Tax

A triumph of country by country reporting

The mean percentage of profits booked in tax havens is about 20% but the figure ranges from 0% in the case of nine of the banks to 58% by HSBC.

The figure is high because of HSBC’s strong ties to Hong Kong, which for the purposes of the study was counted as a tax haven.

We would never have known without the P³. HongKong and Shanghai bank books profits in Hong Kong.

Mercy!

Tax them! Tax them!

The endowment fund behind the Guardian will pump more money into the booming private equity market after the value of its assets increased by nearly a fifth in the pandemic.

The Scott Trust, which owns the left-leaning news publisher and funds its persistent operating losses from its investment returns, said the overall value of its assets increased by 19pc – or £178m – to £1.1bn for the year to March.

If they’re profiting while millions die we must tax them!

And as Elynomics³ keeps pointing out, government running a deficit simply does produce a rise in private wealth which must be taxed back…..

Idiotly stupid

Freelancers face being “left out of pocket” because tax plans that would result in the self-employed paying regular monthly tax bills as if they were employees, according to new polling.

Two in five freelancers would be left struggling with cash flow if proposals for a monthly or quarterly pay-as-you-go tax regime came to fruition. It would require the self-employed to pay tax in advance, based on their profits from the previous year.

I’ve had $200,000 years. I’ve also had $30,000 years.

So the intention is that I should pay tax on $200k in a $30k year?

Cretins.

Ah, yes, cretins

In the US, most people make their money from a regular job; they get a paycheck and pay income taxes. But the richest Americans, the top 1 percent, make most of their money from things like investments in real estate or the stock market. Those investments are taxed as capital gains. While federal income tax has a maximum tax rate of 37 percent, the tax rate for capital gains tops out at just 20 percent.

Sigh.

No.

It’s not even a majority is capital income, let alone capital gains.

For the top 1 percent of households, in contrast, capital income — most of which enjoys preferential tax rates[4] — constitutes 41 percent of their taxable incomes,

Capital income is not the same as capital gains. Further:

According to the Congressional Budget Office, as of 2011, the top 1 percent of income earners in the U.S. get more than a third of their income from capital gains. For context, the typical annual income for those in the top 1 percent is about $1.4 million.

Sigh.

We are saved! Saved!

The OECD said more than $100bn (£73bn) was expected to be raised by curbing profit shifting. About $150bn is expected to be raised from the global minimum tax rate.

Those numbers are in fact bollocks but still.

Consider the total impact. Global tax revenues are around $25 trillion. Governments will – OK, might – have 1% more to play with.

We’re saved I tell ‘ee, saved.

Sounds like a good person to have really

The City watchdog’s new most senior lawyer was involved in a celebrity tax avoidance scheme that cost the taxpayer £52m, The Sunday Telegraph can reveal.

David Anthony Scott, appointed last week as the Financial Conduct Authority (FCA)’s interim general counsel, is named in Companies House filings among hundreds of people who backed a 2011 tax incentive scheme involving empty data centres in Tyneside.

OK.

HM Revenue & Customs officials began clawing back the £52m “tax profit” in 2016, but a High Court ruling in 2019 then ruled in favour of the investors. The scheme was legal and there was no suggestion of wrongdoing by anyone who invested in the centres, which were intended to foster economic growth in the area by offering investors a generous tax allowance.

Someone who obeys the law sounds like a useful fort of person to have in that job, no?

Resolved, David Sirota is an idiot

We’re told billionaire tax avoidance is ‘perfectly legal’. But is it?
David Sirota
A presumption of innocence is never afforded to poor people accused of petty theft. Yet billionaires benefit from it every day when it comes to taxes

Every court case ever starts with that presumption of innocence. OK, well, since the end of the Star Chamber at least.

In the wake of ProPublica’s recent disclosure of how billionaires avoid income taxes,

Jeeeezus. It’s not even about income taxes, it’s about capital gains taxes.

Idiot.

Mr Shaxson is an idiot

As we get braver we should also aim to tax all those unrealised gains – so if a billionaire’s wealth rises, they pay tax on that annually, whether or not they sell (or “realise”) assets. Some powerful Democrats in the US are now pushing for just this.

Sigh.

So where does the money come from to pay taxes on unrealised gains? The gains must be realised, right?

Isn’t this fun?

ProPublica’s bombshell report on America’s super-wealthy paying little or nothing in taxes reveals not only their humongous wealth but also how they’ve parlayed that wealth into political power to shrink their taxes to almost nothing.

Jeff Bezos, the richest man in America, reportedly paid no federal income taxes in 2007 and 2011. Elon Musk, the second richest, paid no taxes in 2018. Warren Buffett, often ranking number 3, paid a tax rate of 0.1% between 2014 and 2018.

The real scandal is it’s legal.

Wealth and power are inextricably connected. The super-rich have bought armies of lobbyists to keep their taxes minuscule and to create and maintain tax loopholes large enough to drive their Lamborghinis through.

This talk of loopholes and avoidance.

America has never had a tax system which taxes those uncrystalised capital gains. So what loopholes, what tax avoidance?

That over-weening state

HMRC has been charging too much tax:

HM Revenue & Customs has refunded millions of pounds to taxpayers who paid its controversial loan charge.

But only a fraction of those who applied for a refund have so far received any money, meaning hundreds of taxpayers face a longer wait for their cash to be returned.

The taxman has so far refunded, or waived, £3.6m to 50 taxpayers who paid the loan charge, at an average of £72,000 each, a Freedom of Information request submitted by this newspaper has revealed.

And here’s the bit:

The remuneration schemes, which were legal at the time,

So HMRC has been charging taxes, unlawfully, on something that was entirely legal? That benevolent state idea is looking a bit iffy, no?

What fun!

The European Commission suffered an embarrassing defeat in its court battle with Amazon on Wednesday, after EU judges cancelled Brussels’ order that Luxembourg recoup about £215m in back taxes from the US tech giant.

The victory for Amazon is another setback for Margrethe Vestager, who leads the EU’s powerful competition authority and had accused Luxembourg of signing sweetheart tax deals with the company that amounted to illegal state aid.

At the heart of the case is a simple concept. Were the rules special for Amazon? If yes then maybe it’s state aid and thus illegal. If no, if other companies could achieve the same deal, then it’s not state aid and is just the normal ability of a country to decide its own tax rates.

As with the Apple and Ireland result – so far – the courts are finding that it’s not special to the specific company therefore isn’t state aid. All very simple indeed.

Dodge?

Charity donations soar as thousands dodge inheritance tax

All gifts to charitable causes are tax free. However, someone can cut the inheritance tax rate paid by their estate by donating more than a tenth of your worldly possessions to charity. This discounts the typical 40pc rate to 36pc on assets over the £325,000 tax-free threshold.

As an example, if your taxable estate is worth £250,000, you would be faced with an IHT bill of £100,000, leaving your family with £150,000. By giving away 10pc – £25,000 – to a registered charity, the tax bill would drop to £81,000, leaving your family with £144,000 following the donation. Although heirs lose £6,000, the charity is £25,000 better off.

What’s a “dodge” about obeying the tax law?

Well, no, she didn’t say that

Treasury Secretary Janet Yellen says a ‘shocking’ $7 trillion in taxes is going uncollected

No, she didn’t say that much is going uncollected – and it’s over a decade too.

“It’s really shocking and distressing to see estimates suggesting that the gap between what we’re collecting in taxes on current tax and what we should be collecting — if everybody were paying for taxes that are due — that amounts to over $7 trillion over a decade,” Yellen said in an interview with The Atlantic published on Tuesday.

She said that it’s shocking to see estimates that it’s that much. This is a different statement.

I think this is true

Not sure. A brief reading of the Biden tax plan suggests – suggests – that dividends should be taxed like other income.

So, 28% corporate income tax, then 39.4% individual income tax. That is, remove the 15% dividend tax rate.

So, taxing dividends twice is going to be the same rate as once, is it?

The tax bill for being a good neighbour

A Connecticut middle school teacher who raised $41,000 to help hundreds of his struggling neighbors during the COVID-19 pandemic got an unwelcome surprise for his charitable efforts: a form stating he could owe $16,031 in income taxes.

Louis Goffinet, 27, of Mansfield, began picking up groceries for elderly neighbors afraid to go to the store during the early days of the pandemic, often spending his own money. Given the great need, he later organized two fundraisers on Facebook over a year and helped hundreds of families with groceries, rent money and holiday gifts, the Hartford Courant reported, setting a $200 limit.

The grifters in government always want their slice, don’t they?

Tax after coronavirus

The committee report is now out:

79. Tim Worstall, Fellow of the Adam Smith Institute, was concerned about the nature of
a wealth tax, in that it would tax wealth accumulated in the past. He told us:

A retroactive tax is an appalling idea. It is akin to theft. Roy Jenkins did
this in the 1960s. He retroactively imposed a 130% tax at the top end of
capital incomes on the previous tax year that was already closed. That is
just appalling behaviour. However much Government need the money, that
is just not what we should be doing. Tax, just like any other form of law,
should be: “It starts today. If you do not agree with it, you can change your
behaviour in the future to avoid it and not do the activity [ … ]88

Interesting

The charity TaxWatch tells me that the Department for Work and Pensions prosecutes 23 times more people for benefit fraud (usually small sums) than HMRC prosecutes tax frauds (often vast), a quiet ticking off for wealthy tax cheats, the slammer for often penniless benefit offenders.

Perhaps it’s actually more people doing benefit fraud than tax evasion?

What are these idiots talking about?

His company’s tax savings, now Ratcliffe has moved to Monaco, have been estimated at £4bn.

She backs this up with a reference to Baron Sikka of all people.

And you’d think that someone might have grasped. Where Jim Ratcliffe lives changes where Jim Ratcliffe pays taxes. Where Ineos is incorporated/resident, changes where Ineos pays taxes. Where you pay taxes of course makes a difference to the amount of tax you pay.

But where Jim Ratcliffe lives and pays taxes does not change where Ineos is resident and pays taxes. Because they are different legal persons with different residencies, see?

Inheritance tax is very fair

So it is said at least. Why should children benefit just because they won the lucky sperm club thing? And yet inheritance tax is also the most hated of all taxes:

What’s your financial priority for the years ahead?
I’d like to keep working for as long as I can, so that the wealth I accumulate can benefit my children.

Things do tend to get done to benefit children. That’s rather how the species works.

That is, those who say that inheritance tax is the best tax are those who haven’t met than many humans.

If I ran into a fortune by chance, I’d want to find a way to use it productively, and after setting some money aside for my children,