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Old 6th November 2017, 04:23 AM   #1
Nessie
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The very rich avoid paying tax - news.

It is not really news, we know the very rich get to avoid tax. It is just interesting to see exactly who is at it, how they do it and how it is all perfectly legal;

http://www.bbc.co.uk/news/uk-41876942

"Paradise Papers: Tax haven secrets of ultra-rich exposed

A huge new leak of financial documents has revealed how the powerful and ultra-wealthy, including the Queen's private estate, secretly invest vast amounts of cash in offshore tax havens.

Donald Trump's commerce secretary is shown to have a stake in a firm dealing with Russians sanctioned by the US.

The leak, dubbed the Paradise Papers, contains 13.4m documents, mostly from one leading firm in offshore finance."
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Old 6th November 2017, 04:29 AM   #2
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Originally Posted by Nessie View Post
......Donald Trump's commerce secretary is shown to have a stake in a firm dealing with Russians sanctioned by the US....
Which is presumably OK so long as he declared it prior to the Senate hearing into his appointment.
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Old 6th November 2017, 05:17 AM   #3
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Originally Posted by Nessie View Post
The very rich avoid paying tax - news olds.
ftfy.
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Old 6th November 2017, 05:27 AM   #4
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Surely all tax avoidance is OK if done in concert with the rules?

Now tax evasion...........
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Old 6th November 2017, 08:34 AM   #5
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All this tax avoidance and tax evasion outrage was discussed at length on TV by talking heads, and even by David Cameron and Margaret Hodge, five years ago and yet nothing at all has been done about it. I can see that it's unfair for a writer to have to pay UK tax on overseas earnings.
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Old 6th November 2017, 09:00 AM   #6
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Originally Posted by Henri McPhee View Post
All this tax avoidance and tax evasion outrage was discussed at length on TV by talking heads, and even by David Cameron and Margaret Hodge, five years ago and yet nothing at all has been done about it. I can see that it's unfair for a writer to have to pay UK tax on overseas earnings.
What should be done about perfectly legal tax avoidance?
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Old 6th November 2017, 11:21 AM   #7
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There should be no avoidance nor evasion. Pay tax in the country you live in or piss off.
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Old 6th November 2017, 11:44 AM   #8
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Originally Posted by Nessie View Post
There should be no avoidance nor evasion. Pay tax in the country you live in or piss off.
If the country I live in gives me legal options to not pay taxes there, why shouldn't I make use of them?
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Old 6th November 2017, 01:41 PM   #9
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It's simple.

In a complicated tax system with exceptions and special cases and different rules for different situations people who have the money to throw at a good tax expert will always be able to find a way to use all those variables to their benefit, often while staying 100% legal.

Which brings us to why our tax code is 73,954 pages long. It's not an accident. Every single rule in that tax code is a politician somewhere buying the votes of a block of people.

Farm subsidies have nothing to do with how much food the country needs to grow or how much the people in charge care about the farmers. Parental deductions have nothing to do with encouraging families. Homeowner benefits have nothing to do with the American dream. The 97 bazillion tax perks for retirees have nothing to do with respect for our elders. Tax rebates for low income families have nothing to do with charity.

These all are based on a simple fact. Somewhere some politician decided that those demographics; farmers, parents, homeowners, retirees, the poor... were blocks big enough to bribe to get their votes.

Why is practically impossible for a young, single person who rents and just has a normal job to do anything beyond filing a standard 1040EZ form and doing practically nothing special or crazy with their taxes? Because young, single, non-home owners don't vote in large numbers and aren't a demographic that sways elections so are therefore political pointless. It would be money wasted.

It's political hard reality. Every cent you spend directly or indirectly on a demographic that isn't going to vote in large numbers (that would be the youth) is money wasted you could be using the get votes. Young people start voting in numbers and we'll start seeing tax rules written for them.
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Old 6th November 2017, 03:11 PM   #10
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Originally Posted by theprestige View Post
If the country I live in gives me legal options to not pay taxes there, why shouldn't I make use of them?
Because the option is not available to all, equally. Why can I not be loaned money for the work I do by my employer into an off shore account, so I pay no tax at all?

That option is not available to me because the very rich want the middle and working class to pay for public services, not them.

If it was made legal to marry at the age of 6 and over, that would not make it right.
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Old 6th November 2017, 03:21 PM   #11
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Originally Posted by Nessie View Post
That option is not available to me because the very rich want the middle and working class to pay for public services, not them.
No. Nobody wants to pay for public services, the rich just have enough resources to not do so.

Everybody, period, pays the amount of taxes they are forced to pay, not one cent more.

Nobody voluntarily gives more to the government then they have to, which is where this all falls apart.

You get some form of tax break, everybody does in some way. Do you send those back?
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Old 6th November 2017, 03:30 PM   #12
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I want to pay for public services. I would suggest most people at least accept the NHS, schools, roads etc are best paid for via tax. That I may object to some things the tax I pay goes to does not excuse non payment.

If the rich really do not want to pay UK tax, then they should live elsewhere.
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Old 7th November 2017, 12:35 AM   #13
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Originally Posted by Nessie View Post
There should be no avoidance nor evasion. Pay tax in the country you live in or piss off.
By that reasoning you (personally) should not be able to claim a tax deduction - ever.
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Old 7th November 2017, 12:46 AM   #14
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Originally Posted by Nessie View Post
I want to pay for public services. I would suggest most people at least accept the NHS, schools, roads etc are best paid for via tax. That I may object to some things the tax I pay goes to does not excuse non payment.

If the rich really do not want to pay UK tax, then they should live elsewhere.
It's not the don't want to pay tax, it's simply that they only want to pay the minimum legally required. Probably much like yourself.

I can't see what the problem is.
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Old 7th November 2017, 12:53 AM   #15
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There is nothing wrong with tax evasion or tax avoidance, which is why Trump released his tax returns for everyone to see...........
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Old 7th November 2017, 12:55 AM   #16
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Originally Posted by bluesjnr View Post
It's not the don't want to pay tax, it's simply that they only want to pay the minimum legally required. Probably much like yourself.

I can't see what the problem is.
The problem is those wealthy have the power to buy government officials who make laws that make the minimum lower.
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Old 7th November 2017, 01:03 AM   #17
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Originally Posted by bluesjnr View Post
What should be done about perfectly legal tax avoidance?
The laws should be changed to prevent it. Otherwise the burden of paying for the infrastructure that these rich folks enjoy falls on those least able to afford it.

And where the law can't keep up a healthy dose of shaming those doing it helps too.
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Old 7th November 2017, 02:33 AM   #18
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Originally Posted by psionl0 View Post
By that reasoning you (personally) should not be able to claim a tax deduction - ever.
You think there is no difference between opening an ISA (tax free savings account), a way to encourage saving within the UK (desperately needed) or the married person transfer allowance, so allowing low earners to transfer tax free income to their spouse (the aim to encourage people to marry each other in the UK) and putting millions of pounds offshore that would have been subject to tax which has no knock on benefit for the UK?
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Old 7th November 2017, 02:37 AM   #19
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Originally Posted by bluesjnr View Post
It's not the don't want to pay tax, it's simply that they only want to pay the minimum legally required. Probably much like yourself.

I can't see what the problem is.
The problems are

1- the schemes available to them, mean zero or very low tax, not just small reductions designed to encourage saving and helping low earners who are married.

2 - those zero or very low schemes are not available to me.

I take it you have no problem with unfair schemes where you lose out and having to watch as others get to lord it over you and rip the pish.
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Old 7th November 2017, 03:16 AM   #20
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The two tax avoidance schemes commonly available to people like me are the Married Couple's allowance and an ISA savings account, the maximum amount one can avoid paying tax on being £20,844.50.

Lewis Hamilton, F1 driver, has avoided £3.3 million VAT on a private jet. He can stillopen an ISA and if he marries someone who earns less than £11,500 a year, he can get part of her tax free allowance.

Anyone who thinks that is OK needs a reality check and to think very hard about how public services should be paid for.
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Old 7th November 2017, 03:25 AM   #21
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Originally Posted by Nessie View Post
You think there is no difference between opening an ISA (tax free savings account), a way to encourage saving within the UK (desperately needed) or the married person transfer allowance, so allowing low earners to transfer tax free income to their spouse (the aim to encourage people to marry each other in the UK) and putting millions of pounds offshore that would have been subject to tax which has no knock on benefit for the UK?
You originally made the blanket statement: "There should be no avoidance nor evasion." You didn't even imply that you or others that you approve of would be an exception to that all encompassing rule.
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Old 7th November 2017, 03:38 AM   #22
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Originally Posted by psionl0 View Post
You originally made the blanket statement: "There should be no avoidance nor evasion." You didn't even imply that you or others that you approve of would be an exception to that all encompassing rule.
I also said "Pay tax in the country you live in or piss off" in that post, in a thread relating to news about the very rich hiding money off shore to avoid paying any tax at all. That, to me, says I was referring to such schemes only available to a few.
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Old 7th November 2017, 03:47 AM   #23
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Old 7th November 2017, 04:35 AM   #24
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The concentration of wealth in the hands of few makes tax avoidance and evasion almost inevitable:
the industry of "cheating" on taxes only works if enough money can be saved using various tricks. This can either happen if the sums taxed are moderate but tax rates are high, but it also happens if the tax rates are low if the sums involved are big enough.

So it is disingenuous to claim that lowering tax rates would increase honesty of paying taxes.
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Old 7th November 2017, 06:24 AM   #25
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Originally Posted by Nessie View Post
Because the option is not available to all, equally. Why can I not be loaned money for the work I do by my employer into an off shore account, so I pay no tax at all?

That option is not available to me because the very rich want the middle and working class to pay for public services, not them.

If it was made legal to marry at the age of 6 and over, that would not make it right.
Tell me more. If I qualify for the mortgage tax credit because I own a home, should I forgo it because you're renting and thus not eligible?
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Old 7th November 2017, 07:23 AM   #26
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Originally Posted by theprestige View Post
Tell me more. If I qualify for the mortgage tax credit because I own a home, should I forgo it because you're renting and thus not eligible?
No, because the various tax and benefit payments to do with mortgages and rent are dependent on economic and policy factors designed to benefit the UK. That is why I have no issue with ISAs, as they encourage people to save and we really need that. Not paying tax for a good reason, like encouraging saving, is fine.

Removing money from the UK, which was either earned here or by someone resident here, so as to avoid tax, is a different issue.

I take it you would have no problem if there was a way for me to avoid paying for something, which we both use, but you have to pay for it, even though I am earning far more than you.
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Old 7th November 2017, 07:36 AM   #27
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Originally Posted by JoeBentley View Post
Everybody, period, pays the amount of taxes they are forced to pay, not one cent more.
Not true, although it is a minuscule percentage of the populous who voluntarily pays extra. Since adding the option to our tax forms in 2002, there are about 1000 to 2000 Massachusetts residents who voluntarily pay 5.85% instead of the required 5.1% income tax each year adding about $250,000 extra to the state's balance sheet.

On top of that there are voluntary contribution options for a number of state funded programs that increase the amount you pay on your MA income tax. Those raise a half to one million dollars per year for the programs.

Other states have similar programs with similar results.
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Old 7th November 2017, 07:54 AM   #28
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I had a wealthy relative who did not collect his state pension, as he did not think it right as he had so much money.

I know many who make sure they pay all their taxes and refuse jobs where they know tax should be paid but it is being avoided/evaded.

Plenty of people (including very rich people) understand that tax goes to a lot of very good things and in a democracy, we need to accept it goes to things we may not want (like nuclear weapons).
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Old 7th November 2017, 08:05 AM   #29
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I think some people here don't understand the issue. This isn't about questionable tax deductions.

This is about transferring profits to tax havens. It works something like this: There's some company in a major industrialized country, eg the USA. The company establishes a recognizable trade mark, develops some patents, buys some real estate and so on.
Then a new firm is founded in a tax haven. The rights to the brand, the patents, the real estate and everything is transferred to the new firm. The real, original company now pays license fees, rents, etc to the new firm in the tax haven.
Suddenly the original company has huge expenses and the paper company in the tax haven makes a huge profit.

The actual, economic reality remains that the profit is created in the industrializde country but now there is an alternative, legal reality according to which some tiny island is an economic wonderland.

If an ordinary person creates alternative paper realities like that they go to jail as fraudsters.
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Old 7th November 2017, 09:00 AM   #30
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Originally Posted by bluesjnr View Post
It's not the don't want to pay tax, it's simply that they only want to pay the minimum legally required. Probably much like yourself.

I can't see what the problem is.
The problem is (from my pov) that only those already with access to very large sums of money have the resources necessary to reduce their taxes in this way. The tax revenue of the UK treasury (say) is thus reduced by the amount legally avoided through these mechanisms, putting up taxes (or reducing services and benefits) for those everyday folks who have exactly zero chance of reducing their own taxes through similar means. It's inequitable, in a word, and rather like the way certain senior figures have managed to avoid national service through perfectly legal manoevering.

So yes, these schemes are legal, but they're legal because some people can hunt down the loopholes or find amenable governments to host them and charge large fees for their services.
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Old 7th November 2017, 09:08 AM   #31
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The most amazing thing is that the cast of Mrs Brown's Boys earn enough that they need/can afford to use offshore tax havens.
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Old 7th November 2017, 12:34 PM   #32
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Originally Posted by zooterkin View Post
The most amazing thing is that the cast of Mrs Brown's Boys earn enough that they need/can afford to use offshore tax havens.
No one needs to avoid taxes and some man-hours by lawyers and clerks aren't that expensive.

WP gives this quick summary:
The scheme involved companies having their main operations in the UK and shell companies offshore. An employee of the UK company would quit their job and then be rehired by the offshore company to the UK. The offshore company would pay a lower salary than the person was originally on but would additionally loan them a large sum of money. Those loans would then be written down as tax liabilities to reduce the amount of tax payable.

What I find amazing is that this does not lead to fraud prosecutions.
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Old 11th November 2017, 07:10 AM   #33
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The United States loses, according to my estimates, close to $70 billion a year in tax revenue due to the shifting of corporate profits to tax havens. That’s close to 20 percent of the corporate tax revenue that is collected each year.
https://www.nytimes.com/interactive/...x-evasion.html

Article also contains easy to understand description of how it's done.


I am still puzzled by the assertion that this stuff is supposedly legal. Difficult to prosecute I can see, but actually legal?
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Old 11th November 2017, 10:34 AM   #34
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I still think there is something fishy, and even tax evasion, with regard to Murdoch's tax affairs being arranged in the Dutch Antilles. There is a bit about all that at this website:

http://www.thekomisarscoop.com/2007/...y-the-journal/
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Old 11th November 2017, 08:06 PM   #35
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I think there should be a tax on moving money offshore with some exceptions such as for tourism. If it is a business doing it they should be able to claim credits on their GST (or VAT).
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Old 12th November 2017, 03:30 PM   #36
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Originally Posted by GnaGnaMan View Post
I think some people here don't understand the issue. This isn't about questionable tax deductions.

This is about transferring profits to tax havens.
You do know that there are just as many "tax havens" for poor and middle class.

I paid a guy at H&R Block to make sure my Homestead Exemption Act for my new house (A Florida state tax code to encourage home ownership that means I will always only be calculated taxes on the initial purchase price of my home, saving me potentially tens of thousands if not more in taxes over the life of my house) was filled out correctly. By what definition is that not a "tax haven?" Because I'm a middle classed blue collar guy and not an evil super rich capitalist industrialist?

Rich Uncle Pennybags pays his high priced account more money to save more money by not paying more taxes on larger taxable assets.

The rules don't change just because the numbers got bigger.

Again this entire train of thought hits the brick wall that nobody (within a rounding error to appease the pedants) ever goes out of their way to pay more taxes then they literally they are legally forced to.

Everybody in America, Everybody in the world, everybody in ever society and civilization ever has paid the exact same amount of taxes... the exact amount the government makes them pay, not one cent more.
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Old 12th November 2017, 04:28 PM   #37
Skeptic Ginger
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Originally Posted by The Great Zaganza View Post
.... So it is disingenuous to claim that lowering tax rates would increase honesty of paying taxes.
Disingenuous or not it's clearly a false assertion. It has never happened before and there's nothing in human nature that suggests it would happen now.

It's as false as pretending giving cash rich corporations more cash would either result in them raising workers' wages and/or expanding the supply of jobs.

Originally Posted by GnaGnaMan View Post
The United States loses, according to my estimates, close to $70 billion a year in tax revenue due to the shifting of corporate profits to tax havens. That’s close to 20 percent of the corporate tax revenue that is collected each year.
https://www.nytimes.com/interactive/...x-evasion.html

Article also contains easy to understand description of how it's done.

I am still puzzled by the assertion that this stuff is supposedly legal. Difficult to prosecute I can see, but actually legal?
And yet, legal or not, there is no effort in these tax plans to change the situation other than repeating the fantasy that lowering taxes would make rich people bring their money back to the states and pay taxes on the money. Why would they do that if the only motivation being offered is, you can pay less? As it is now they don't have to pay anything. What do they gain from moving where their money's parked?

Originally Posted by JoeBentley View Post
You do know that there are just as many "tax havens" for poor and middle class. ...

Everybody in America, Everybody in the world, everybody in ever society and civilization ever has paid the exact same amount of taxes... the exact amount the government makes them pay, not one cent more.
And yet the only tax havens/deductions in either the House or the Senate plans is to take away deductions from the poor and middle class and add the deduction for the estate tax**.

Then there is the assertion everybody rich and poor gets a tax break. Really? And who pays for these cuts? Magical economic expansion and the assertion they can/will simply cut government spending. By the way, don't mention those spending cuts are planned for Medicaid, Medicare, and Social Security. Because that's the only place short of military spending where there is a big enough pot of money to cover these cuts. And you know the military-industrial lobby is too powerful to allow any cuts in military spending.


**No it is not money that was already taxed. It's disgusting the news media rarely if ever mentions the fact most of the estates in question here have huge amounts of untaxed capital gains. At least the news media is calling out the lie the estate tax hurts family businesses. But come on, those capital gains are simply erased when your heirs inherit your estate.


All this and let's not forget, it's a huge lie that somehow taxes have squelched economic growth. Not only is economic growth reasonably OK, a lot of these corporations are cash rich, not cash poor. They don't need tax cuts. It's a fabricated campaign issue. If you don't have an enemy—Hilary Clinton—you need a new one, the economy.

What's wrong with the economy is wage stagnation. We need to increase demand in either the form of increased minimum wages and/or increased investment in infrastructure.

Come on skeptics, look at the evidence not your preconceived beliefs.

Last edited by Skeptic Ginger; 12th November 2017 at 04:35 PM.
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Old 12th November 2017, 04:41 PM   #38
P.J. Denyer
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Originally Posted by JoeBentley View Post
Everybody, period, pays the amount of taxes they are forced to pay, not one cent more.

Nobody voluntarily gives more to the government then they have to, which is where this all falls apart.
Thousands of low paid 'self employed' workers in the UK do pay Class 3 National Insurance contributions voluntarily.
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Old 12th November 2017, 04:46 PM   #39
GnaGnaMan
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Originally Posted by JoeBentley View Post
I paid a guy at H&R Block to make sure my Homestead Exemption Act for my new house (A Florida state tax code to encourage home ownership that means I will always only be calculated taxes on the initial purchase price of my home, saving me potentially tens of thousands if not more in taxes over the life of my house) was filled out correctly. By what definition is that not a "tax haven?"
That's not a tax haven by any definition.
That's a so-called tax exemption. Countries design their tax system in ways that is most beneficial to everyone and/or certain constituencies. What you describe is part of that.

A tax haven is a country (usually). They have laws that make it possible for people abroad to dodge taxes in their home country. Some ways to do so are superficially legal, or at least extremely difficult to prosecute.
Secrecy also plays a big role. They will not just hide the proceeds of even the most blatant tax frauds but also hide money from criminal activity.
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Old 12th November 2017, 04:59 PM   #40
P.J. Denyer
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Originally Posted by GlennB View Post
So yes, these schemes are legal, but they're legal because some people can hunt down the loopholes or find amenable governments to host them and charge large fees for their services.
I don't know that much hunting is necessarily required. There is a practice in the UK (that frankly should be a scandal) of senior accountants from the 'Big 4' accountancy firms joining the treasury on secondment as advisers and then taking the knowledge of the laws that they have helped influence the creation of back to private practice to help minimise the taxes paid under those laws.. Add the revolving door between senior treasury officials and the finance departments of large corporations (*cough* Vodafone *cough*).

There is of course a department in the Civil Service whish is supposed to oversee such things and ensure that no-one moves on to a job where conflicts of interest might allow them to use their influence to help their employer (or where they might have used their influence in the understanding that a job was to be forthcoming). But it seems remarkably toothless, even by Whitehall standards.
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