Jimmy Carr, tax avoidance, and morality

[ricgem2002]

not at all i say "good on him" because he has used a legal way to reduce his tax bill ! as far as i can see there are no morals where tax is concerned, anyone with any sense does not pay more than is legally required, unfortunatly if you are in PAYE your stuffed, but thats what happens if you want a secure position, if you take risks and run a business or are self employed you reap the rewards for that risk.

when you get your payslip at the end of the month and see what HM revenue has deducted do you say hang on i want to pay a bit more???.........no of course you dont:roll:

so how would you feel if your employees turned round on monday and told you they were now wanting to be paid through one of these schemes ?

[Stan Tamudo]

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[Cyclone]

so how would you feel if your employees turned round on monday and told you they were now wanting to be paid through one of these schemes ?

 

He'd probably feel like they were being stupid. If they are employed then their legal options for how they are paid are severely restricted, and going from employment to self employment whilst staying at the same company is generally a red flag to HMRC.

[Cyclone]

But they would spend an insignificant portion of the income on essentials, they tend to spend more money on fast cars and boats than they spend on tea bags.

Poor people buy cars as well, or do you propose to make the VAT rate on a car based on it's top speed?

 

The bigger issue with your idea is that I think you're only considering the extremes of someone on the breadline and someone who can afford a yacht. The majority of the well off in the country are between those two extremes.

What measurable purchasing differences would you see between a household bringing in 16k/annum and one bringing in 160k/annum?

I might even start that question as a new thread.

So if 1% of their income is spent on essentials at zero VAT and the rest is spent on luxury item it higher levels of VAT they will pay an higher percentage of their income on tax than the poor, they would also find it much more difficult to avoid.

The rich don't spend all their money of course, they save a lot of it.

[ricgem2002]

He'd probably feel like they were being stupid. If they are employed then their legal options for how they are paid are severely restricted, and going from employment to self employment whilst staying at the same company is generally a red flag to HMRC.

why they are doing nothing wrong

[WeX]

The usual measure is tax burden as a % of income. It's not about paying more in absolute terms but about the proportion of income that is taxed.

 

Or put another way a regressive tax is “a tax where the ratio of tax paid to income falls as income rises”. Textbook basic economics.

 

The only way you can make it not regressive would be to hack the VAT rates and re-classify many items bought by people on lower incomes to lower bands (but in doing so richer people would benefit to because they rely on basics like food and energy too to stay alive), and to increase the personal allowance of tax to much higher than it is now.

 

I think you're wrong here. A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

 

The VAT rate would not decrease for the wealthy compared to the poor for the simple reason the rich spend more money.

[Cyclone]

Of course they are, they employee's who are pretending to be self employed.

 

If they were genuinely self employed then whoever was currently paying them wouldn't give a fig where the money went.

For example I will be invoicing my current client at the end of the month, if I give him new bank account details he will just make the payment to that account. He doesn't know whether I use a scheme or not and he doesn't care, but that's because being truly self employed he's not liable for what I do with the money.

In the case of allowing employees to pretend to be self employed the employer will get stung for the NI and tax that hasn't been paid while the employees are taken to court under IR35 legislation.

[Guest sibon]

 

The VAT rate would not decrease for the wealthy compared to the poor for the simple reason the rich spend more money.

 

Not necessarily true.

 

For the sake of argument, let us assume VAT on everything at 20%. If you earn £10k and spend it all, you pay 20% tax. If you earn £100k spend half and save half, you only pay 10% tax.

[Guest sibon]

 

The bigger issue with your idea is that I think you're only considering the extremes of someone on the breadline and someone who can afford a yacht. The majority of the well off in the country are between those two extremes.

What measurable purchasing differences would you see between a household bringing in 16k/annum and one bringing in 160k/annum?

I might even start that question as a new thread.

 

.

 

Don't start a new thread, just email any major supermarket. They know exactly which people buy what, when they buy it and how much they will pay.

[WeX]

Not necessarily true.

 

For the sake of argument, let us assume VAT on everything at 20%. If you earn £10k and spend it all, you pay 20% tax. If you earn £100k spend half and save half, you only pay 10% tax.

 

You are assuming the point of taxation is on your earnings, which is incorrect, not on what you spend which is where VAT is levied.

 

We have three levels of VAT in the UK. Full rate (20%), reduced rate (5%) and Zero rate (0%). Those on lower incomes will be spending a greater proportion of their earnings on reduced and zero rated items compared to someone on a higher wage.