O/T people on benefits

[ragingpup]

The impact on people here now is only part of the story. The thousands of millionaires clinging to a rock in the Irish Sea aren't there for the weather, they're there because they pay 20% income tax (I may not be up to date with the current rate) Now imagine somewhere where people would actually like to live with a 20% tax rate. How many wealthy people would be attracted to come and pay their taxes here then? It's worth remembering that something like a third of the income tax is paid by less than 1% of taxpayers. You don't need to attract that many people at this level before it starts to make a difference.

To answer your question directly, I used to pay the higher rate of tax (not exactly happily, but without trying to avoid it). But when the rate went up under Gordon Brown it prompted me to look at whether there was an alternative. There was, and as a result I've paid an awful lot less ever since - nothing dodgy, underhand or illegal I hasten to add! I know several other people who did the same thing, which is why I feel so strongly about people who say we should hit the 'rich'. It doesn't work.

So you consider that the democratically decided 40% is "hitting the rich"?

And even though the report you are quoting from believe that around 40% is the optimum amount for raising public revenues, you would still cut it to half of that for the wealthy?

I understand the logic of what you are saying but this 'experiment' would be a huge risk to take with public revenues when even the financial experts from whom you are quoting for other purposes would disagree with you? Might there be a little bit of self interest here swaying your judgement?! Would you like to see this risk taken if you were on 25K a week?

[animallittle3]

The impact on people here now is only part of the story. The thousands of millionaires clinging to a rock in the Irish Sea aren't there for the weather, they're there because they pay 20% income tax (I may not be up to date with the current rate) Now imagine somewhere where people would actually like to live with a 20% tax rate. How many wealthy people would be attracted to come and pay their taxes here then? It's worth remembering that something like a third of the income tax is paid by less than 1% of taxpayers. You don't need to attract that many people at this level before it starts to make a difference.

To answer your question directly, I used to pay the higher rate of tax (not exactly happily, but without trying to avoid it). But when the rate went up under Gordon Brown it prompted me to look at whether there was an alternative. There was, and as a result I've paid an awful lot less ever since - nothing dodgy, underhand or illegal I hasten to add! I know several other people who did the same thing, which is why I feel so strongly about people who say we should hit the 'rich'. It doesn't work.

Everyone sees the world differently and what kind of society they wish to live in .

Now the crux of your views are that you feel you contribute enough to the pot and you are not prepared to contribute anymore than you do now .

Even though governments who you can choose to elect every five years decide which rate of tax is applicable to you , none the less it's yourself who has decided which rate of taxation suits you best .

Every pound of tax not collected then places the burden elsewhere , now this burden is generally materialised in the form of poorer services , pay stagnation , loss of services , deaths , ill health and an unequal and divided society .

The ability to pay is the only way taxation can be collected fairly to meet the needs of it's people and keep society functioning , it's in the greater interest of everyone to ensure this happens , business needs educated and healthy staff , we all require roads and motorways to be in good order to name a few examples .

Nobody says you have to like taxation , who does ? But nobody as an end user of government spending which is everyone should be avoiding their responsibility .

Anyone who avoids taxation set by elected governments will pay a far higher price further down the road in my opinion , the current health of the country is all the evidence you need .

[Lasterman]

Everyone sees the world differently and what kind of society they wish to live in .

Now the crux of your views are that you feel you contribute enough to the pot and you are not prepared to contribute anymore than you do now .

Even though governments who you can choose to elect every five years decide which rate of tax is applicable to you , none the less it's yourself who has decided which rate of taxation suits you best .

Every pound of tax not collected then places the burden elsewhere , now this burden is generally materialised in the form of poorer services , pay stagnation , loss of services , deaths , ill health and an unequal and divided society .

The ability to pay is the only way taxation can be collected fairly to meet the needs of it's people and keep society functioning , it's in the greater interest of everyone to ensure this happens , business needs educated and healthy staff , we all require roads and motorways to be in good order to name a few examples .

Nobody says you have to like taxation , who does ? But nobody as an end user of government spending which is everyone should be avoiding their responsibility .

Anyone who avoids taxation set by elected governments will pay a far higher price further down the road in my opinion , the current health of the country is all the evidence you need .

I understand the point you're making, but most people minimise the tax they pay to a greater or lesser degree...pensions's and ISA's for example offer the opportunity to pay less tax. They're promoted as tax saving vehicles. A bit further up the scale EIS and SEIS schemes do the same, again promoted and sanctioned by the government. And then there are things like entrepreneur relief which allows someone to sell a business and pay very little tax. Where do you draw the line? For me, you draw the line at what is and isn't legal. And on that point, I'd be prepared to bet that a lot of people who castigate 'wealthy tax dodgers' who are doing nothing illegal, have happily paid a tradesman cash to save the VAT. And there's no doubt which side of the line that's on.

My perception, perhaps wrong, is that a lot of people object to other people avoiding more tax than they are able to avoid themselves!

[millmoormagic]

I understand the point you're making, but most people minimise the tax they pay to a greater or lesser degree...pensions's and ISA's for example offer the opportunity to pay less tax. They're promoted as tax saving vehicles. A bit further up the scale EIS and SEIS schemes do the same, again promoted and sanctioned by the government. And then there are things like entrepreneur relief which allows someone to sell a business and pay very little tax. Where do you draw the line? For me, you draw the line at what is and isn't legal. And on that point, I'd be prepared to bet that a lot of people who castigate 'wealthy tax dodgers' who are doing nothing illegal, have happily paid a tradesman cash to save the VAT. And there's no doubt which side of the line that's on.

My perception, perhaps wrong, is that a lot of people object to other people avoiding more tax than they are able to avoid themselves!

Good points made there to be honest Lasterman, my take on it is not so much those who are earning a decent wage which takes them just over the £45k higher tax threshold, rather than the millionaires and companies that avoid billions, it's those who should be paying their dues, which obviously isn't happening right now is it.

[wrinkly]

I understand the point you're making, but most people minimise the tax they pay to a greater or lesser degree...pensions's and ISA's for example offer the opportunity to pay less tax. They're promoted as tax saving vehicles. A bit further up the scale EIS and SEIS schemes do the same, again promoted and sanctioned by the government. And then there are things like entrepreneur relief which allows someone to sell a business and pay very little tax. Where do you draw the line? For me, you draw the line at what is and isn't legal. And on that point, I'd be prepared to bet that a lot of people who castigate 'wealthy tax dodgers' who are doing nothing illegal, have happily paid a tradesman cash to save the VAT. And there's no doubt which side of the line that's on.

My perception, perhaps wrong, is that a lot of people object to other people avoiding more tax than they are able to avoid themselves!

I'm amazed that you argue that tax avoidance is somehow merely an extension of tax benefits provided by successive governments. We have a democracy. The duly elected Government of the day decides on a tax strategy based on the aims of that government. There are reasons for tax breaks sanctioned by the government.

HMRC's definition of tax avoidance:

"Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended

It often involves contrived artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter, but not the spirit, of the law."

HMRC has stated aims to plug the avoidance loopholes. Of course this is not made easy by the massive reductions in staff numbers. Compliance staff in HMRC, with their effective reductions in pay over several years are up against mighty slick operators with vast resources. It's pretty much finger in the dyke time for HMRC.

You may think that it's ok as long as it's legal (do you honestly believe that?). The elected, Tory, Government obviously does not.

Of course the cash in hand VAT fiddles should not happen but see above re HMRC resources. You are no doubt correct that some critics of wealthy tax avoiders will have saved a few hundred quid on a cash in hand job. So what? If a bloke who has knicked a packet of fags in a shop criticises a bank robber it doesn't make bank robbery ok.

[Lasterman]

I'm amazed that you argue that tax avoidance is somehow merely an extension of tax benefits provided by successive governments. We have a democracy. The duly elected Government of the day decides on a tax strategy based on the aims of that government. There are reasons for tax breaks sanctioned by the government.

HMRC's definition of tax avoidance:

"Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended

It often involves contrived artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter, but not the spirit, of the law."

HMRC has stated aims to plug the avoidance loopholes. Of course this is not made easy by the massive reductions in staff numbers. Compliance staff in HMRC, with their effective reductions in pay over several years are up against mighty slick operators with vast resources. It's pretty much finger in the dyke time for HMRC.

You may think that it's ok as long as it's legal (do you honestly believe that?). The elected, Tory, Government obviously does not.

Of course the cash in hand VAT fiddles should not happen but see above re HMRC resources. You are no doubt correct that some critics of wealthy tax avoiders will have saved a few hundred quid on a cash in hand job. So what? If a bloke who has knicked a packet of fags in a shop criticises a bank robber it doesn't make bank robbery ok.

Just so I'm clear, specifically which tax avoidance actions on the part of individuals, do you object to?

[Lasterman]

Good points made there to be honest Lasterman, my take on it is not so much those who are earning a decent wage which takes them just over the £45k higher tax threshold, rather than the millionaires and companies that avoid billions, it's those who should be paying their dues, which obviously isn't happening right now is it.

I'm with you on that. The problem with companies and the super rich is that they can base themselves pretty much anywhere these days, and if they don't like the 'price' in one country, they'll simply up sticks and go somewhere else. So in my view, that means governments have to display pragmatism in their approach.

[rolymiller]

Piss poor from you crash..you only want to talk about poor people who fiddle the system but don't care about rich people who do it. Everyone who reads your posts on here have to assume you think its ok for the rich to fiddle their taxes. Can you be good as to enlighten us why this is ok.

Feck me, there are some odd people who follow the millers.

[ragingpup]

I'm with you on that. The problem with companies and the super rich is that they can base themselves pretty much anywhere these days, and if they don't like the 'price' in one country, they'll simply up sticks and go somewhere else. So in my view, that means governments have to display pragmatism in their approach.

OK, so we can be pragmatic but it still leaves the question : how are we going to raise the increasing cost of public services?

If we follow your research we're already at the maximum take off 40% higher rate income tax. So no inroads there. We have already followed the line of cutting corporate taxes in a big way which has created more wealthy people but no clear extra revenues for the public purse. So where now?

Obviously it leaves an increase in income tax at the standard rate. Where else can we go? You have stated that your unwilling to pay any more than a schoolteacher. Or shop worker. Or my old mum.

So it stands to reason that these people will have to pay extra for our public services as not enough of us earning better (I'm on higher rate too) are willing to pay more.

Are you happy with that outcome?

[wrinkly]

Just so I'm clear, specifically which tax avoidance actions on the part of individuals, do you object to?

Obviously I don't have details of all tax avoidance schemes, neither does HMRC otherwise they would be taking steps to shut them all down. Generally I would go along with HMRC's definition as quoted in my previous post. The tax avoidance actions evolve to keep one step in front of HMRC so it's impossible to be specific about which I object to.

However here are some examples of actions I object to:

The K2 scheme. Possibly only in the limelight because of Jimmy Carr's involvement. UK earners supposedly quit their jobs and sign new contracts with offshore shell companies. These companies pay the the employee a pittance and then "loan" them sizeable amounts to make up their earnings. Without going into too much detail the "legal" scheme enabled JC to carry on doing the same job, receiving the same money but only paying tax of 1% on that money. JC chucked £3 million a year into that scheme. It doesn't cross your " line" of legality so is it OK? In my opinion it is morally abhorrent.
Over a thousand other "investors" used that scheme. An accountant selling the scheme advised clients that it would take HMRC years to block the scheme so "make hay while the sun shines". You may think that all the 1%ers still pay a decent amount in to the pot so they are not a bad bunch. I have to disagree. You may also think that , if there were no higher rates of tax, these investors would not bother with such a scheme and would be happy to pay say 20% instead because that would be "fair". The cynic in me suggests that you would be dreaming to think that.

I have twice now tried to finish this post and the site has kicked me out. I will leave it at that and expand at a later time - if I can be arsed.