RANT - Fed up with life here in the UK

[featured_spectre]

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.

[DPrince]

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.

[seawolf]

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/markadomanis/2012/01/20/attention-mitt-romney-russia-has-a-flat-tax-and-almost-no-debt/). How ironic.

[Dos_Box]

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.

[DPrince]

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 don’t 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.

Let’s 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, I’m not sure how you would tax a business with this model, but I’m 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...

[Arthur]

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 – employer-financed retirement benefit schemes – 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 – an extra 12.8 per cent on top of the player's salary – 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.

[Dos_Box]

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.

[solidchrome]

Some good points raised in this thread. How many have actually complained to your local MP or written to parliament?

[alttab]

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.

[ADMaster]

Interesting point SolidChrome, and welcome to the forums.

I can’t speak for the UK but here in the US I wonder how many people actually know what they pay in taxes. Our income tax is deducted from our pay so there is not a separate tax bill. I think businesses have to pay tax quarterly, if individuals did that they would be more aware of the costs.

Now in my case I use budget management software on the computer and input those numbers. My income tax bill his higher than my auto bill, monthly.

 

There have been a few folks run for president that wanted to abolish the IRS and income tax, go to a flat tax 13% I think. However they were independent or third party candidates.

[solidchrome]

Many thanks ADMater. It seems, at least sometimes, the only way politicians will listen is if enough people speak out. A couple of years ago I sent many emails to Phil Hogans office here in Ireland and spoke to my local TD about an issue over here. I think enough people spoke out as there was a fairly good solution put in place.

 

Thats what politicians are here for- to serve the people not for the people to serve the politicians.