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  1. #121

    localzuk's Avatar
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    Quote Originally Posted by ADMaster View Post
    Yes there may be fluctuation in tax revenue to begin with, but I think it would stabilize. Similar to how folks on all the benefits donít have much incentive to work because they can make more money than someone with a low paying job. What is the incentive for someone to be a successful entrepreneur? That person progressively pays a higher tax rate based on how much profit they make. A low paid worker may pay 15% and a very high paid owner may pay 30%. In my opinion this is unfair.
    Letís say the low paid worker makes $10,000 @ 15% tax is $1,500
    And the high paid owner makes $100,000 @ 30% tax is $30,000
    If the owner paid just 15% too that would be $15,000
    Still ten times more than the low paid worker, but the same rate. That is the nature of percentages.
    Now the owner has an extra $15,000 he could hire a new worker, give the current workers a raise, reinvest in his shop etc.
    A progressive income tax only punishes success.
    The flat sales tax is aimed at individuals, Iím not sure how you would tax a business with this model, but Iím sure there is something out there better than all the loop holes we have now.
    That has been proven a false concept. Reduced taxation of higher earners does not boost investment and trickle wealth down. It doesn't increase tax revenue. GW Bush showed this during his years. The tax cuts he implemented in the USA were supposed to boost tax revenue through "trickle down economics". Instead, tax revenue was something like $3tn less than it would have been without the changes.

  2. #122

    nephilim's Avatar
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    Whilst I agree a flat percentage on principle, it also has the potential to lose billions from various avenues.

    Football players make on average £86000 a week in the premiership. They are taxed at 50%, which means £43000 goes to the government per week. If we had say a flat 20% (for example) then on the footballers wages, the government would only get £17200, thereby making a deficit.

    Factor in most footballers also import food, drink, cars, and pay for houses through a corporation and "gift" them to themselves, they pay no stamp duty etc. It isn't a good system.

  3. #123
    ADMaster's Avatar
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    I still believe that things would balance out. Forget about the business tax for a moment, ideally all of those loop holes would be closed.
    Let’s focus on the individuals tax.
    First the government should balance the books better and not spend what they don’t have, much like us individuals must do.
    Second the money that will be lost because the footballers will not pay as much will be made up for in other avenues.
    The organized crime rings / drug rings who spend their money on the latest because they don’t want that much cash lying around, and a deposit like that at the bank would be suspicious.
    Free lancers that do side jobs or individuals, some may report properly some will not.
    Folks that work for cash only because if they were on the books it would interfere with their benefits.
    Your 1.5% of people on benefits not working, that can afford to get their kids the latest phones and TV’s etc.
    Illegal aliens that are not paying income tax because they are not a citizen and working for a company that will pay them cash off the books.
    Tourism, visitors to your country that otherwise wouldn’t pay income tax would pay sales tax.

    All of these additional streams of tax revenue would be picked up if the tax was sales only.

    Finally as others have said I too look for local first, I like to save money, but something made here is my preference over something made abroad.

  4. #124


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    Quote Originally Posted by ADMaster View Post
    Now the owner has an extra $15,000 he could hire a new worker, give the current workers a raise, reinvest in his shop etc.
    And they will probably want healthy, educated workers. Paid for by tax payers. They will want to transport goods by road and rail, again paid for by taxpayers. A lot is made of the fact that rich people tend to be employers, as if by some feudal principle the taxes paid by their serfs are proxy taxes for them. I remember listening to one over privileged old biddy who was incensed that she would no longer get tax relief for her sponsorship of her pet arts project. She was outraged that she would be asked to pay tax instead - as if everyone has such choices!

    Progressive tax recognises that entrepreneurs stand on the shoulders of the society that has provided educated, healthy workers, good transport, communications and infrastructure. They are able to make good profits for themselves and live extremely comfortably by virtue of that and their hard work. The former often seems overlooked.
    Last edited by pcstru; 26th October 2013 at 06:27 PM.

  5. #125

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    Flat tax serves nobody well unless there is no debt in the country, and the infrastructure in place, healthcare is paid for as a percentage of the earnings of everyone, and education system is covered by various taxes (gains tax, corporation tax, etc). You will never find a perfect system, because in this day and age, nothing so perfect can exist. There will always be loopholes which people/businesses will exploit.

    When a perfect system is created, let me know, I'll be the first to champion its adoption.

    FYI, the system you are proposing @ADMaster is communism.

  6. #126
    ADMaster's Avatar
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    @nephilim
    We must have a misunderstanding somewhere, I am not advocating communism at all. Communism simply defined is a government structure in which the government owns everything, no private property.
    If you took the first sentence of my last post as government owning everything, apologies that is not the case. I only meant for the sake of this discussion forget businesses, because I’ve not fully thought out how a fair business tax would work.
    I am for capitalism, the tax structure I suggest would allow for personal success and not punish it, that is not communism.
    As you say there will always be loop holes in any system. We may have to agree to disagree. Apologies to the OP for hijacking your thread.

  7. #127

    nephilim's Avatar
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    Ahh no...I agree...shouldn't punish the wealthy because they worked for it/born into it. A fair tax system is needed, no doubt, but again, you'll never make a system that everyone agrees on.

  8. #128

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    Quote Originally Posted by nephilim View Post
    Ahh no...I agree...shouldn't punish the wealthy because they worked for it/born into it. A fair tax system is needed, no doubt, but again, you'll never make a system that everyone agrees on.
    The problem with the tax system isn't one of fairness... It's one of complexity.
    It's actually pretty fair. It's just that in achieving that, it has become overly complex.

  9. #129

    seawolf's Avatar
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    Quote Originally Posted by nephilim View Post
    Whilst I agree a flat percentage on principle, it also has the potential to lose billions from various avenues.

    Football players make on average £86000 a week in the premiership. They are taxed at 50%, which means £43000 goes to the government per week. If we had say a flat 20% (for example) then on the footballers wages, the government would only get £17200, thereby making a deficit.

    Factor in most footballers also import food, drink, cars, and pay for houses through a corporation and "gift" them to themselves, they pay no stamp duty etc. It isn't a good system.
    Actually, a flat tax properly implemented without any loop holes or tax deductions would most likely increase tax revenue because the disincentives that exist in the current tax structure would be eliminated. More importantly, companies or individuals would not have to make the decision on whether to produce or not produce more goods or services when at the "margin" of the next tax rate, or make investment or purchasing decisions primarily based on reducing or deferring taxes. There would be greater individual and corporate compliance, and much less money spent on administration and enforcement of an obscenely complicated tax system. Corporations would be far less likely to funnel money through any legal loopholes possible and might actually repatriate profits (e.g. Apple, Google, etc.). There would also be less much less "cash in hand" payment of workers, meaning more taxed income.

    Although not a good example in many other areas, Russia has shown leadership in tax reform and economic management over the past 10-12 years (http://www.forbes.com/sites/markadom...lmost-no-debt/). How ironic.

  10. #130

    Dos_Box's Avatar
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    Quote Originally Posted by nephilim View Post
    Whilst I agree a flat percentage on principle, it also has the potential to lose billions from various avenues.

    Football players make on average £86000 a week in the premiership. They are taxed at 50%, which means £43000 goes to the government per week. If we had say a flat 20% (for example) then on the footballers wages, the government would only get £17200, thereby making a deficit.

    Factor in most footballers also import food, drink, cars, and pay for houses through a corporation and "gift" them to themselves, they pay no stamp duty etc. It isn't a good system.
    Really? I'll bet our accountant would have something to say about that! The truth is that the tax system is so locked down that you simply cannot pull a stunt like that. Not without making HMRC very interested in you indeed. Tax must be paid somewhere. You cannot simply 'gift' yourself something like that as you would be subject to a gains tax in one form or another. If your company 'loaned' you a house you would be taxed on the benefit or you would have to pay a rent back to your company, and when if all goes wrong for your company you would lose the lot. There are indeed tax loopholes, and always will be, but not when it comes to things like that.
    Quite simply, having a company and getting it to pay for everything is simply not going to happen. Please note that this is not the same as tax breaks and allowances.

  11. #131

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    Quote Originally Posted by ADMaster View Post
    Yes there may be fluctuation in tax revenue to begin with, but I think it would stabilize. Similar to how folks on all the benefits donít have much incentive to work because they can make more money than someone with a low paying job. What is the incentive for someone to be a successful entrepreneur? That person progressively pays a higher tax rate based on how much profit they make. A low paid worker may pay 15% and a very high paid owner may pay 30%. In my opinion this is unfair.
    Letís say the low paid worker makes $10,000 @ 15% tax is $1,500
    And the high paid owner makes $100,000 @ 30% tax is $30,000
    If the owner paid just 15% too that would be $15,000
    Still ten times more than the low paid worker, but the same rate. That is the nature of percentages.
    Now the owner has an extra $15,000 he could hire a new worker, give the current workers a raise, reinvest in his shop etc.
    A progressive income tax only punishes success.
    The flat sales tax is aimed at individuals, Iím not sure how you would tax a business with this model, but Iím sure there is something out there better than all the loop holes we have now.

    In the UK, someone earning £100k pays ONE HUNDRED times the tax that someone earning £10k pays, despite earning ten times as much.
    I don't, however, believe that this in any way disincentivises someone earning £100k...

  12. #132


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    Quote Originally Posted by Dos_Box View Post
    Really?
    Yes. @nephilim is right. Top footballers and their clubs use all sorts of tax avoidance schemes (and they're all perfectly legal). For example...

    It is understood that many leading Premier League clubs, including Manchester City and Chelsea, have used EFRBS Ė employer-financed retirement benefit schemes Ė in order to make their offers to players even more attractive. Completely legal, the scheme allows players to sacrifice up to 50 per cent of their wages at source to be placed in a trust that is set aside for their retirement.

    It was first used by City bankers to avoid paying tax on their bonuses but has become very popular with footballers after the Inland Revenue closed down the "image rights" loophole that was used to great effect in the late 1990s and early part of the last decade to give predominantly foreign players tax relief.

    The EFRBS scheme also allows clubs to save on National Insurance payments Ė an extra 12.8 per cent on top of the player's salary Ė because the money is paid straight into an EFRBS and is therefore not liable. With wage costs going inexorably upwards for the elite players, fuelled by City's willingness to break the wage ceiling, clubs are increasingly looking around for more tax-efficient ways of paying their players.

    Industry experts believe that there is a very good chance that Wayne Rooney's new deal at Manchester United, understood to earn him up to £200,000 a week including bonuses, would have included an EFRBS. It would potentially mean that the Manchester United striker will have a substantial retirement fund when he finishes playing. (Source)
    And before that...

    Scores of top footballers launched their own companies eligible to take image rights payments after Labour Chancellor announced the 50p top rate tax.

    The players have two contracts with their clubs. They get a salary as a player and the other is for 'image rights' - earnings from shirts and other merchandising.

    These royalties are paid into a company which is only liable for 28 per cent corporation tax rather than the 50 per cent income tax.

    And players can take out loans from their companies where they only pay two per cent tax on the sum because it is regarded as a benefit in kind. (Source)
    Every time the government closes a loophole, another is found. The more you earn the easier it is to avoid paying tax.

  13. #133

    Dos_Box's Avatar
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    Quote Originally Posted by Arthur View Post
    Yes. @nephilim is right. Top footballers and their clubs use all sorts of tax avoidance schemes (and they're all perfectly legal). For example...



    And before that...



    Every time the government closes a loophole, another is found. The more you earn the easier it is to avoid paying tax.
    My point was that they cannot simply 'give' themselves a house, or other items.
    Yes, there are some very complicated tax schemes out there helping very, very wealthy people avoid paying taxes, but what you have to remember is that, footballers aside, high earners are often those who have companies and employ people and pay way more tax than most anyway. I agree it may seem unfair to see a UK earner paying next to nothing in tax, but once you factor in the tax they have generated and paid via their company then they are often paying many, many times more than the average tax payer.

  14. #134
    solidchrome's Avatar
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    Some good points raised in this thread. How many have actually complained to your local MP or written to parliament?

  15. #135

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    Quote Originally Posted by ADMaster View Post
    First the government should balance the books better and not spend what they don’t have, much like us individuals must do.
    that would never work, unless a government pursued and was successful in implementing a highly export driven economy, think Norway and it's substantial Oil and Gas exports.

    But norway is the exception rather than the rule, Japan has for decades been a big export driven economy, but because of it's demographics it's government has to run a large deficit just to get the economy ticking over.

    I think it's just mad for a government like ours or the US to focus on reducing an already insubstantial deficit of between 5%-9% to 0, through counterproductive tax rises that hit ordinary working people the hardest. Government borrowing only goes up anyway as a result of ill-timed tax rises.

    I agree the loopholes are a problem, but to me that suggests an overly complex domestic tax situation, I wouldn't argue for a flat tax to correct that, and a race to the bottom to encourage business investment seems pointless because your competing with offshore havens and tax structures that can offer a lower rate, the only way to change that is international agreement....

    it'd be more beneficial to domestically take a lot more people out of paying tax completely. And find a way through taxation to put more money in people's pockets, where that money could circulate through the economy via spending and investment.

    At the moment more money than is necessary goes into the blackhole that is taxation - and amongst the worst is long term tax burdens like the graduate tax. Just as much of a blackhole are excessive corporate profits.

    Our government should be relaxed about the deficit and debt and realise that if they cut Ni, income taxes, do something about excessive costs of utilities, you'd get a far fairer outcome when it comes to wealth creation.

    Just about the only strategy that's working for me at the moment are the moves to raise the income tax threshold and 0.5% interest rates. It's not enough though.

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