UK Wealth Tax Needed; Rich Not Paying Fair Share

[Seth]

To laklak

Certainly. That is why the amount to be taxed is a variable, depending on type of business.
The thing is, though, that it puts all businesses of a particular type on a "level playing field". If, f'rinstance, you have a business that makes an average 10% profit on turnover, and it gets taxed at 5%, then all businesses of that type get taxed at 5%. If this is not sufficient to make the business viable, all such businesses will have to make changes, such as raising prices, or cutting costs. But they are all in the same boat. There is nothing anti-competitive here.

Such a tax regime will require a change in the way people do business. But it is all do-able, and it is not difficult. For a start, the business will save an awful lot of money not paying expensive lawyers and accountants fees! The tax compliance cost would plummet. The system would also put an awful lot of government tax officials out of work, and force them to do something actually productive.

This of course is utter nonsense. All it would do is drive commerce underground and into the black market, just like Greece.

"So, sir, what was your stock turnover this last year?"
"Oh I sold fuck-all last year, horrible economy wasn't it."
"Really, nothing at all? Let's see your invoices."
"Here you go sir, all two of them. Terrible business it is."

You'd have to hire MORE tax inspectors to go out and inventory twice a year (and even that wouldn't work) to make sure stock and sales are "on the books."

"Tax loopholes" are the creature of government and politics and always have been. It's politicians paying favors to contributors by passing laws that benefit their cronies by lowering tax rates. Or, it's politicians pandering for votes by reducing tax rates that affect groups they want to vote for them.

It's not the lawyer's fault for being diligent in protecting their client's profits, it's the politician's fault for creating the "loophole" in the first place to curry favor.

That's why a single national sales tax is appropriate. It taxes consumption not frugality and savings, it affects everyone equally, and it allows consumers to tailor their tax burden by tailoring their consumptive habits. And limiting government collections and spending to 15 percent of last year's GDP keeps politicians working to improve, not destroy the economy.

[Blind groper]

This of course is utter nonsense. All it would do is drive commerce underground and into the black market, just like Greece.

Actually, no.

The thing is that tax evasion is alive and well with the current system, with all kinds of falsified documents designed to make profit look minimal. A system based on turnover would attract no more fraud than the present system. And the fraud would be much, much easier to detect. It is often very difficult, with the current system, to know what expenses are real and what are 'stretched'. But turnover is something that can be easily estimated from a wide range of indicators. Including asking customers what they bought.

If a business understated its turnover in order to pay less tax, they would have to be very careful to understate it by only a small amount. A large 'error' would be far too obvious. Even noting the number of trucks coming and going from a business would give a good idea of turnover. Tax agents could easily obtain data on goods brought in and how much is sold to specific customers.

[Tyrannical]

The problem is that there are too many poor that aren't paying their fair share. Too many of them have never had jobs and combined with children they are unable to provide for consume thousands in "free" rent, food, education, medical, and other cash expenditures. Yet they never pay anything in, or at least never come close to paying for what they use.

[Seth]

This of course is utter nonsense. All it would do is drive commerce underground and into the black market, just like Greece.

Actually, no.

Actually yes.

The thing is that tax evasion is alive and well with the current system, with all kinds of falsified documents designed to make profit look minimal. A system based on turnover would attract no more fraud than the present system. And the fraud would be much, much easier to detect. It is often very difficult, with the current system, to know what expenses are real and what are 'stretched'. But turnover is something that can be easily estimated from a wide range of indicators. Including asking customers what they bought.

Easily estimated? How? And why would customers tell the tax man anything? And if your system is not better at preventing fraud than the current one, why bother?

If a business understated its turnover in order to pay less tax, they would have to be very careful to understate it by only a small amount. A large 'error' would be far too obvious. Even noting the number of trucks coming and going from a business would give a good idea of turnover. Tax agents could easily obtain data on goods brought in and how much is sold to specific customers.

And how are they going to do that, exactly, without having legions of "agents" surveilling millions of shops every day and noting down deliveries and stopping patrons to ask what they've bought?

It's ridiculous to think that your system is reduce the need for tax agents.

As it stands, tax auditors do a fine job of detecting tax fraud on a selective and random basis, and that's the best they can possibly do because there aren't enough of them to catch everyone who tries to cheat. That's why they publish and trumpet high-profile tax fraud cases and throw the book at them. It's called "scaring the public into voluntary compliance" using fear tactics that are very carefully and deliberately crafted by the IRS to keep people from cheating.

[Seth]

The problem is that there are too many poor that aren't paying their fair share. Too many of them have never had jobs and combined with children they are unable to provide for consume thousands in "free" rent, food, education, medical, and other cash expenditures. Yet they never pay anything in, or at least never come close to paying for what they use.

Aren't paying their fair share? Fuck, they aren't paying ANY SHARE AT ALL. The bottom 25 percent pay NOTHING, and in fact get money FROM the government. The top 50 percent pay 93 percent of all taxes paid.

[Blind groper]

Easily estimated? How? And why would customers tell the tax man anything? And if your system is not better at preventing fraud than the current one, why bother?

The "tax man" has known right along that a sizable percentage of business and corporate tax payers are dishonest. Tax inspectors develop a wide range of ways of estimating profit, so as to compare the declared profit with the estimated profit. If there is too big a disparity, the tax man will then instigate a full tax audit, in which they study the business and its accounts with the proverbial 'fine tooth comb'. This is a seriously expensive proposition for the business and often enormously embarrassing, when the 'creative accounting' is uncovered.

However, getting an accurate estimate of profit is not easy, short of a full tax audit. To estimate turnover, though, is much simpler, and there are a wide range of indicators. Turnover is pretty much consistent with business activity, which is much more readily determined. As I said, you can estimate it just from the number of trucks going to and from a warehouse. And from many other ways.

Why would a customer tell the tax man? Because the tax man has the legal right to demand his accounts. And because no one wants to alienate the tax man, since he might demand an audit of that business's accounts.

[Seth]

Easily estimated? How? And why would customers tell the tax man anything? And if your system is not better at preventing fraud than the current one, why bother?

The "tax man" has known right along that a sizable percentage of business and corporate tax payers are dishonest.

Yeah, since about the time they started trying to collect taxes some thousands of years ago. So what?

Tax inspectors develop a wide range of ways of estimating profit, so as to compare the declared profit with the estimated profit. If there is too big a disparity, the tax man will then instigate a full tax audit, in which they study the business and its accounts with the proverbial 'fine tooth comb'. This is a seriously expensive proposition for the business and often enormously embarrassing, when the 'creative accounting' is uncovered.

Yup. They can "impute income" based on the business owner's lifestyle and possessions. But that's all done if there's a reason to suspect fraud. What you're suggesting is trying to solve a non-existent problem. If people are going to be honest in reporting their incomes according to the rules, and the vast majority of businesses do exactly that because of the financial consequences of not doing so, then the current audit/accounting process works fine.

You're complaining about "loopholes" and "creative accounting" by lawyers and accountants that reduce and minimize a company's tax burden. The thing is that AVOIDING taxes is perfectly legal. EVADING taxes is not. The Supreme Court has said that its the right of every person to construct their personal and business affairs so as to reduce or eliminate their tax liability. It's a perfectly lawful and ancient custom. If you take advantage of the way the tax law is written and remain in compliance by managing your business affairs in a specific manner so that you DO NOT OWE taxes, or owe less taxes, that's perfectly acceptable.

It's only illegal if you fail to pay taxes you actually do owe.

If you have complaints about the loopholes and special dispensations provided to businesses or individuals, look to your legislators to change the law. But so long as the law exists and can be used in the company's favor, it's fiduciary negligence for the accountant to FAIL to take advantage of those reductions, and it's stupid too.

However, getting an accurate estimate of profit is not easy, short of a full tax audit. To estimate turnover, though, is much simpler, and there are a wide range of indicators. Turnover is pretty much consistent with business activity, which is much more readily determined. As I said, you can estimate it just from the number of trucks going to and from a warehouse. And from many other ways.

And who, exactly, is going to sit and watch the warehouse 24/7 to count trucks? And what's in those trucks? Are they full of product, or are they empty or only partly full? Are they stuffed with high-value items or filled with packing peanuts for the shipping department.

Get real, the best way to audit a company is to look at its books, not try to watch every company in the nation as it moves trucks in and out of a warehouse. I mean really, where are they going to get all the eyes to do that?

Why would a customer tell the tax man? Because the tax man has the legal right to demand his accounts.

Huh? What accounts? A customer doesn't have accounts, he just goes in and buys something and walks out the store with it. The tax man has no authority to ask him questions about his purchase, nor does the customer have to answer any such questions if they are posed.

"Sir, I'm from the IRS and I want to ask you about what you just bought from this company."

"Go fuck yourself, I don't have to answer any of your intrusive questions."

And because no one wants to alienate the tax man, since he might demand an audit of that business's accounts.

HellOOOOO! What does the customer care if the IRS audits the business?

[Blind groper]

The thing is that AVOIDING taxes is perfectly legal. EVADING taxes is not.

Certainly.
However, it is still a problem. This is what this entire thread is about. The fact that wealthy people and big business can avoid taxes to the point where they are paying a pittance.

It is common for such entities to pay only 5 to 10% of earnings, while the honest worker, or small businessperson, pays 30%. This creates an unfair burden on those people, who are often struggling to look after their families. If we can get the corporations and the wealthy to pay an equivalent percentage of earnings, then the poorer earner can gain some tax relief, and the government can pay off debt.

I have suggested a way that will make it far more difficult for those tax avoiders to pay less than their rightful share. It would work, too. The problem with my scheme is not those spurious reasons you came up with, but the fact that government has too damn many lawyers, and they will stymie any effort at tax reform that will reduce the lucrative and excessive earnings they and their colleagues can gain as tax lawyers.

[Tyrannical]

The thing is that AVOIDING taxes is perfectly legal. EVADING taxes is not.

Certainly.
However, it is still a problem. This is what this entire thread is about. The fact that wealthy people and big business can avoid taxes to the point where they are paying a pittance.

It is common for such entities to pay only 5 to 10% of earnings, while the honest worker, or small businessperson, pays 30%. This creates an unfair burden on those people, who are often struggling to look after their families. If we can get the corporations and the wealthy to pay an equivalent percentage of earnings, then the poorer earner can gain some tax relief, and the government can pay off debt.

I have suggested a way that will make it far more difficult for those tax avoiders to pay less than their rightful share. It would work, too. The problem with my scheme is not those spurious reasons you came up with, but the fact that government has too damn many lawyers, and they will stymie any effort at tax reform that will reduce the lucrative and excessive earnings they and their colleagues can gain as tax lawyers.

The rich already pay far more than their "fair share" because their "fair share" is paying a similar amount in taxes corresponding to the benefits they receive from those taxes. It is the poor that consume far more in benefits but pay nothing into the system that are the problem. Everyone on benefits should be made to design a plan to get off of benefits, and at the top of almost all recipient's lists would be use birth control and complete your education.

Certain taxes like Medicaid and Social Security contributions are capped so you don't pay any taxes towards that for earnings over a few hundred thousand. But after that threshold the Federal tax rate kicks up

[Seth]

The thing is that AVOIDING taxes is perfectly legal. EVADING taxes is not.

Certainly.
However, it is still a problem. This is what this entire thread is about. The fact that wealthy people and big business can avoid taxes to the point where they are paying a pittance.

It's not a problem, it's a feature of our system. It's intentional and it's created by the legislature in order to stimulate the economy. Remember that taxes still get paid, but the more economically successful a company is, the more people it can hire and the more wealth it can generate and the more money the government can collect. Killing the goose that lays the golden egg is a common socialist problem because socialists don't understand economics, they just have a child's view of "fairness." Companies that pay low taxes on profits generate far MORE revenue for the government precisely because they get to use that tax money to increase their earnings, which improves the economy, which is a tide that raises all ships. That's exactly why politicians write laws allowing companies to pay less tax. The benefits are not as direct as socialists like under their "its not FAIR" foot-stomping temper tantrums, but economically it's perfectly sound public policy that works quite well.

It is common for such entities to pay only 5 to 10% of earnings, while the honest worker, or small businessperson, pays 30%. This creates an unfair burden on those people, who are often struggling to look after their families. If we can get the corporations and the wealthy to pay an equivalent percentage of earnings, then the poorer earner can gain some tax relief, and the government can pay off debt.

If the corporations make less, they can't afford to expand or hire people, so the "honest worker" is out of a job.

I have suggested a way that will make it far more difficult for those tax avoiders to pay less than their rightful share. It would work, too. The problem with my scheme is not those spurious reasons you came up with, but the fact that government has too damn many lawyers, and they will stymie any effort at tax reform that will reduce the lucrative and excessive earnings they and their colleagues can gain as tax lawyers.

See, that's your problem, your a jealous, covetous socialist who can't see the forest for the trees. All that money that the corporation saves in taxes gets passed on to its investors, who pay income tax on it just like the "honest worker" does, and in doing so it improves the economy, which makes more jobs and more wealth for more people.

That's why the revenue collected has remained at about 19 percent of GDP regardless of how heavily the progressives and socialists try to tax the economy. All they do by trying to be "fair" is burden business, which slows the economy and reduces the GDP and therefore the revenues available to the government to collect.

[MrJonno]

Not sure when 19% comes from the Libertarian times or something it its nearer 25-27% US ~ 38% UK and on average around 40% in the EU as whole

http://en.wikipedia.org/wiki/List_of_co ... age_of_GDP

[Blind groper]

The rich already pay far more than their "fair share"

Yes, I am aware of this argument.
The argument is based on a particular value system. I cannot argue against it on that basis, but my values are different.
I believe in the "greater good for the greater number." A value system designed to be the "greater good for a minority" is one I reject.

If the goal is the greater good for the greater number, then the rich should pay at least the same percentage tax as everyone else, since that permits the poor to become less poor, and permits the government (of whatever nation) to pay off debt.

[Blind groper]

the more economically successful a company is, the more people it can hire and the more wealth it can generate and the more money the government can collect. Killing the goose that lays the golden egg is a common socialist problem

This argument too, is one I have heard many times. The problem is that it does not stand up to investigation. There is absolutely no solid empirical evidence for the "trickle down" effect, and many economists have carried out studies to try to prove it. What they have found instead is that giving more money to the wealthy through lower taxes simply means the rich get richer. The rest of us get shafted.

[Svartalf]

The thing is that AVOIDING taxes is perfectly legal. EVADING taxes is not.

Certainly.
However, it is still a problem. This is what this entire thread is about. The fact that wealthy people and big business can avoid taxes to the point where they are paying a pittance.

It is common for such entities to pay only 5 to 10% of earnings, while the honest worker, or small businessperson, pays 30%. This creates an unfair burden on those people, who are often struggling to look after their families. If we can get the corporations and the wealthy to pay an equivalent percentage of earnings, then the poorer earner can gain some tax relief, and the government can pay off debt.

I have suggested a way that will make it far more difficult for those tax avoiders to pay less than their rightful share. It would work, too. The problem with my scheme is not those spurious reasons you came up with, but the fact that government has too damn many lawyers, and they will stymie any effort at tax reform that will reduce the lucrative and excessive earnings they and their colleagues can gain as tax lawyers.

The rich already pay far more than their "fair share" because their "fair share" is paying a similar amount in taxes corresponding to the benefits they receive from those taxes. It is the poor that consume far more in benefits but pay nothing into the system that are the problem. Everyone on benefits should be made to design a plan to get off of benefits, and at the top of almost all recipient's lists would be use birth control and complete your education.

Certain taxes like Medicaid and Social Security contributions are capped so you don't pay any taxes towards that for earnings over a few hundred thousand. But after that threshold the Federal tax rate kicks up

Actually, as per the old "from each according to ability, to each according to his needs", your blather is hogwash, and I hope you're just trolling and not sincere.
Plus, you forget that the very social setup, and the state around them is what allows the rich to get richer... let them try to do that when they actually have to start contributing directly to road building and maintenance, when they pay for their medicine without the hospitals being state funded, when they try to engage in economic endeavours with the bank structure and legal safety net ensuring their ability to do profit and get fraudsters convicted aren't enforced, and when they have to maintain private security forcces to ensure that gangs of have nots are not going to rob and/or kill them... that might put a more significant crimp on their disposable funds than they think and you assert...

[Seth]

The rich already pay far more than their "fair share"

Yes, I am aware of this argument.
The argument is based on a particular value system. I cannot argue against it on that basis, but my values are different.
I believe in the "greater good for the greater number." A value system designed to be the "greater good for a minority" is one I reject.

Yes, that's the Socialist mantra all right, but it's still evil. When the rights of one man to enjoy the fruits of his labor are disrespected and his wealth is taken from him to serve the needs or desires of others it's generally called "theft" and those who do it are branded as criminals. Put Karl Marx behind it and it's all of a sudden morally acceptable to take what doesn't belong to you and redistribute it to others. Please explain the moral underpinnings of this philosophy of stealing from others to suit your own desires.

If the goal is the greater good for the greater number, then the rich should pay at least the same percentage tax as everyone else, since that permits the poor to become less poor, and permits the government (of whatever nation) to pay off debt.

Why should they pay the same percentage? Why shouldn't they pay the same absolute amount as everyone else? And do you even begin to understand why "the rich" might pay a tax rate on investment income that is pretty much exactly the same as your average middle-class and certainly more than the poor pay as a percentage? Fifteen percent tax rates on investment income are just about exactly equal to the 15 percent that the vast majority of middle-class taxpayers pay in federal income tax. When Warren Buffet lies and says he pays a lower tax rate than his secretary, he's forgetting to tell you that his secretary makes so much money that she's in the 30 percent tax bracket. This is hardly making the poor more poor.

And the reason that the tax rate on investment earnings is 15 percent is that more than half the investment input comes from the "little guy" in the form of small investments in 401K's and other long-term investments intended to bolster retirement funds, and the government wants to encourage people to invest in the economy, so they keep the tax rate equal to what the middle and lower middle class incomes are taxed at in order not to stifle investment of spare cash, which harms the economy.

The poor, you see, pay almost NO TAXES AT ALL. The bottom 50 percent of earners, who make less than $32,396, pay only 2.26 percent of the taxes collected by the government. The top 50 percent, who pay more than $32,395 pay 97.75 percent of the revenues, and the top 10 percent, who make more than $112,124 pay SEVENTY PERCENT of the taxes collected. And the top 1 percent, who make more than $343,947 pay 36.73 percent of revenues.

So, the rich are, and have always paid more than their "fair share" by far, while the dependent class leeches just take and take without contributing much of anything to the nation.