Tax Evasion clampdown?

[Beeroclock]

@BoC
'Income inequality gets worse each year, and one reason why the rich get richer is they use these schemes to minimize the tax the pay.'

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Google definition:
'noun: tax avoidance. The arrangement of one's financial affairs to minimize tax liability within the law.'

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Tax avoidance is every man's right.
- Will you volunteer to stop visiting Duty Free Shopping, or
- Should duty-free be made illegal?

@JR8, indeed, I agree it's every man's right to avoid tax as per your definition, I never said otherwise. And it's also my right to have an opinion that I don't like it and wish for something to be done about it. I don't mind either if they want to do away with duty free shopping as part of the same package. Most likely though, they will end up introducing more regulations full of loopholes that the wealthy have no difficulty side-stepping, and only succeed in penalizing the middle class even further....

[JR8]

That alas is life, as the authorities can only be reactive to what's already happening, something that they subsequently take a dislike to.

It never changes anything.

[Beeroclock]

I guess there are solutions if the authorities seriously want to make it more difficult to avoid tax. But they will upset a lot of vested interests and these authorities will not have the mandate/clout to take such a stand.

It just makes me wonder really what is the point of having a progressive income tax scale in the first place.

[Barnsley]

I guess there are solutions if the authorities seriously want to make it more difficult to avoid tax. But they will upset a lot of vested interests and these authorities will not have the mandate/clout to take such a stand.

It just makes me wonder really what is the point of having a progressive income tax scale in the first place.

VAT/GST or whatever its called in various countries should be replaced with a higher income tax.



Can't get more "progressive" than that

[Barnsley]

http://m.smh.com.au/business/singapore- ... z30RGmwLul[/url]

[PNGMK]

I guess there are solutions if the authorities seriously want to make it more difficult to avoid tax. But they will upset a lot of vested interests and these authorities will not have the mandate/clout to take such a stand.

It just makes me wonder really what is the point of having a progressive income tax scale in the first place.

VAT/GST or whatever its called in various countries should be replaced with a higher income tax.



Can't get more "progressive" than that

Actually a consumption tax is probably better than an income tax that people can work around.

[Beeroclock]

I guess there are solutions if the authorities seriously want to make it more difficult to avoid tax. But they will upset a lot of vested interests and these authorities will not have the mandate/clout to take such a stand.

It just makes me wonder really what is the point of having a progressive income tax scale in the first place.

VAT/GST or whatever its called in various countries should be replaced with a higher income tax.



Can't get more "progressive" than that

Actually a consumption tax is probably better than an income tax that people can work around.

Yeah I tend to agree, even though they are theoretically regressive taxes, it might not be in practice because it's difficult for the ultra wealthy to avoid paying it when they consume....

if it's my country and I'm the King, I would just make these tax havens illegal. Any person or company found using them, directly or indirectly, to face fines and/or jail. oh, and no duty free shopping either.

[Girl_Next_Door]

Was having this discussion with my colleagues. Unless you are working in US or plan to work in US in the future, then keeping US citizenship or green card make sense. Otherwise, there is going to be a lot of challenges in "hiding" your monies in the future. Many non-US banks actually rejects consumer/retail US customers and I know a few private banks who also do not accept US citizens as customers due to the high compliance cost.

[zzm9980]

Was having this discussion with my colleagues. Unless you are working in US or plan to work in US in the future, then keeping US citizenship or green card make sense. Otherwise, there is going to be a lot of challenges in "hiding" your monies in the future. Many non-US banks actually rejects consumer/retail US customers and I know a few private banks who also do not accept US citizens as customers due to the high compliance cost.

Unfortunately it isn't quite as simple as just renouncing if you're a citizen or have had a green card for 8+ years. There is a hefty "exit tax" if your income is above average:

http://en.wikipedia.org/wiki/Expatriati ... ted_States

[Girl_Next_Door]

Was having this discussion with my colleagues. Unless you are working in US or plan to work in US in the future, then keeping US citizenship or green card make sense. Otherwise, there is going to be a lot of challenges in "hiding" your monies in the future. Many non-US banks actually rejects consumer/retail US customers and I know a few private banks who also do not accept US citizens as customers due to the high compliance cost.

Unfortunately it isn't quite as simple as just renouncing if you're a citizen or have had a green card for 8+ years. There is a hefty "exit tax" if your income is above average:

http://en.wikipedia.org/wiki/Expatriati ... ted_States

When we were chatting, its more on kids who are currently holding dual citizenship, and how they need to consider carefully which citizenship they want to give up, when they come of age.

For adults, the exit tax is unavoidable. However, if your income is above average, you have to consider long term. Of course if you expect to retire shortly, then it might make little sense. However, if you expect to accumulate more wealth long term, then it might be worth considering paying the "exit tax", in view of future earnings.

[JR8]

I guess there are solutions if the authorities seriously want to make it more difficult to avoid tax. But they will upset a lot of vested interests and these authorities will not have the mandate/clout to take such a stand.

My thinking is that they can for the mainstream citizenry, but for the creative there will always be other options.
I’m not sure about upsetting ‘vested interests’ or whom they might be, but it would upset a lot of the better off, and ‘turkeys don’t vote for Christmas’ do they?
Even now the UK has a coalition government, and what with the reported growing threat from UKIP the Tories are never going to start persecuting and alienating, a significant element of their loyal established vote.

It just makes me wonder really what is the point of having a progressive income tax scale in the first place.

Because it covers 99.9% of the population, in a relatively straight-forward fashion?

VAT/GST or whatever its called in various countries should be replaced with a higher income tax. Can't get more "progressive" than that

I appreciate that is at least somewhat tongue in cheek, but, do you remember the 70s ‘brain-drain’, when Labour brought in up to 95% tax, and hence all the talent fled, with a large segment going to the US?

re: your linked article. If people think ‘a man’s tax affairs’ are a national issue of concern, then corporate tax affairs are akin to putting nitromethane into the incentive to get creative. Pursue it how ever you wish, but those funds are going to be off like a rocket <geddit>

Actually a consumption tax is probably better than an income tax that people can work around.

You reckon? Brits have been going on ‘booze-cruises’ over to the French Channel ports for perhaps 30 years now. Go on a booze-cruise day-trip, load up as much as your axles will bear, and you’re sorted. I think I previously recounted a story of a friends mother who, having to cater for a daughter and a nieces wedding, took a Land-Rover+horse-box over to France, where she proceeded to load it with a copious number of cases of various wines (maybe a hundred?). She was stopped on her way back into the UK, as they could not believe that the quantity met the test of ‘being for personal use’. They wanted to stick her a huge tax-bill. But being a hard-as-nails farmer’s wife she told them where to go, returned to France, then drove all the way down to Spain, maybe 800 miles, and came back in that way via Southampton. It goes back to the point of, threaten to punish people hard enough, and they will find a way around it.

- re: consumption tax? For one thing that kills tourism, it is the precise opposite of ‘Tax-free for Tourists’. How many Brits have been on holiday, or even weekend breaks, to Norway or Sweden. Why is that? Their insane consumption taxes.

if it's my country and I'm the King, I would just make these tax havens illegal. Any person or company found using them, directly or indirectly, to face fines and/or jail. oh, and no duty free shopping either.

But you couldn’t, because they’re not under your countries, and not under your jurisdiction. Because if you were a UK king you’d only have token-power, as you’ve given it all away to Parliament.
p.s. You’d ban duty free? Interesting, and a genuine question ... So you don’t shop in Duty Free, on ethical grounds?

@ GND. Yes, that is correct. The reporting requirements for US citizens can often outweigh the likely net-margin a bank can expect to make. So, apparently, US citizens have far fewer options regarding banking/investing overseas. Just one example of citizens abroad, paying the price of popular domestic/back-home policies?

[Beeroclock]

if it's my country and I'm the King, I would just make these tax havens illegal. Any person or company found using them, directly or indirectly, to face fines and/or jail. oh, and no duty free shopping either.

But you couldn’t, because they’re not under your countries, and not under your jurisdiction. Because if you were a UK king you’d only have token-power, as you’ve given it all away to Parliament.
p.s. You’d ban duty free? Interesting, and a genuine question ... So you don’t shop in Duty Free, on ethical grounds?

"King" is tongue in cheek, the intent of my comment is if these G8 countries are really serious about reducing tax avoidance, then they can take such a step which will be simple and effective. Of course they have no jurisdiction over other countries. But they do have jurisdiction over their own citizens and residents. So for example if the UK Government were to put in place a law like this, then after an amnesty period to allow people to come into compliance, any UK citizen/resident or UK based company found using any tax haven structure will be illegal. In addition to the fine/jail, I would also throw in a ban from any Govt contract, welfare, medical, subsidized housing, public sector job, etc etc. I guess some people will renounce or decide to reside elsewhere, and that will be sad but do you really want to keep these people anyway?

IMHO these tax havens serve no real, positive purpose and add no tangible value to the global economy. On the negative side, it is well known that they facilitate illegal activity and distort the tax/fiscal policies of other countries, both of these to a substantial extent.

If people/companies choose to do tax avoidance (which yes, is absolutely their right), then I see it as the Govt's role to uphold the integrity of their own tax/redistribution policy and to protect the majority of people/companies in the country who willingly pay their fair share of tax.

As for duty free, I can't remember the last time I bought anything there. Frankly it is a drop in the ocean compared with the scale of money channeling through BVI, Isle of Man, etc etc. And duty free is a relatively level playing field, nowadays with budget airlines etc, people from all walks of life are travelling, so I personally don't have much gripe with duty free.

[JR8]

Ok well, I can't really see further progress being made, it's starting to get all rather circular.

I do find it all a 'little rich' choosing to live in a greenhouse, and then throwing stones. After all SG is one of the largest 'low-tax offshore banking centres' in the world...

If you were to live your moral values Eritrea might be the place for you (I bet you can't wait to pack! ). The only other place imposing tax on global income is the US but the culture might be too capitalist for you, how would you sleep at night paying such low income tax rates (indeed how do you here)? Oh and then there is also the the question over whether they'd have you; they don't tend to go big on people with 'commie values'.

p.s. @ZZM - Yes, this is why when I was entitled to a green-card I declined to take it up. The 'lifetime' reporting requirements made it unattractive to the point of being net-net an onerous burden.

[Beeroclock]

I gather we agree on one thing which is that not much will change. As for the rest - yes we see it quite differently.

[JR8]

I'm reminded of a friend, the son of 1960s London 'art-school' parents. Imbued with radicalism and politics at the right-on socialist font that was the RCA back in those days.

I don't believe either came from privileged backgrounds, but they went on to found a very successful interior-design business from a shop in Knightsbridge. Not so long after they were being jetted off all over Europe, The Gulf, and Asia to 'spec up' projects.

They clearly worked hard and did very well. The first time I visited their then home, perhaps 25 years ago now, I was dazzled by it, a socking great lower-floors South Kensington apartment opening directly onto a communal square garden behind. They'd done well indeed.

So imagine my curiosity, as we'd sit there after dinner, on the third bottle of Chablis, deep in debate, her with a silk scarf tied in an haut-Bohemian fashion around her forehead and smoking a cheroot, espousing unadulterated socialist values? What was one to make of sitting in a relative mansion hearing this talk? Well they were charming and quite eccentric, so we enjoyed many evenings of vigorous debate, but as they were the hosts you also knew that there was a line and contradiction that would be too personal to cross.

Wind forward to the present day. That friend, brought up amongst these luxurious surroundings, is now a director of a Swiss bank. He's a lovely guy (in fact he was by best man). Despite this background of privilege, + now some added significant wealth on top, he is still espousing precisely the same radical 1960s political views as his parents used to. Huh?

The difference is that he point blank refuses to discuss the apparent conflict and hypocrisy of his status vs his views. He's smart enough to know it's wholly conflicted, and I can only conclude that that is why. (At least you're giving it a go, so kudos for that).

So I've something of a track record in being perplexed by trying to sift the facts of a matter of someone's status, versus their touted beliefs... and I'm rather intrigued if and how the dots can somehow be joined between these two completely opposing positions.