost never offer competitive rates. Also the recent lifetime ISA announcement, which - arguably - are being offered as long-term savings to the middle-classes in order to reduce/remove the provision of state pensions in 30 or 40 years time.

These kinds of state nudges (including the gift aid system in the UK) are pretty small beer.

On the sliding scale of the morality of paying tax, the next step seems to me to be the widespread underpayment of National Insurance by individuals who have incorporated their self-employed status, the avoidance of inheritance taxation, the general attitude that assets should be hidden - or conveniently lost - when it comes to paying for old-age care and other such wheezes.

Many of these things seem to me to be morally objectionable. But in another sense they're at least done "in public", under the full gaze of British law, by arrangement to the laws of the land and by design of the law-makers for other ends.

Then we have the whole phenomena of the wealthiest using hidden, black, impenetrable overseas jurisdictions to avoid paying tax in this country. That seems to me to be morally bankrupt on a whole other level. That just smacks of someone who wants to take-take-take from the public purse in this country while contributing the least possible. Because they're very wealthy they have access to accounts, systems and expertise that the poorest do not have access to (and probably would make very little difference to their own tax bill even if they did, due to the economies of scale).

That, ultimately, is the problem here. Egged on by the Tory mantra, we have a whole section of society who thinks that they're just too important to pay the tax that the "little people" have to pay, that they're too important to have to declare their earnings, that they're too moral to have others ask questions about how and who is managing their wealth.

And the greatest tragedy is that these are the very same people who are lecturing everyone else about cuts in public services, about the best way to arrange education and healthcare systems that they don't even use and who like to divide everyone else into the deserving hard-working, tax-paying class and the undeserving, shirking, benefit-takers. The reality is that these hypocrites would rather shine the light on those they deem to be shirkers - and in the process spend more on investigation and collection of fairly minor amounts of benefit fraud - than do anything about the vast amounts of money that are dodged by the wealthiest individuals and corporations in this country.
 
Posted by Barnabas62 (# 9110) on :
 
Maybe someone has said this earlier and I missed it, but there is both a legal and a moral difference between tax evasion (evading tax by illegal means) and tax avoidance (avoiding tax by legal means).

Pension fund managers routinely use legal tax avoidance measures to safeguard retirement incomes for their customers. You might well argue that they would be lousy pension fund managers if they didn't.

The devil is in the detail of the now very complex tax regulations we have in the UK. When does legitimate tax avoidance shade into illegitimate tax evasion? My brother used to work for the Revenue. He says the answer to that question is a moving target, depending very often on legal arguments over the real meaning of the tax legislation and its application in specific cases. Case law and precedent can change things, as can modification to existing regulations.

What we now have is a moral and legal morass, now complicated further by the political "does that smell right?" considerations. The politics of arrogance meets the politics of envy around the heads of posh boys.

[ 12. April 2016, 12:59: Message edited by: Barnabas62 ]
 
Posted by Baptist Trainfan (# 15128) on :
 
quote:
Originally posted by mr cheesy:
It seems to me that there are two intertwined issues here which are being confused.

...

And the greatest tragedy is that these are the very same people who are lecturing everyone else about cuts in public services, about the best way to arrange education and healthcare systems that they don't even use and who like to divide everyone else into the deserving hard-working, tax-paying class and the undeserving, shirking, benefit-takers. The reality is that these hypocrites would rather shine the light on those they deem to be shirkers - and in the process spend more on investigation and collection of fairly minor amounts of benefit fraud - than do anything about the vast amounts of money that are dodged by the wealthiest individuals and corporations in this country.

[Overused] [Overused] (Quote shortened only to save space).

[ 10. April 2016, 10:15: Message edited by: Baptist Trainfan ]
 
Posted by Enoch (# 14322) on :
 
quote:
Originally posted by Eutychus:
'Tax planning' is something everybody does as soon as they have any money at all that can be taxed. Even if that is no more than shopping in a duty free zone or choosing a savings scheme with tax-free interest in preference to one that's taxed.

I don't think there's anything ethically wrong with this. The only alternative is to deliberately set out to pay as much tax as possible! ...

Fair comment. That gets a [Overused]

And the state could only plead that you should pay as much tax as possible if in return it set out to provide you with as many benefits as possible. And I don't see that ever happening.
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Enoch:
Fair comment. That gets a [Overused]

And the state could only plead that you should pay as much tax as possible if in return it set out to provide you with as many benefits as possible. And I don't see that ever happening.

That's utterly the wrong way to think - and ultimately is the cause of the current problems. If everyone thought that their (individual) benefits should meet (or even exceed) the net contributions they (individually) contribute, then that obviously wouldn't work.

This thing we live in is called a society. It isn't just about you and me as individuals funding the little pieces we think we might benefit from now or in the future.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by Cod:

Because of the rather ineffable nature of what income is, collecting tax on the basis of income requires a gigantic legislative code constantly in need of amendment even just to stop things from getting any worse. I feel that most countries face a choice - either abandon the principle of progressive taxation and rely on flat-rate consumption taxes like VAT or bring in a wealth tax - something I doubt I will see in my lifetime.

I think there is also an argument for abolishing corporation tax altogether and raise personal tax on investment income to compensate. The reasons being:

a.) Insofar as a corporation is fundamentally a 'front' for a group of investors, the same profit is being taxed twice at the point at which it benefits someone;

b.) Investment income on a share reflects the movement in market value of a share, which assuming market efficiency should be a better indicator of the company's real performance than profit, which can be manipulated;

c.) It's relatively easy for a company to obfuscate profit, but the amount of money anyone makes on an investment should be (at least by comparison) a relatively objective fact.
 
Posted by Anselmina (# 3032) on :
 
When I think of my mother having to pay tax on the pension she receives as my father's widow, I find it sickening to think of how some rich people can so easily avoid tax contributions. It seems that out of the little enough she receives, she's still ensuring - in her late seventies - there's an NHS, benefits etc for the country, while fat cats rake it in, store it away, and give back as little as possible for those truly in need.
 
Posted by Alan Cresswell (# 31) on :
 
Taxation is both a revenue source for governments and a means of enacting government policy. So, if you want to encourage charitable giving, governments make that favourable through some form of tax relief (either the UK Gift Aid type scheme, or through tax rebates to the donor). Encourage saving, introduce tax free savings accounts (which only work when interest rates are high enough to make tax a factor in the returns on a savings account). Discourage smoking, increase tax on tobacco. Of course, one can question whether a particular policy is desirable and whether using the tax system is the most effective way of achieving that policy.

For a long time, turning a blind eye to income in low tax nations has also served government policy - it has kept the rich content, and donating to political parties.
 
Posted by rolyn (# 16840) on :
 
I think this is a storm in a teacup where Mr C is concerned and also agree about a certain degree of hypocrisy from many a shrewd manager.
Wherever there is a pot of money tendrils will find their way in to it, just as wherever there's an effective hidding hole then money will find it's way in to that as well. Didn't it used to be Swiss bank accounts?
 
Posted by quetzalcoatl (# 16740) on :
 
I think normally it would be a storm in a tea-cup. After all, it's not a shock that the rich find ways to keep their dosh unravaged by the moths and termites, known as the tax-man. Well, so do local tradesmen actually, cash only guv.

But it is intersecting in an interesting way with the EU referendum. Cameron is presumably the leading man in the pro-EU-pantomime, and any tarnishing of his image may impinge.

I suppose you could argue that salivating anti-EU nutters are not going to vote even more anti-EU. Will it affect the don't knows? Don't know.
 
Posted by Eutychus (# 3081) on :
 
quote:
Originally posted by quetzalcoatl:
But it is intersecting in an interesting way with the EU referendum. Cameron is presumably the leading man in the pro-EU-pantomime, and any tarnishing of his image may impinge

That was certainly one of my fears, but then I discovered that Leave campaigner Boris Johnson has suggested that the super-rich are a put-upon minority, which kind of evens things out, perhaps...
 
Posted by rolyn (# 16840) on :
 
quote:
Originally posted by quetzalcoatl:

But it is intersecting in an interesting way with the EU referendum. Cameron is presumably the leading man in the pro-EU-pantomime, and any tarnishing of his image may impinge.

The dirt-diggers are no doubt exceedingly pleased with themselves over this juicy Find . It to be said though that until Brexit start to look more like a Movement and less like a breakfast cereal brand name then I don't think Cameron has much to worry about on that score.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Eutychus:
That was certainly one of my fears, but then I discovered that Leave campaigner Boris Johnson has suggested that the super-rich are a put-upon minority, which kind of evens things out, perhaps...

But then that only really matters if his views get the same level of exposure as the current furore over Cameron. Which - unless Johnson's name is found amongst the papers - is rather unlikely at this point.
 
Posted by Ricardus (# 8757) on :
 
quote:
Originally posted by Eutychus:
'Tax planning' is something everybody does as soon as they have any money at all that can be taxed. Even if that is no more than shopping in a duty free zone or choosing a savings scheme with tax-free interest in preference to one that's taxed.

I don't think there's anything ethically wrong with this. The only alternative is to deliberately set out to pay as much tax as possible!

I think the question is whether one is obeying the letter or the spirit of the rules. For most people it may be debatable whether obeying the letter rather than the spirit is really a sin, but if one is the Prime Minister and therefore in charge of setting those rules, one has a greater responsibility to obey them in spirit as well.
 
Posted by Brenda Clough (# 18061) on :
 
And woe unto the tycoon who is switching from one mode to another: from energetic tax avoidance to the purity and rectitude of the candidate for office (please, no laughter). Behold the dazzling charitable impulses of Donald Trump.
 
Posted by Penny S (# 14768) on :
 
Could we reverse the revolutionary cry and claim that there should be no representation without taxation, and no-one involved in extreme avoidance should be able to contribute to political parties or be considered over the opinions of the little people who do pay their taxes? As if...

[ 11. April 2016, 15:03: Message edited by: Penny S ]
 
Posted by quetzalcoatl (# 16740) on :
 
There's also a wider aspect of tax avoidance/evasion, not just the technicalities of various financial instruments.

I mean that a rich elite are exiting from our society.

Quoting the tax expert, Nicholas Shaxson, 'you take your money elsewhere, to another country, to escape the rules and laws of the country where you operate', (quoted by Aditya Chakrabortty, see below*).

Of course, you can argue that we can all participate in this avoidance, for example, we can take out ISAs, or take out investments, which take some money abroad, to reduce tax.

The other interesting thing is that the super-rich, simultaneously take their money away, and pursue political power in the countries they have left (financially). I don't think there is a word for this.

*
http://tinyurl.com/hgkvx54
 
Posted by Brenda Clough (# 18061) on :
 
Big corporations are doing this in the US -- buying a smaller foreign firm and then essentially moving themselves over to Ireland or wherever, avoiding US taxes. Pfizer was the last to try this, and Obama pulled the plug on the tax break. They immediately canceled the merger, demonstrating that this was why they were doing it in the first place.
I would be good with stripping all the CEOs and execs of those firms of their citizenship.
 
Posted by quetzalcoatl (# 16740) on :
 
I thought that Penny S had got a brilliant slogan, no representation without taxation. Well, this applies to politicians, and I suppose not to companies.

Of course, the big problem is secrecy. If politician Fatso Gatso has stashed $4 billion away in the Splishsplash Islands, where tax is nominal, who would ever know, except Mrs Fatso Gatso? And she quite likes her collection of shoes and diamonds.

Well, one thing about that is that the UK seems to administer a ton of these places, so make them give up their financial secrets. But who is going to do that?
 
Posted by quetzalcoatl (# 16740) on :
 
The other odd thing about this is the way in which political life throws up these revelations. I often get depressed about the corruption of the rich, and they way they corrupt political life, yet on the other hand, the Panama papers have opened up a debate.

No doubt it will be closed down, and we will all be advised to look at the latest TV reality show, and not bother about such exotica. Still, it is hard to put the toothpaste in the tube, and the shit in the alimentary canal.

Gramsci: 'The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear'.
 
Posted by alienfromzog (# 5327) on :
 
quote:
Originally posted by quetzalcoatl:
Of course, you can argue that we can all participate in this avoidance, for example, we can take out ISAs, or take out investments, which take some money abroad, to reduce tax.

No.

An ISA is a tax-exempt savings device designed specifically to allow individuals to save money and not pay tax on the interest.

Tax-avoidance vehicles in tax-havens are quasi-legal ways of avoiding tax against the design of the government.

It really is quantitatively different. Now, there is a point where the division blurs, and that is where we should have the debate but they really are not the same thing.

AFZ
 
Posted by Penny S (# 14768) on :
 
I've got round to reading today's Panama stuff. The man now in charge of HMRC was, in 1999, in a law firm whose clients included Ian Cameron's fund in Panama. But, more than that, in 1999, he put out a press release asking the government to withdraw proposals to tackle tax avoidance, giving wide-reaching powers to the Inland Revenue. He described taxation as 'legalised extortion'.

Guardian report

This is the leader of an entire gang of poachers got into the gamekeeping business, and I can't get my head about it.
 
Posted by Enoch (# 14322) on :
 
quote:
Originally posted by Brenda Clough:
Big corporations are doing this in the US -- buying a smaller foreign firm and then essentially moving themselves over to Ireland or wherever, avoiding US taxes. Pfizer was the last to try this, and Obama pulled the plug on the tax break. They immediately canceled the merger, demonstrating that this was why they were doing it in the first place.
I would be good with stripping all the CEOs and execs of those firms of their citizenship.

Brenda, despite what some of our politicians also allege, Ireland is not a tax haven. Nor is it off shore.

There are also some very good business reasons for basing parts of a multinational there. It is in the eurozone. It adjoins the UK which is not. It speaks English. It has a good infrastructure. Its in a convenient timezone. It has an educated and economically sophisticated population. It's also weak on natural resources apart from agriculture. So it is keen to encourage the financial and marketing sector to come there, and gives them a relatively favourable tax treatment.

That is known as tax competition. Most people think that's OK but some people seem to regard it as a sort of intergovernmental cheating. But that's a matter of opinion. It doesn't make Ireland a tax haven or off shore.

Some of our politicians moan about this, but there are good reasons why, if you were the Irish government, you might do the same. If I were them, I would.

Nor, if Ireland offers these encouragements, does that make it wrong for companies to accept them, any more than it's wrong for citizens to take advantage of tax favours governments give them to encourage them to provide pensions for themselves, invest in solar panels or whatever.

[ 11. April 2016, 22:32: Message edited by: Enoch ]
 
Posted by Doublethink. (# 1984) on :
 
The problem with tax competition is that what should happen - you look like a good place to do business, I 'll move my operation here - doesn't.

Instead what happens is - you look like a good place to do business, I'll move my address here. Meanwhile taking advantage of the social infrastructure over here to actually run my business, social infrastructure financed by the tax regime over here.

This is why it appears unfair. The business is not paying to support the infrastructure it relies upon, at the same rate as others / at the rate that that infrastructure is being priced.

As if a couple goes shopping, one goes to sit in the asda coffee shop and read the paper and the other goes round Waitrose selecting goods. Then Waitrose dude texts asda dude the purchase list, who then pays asda whatever asda charges for those goods on the grounds they were shopping as a couple and asda has better prices.
 
Posted by Doublethink. (# 1984) on :
 
(How can Ireland not be off-shore ? Its an island, and a foreign territory ?)
 
Posted by mr cheesy (# 3330) on :
 
quote:
Originally posted by Doublethink.:
The problem with tax competition is that what should happen - you look like a good place to do business, I 'll move my operation here - doesn't.

Instead what happens is - you look like a good place to do business, I'll move my address here. Meanwhile taking advantage of the social infrastructure over here to actually run my business, social infrastructure financed by the tax regime over here.

This is why it appears unfair. The business is not paying to support the infrastructure it relies upon, at the same rate as others / at the rate that that infrastructure is being priced.

As if a couple goes shopping, one goes to sit in the asda coffee shop and read the paper and the other goes round Waitrose selecting goods. Then Waitrose dude texts asda dude the purchase list, who then pays asda whatever asda charges for those goods on the grounds they were shopping as a couple and asda has better prices.

I think this is where I part company with this argument. Unless all countries in the EU (for the sake of this discussion) have exactly the same tax system, I can't see how realistically it would be possible to prevent countries from attempting to attract businesses by changing their corporation tax regimes.

The problem comes when the corporations use their headquarters address in a low-tax EU jurisdiction when conducting most/all of their business in higher tax jurisdictions via clever accounting tricks. So they try to tell us that they sell large amounts of coffee from the shops in the UK but, oh no there's no corporation tax to pay because the British arm had to pay £squillions to a holding company operating out of a PO Box in Luxembourg.

Or the broadly similar idea that one can be a non-dom (or even more bizarrely an inherited non-dom) whilst spending the vast majority of a life in the UK.

To me that is not a problem with competition with tax codes between EU countries but to do with wealthy individuals and corporations trying to avoid paying tax in the jurisdictions that they're actually trading or living in.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Enoch:

There are also some very good business reasons for basing parts of a multinational there. It is in the eurozone. It adjoins the UK which is not. It speaks English. It has a good infrastructure. Its in a convenient timezone. It has an educated and economically sophisticated population.

Yes, there are some good reasons for setting up business in Ireland. Equally though, as mr_cheesy points out below, a number of companies are using Ireland as part of a general scheme of tax arbitrage and avoidance, via arrangements such as the Double Irish:

https://en.wikipedia.org/wiki/Double_Irish_arrangement

(Virtually all those companies named have a larger base in some other European country, in the case of Apple the discrepancy is probably the largest).
 
Posted by anoesis (# 14189) on :
 
quote:
Originally posted by Eutychus:
'Tax planning' is something everybody does as soon as they have any money at all that can be taxed. Even if that is no more than shopping in a duty free zone or choosing a savings scheme with tax-free interest in preference to one that's taxed.

I don't think there's anything ethically wrong with this. The only alternative is to deliberately set out to pay as much tax as possible!

Wot? I had not, prior to reading your post, even heard of the phrase 'tax planning'. But I can assure you that at no point have I made a deliberate choice to pay as much tax as possible. Not because of piety or because I'm astonishingly squeaky-clean either. Just because, well, tax. It exists. So what? So do flies. I don't invite flies into my house and I suppose ideally I'd prefer they weren't there, but firstly, if they suddenly all disappeared I might be worried there was something a bit wrong with the ecosystem, and secondly, I'm damned if I'm going to spend half my waking hours twitching and walking around with a can of spray-poison because something might leave a dirty spot on my ceiling. It just.doesn't.matter.that.much. Which is why I have only ever been able to understand tax avoidance by the mega-rich as an ideological fight. After all, it's not as though they will have to go without anything if they pay their share.
 
Posted by Alan Cresswell (# 31) on :
 
Likewise, I haven't actively "tax planned". I have ISAs, but the tax benefits were secondary to my choices. The cash ISA currently earns next to no interest anyway, but when it was paying interest the product I have paid more than equivalent taxable products while retaining some ethical considerations. The investment ISAs were simply the easiest way to invest for the longer term, the introduction of ISAs had simply removed equivalent taxable products from the market.
 
Posted by Doublethink. (# 1984) on :
 
I think we are agreeing with each other mr cheesy ?

[ 12. April 2016, 11:44: Message edited by: Doublethink. ]
 
Posted by Dave W. (# 8765) on :
 
quote:
Originally posted by Alan Cresswell:
Likewise, I haven't actively "tax planned". I have ISAs, but the tax benefits were secondary to my choices. The cash ISA currently earns next to no interest anyway, but when it was paying interest the product I have paid more than equivalent taxable products while retaining some ethical considerations. The investment ISAs were simply the easiest way to invest for the longer term, the introduction of ISAs had simply removed equivalent taxable products from the market.

I'm surprised to hear that. Do you mind saying what kind of product you're referring to?
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by Dave W.:
I'm surprised to hear that. Do you mind saying what kind of product you're referring to?

A fairly basic investment fund - a mix of shares, bonds and a bit of cash. In a relatively safe mix. Nothing very fancy. Suitable for relatively small investments of a few thousand pounds, with the option of investing a small amount regularly rather than just a lump sum. And, not tied into a fixed term or part of a pension scheme. I'm sure such funds still exist that aren't ISA's, but with ISAs dominating they seem to have been pushed out of the market - certainly when we took out our investment ISAs a few years back our financial advisor only produced different ISA options, and no other option. There are fixed term funds (initial lump sum, maturing after x number of years), high return funds (with the caveat that they may not perform as well as hoped - ie: they are higher risk), funds if you have more than the ISA limit to invest.
 
Posted by Sipech (# 16870) on :
 
ISAs have effectively been made redundant, now that there's a £1,000 personal savings allowance (£500 for higher rate tax payers). With interest rates as artificially suppressed as they are, there's naff all interest to be earned gross anyway, so unless you have a massive lump of cash sitting around, you're unlikely to earn more than £1,000 of interest in a given year, making the vast majority of savings accounts little different from an ISA as far as tax is concerned.
 
Posted by Alan Cresswell (# 31) on :
 
Cash ISAs are effectively redundant - there are plenty of other products with higher interest rates and, as you say, effectively no tax for the majority of people.

Investment ISAs however are still the best option for small investors. And, the new ISAs for first time buyers are exceptionally good value - not for the tax benefits or interest, but the extra the government will add.
 
Posted by Marvin the Martian (# 4360) on :
 
quote:
Originally posted by Enoch:
Ireland ... is keen to encourage the financial and marketing sector to come there, and gives them a relatively favourable tax treatment.

That is known as tax competition. Most people think that's OK but some people seem to regard it as a sort of intergovernmental cheating. But that's a matter of opinion. It doesn't make Ireland a tax haven or off shore.

I'm not sure I see the difference between Ireland offering low taxes in order to encourage corporations to go there and Panama offering low taxes in order to encourage corporations to go there.
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by Marvin the Martian:
quote:
Originally posted by Enoch:
Ireland ... is keen to encourage the financial and marketing sector to come there, and gives them a relatively favourable tax treatment.

That is known as tax competition. Most people think that's OK but some people seem to regard it as a sort of intergovernmental cheating. But that's a matter of opinion. It doesn't make Ireland a tax haven or off shore.

I'm not sure I see the difference between Ireland offering low taxes in order to encourage corporations to go there and Panama offering low taxes in order to encourage corporations to go there.
Regulation and transparency could be two differences between a business friendly economy and one that is open to abuse.
 
Posted by Dave W. (# 8765) on :
 
Thanks for the answer, Alan. In my experience with the US counterpart, the Individual Retirement Account (IRA), the special tax treatment is a characteristic of the account, not the asset held within the account - I don't think there's anything you can buy within an IRA that you can't buy in a regular, non-tax advantaged brokerage account. I've owned shares in the same mutual fund in both kinds of account, and the only difference was that I didn't have to pay tax on dividends from the shares in the IRA.
 
Posted by Alan Cresswell (# 31) on :
 
For an ISA the non-taxable characteristic is with the account. Yes, I could probably find out the details of the shares and bonds that the fund has and buy equivalent components myself, receiving the dividends directly (and, paying tax on it). But, the fund has shares in multiple companies (spreading the risk) and bonds. It would be a lot of work to do that myself, much easier to simply invest in a fund someone else manages. Before the introduction of ISAs with relatively large investment limits (previously there had been ISAs, and PEPs before that, with tax advantages but limited to investments of only a few thousand pounds per year) there would have been similar funds for those who wanted to invest slightly more than the ISA limit. But, with the raising of the ISA limit they would have been squeezed out of the market - why invest in a fund which is taxed when there is an equivalent that is not taxed?

There are still funds for people who have more than the ISA limit to invest, but they would be out of the range of the cash I'm ever likely to have to invest. Those would include the "tax free" offshore funds.
 
Posted by no prophet's flag is set so... (# 15560) on :
 
ISA, IRA. Did a search on what these things are. Is ISA just for any form of savings or for retirement? "Individual savings/retirement account" seems to be what the abbreviations mean. Is this correct?

What is a PEP?

RRSP and RRIF for retirement in Canada. Registered Retirement Saving Plan, and Registered Retirement Income Fund . RRIFs are created from RRSPs. We also have TFAs - Tax Free Savings Accounts.

The Cdn limits on annual RRSP are something like $24,900 if you make more than about $120. For TFAs, which are not tied to income, the limit is $5,500. You can put any kind of investment in these. Cash, stocks, fund shares. The interest in TFAs is untaxable when withdrawn. RRSP/RRIF is taxable at the rate you have when it is withdrawn. Those of us without pensions rely on these for retirement which creates a fair bit of anxiety for many.

The number of people in Canada with fully-funded pensions have declined since the 1980s. Pension contributions from both employer and employee are put into an investment account. If the market or interest rates are good or bad, this will determine the pension income. Fully-funded pensions are those that allow retirement after some calculation between age and years of service and some indexed percentage of best years of pay.

My conclusion about pensions is that people are more anxious about retiring these days than the generations before and will have to work longer whether they want to or not. My father is collecting his 30th year of fully funded pension. Which exceeds the contributions he made.

[ 13. April 2016, 01:32: Message edited by: no prophet's flag is set so... ]
 
Posted by Alan Cresswell (# 31) on :
 
quote:
Originally posted by no prophet's flag is set so...:
ISA, IRA. Did a search on what these things are. Is ISA just for any form of savings or for retirement? "Individual savings/retirement account" seems to be what the abbreviations mean. Is this correct?

What is a PEP?

ISAs are for any form of saving, and not linked to retirement although investment funds are (by their nature) long term and often used to provide an additional nest egg for retirement. Funds can be removed at any time without loss of tax benefits, whereas for a retirement fund that would result in a loss of the tax benefit if cashed in prior to retirement.

PEPs (Personal Equity Plans) were precursors of ISAs - they were investment funds, the cash equivalent was a TESSA (Tax Exempt Special Savings Account). Both accounts were replaced by ISAs, initially with seperate limits for cash and investment (£3,000 cash and £4,000 investment per annum). In 2014 the limit was raised to £15,000, which could be split anyway you wanted between cash and investment.
 
Posted by Dave W. (# 8765) on :
 
Alan, I wonder if you and I perhaps don't mean quite the same thing by "account" and "fund". In the usage I'm familiar with, an account is like a bucket which can contain various assets - cash, bonds, individual stocks, mutual funds, or a mixture of any of these. Each mutual fund, in turn, may purchase many different assets.
quote:
Originally posted by Alan Cresswell:
For an ISA the non-taxable characteristic is with the account.

This sounds like a US-style IRA. But with this:
quote:
Yes, I could probably find out the details of the shares and bonds that the fund has and buy equivalent components myself, receiving the dividends directly (and, paying tax on it). But, the fund has shares in multiple companies (spreading the risk) and bonds. It would be a lot of work to do that myself, much easier to simply invest in a fund someone else manages.
ISTM you're not talking about an account any more, but about an asset within the account. The features you describe (diversity, professional management) are common to mutual funds (e.g.) - but shares of such mutual funds can be purchased within either a tax-advantaged account (like an IRA) or a regular brokerage account. In neither case would you have to buy the individual components yourself.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Dave W.:

ISTM you're not talking about an account any more, but about an asset within the account. The features you describe (diversity, professional management) are common to mutual funds (e.g.) - but shares of such mutual funds can be purchased within either a tax-advantaged account (like an IRA) or a regular brokerage account.

Yes, this is mostly the case with the ISAs Alan is talking about. The UK equivalent of the mutual funds with be Unit Trusts(UTs) and OIECs(Open Ended Investment Companies). They can be held both inside and outside an ISA.

Historically the UK market for such funds was not as well developed as that in the US, and prior to the introduction of ISAs most wrappers charged quite high fees (we didn't really have the kinds of low cost index funds that Vanguard popularised in the US). One of the measures that the government put in place when ISAs were introduced were guidelines on the level at which charges could be levied. As a result, to this day there is usually a difference on the charges levied on buying a UT inside an ISA and buying the same UT outside the ISA.
 
Posted by TonyK (# 35) on :
 
So, Mr Corbyn (see, I'm being polite again! For the moment anyway!) has submitted for public scrutiny a copy of his (alleged) tax return to HMRC for 2014/5.

He boasted about how much tax he paid, and said that he had no income other than what he earned.

However, this self-styled advocate of responsible tax handling, this persecutor of those finding legal ways to reduce their tax levels, has at least one serious question to answer (which AFAICS he has not done yet.)

There was not a mention on his purported tax return of his state pension (worth a basic £6K approx. per year - more if he has accumulated any supplementary state pension) nor of any private pensions - he has at least one.

If this was a copy of his actual tax return, then I wonder when HMRC will take action and what penalties he will face?

If it is not a copy of his actual tax return - then why is he claiming it is?

A Labour party spokesman is reported as saying that Mr Corbyn's pensions were 'taxed at source, so there were no problems'. False on two accounts - state pension is always paid gross, and in any case all sources of income, whether taxed or note must be declared on the tax form.

Like I said earlier - I longer trust any of them...
 
Posted by Brenda Clough (# 18061) on :
 
And, on this side of the pond, Donald Trump won't release his tax returns.
 
Posted by Penny S (# 14768) on :
 
P'raps what we need from Mr Corbyn is his Tax Code notification, which will detail the way his pension has been factored in by HMRC. It is on mine, anyway.
 
Posted by Doc Tor (# 9748) on :
 
quote:
Originally posted by TonyK:
A Labour party spokesman is reported as saying that Mr Corbyn's pensions were 'taxed at source, so there were no problems'. False on two accounts - state pension is always paid gross, and in any case all sources of income, whether taxed or note must be declared on the tax form.

Having dealt with this for my mother last year, you're wrong.

While the state pension is paid gross, the tax code applied by the HoC will take this into account, by taxing the total (pension + earned income) via PAYE.

So the Labour spokesbeing was absolutely correct. He's taxed at source.
 
Posted by TonyK (# 35) on :
 
Doc Tor - I agree that the PAYE code on one of his other income sources will be adjusted accordingly to pay the tax required - but whereas private pensions deduct tax and pay net, State Pension is paid gross to the individual - it is not taxed at source, but the tax is still deducted. However, I agree that it is in effect paid net.

Regardless, pension income must still be declared with all other income, whether taxed at source or not, on the tax form. I don't know offhand whether or not it is a criminal offence to fail to declare income, but it seems to me to be tax evasion.
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by TonyK:

Regardless, pension income must still be declared with all other income, whether taxed at source or not, on the tax form. I don't know offhand whether or not it is a criminal offence to fail to declare income, but it seems to me to be tax evasion.

What tax was being evaded?
 
Posted by quetzalcoatl (# 16740) on :
 
Fuck me, tax havens are estimated to hold £20 trillion in hidden assets, but Corbyn hasn't written down his pension! Hold the front page, we have a winner.
 
Posted by mr cheesy (# 3330) on :
 
It seems to me that there is a major difference between not properly declaring something with no tax implications (a UK pension already taxed) on one hand and expecting everyone to believe your abbreviated tax declaration that isn't even a full tax return and which you've admitted includes capital gains from a fund in a tax-haven on the other.

The former might indeed be a technical breach which may (or may not) require a fine and an adjustment. The latter is just asking us to believe that a document that you're waving about as true because you say it is true.

Fairly obviously, if you were trying to hide monies from tax, they wouldn't appear on your tax return and it wouldn't be as easy as saying "oh, hang on, you've not filled the box for your pension".

[ 13. April 2016, 20:56: Message edited by: mr cheesy ]
 
Posted by Sioni Sais (# 5713) on :
 
quote:
Originally posted by chris stiles:
quote:
Originally posted by TonyK:

Regardless, pension income must still be declared with all other income, whether taxed at source or not, on the tax form. I don't know offhand whether or not it is a criminal offence to fail to declare income, but it seems to me to be tax evasion.

What tax was being evaded?
We won't know unless we see his tax return. In that respect he's just like Cameron and Osborne (although I suspect their numbers are larger and their accountants are smarter).
 
Posted by chris stiles (# 12641) on :
 
quote:
Originally posted by Sioni Sais:
We won't know unless we see his tax return.
[/qb]

Which HMRC have seen - and their verdict is that it's a technical error - the kind of error someone may make if they were filing their tax return themself.

If there had been a financial impact the papers would be full of it by now. As it is, they are forced to go with the less compelling 'man who works for 30 years gets paid for 30 years' story.
 
Posted by mr cheesy (# 3330) on :
 
As Mark Steel says:

quote:
It also turns out Corbyn paid too much tax, having stated he earned more than he did. We could quibble about the too much/too little detail – but he paid the wrong amount. This seems to be the Conservative argument about tax avoidance: we’re all up to it in our own way, so if you give your son three quid for mowing the lawn without paying VAT, you’re no different to an investment banker squirreling £10bn in the Virgin Isles so he can keep the lot and buy a Rembrandt to use as a dishcloth.

If you express discontent about it, you’re asked ‘do you have an ISA, because THAT’S tax avoidance’? I suppose it is. If you buy an apple rather than spending that money on a house, you’re sneakily avoiding stamp duty. Who are you to complain about Google?


 
Posted by sharkshooter (# 1589) on :
 
quote:
Originally posted by Baptist Trainfan:
... I also have a question: if one is super-rich, why does one feel the need to avoid/evade tax? ...

It is not always that one feels the need to avoid tax. Tax planning has been authorized in England (and Canada) since the Duke of Westminster tax case in 1934, where we find this gem:

quote:
Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.
The legal issue arises when one uses the provisions of a tax act to arrive at a result which is not in the spirit of the act. This is when tax planning becomes aggressive tax planning (another word for tax avoidance). This is something which is extremely difficult to enforce, because each step in such a plan is legal in and of itself, but the result is offensive.

Tax evasion is a different matter, and includes simple issues like failing to report income, or failing to pay a sales tax when one is due.
 
Posted by PaulTH* (# 320) on :
 
quote:
originally posted by Uriel:
Cameron needs to come clean on this - what happened to his father's offshore money, where is it now, where could it go in the future. And most importantly, does he agree or disagree with his father's actions in denying the Treasury large sums of tax revenue

A few years ago, David Cameron critcised the comedian Jimmy Carr, because he was using a tax loophole involving a company in Jersey, which meant he was only paying around 2% tax. Cameron referred to this as "immoral." I take the same view now as I did then. There's no such thing as an immoral avoidance of tax. What people do is either legal or illegal. None of us pays tax because we enjoy it. We do so because we're required to. I would, for example, always Gift Aid my donations to my church because I would rather the church has a bit of extra money from me, and the state less.

If anyone is avoiding tax in an illegal way, they can and should be prosecuted for it. If they've found a legal loophole, they are doing nothing wrong until that loophole is closed. This is what governments, with international cooperation, should be doing. They should be eliminating loopholes and tax havens which allow mostly the rich to stash their money in a way which avoids the tax the rest of us have no opportunity to avoid. I doubt if Cameron thinks his father did wrong to deny the treasury vast sums of money, and neither do I if he was acting within the law. Tax avoidance by the well off needs to be tackled by law and governments working together to shut down the opportunities for it to happen.
 
Posted by Gee D (# 13815) on :
 
quote:
Originally posted by sharkshooter:
quote:
Originally posted by Baptist Trainfan:
... I also have a question: if one is super-rich, why does one feel the need to avoid/evade tax? ...

It is not always that one feels the need to avoid tax. Tax planning has been authorized in England (and Canada) since the Duke of Westminster tax case in 1934, where we find this gem:

quote:
Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.
The legal issue arises when one uses the provisions of a tax act to arrive at a result which is not in the spirit of the act. This is when tax planning becomes aggressive tax planning (another word for tax avoidance). This is something which is extremely difficult to enforce, because each step in such a plan is legal in and of itself, but the result is offensive.

Tax evasion is a different matter, and includes simple issues like failing to report income, or failing to pay a sales tax when one is due.

How do you determine "the spirit of the act"? Ultimately, a court reads and interprets the Act using the words chosen by the legislature. The interpretation (at least here) can be assisted by reading a part of the proceedings of the legislature, but they cannot override the words finally adopted.

Take this example: I can choose whether to spend some money buying shares, or to carry out renovations/improvements to my house. If I choose the former, I pay tax on the income from the shares and when I sell them, I pay capital gains tax on any increase in price (much simplified, but you can get the gist of it). If I carry out the work, I have chosen a course or ordering my affairs which results in my income being less than it might otherwise be. By carrying out the work to my own house, there is no capital gains tax on any increase in value attributable to the work I did. Am I wrong to take the latter course? Is paying less tax somehow against some spirit of the Act? Why?
 
Posted by simontoad (# 18096) on :
 
quote:
Originally posted by quetzalcoatl:
I thought that Penny S had got a brilliant slogan, no representation without taxation. Well, this applies to politicians, and I suppose not to companies.

Of course, the big problem is secrecy. If politician Fatso Gatso has stashed $4 billion away in the Splishsplash Islands, where tax is nominal, who would ever know, except Mrs Fatso Gatso? And she quite likes her collection of shoes and diamonds.

Well, one thing about that is that the UK seems to administer a ton of these places, so make them give up their financial secrets. But who is going to do that?

I hate bloody Fatso Gatso.
 
Posted by Soror Magna (# 9881) on :
 
quote:
Originally posted by Penny S:
Could we reverse the revolutionary cry and claim that there should be no representation without taxation ...

Well, that was sort of Mitt Romney's 47% argument - that people who don't pay income tax are "takers", not "makers", in Paul Ryan's terms. Except that could also be applied to the 1% stashing billions in offshore mattresses. They clearly have no intention to make or create anything with that wealth.

Oopsie.
 


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