Tax incidence doesn’t work this way

The caveat is that it is highly likely that the market will adjust quickly to the new system and that sellers, far from footing the bill, will simply price it in — pushing up house prices.

Or rather, it does work this way. The price is the price, how it’s distributed between tax and seller’s receipts is a very secondary issue.

So, tell me about dividend taxation

From the IFS report:

Partnership and dividend income are taxed at lower rates than normal salaries – a policy choice to tax the incomes of business owners at lower rates than employees, which therefore benefits a significant share of the top 1%.

If you add corporation tax and income tax and NI together, are dividends actually taxed less than labour incomes? There’s been so much change in rates and stuff that I no longer know….

Anyone want to do a calculation (perhaps with and without NI?) on a £1 million income taxed as partnership income, labour income and dividends?

Oh, OK, never mind. They do the calculation in the report.

Huzzah!

Boris Johnson proposes a Worstall policy:

Increasing the starting point for national insurance contributions to £12,500
Cost: £11bn. At present people pay NICs when they earn £166 a week and income tax when they earn £12,500 a year. Johnson wants to gradually align the two systems by raising the NICs ceiling to an annual £12,500. Doing this in one go would cost £11bn a year and take 2.4 million people out of paying NICs altogether, but would still offer most benefits to those on higher earnings.

Huzzah and Gloria etc.

And how do I know it’s a Worstall policy? Because of the £12,500. That’s what the full year, full time, minimum wage was when I made the proposal. Which was my proposal – income tax and NIC should be aligned with the full year, full time, minimum wage.

Sure, inflation and minimum wage changes have moved the number on, but the policy is still living in that old form.

Sigh

….and ordering Apple to pay €13bn plus interest — the biggest tax fine in corporate history — for using Irish law to cut its bill.

It’s not a fine. It’s the return of unlawfully provided state aid.

And as the EU itself points out. It’s the state that provided the aid. Therefore, if there were any fines they would be levied on the state, not the company. The company being the innocent recipient of that illegal state aid.

Tax

Revealed: the HMRC scam most likely to trick you out of your savings

Tax, that’s what the scam’s called.

Hmm? Oh, you mean scamsters pretending they’re HMRC. Oh yes, that is different then. You’ll only have to pay them if you’re stupid, they can’t claim it as of right….

Quite

Teachers and police officers will not have a national exemption from a controversial workplace parking tax agreed by the SNP and Greens, under plans lodged in the Scottish Parliament.

The Scottish Greens tabled amendments to a Transport Bill, agreed with the Scottish Government, that will allow councils to introduce the new levy.

They included a “national exemption” for hospitals and NHS properties and, following complaints from doctors and charities, specified this should include GP practices and hospices.

Blue badge holders will also not have to pay the charge but pleas by teachers and other groups that they should be extended the same privilege fell on deaf ears.

How wide should the exemption be? Politicians? Bureaucrats? Employees of vital exporting firms? Members of political parties?

Isn’t this fun about candidate’s tax returns?

So, they all pile in about Trump not releasing his tax returns. Then Beto O’Rourke, s#rising start, releases his returns for the past decade.

This is really quite glorious, Beto O’Rourke has released his tax returns and the WSJ has thus found out that he underpaid his taxes for two years, 2013 and 2014. Given the emphasis the Democrats are putting on getting Trump to release his tax returns is that the end for this little campaign? I mean, it should be, right?

Yep, it’s a technical and near trivial mistake. And yet, you know….

Snigger

The archive of Tony Benn has been donated to the British Library under the acceptance in lieu scheme, allowing his family to reduce a substantial inheritance tax bill.

The enormous collection, comprising several hundred thousand documents and recordings and worth over £500,000, has been gifted to the nation.

And in a move that won praise from Conservative MPs for prudent financial management, the donation settled £210,000 in tax.

But then Tony Benn always was very careful with the family money, wasn’t he?

Guess what calculation we won’t see here?

But now, Beefeaters from the Tower of London, Hampton Court Palace and Kensington Palace could vote to strike for the first time in 55 years in a row over pensions.

Historic Royal Palaces (HRP) employees, including Jewel House Wardens and other workers, who have been affected by the closure of their pension will be balloted on strike action from Friday, November 30, which could result in a walkout.

Unions claim changes will mean members’ final salary pensions will be replaced by an inferior plan

What is the value, as a percentage of their annual pay, of the accrual of that final salary pension?

It’ll be an eye popping number and one that rather puts the lie to he idea that the public sector is underpaid.

These people are idiots aren’t they

Alston asked a group of Glasgow kids who it is that should help those in poverty. “The rich people,” one shot back. “It’s unfair to have people earning billions and other people living on benefits.” Out of the mouths of babes.

How do you get the benefits if there are no richer people to tax to pay them?

Lying toads

Legal experts have accused the Government of sneaking in a new “death tax” by the back door without proper parliamentary scrutiny.

New rules will mean estates worth £2m or more pay £6,000 in probate fees, up from £155 currently. The 3,770pc increase is a reduction on the original plans, which would have meant a bill of £20,000 for the largest estates.

A “grant of probate” allows the executor to access and distribute someone’s estate when they die.

The fiercely unpopular changes have been dubbed a “stealth death tax” and a de facto increase on top of existing inheritance levies (IHT). Experts have now warned that the probate fee structure will not be thoroughly debated in Parliament, as any other tax rule changes would.

The changes are expected to be introduced in April 2019, but the rules already form part of the law, it has emerged.

Making use of a parliamentary procedure called a “negative statutory instrument”, the Government is able to write the changes into law without debate.

The procedure dictates that an amendment is made to existing legislation on the day it is announced and remains so unless a motion to reject it is agreed within 40 days.

Given the use that is made of these things – despite the entirely true case that they have positive uses – perhaps it’s time to abolish SIs altogether?

Further, the best argument against more government is what government currently does.

Not quite getting it

It makes little sense for those earning £49,000 to be paying the same rate as those on £149,000, nor should those earning £500,000 pay the same as those getting £200,000. The Laffer curve was only created to enable Ronald Reagan to lower taxes so it needs to be discredited, and draconian measures introduced to ensure that the rich, for the first time in our history, pay their fair share. Let’s start with a 90% tax on incomes over £1m.

All tax avoidance should be made a criminal offence, as should giving advice to enable it to take place.

No, the Laffer Curve is a mathematical certainty. And the definition of tax avoidance is that it’s legal.

Sigh, Guardian letters page, eh?

Positively Spuddy in its ignorance

In September, AAT published a short report highlighting £27bn of annual savings that could be made without raising taxes or increasing borrowing – by scrapping car tax and fuel duty and replacing it with a pay-as-you-drive system, by simplifying inheritance tax, and removing higher rate tax relief for pension contributions,

Collecting more in tax is not raising tax in what manner?

Well, he would, wouldn’t he?

One of Britain’s most high-profile retail landlords has backed calls for higher taxes on online retailers to relieve the pressures of the “out of date” business rates regime on the country’s struggling high streets.

Brian Bickell, chief executive of Carnaby Street owner Shaftesbury, called for a “level playing field” between shops and online shopping websites such as Amazon, which typically occupy much cheaper property and pay much less in rates as a result.

That we currently have a level playing field – those who use property pay tax based on the value of the property they use – doesn’t fit the narrative of someone on the losing end of that level competition, does it?

How does this work then?

Mondelez UK accounts reveal that its turnover rose from £1.64billion to £1.66billion and its profits increased to £185million from £22million. The rise was mainly due to £146million of dividends from two subsidiaries – its Terry’s chocolate business and a coffee business in the Netherlands. This cash offset its profits and helped cut the corporation tax – which is payable on profits – to zero.

Mail butchery there, obviously. But what actually is the allegation? That they received tax paid dividends and then didn’t pay tax on them again?

‘Uman rights, Pah! What matters is Moar Tax!

A group of contractors who used tax avoidance schemes have branded looming fines “grossly unfair” and a breach of human rights in an official legal challenge.

The tax office has targeted around 50,000 self-employed people with a “loan charge”, set to hit in April, which those liable claim will see them forced into bankruptcy.

The dispute arises from the contractors’ use of complex arrangements, popular and widely accepted to be legal in the early 2000s, in which much of their salary was paid in the form of supposedly tax-free loans.

Well, they were actually legal. What is not illegal is legal, recall? Then the rules were changed. Retrospectively.

Following the successful case against Scottish football club Rangers last year, the Government introduced a new law and HM Revenue & Customs has deemed any outstanding loans liable for tax.

The contractors will also be hit by the loan charge, which rolls all the loans received into a single tax year meaning the bill could be more than the actual tax liability. It also does not clear the original unpaid tax bill.

But Moar Tax is to be collected so that’s fine, isn’t it.

Interesting question for Robert Reich

Hard to believe, but the Trump administration is proposing yet another massive tax windfall for the rich.
It would be to reduce their capital gains taxes. Those are taxes on the increased value of their stocks and bonds, businesses, and other valuables, when they sell them. Trump would do this by eliminating whatever portion of that increased value was due to inflation.

How about a logical defence of why inflation gains themselves should be taxed? Something from perhaps theory or even morality?

Well, no, not quite

Contractors suspected of being “false employees” win the vast majority of tax tribunal cases brought against them – raising further questions over the taxman’s ability to enforce the rules accurately.

The successful finding against BBC television presenter Christa Ackroyd, who was ordered to pay £419,000 by a tribunal, has been hailed as a huge win for the taxman.

But analysis of other cases relating to “off-payroll” working by advice service Contractor Calculator found that this was an exception. HMRC has won just one of the 10 cases it has brought to tribunal against the self-employed in the past decade. Another of the 10 was a split decision.

Looks more like a failure to understand the rules than enforce them on HMRC’s part.

Yes, Prem Sikka is an idiot

Prem Sikka, professor of accounting at Sheffield University, said: “This shows just how far removed the senior leadership of HMRC are from public opinion. This policy provides absolutely no deterrent to tax cheats.”

Hmm, what?

Richard Las, the deputy director of HMRC in charge of organised crime, said that “very wealthy and prominent members of the community” were afraid of the “reputational damage” that a criminal trial for fraud, money-laundering or tax evasion would bring.

He admitted that “criminal justice” was never a “default option” for HMRC. “We use it where it is necessary and it will have the greatest effect,” Las said.

“When deciding whether to deploy our resources, we try to understand what motivates different types of offenders. For example, some tax offenders are very wealthy, prominent members of the community. We know that these types of people do not want the reputational damage of custodial sentences, and we can use that to our advantage.”

The news raises fresh questions about the approach of HMRC, which has been criticised for failing to prosecute high-profile people with financial interests in offshore tax havens.

What HMRC has actually said is that we’ll use whatever we can to make the bastards cough up. And if it’s the threat of public shame which will then we use that. If that won’t work then sure, we go to the expense of prosecution and the courts.

What the hell else do you want us to do?

What’s the net effect here?

They point to Diageo, which agreed in July to pay an extra £190 million in conventional corporation tax in order for HM Revenue & Customs to return £107 million it had paid previously in diverted profits tax.

Other as yet unidentified multinationals are also agreeing larger corporation tax payments to avoid the embarrassment and reputational damage of being seen as paying DPT, a tax introduced in 2015 to crack down on the most egregious forms of tax avoidance.

Last year Diageo, which operates in 180 countries and makes Guinness and Gordon’s Gin, was one of the first companies to admit that it was being asked to pay diverted profits tax, revealing that it had paid up despite challenging the demand.

The sum will now be paid back by the taxman, but in exchange Diageo has agreed to pay an extra £143 million of corporation tax in respect of the three years to June 2017 and, using the same approach, has earmarked an extra £47 million that it will pay for this year.

DPT paid over how many years? Corporation tax paid over how many years?

Is this a net gain to the Treasury or not?