Sen. Robert Casey (D-PA)
Sen. Charles Schumer (D-NY)
Capitol Hill

Dear Sen. Casey and Sen. Schumer:

Irked that Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship, you propose, with your “Ex-Patriot Act,” to punitively tax and to permanently bar from ever again entering America men and women who, to reduce their tax liabilities, renounce their citizenship in the U.S.

The very fact that sitting U.S. senators issue such a proposal – the sick reality that representatives of an allegedly free people act as if individuals are serfs bound to a master – the noxious yet proudly paraded assumption by American government officials that a peaceful man’s or woman’s freedom of movement can properly be restricted by a government jealous that it misses the opportunity to seize a huge chunk of that man’s or woman’s earnings – does nothing other than to confirm the wisdom and justice of Mr. Saverin’s decision.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

Freedom, at least in part, consists of the freedom to exit.

Two thousand senior civil servants could be minimising their tax by being paid off the Government payroll, it has emerged.

That people who are not really eligible for not PAYE are getting paid through not PAYE is indeed pretty dodgy.

However, this of course is bollocks:

Being paid through a service company allows the recipient to be taxed at the corporation rate tax rate of 21 per cent rather than pay up to 50 per cent in income tax.

The deal was estimated to allow Mr Lester – who received £182,000 a year via a headhunter to his own service company – to save as much as £40,000 a year in tax.

Because when you take the money out of the company as a dividend then you’ve got to pay the extra income tax to take you up to the regular rate.

Where you do save is on national insurance. But this causes another problem:

But he added: “I also believe that departments should be able to assure themselves that highly paid specialist staff are meeting their income tax and [national insurance] obligations.”

Under the new crackdown Mr Alexander will force any official who is not on the pay roll, has been employed for more than six months and is paid over £220 a day – the equivalent of a senior civil servant’s salary – to prove that they are paying their fair share of tax.

If cannot prove they are paying the same income tax and National Insurance Contributions as an employee, they will have their contracts terminated.

The major saving is in fact on employers’ national insurance. And it is that that the government itself hasn’t been paying on these wages as a result of the paying through service companies. So it is in fact the government that has been dodging taxes here.

Which is amusing, isn’t it?

And to add to John B’s comment:

“Departments have provided the Treasury with information in relation to all individuals engaged off-payroll – for payment in excess of £58,200. Over 2,000 such individuals have been identified,” he said, before adding that around 1,500 are paid more than £380 a day.

He continued by stating that around 1,600 people have been working for their departments for more than six months. Of these, 1,200 have been working for in excess of a year and 800 of them have been working for at least two years.

The increase in higher-rate taxpayers is due to reductions in the threshold for paying 40pc tax, in combination with so-called “fiscal drag”, where tax bands do not move up in line with inflation, meaning inflation-linked wage increases push more people into higher rate tax bands.

Fiscal drag is more subtle than just not moving the bands up with inflation. It’s that (outside recessions of course) wage inflation, or perhaps wage growth, is higher than general inflation. It must be, that’s how everyone gets richer over time.

So, even if you move the bands up with inflation you still get fiscal drag as wages rising faster than inflation push ever more people either into the tax band or into the higher ones.

Which is how we end up with the current situation. Wasn’t all that long ago, within my parents’ life time if not my own, that you didn’t pay income tax until you were on average or above wages. Now you do if you’re part time on the minimum wage.

The Coalition’s much vaunted “huge rises” in the personal allowance are merely undoing a couple of decade’s worth of fiscal drag, nothing more.

Of course, it’s also true that that bastard Brown didn’t even raise allowances in line with CPI inflation. But no one at all has raised them in line with wage growth.

The London arm of the great vampire squid paid only £4.1m in corporation tax to the Treasury last year. Despite pocketing £1.9bn in pre-tax profits.

Lord Blankfein’s investment bank received a tax bill of £422.3m for 2011 but has put off paying 99pc of it until next year.

Umm, isn’t corporation tax always paid in arrears?

You know, you’ve got to get to the end of the tax year before you can calculate what the bill is?

I can imagine that there’s some form of pre-payment scheme, HMRC insisting that they get a chunk earlier, based upon perhaps an assumption that this year’s profits will be similar to last year’s. You know, like with self-assessment.

But you might think that a bank could have losses to carry forward after the worst financial crisis for nigh on a century?

So, help me out here. Is this just some journo not understanding the basics of the tax system or is the Vampire Squid actually doing something nefarious?

International sales accounted for 64pc of the $39.2bn of revenue that Apple generated in the quarter, with chief executive Tim Cook describing the demand in China as “mind boggling”.

If all of the kit is made in China and 64% of it is sold outside the US, why should the US Govt get a cut of that 64% of the business?

1) The Diamond and Saez paper does not tell us what the revenue-maximizing tax rate is. It gives us a formula which (subject to their assumptions) allows us to calculate such a rate (the marginal rate on high earners), if we know the elasticity of taxable income and a parameter describing the shape of the high-end tail of income distributions. The 54% Tim quotes is just a number he likes.

Looking at the Diamond and Saetz paper we get:

As an
illustration using the different elasticity estimates of Gruber and Saez (2002) for high
income earners mentioned above, the optimal top tax rate using the current taxable
income base (and ignoring tax externalities) would be *=1/(1+1.5 x 0.57)=54 percent while the optimal top tax rate using a broader income base with no deductions would be
*=1/(1+1.5 x 0.17)=80 percent. Taking as fixed state and payroll tax rates, such rates
correspond to top federal income tax rates equal to 48 and 76 percent, respectively.

Note that the “payroll taxes” which they include would very much include employers’ NI in our UK case.

Further, there’s good reason to think that the territorial nature of the UK tax system, as opposed to the citizenship based US one, would mean that the optimal top UK rate will be lower.

And I certainly think that they telling us the actual top optimal rate there, not just providing a formula.

David Cameron’s father built up legal offshore funds in Panama and Geneva

Blimey.

That anyone and everyone resident in the UK would have to pay tax on what they received from the funds is noted. In which case, what’s the damn problem?

Peeps in UK pay UK tax. Hurrah!

David Gauke, exchequer secretary to the Treasury, supported the CBI’s argument: “Those who have technical knowledge of tax say that allegations [of sweetheart deals] are clearly nonsense, and those that don’t have a close understanding tend to agree with whatever the wildest allegation is.”

And Aaronson’s suggestion is a rule so narrowly drawn that it will legitimise most of what the public recognises as avoidance.

Wack Wack, Buzz Buzz.

“Legitimise”.

Make legal.

Tax avoidance is, already by definition, legal twatface.

Graham Black is president of the Association of Revenue and Customs, part of the senior civil servants union, the FDA

There’s someone who needs to be taught the meaning of the phrase “the rule of law”.

And if he says that the law isn’t what it it is, but what it ought to be, can we then lynch him?

It’s entirely possible that I’ve missed something….in which case let me know…..but what they’ve actually said about these figures makes no damn sense at all.

This is worse than the guff we get from the retired accountant from Wandsworth. Worse even that nef.

No, really, it’s garbage.

The extent of tax avoidance by Britain’s super-rich has been revealed with the release of Treasury figures showing that almost a thousand UK taxpayers earning more than £1m a year have a tax rate of less than 30% of their income.

I’ve been poking around trying to find the release of those figures. Can’t see it on the Treasury site.

Anyone know where they actually are?

Mr Diamond, an American citizen, is entitled to compensation from his employer if he is charged tax twice – as he was last year by Britain and New York State.

The scale of last year’s tax equalisation payment caught some investors by surprise, even though such clauses are common among FTSE 100 companies and the details were available in Mr Diamond’s contract.

The information was all there, all easily available.

Treasury officials argued the revelation underlined the need for action to prevent the super-rich exploiting loopholes to reduce their tax bill below that of low-paid workers.

The figures, released by the Government, show 6 per cent of £10 million-plus earners pay less than 10 per cent in tax and another three per cent pay below the basic 20 per cent rate. Fewer than three quarters pay more than 40 per cent.

Anyone reading that is going to think that people are somehow able to tick the box “I’m rich, don’t tax me” and that’s just not what is happening. Everyone is subject to the same income tax rates on their income, no exceptions.

The changes come in what is defined as income subject to income tax. For example, if you make capital gains you pay capital gains tax: 18% in previous years, with hte entrepreneur’s exemption at 10%.

So, one of those mega millionaires with a below 20% tax rate could simply have been someone who had spent years building up a business and then selling it.

Or one that was mentioned by Osborne, people deducting the interest paid on business mortgages (could be commercial or residential). The interest is a cost of business so it’s not even true that the people have high incomes. They have high gross incomes and high expenses so that their net incomes, the part which is actually taxed, are low. To say that this is tax dodging, even to compare their tax rate with their gross income, is absurd: it’s like taxing a company on turnover not profits.

And running around telling everyone that there should be some sort of Buffett Rule is simply absurd. People already will be paying 30% tax on their incomes. Because income is defined as that money which is subject to income tax which is, for high earners, above 30%. It’s all in the definitions of what is income, so demanding a specific tax rate on income is near irrelevant.

What in buggery is Osborne doing? Is this all bait and switch? He knows all this and is playing with the public? I’ll clamp down knowing that he’ll not end up changing much?

This includes the shoppers at Topshop, owned by Philip Green.

Does he own it?

Green avoids paying huge sums of tax in Britain by registering his company in the name of his Monaco-based wife, Tina.

Oh, no, he doesn’t own it. So he’s not avoiding any tax then, is he?

Americans paid federal incomes taxes of $945 billion.

Sounds like enough to run a government on if I am to be honest really.

You know, a trillion dollars does actually manage to buy an awful lot of what citizens would actually like from a government. Perhaps not as much as the governors would like to be paid for providing that government but that’s rather a different thing.

A trillion bucks.

Sounds like a reasonable top end limitiation on the size of government to me. You know, if they can’t do it for one thousand thousand big ones then can they do it at all?

And, erm, please note. SS, FICA, Medicare, Medicaid, these are nothing to do with this. For they are not funded by federal income tax, they are funded by their own hypothecated taxes.

We really are talking about a trillion bucks for the fuckers in Wash DC. And, err, fuck ‘em.

We should know what tax is paid on profits from our purchases at Amazon, Boots or Philip Green’s Top Shop.

We do. There’s a line in their published accounts that says “tax paid”.

Last time I looked at the Top Shop ones it was 30% or so of profits. Bang on the statutory rate.

This is even better though:

Personal statement, to get in early: I have always advocated total tax transparency, and like George Monbiot, I am open about my own earnings: I was even asked about it by a parliamentary select committee so it’s on the record. Last year my Guardian pay was around £115,000. I have never had any kind of company, and I have always paid PAYE as an employee. I would welcome all journalists agreeing to transparency, especially those writing about the earnings of others.

This is a comment at the end of a piece in which she tells us that she’s recently published a book with her husband.

Note that the income from that book is not included in her declaration of income. Nor are her speaking fees from the BBC (look, if they even pay me £50 for 10 minutes on a local radio station then she’s obviously getting something close to a decent income from them alone the amount of times she’s on).

Etc, etc. She’s declared her salary but not her income. And of course she doesn’t pay PAYE on book earnings, BBC earnings etc either.

One rule etc.

The report found that Britain’s 20 biggest tax avoiders have used three main loopholes to legally reduce their their income tax bills by a total of £145 million in a year.

Two thirds of them wrote off business losses in one of their companies against their income tax bill, reducing it by as much as half .

Several of them offset the cost of business mortgages or borrowing on buy-to-let properties against their income tax bill, while others took advantage of relief on donations to charity.

None of these are tax dodging in the least. Not even tax avoidance, let alone tax evasion.

If you are in business and the business loses money this is a loss to you. Of course this should be discounted when calculating the income you have on which you pay tax. Similarly, interest on loans: standard deductible business expense. It’s a business expense just as much as the widgets which are inputs to your wodget making process is.

And tax reliefs on donations to charity….this is a very silly claim indeed. For you’ve actually got to, you know, give the money to charity. You can’t keep it yourself and then claim the tax back.

Mr Osborne told The Daily Telegraph: “I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right.

Humph, OK.

Then they insist that I buy commercial software in order to file the form?

What?