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Progressive taxation is 'soft Marxism'

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Primrose Hill
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Post by Primrose Hill » Tue, 05 Aug 2014 2:00 pm

ISAs etc in UK has a limit.
We pay tax on our pension pot and there's a maximum that one can contribute to the pension pot.
If you work 2years or else, all our pension that's tied to the company will be return to you when you leave the company, minus your taxes, of course.
If you are on defined contributions as most of us are on, there's still the 2.5-3% admin cost to administration cost to pay.

Middle classes are now being sucked dry. Lets tax the people that actually pay their taxes. Lets tax the people that actually bother to work and try to take care of themselves and their families.

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Post by JR8 » Tue, 05 Aug 2014 2:22 pm

I didn't suggest it hadn't.

My previous long-term employer went 'kaput'. I wouldn't know if any accrued pension there has a value, or when I might have a right to access it. I'm assuming none/almost none, and not until state retirement age. I know my corporate ESPP went to being worth 'cents on the dollar' about 1/50th of it's peak value. People who get part-paid in Restricted (i.e. locked-in) Stock by their blue-chip employers might want to consider the ramifications of such circumstances.

So I put that out of my mind many years ago, and am currently in the last steps, after about 5 years?, of creating my own DIY pension. Or rather, converting long-term hands-on investments, into a tax-efficient future income-stream. Coincidentally in another few weeks (touch wood) or so when I'm due a block of funds, should mark my final move from employment > self-employment > almost passive/funded retirement.

My goal is not huge wealth, you know, going and buying a Maserati or gold Rolex, not at all and quite the opposite in fact, but rather setting the bar at: 'All reasonable foreseeable needs likely met, and secured for the future'. Indeed I 'base-lined' that estimated figure off my quite modest income now. And having been burned before, I simply desire something I'm 100% in control of every element that I might be, via almost zero fee products, to which the risk of 'external shock' should be minimal.

A next step then is to ensure that before heading home the income-generating assets are parked in a non-UK tax jurisdiction, and that should be it, barring some minor portfolio tinkering and divi reinvestment.

Anyway apologies if I'm 'going on' a bit, you can likely tell it's rather pre-occupying me right now. I suppose it's something of a once in a lifetime step-change that's underway.
Last edited by JR8 on Tue, 05 Aug 2014 2:44 pm, edited 1 time in total.

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Post by Primrose Hill » Tue, 05 Aug 2014 2:42 pm

JR8, that makes complete sense, keeping HMRC away. How do you propose putting UK properties out of HMRC clutches?
I researched into bare and discretionary trusts and thats being erroded. Then there's envelope tax if I were to use a ltd company.

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Post by stuckmojo » Tue, 05 Aug 2014 3:24 pm

JR8 wrote:
stuckmojo wrote: The accumulation of wealth at the top has now gotten to a stage where there is no opportunity for those at the bottom of the pyramid, as they start off with a disadvantage too big to bridge.
What on earth does that mean? :???:

It sounds as if you are suggesting that there is a fixed supply of money/wealth in the world.

Rockerfeller's, Carnegie's etc, Gates, Bloomberg, Corzine, Jobs ... heaven's even King Solomon, he 'of the gold-mines', and Croesus .... which one of these do you think marked the end point for the wealth-stakes of 'little people'? Or are you going to try and pin it on that pleasant looking Mark Zuckerberg?

I've no idea how the achievement of wealth by some might 'disadvantage' those starting out: In fact isn't that precisely the reverse of 'The American Dream'*? So you're saying Zuckerberg killed the American Dream? :???:



* 'The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work. In the definition of the American Dream by James Truslow Adams in 1931, "life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement" regardless of social class or circumstances of birth.
http://en.wikipedia.org/wiki/American_dream
that's a lot of extrapolation you did there.

In simple terms, let's take two factors:
- Education is now out of reach due to cost. Look at a generation of (let's take the UK as example) young people with 60,000GBP of University debt before they start working (not applicable if rich parents pay).
- More of the people in work now rely on some sort of government support to survive. This was not the case in the past, where a man on a blue collar work could provide for a family.

Where did all the wealth from value creation go? Why all the increasing costs? The answer lies at the top of the pyramid.

I'm not making a moral point out of this.

Zuckerberg is an outlier.

The death of the (western) Middle Class is more significant.

Edited for ugly grammar.

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Post by JR8 » Tue, 05 Aug 2014 3:30 pm

Hi PH,
No what I'm doing is selling investment property, and putting the funds into stocks. I've been a portfolio landlord a looong time, c20yrs, had a great run, but it's time to bank that and do without the 24/7 responsibility always in the background that comes with being a landlord. I know you can go 'full managment' via a letting agent (assuming you have one you know and really trust), and use an accountant to report your taxes, but that *still* involves work, discussion, decisions, checking drafts, obligations, that often comes at the most inconvenient times (like say, at 11pm whilst on holiday). Plus their cost is likely a material slab of your NET profit. Hence the suggestion that such fees are paying for such peoples' children to go to posh schools, that you could not afford to send your own to.

So, for me it's a case of getting my stock portfolio offshore, and that shouldn't be too hard. That said I am aware that providers of 'offshore products' invariably charge fees for that advantage... hence why that question remains pending for now. I recall mooting flipping the brokerage a/c jurisdiction from UK to SG whilst I physically relocate and do the reverse. I've opened a SG (legal entity) based sub-a/c at the UK (legal entity) account of the US/global discount brokerage that I use, with that in mind. IIRC that might work, but it just needs some more research to make sure it'll achieve what's planned.

Landlording and tax is complex (and ever-changing). I knew a guy who bought UK property via Channel Island limited companies that he parked in various offshore trust funds. He had very $$$ advisors, called something like 'Cohen, Cohen and Cohen' of Regent Street... when he told me, I assumed he was joking to make a point, but he wasn't! :)

There are ways of doing it. If I were you I'd go and explore the matter on the financial self-help website/forums at The Motley Fool (or similar). And then if your figures warrant it, later seek a recommendation, and go and pay for up to date and informed professional advice.

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Post by PNGMK » Tue, 05 Aug 2014 3:51 pm

Primrose Hill wrote:ISAs etc in UK has a limit.
We pay tax on our pension pot and there's a maximum that one can contribute to the pension pot.
If you work 2years or else, all our pension that's tied to the company will be return to you when you leave the company, minus your taxes, of course.
If you are on defined contributions as most of us are on, there's still the 2.5-3% admin cost to administration cost to pay.

Middle classes are now being sucked dry. Lets tax the people that actually pay their taxes. Lets tax the people that actually bother to work and try to take care of themselves and their families.
You're right PH. Get your wealth away from the UK if possible and park it in Singapore. At least here you're not going to be wiped out with a super rich tax or 21% VAT or a death tax as is likely in Australia/UK.

Like JR8 I am also pulling out of property - I haven't worked out where to go except perhaps to wait for the next stock market crash and then buy some good dividend stocks (i.e. low payout ratio, consecutive dividend growth etc).

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Post by JR8 » Tue, 05 Aug 2014 4:26 pm

PNGMK wrote:I haven't worked out where to go except perhaps to wait for the next stock market crash and then buy some good dividend stocks (i.e. low payout ratio, consecutive dividend growth etc).
You don't need to 'wait for the next crash', not least as, in such terms it will never come. Or rather, even if it does, you won't then suddenly see it, and accept it. Rather your response will be 'Oh F*** :o I'm not investing NOW, it might crash like that again tomorrow/next month'. Hence you sit and wait until you have comfort that it looks ok, and miss out, and away goes any imagined advantage.

Put another way, any private market investor who claims to have materially bought in after timing a crash, and claims it was other than sheer luck, and/or a very very high-risk gamble is bull&hitting.

[This is why concepts such as 'Dollar Cost Averaging' can work. You invest a fixed amount each month into a market. You are not trying to time the market (no one can!), rather you accept that you blind to it. Result = your fixed amount each month buys more stock when prices are cheap, and buys less when they're expensive.]

My suggestion to anyone would be starting as early as you can, and with what ever you can. It doesn't matter if you're say just 18 or 21 and start by putting $50/mo away, in your own account/plan/portfolio (as discussed pref v.low or no fee!). Another adage 'It's time in the market, not timing the market' that often defines the winners. And getting the mindset in place early is over half of the battle, together with the wonder of long-term compounding.

Google re: the difference at retirement age, of a single fixed sum or regular sum investment made at/from the age of say 20, 30, and 40 years old, and if you haven't seen it before, you will likely be truly :o Even modest contributions started young, seriously make an impact on the overall end result.

p.s. edits/ for typos/mangling stuff up until it made no sense.
Last edited by JR8 on Tue, 05 Aug 2014 5:46 pm, edited 1 time in total.

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Post by Primrose Hill » Tue, 05 Aug 2014 4:26 pm

SIPPS are the only liquid cash left in the UK.
The rest are all out here. Its the properties in UK that's worrying.
I have looked into bare/discretionary trusts and the set up fees are or IHT charges are up to GBP325k - 0%, the rest if 20%, then every 10years it is at 6%. Then there's a CGT charge on disposal at a later date.

I am toying with the idea of a SG Pte but I wonder how envelope taxing will then affect it. Mr Osborne is lowering the entry requirement for envelope tax starting at GBP500k by April 2015.

JR8, I know what you mean about managing the porfolio on your own. I do it myself and there's always a black sheep, isnt it. 9-11% on management of the properties is worth it considering how much I have to do myself, so might as well do it myself. The other problem for me is that one of the flats is share of freehold and the block manages itself and of course, you are likely to get a deranged leader that wants to put up a penthouse on a grade2 listed building or basement parking etc. All fun and games :mad:

I am almost at lost now on trying to figure out the assets in UK, other than selling it.

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Post by JR8 » Tue, 05 Aug 2014 6:29 pm

Primrose Hill wrote:I am toying with the idea of a SG Pte but I wonder how envelope taxing will then affect it. Mr Osborne is lowering the entry requirement for envelope tax starting at GBP500k by April 2015.
What's 'envelope taxing' I can't say I've heard it it, and Googling it came back to this very topic!
I'd have thought a Pte here might be liable to Corporation tax, but Strong Eagle is the one to ask that of.

Speaking of April 2015, I hope you know of the changes to CGT liability on investment property kicking in from there. See further (random example) ... https://wealth.barclays.com/en_gb/inter ... t-you.html . As I understand it, if you're ex-UK, and spend 3+ tax years away you lose liability to UK CGT on investment asset disposals as long as you make them when non-resident. But, from next April, not only will foreign investors become liable to UK CGT on profits from UK property, for the likes of expats who previously benefited from becoming non-res/CGT-free, that will no longer come about/exist. Bam!... suddenly up to 40% tax on any capital profit, a tax that you had expected to avoid. As I recall they're not even tapering that change in, it's a big-bang rule-change. That's my understanding from when I researched it after the previous budget: But if unaware, you need to check that carefully... !

There's always a black sheep (friends with the black swan? ;)) you just have to accept that. That's why I'd rather she cropped up amongst a flock of say 25 pedigree non-black sheep, so any impact is well diluted. And I'd rather 25 pedigree sheep, than having the risk of say 4 black sheep sheep turn up amongst a flock of a hundred decidedly average rag-tag beasts :)


Primrose Hill wrote: The other problem for me is that one of the flats is share of freehold and the block manages itself and of course, you are likely to get a deranged leader that wants to put up a penthouse on a grade2 listed building or basement parking etc. All fun and games :mad:

I am almost at lost now on trying to figure out the assets in UK, other than selling it.
Self-managed SOF.... been there done that, and you're right it's a flipping nightmare. Vested interests, partisanship, chaos, 'in/out groups' of residents, and so on...

I've seen this at a couple of properties. One time I got cajoled onto the informal 'management group', and saw the self interest being played out. The 'How can we get around, or get one over on neighbour X, who no one really likes?' Shocking! I've witnessed that twice now, and the biggest targets can be absentee owners. In one case I was able to force the handing over of management to a corporate managing agent I trust (and some of the other owners knew). Glad I did, half-informed, skin-flint, self-interested self-SOFers are usually a thing to avoid like the plague... (IME)

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Post by Primrose Hill » Wed, 06 Aug 2014 9:18 am


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Post by aster » Thu, 07 Aug 2014 12:45 am

Now I run my own thing here in Singapore, but from what I hear from friends who work regular jobs things are not looking pretty when it comes to companies eroding benefits, cutting out school tuition for kids, etc.

I think most of the guilt lies with "corporate greed" that has reached levels never seen before.

If you look at a chart of how much of the US budget was derived from corporate tax vs personal tax you will see a strong trend that has been going in a single direction for decades.

The way in which large corporations are simply tricking their own country and other markets in which they operate is astounding. And not just that, but mass exploitation seems to be the name of the game today. Look at some of the major phone manufacturers and where all those glossy, new, state-of-the-art smartphones are made. Just to save a buck. Even in developed nations these companies skimp on staff at their flagship stores even, paying peanuts and not even providing health cover where legislation doesn't force them to do so (which raises the question of just how developed some of these countries are).

I recall the day when a Nike or some other brand shirt had the "Made in USA" tag and cost 1/2 of what one costs today, even though now they're made for peanuts in some remote shack of a factory off everyone's radar. How many companies have been caught using sweatshops that employ kids even? And I mean big companies, major brands, not "Yo and Jo Footwear."

If I recall correctly I even read that state or local governments end up paying or giving some sort of subsidy towards Walmart employees. So here is one of the most valuable corporations in the world... and local tax money needs to help pay for such a company to keep people at work? Ridiculous...

Can't afford to pay honest, liveable wages, yet miraculously making billions in profits each year isn't a problem, then shut down and p*** off. Back in the day the general feeling was that a free market economy would function well with as little gov't intervention as possible, but nowadays it seems like governments need to pave the wave and create a playing field that stamps out manipulation, exploitation and abuse. Problem is that there has never been a time when corporations have had so much power over politicians, so maybe here lies the stem of the problem.

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Post by JR8 » Thu, 07 Aug 2014 11:52 am

Primrose Hill wrote:
http://www.pwc.co.uk/private-business-p ... -you.jhtml

here's the envelope tax thingy
Thanks for that!
So it consultant-speak for a property tax-vehicle. And a taxman's attack on all the 'rich' using such various vehicles to avoid tax. Well it's an ongoing battle, so no big surprise.

I reckon physical property is a prime and easy target. You can't just click a button and flip it offshore.

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Post by JR8 » Thu, 07 Aug 2014 12:02 pm

aster wrote:Can't afford to pay honest, liveable wages, yet miraculously making billions in profits each year isn't a problem, then shut down and p*** off.
And that's precisely why, when you visit a chemist/pharmacy/apothecary in Germany a pack of 10 Aspirin will cost you maybe euro 6 (S$10).

Visit one in the US, and a bottle of 250 might cost you US$5 (S$6).

You want protectionism? Go ahead, but don't snuff out competition... you must accept that it's 'against the order or nature' and someone, that's you, are paying for it :wink:

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Post by Primrose Hill » Thu, 07 Aug 2014 12:21 pm

I realised that the CGT will probably come in next year. I like the ltd co set up, for annoymity with ensures privacy and IHT.
Currently there's no tax on incoming funds/income earned abroad, so pte ltd, maybe quite good.However, CGT for companies are significantly lower and there aren't any CGT in SG, or does it matter?
So complicated.
Or should we be investing in another property here given that there's no CGT & IHT here? What do you think?

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Post by JR8 » Thu, 07 Aug 2014 12:34 pm

Not enough input, to yield any useful output.

You'd be far better posing the situation on the forum I've previously suggested to you.

Me? I'm done with property investment. Progressively cashing out. Whacking it in blue-chips where I can pretty much invest and forget...

It's going to be very unfamiliar territory, and I don't know quite how I'll psychologically manage my 'twiddling thumbs'. After all the whole approach is borne of someone who is very hands on. Perhaps just learning to {exhale} let it go ... That said, isn't this what many say about retirement, it's a sort of enforced passivity, that just happens one day.

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