Jimmy Carr talking about his tax avoidance

Not trying to single you out here, but I find the attitude towards wealthy people's income and assets, their property, quite disturbing. These headlines come Jo with such regularity and everyone believes that so many of our problems could be solved if we simply took a "fair share" from "the rich".
How about for a change there is a call for the general public to pay their fair share. In both Ireland and the UK almost 50% of income earners pay no income tax at all. But somehow it is fair to demand that rich people, who pay about 80% of all income taxes should hand over even more?!?!

then how come the latest report out shows the gap between rich and poor is widening all the time?
 
then how come the latest report out shows the gap between rich and poor is widening all the time?



The latest reports I heard about came from Social Justice Ireland, a lobby group with a vested interest in the poverty industry. It is not in the least bit surprising that their report was covered extensively by RTE, a biased left-wing media outlet. Reports from Social Justice Ireland about poverty are like reports from Phillip Morris Inc. about second hand smoking.
What Chris posted is simple fact. What SJI say is derived from CSO information and then subjected to their own measurement criteria.
 
The reason why wealthy people pay most of the overall income tax take is that they earn more. They are not asked to pay a higher rate of tax than someone on 50k. Someone on 500k is on the same effective tax rate (many times actually less) than someone on 50k. It is as pointless as saying that men pay most of income tax taken in every year. Everyone (including low earners) should pay their fair share of tax. However, we need to the look at the percentage of income paid, not the absolute amount. Is the person on €1m who pays €500k a better citizen than the person on €50k who pays €25k?

As for surveys showing the gap between the rich and the poor? Give me a break.
 
The reason why wealthy people pay most of the overall income tax take is that they earn more. They are not asked to pay a higher rate of tax than someone on 50k. Someone on 500k is on the same effective tax rate (many times actually less) than someone on 50k. It is as pointless as saying that men pay most of income tax taken in every year. Everyone (including low earners) should pay their fair share of tax. However, we need to the look at the percentage of income paid, not the absolute amount. Is the person on €1m who pays €500k a better citizen than the person on €50k who pays €25k?

As for surveys showing the gap between the rich and the poor? Give me a break.


Someone on €500K will pay a much higher proportion of their income in tax than someone on €50k because the marginal rate accounts for a greater proportion of their tax bill. Someone on €50k pays way less than €25k, someone on €1 million (should) pay more than €500k.

I have a thread elsewhere about this. I am of the view that there should be a cap on the level of income tax that any one individual pays. Maybe it should be €1 million. The loss to the exchequer would be small but more very high income earners would live here and pay VAT while spending their money. It would also reduce the size of the tax avoidance industry. I know the folks at McCann-Fitzgerald and various accountancy firms would not be too happy but that would be a good thing.
 
Someone on €500K will pay a much higher proportion of their income in tax than someone on €50k because the marginal rate accounts for a greater proportion of their tax bill. Someone on €50k pays way less than €25k, someone on €1 million (should) pay more than €500k.

They will pay a higher but not a significantly higher proportion. The effective tax rate of the 10,000 top earners is about 29%. They earned an average of €590,000. My effective tax rate on a fraction of that income is 26%. Both situations ignore PRSI etc. People on very large incomes do not pay the most of tax because they are burdened with huge tax rates. They pay the most because they earn the most.

I am not saying that we should tax them more. Simply saying that we shouldn't be making out that the wealthy are doing more than anyone else with regards to paying tax just because the absolute amount of tax they pay is greater than other peoples.
 
The reason is that this thread is about Carr's taxes on income not on spending.
Mmmm just a tad convenient to take the blinkered view of income tax only, no?

But of course VAT is also important, and I would still say that rich people pay way more VAT than the rest of the population. Their houses cost more, their cars cost more, they buy more expensive jewellery, their furniture costs more, all resulting in a higher VAT bill. Let me give you an example, I have a very wealthy neighbour who buys a new Merc every 2-3 years The last one he bought, a CLS 63, attracted over €40k in VAT and VRT, that would require an average person to spend €200k, and he did this on one purchase.
Mmmm, just a tad selective in the story there, no? No mention of overseas spending? No mention of overseas investment? No mention of %saved vs %spent? No mention of whether the neighbour's car is a company car or not, and all the tax implications that go with that? No mention of the %spent on customs and excise duties by the stereotypical smoking and drinking layabout, if some AAM posters are to be believed? But really, can't we move beyond the 'I know a bloke who buys a new car' stories?

Anyway, back to Carr, I still believe that he did nothing wrong by reducing his tax bill, quite the opposite, he has kept money out of the wasteful hands of politicians. Unless Carr has invested all his money in Gilts he has done the economy a great service. I don't think there is anything unfair about it, he simply employed a better adviser than the rest did, who are now of course perfectly able to pursue the same process.
I don't think anyone questioned the legality of Carr's actions, but there is certainly an ethical and moral issue here. The issue arises from Carr's tendency to rush to judgement on others, for any and all kinds of reasons. If you're going to appoint yourself as judge and jury, you want to make sure you have a clean record. It's a bit like Bono lecturing the Irish government on how much aid they should be giving to Africa while avoiding Irish taxes by sheltering his income offshore. If he wants to avoid taxes, fine - but just shut up lecturing others.

However, we need to the look at the percentage of income paid, not the absolute amount.
Actually, we need to look at the percentage of income paid on ALL taxes, not just income tax.

As for surveys showing the gap between the rich and the poor? Give me a break.
Why - an inconvenient truth perhaps?
 
No, because the surveys are a load of crap. Same as the ones that show public sector employees earn more than the private sector. They are all deeply flawed.

As for looking at all taxes, what will that show you?
 
No, because the surveys are a load of crap. Same as the ones that show public sector employees earn more than the private sector. They are all deeply flawed.
And what are the particular flaws in the EU-SILC survey on which the Social Justice Ireland report was based?

As for looking at all taxes, what will that show you?
I suspect that it will show that people on low incomes pay a much larger portion of their income on taxes than people on high incomes, when you take VAT and excise duties into account in particular.
 
I suspect that it will show that people on low incomes pay a much larger portion of their income on taxes than people on high incomes, when you take VAT and excise duties into account in particular.

Can you offer more than a suspicion?
 
Mmmm just a tad convenient to take the blinkered view of income tax only, no?
Not at all, it is simply called sticking to the topic of the thread. But I would be very interested in a debate over VAT and other sources of tax, so maybe go ahead and start another thread.

Mmmm, just a tad selective in the story there, no? No mention of overseas spending? No mention of overseas investment? No mention of %saved vs %spent? No mention of whether the neighbour's car is a company car or not, and all the tax implications that go with that? No mention of the %spent on customs and excise duties by the stereotypical smoking and drinking layabout, if some AAM posters are to be believed? But really, can't we move beyond the 'I know a bloke who buys a new car' stories?
Not selective at all. Do you think my rich neighbour is an exception when it comes to spending? But let's address some of the points you question:
1) Overseas spending: even when cars are bought abroad you have to pay the VAT and VRT here. Everybody is able to buy stuff over the internet from abroad at lower tax rates, so this is not something exclusively open to rich people when they are jetting around the world.
2) Overseas investment: no matter where the investment is it attracts taxes here to those that are resident. I have 0% invested in Ireland, and for my rich neighbour's sake I hope he has the same. And the reason people are not investing here is because they think that either government action or inaction are making things worse. Increasing taxes will certainly not make it a more attractive place to invest.
3) The Mercedes is a private car, his company provided car is a fairly standard Opel Insignia. But I agree that the cost of getting to work should not only be a deductible reserved for the self employed, it should be open to everyone.
4) If a layabout spends a lot on cigarettes and booze and receives all their income from state benefits, then they are not contributing to the tax pool, they are simply handing some of the tax pool's money back that was originally there anyway.

I think it is total ignorance of reality to suggest that the story of my neighbour is somehow an isolated occurrence. People give out about the income "the rich" have and the lavish life styles they live, but then suddenly when it doesn't suite your belief that rich people do not pay their fair share of taxes you ignore the fact that rich people spend an awful lot of their money on luxury items that attract huge amounts of VAT. But maybe you can provide some evidence that suggests that rich people do not contribute the lions share of VAT, as they do with income tax.

I don't think anyone questioned the legality of Carr's actions, but there is certainly an ethical and moral issue here. The issue arises from Carr's tendency to rush to judgement on others, for any and all kinds of reasons. If you're going to appoint yourself as judge and jury, you want to make sure you have a clean record.

He is a comedian who makes a living out of one-liners that make people laugh. I think it is a far stretch of the imagination to say that he is judging people for their actions.

It's a bit like Bono lecturing the Irish government on how much aid they should be giving to Africa while avoiding Irish taxes by sheltering his income offshore. If he wants to avoid taxes, fine - but just shut up lecturing others.
I fully agree, Bono is a total hypocrite.


Bottom line is this, no matter how much people say that rich people are not paying their fair share and that all the problems of financing public services would go away if we just taxed the rich a fair amount, the numbers just don't add up.

Let's see what would happen if the UK introduced a 100% tax on the top 0.1%, often called the super rich; surely they have enough other assets to live out their lives that they don't need their lavish income:
The top 0.1% have an annual mean income of £780,043 x 42,000 people = £32.8bn. That is barely 25% of the annual budget deficit for the year 2011!!!
Maybe the top 0.1% is not enough, so let's extend it to the top 1%:
The top 1% have an annual mean income of £155,832 x 421,000 people = £65.6bn. That is still only 50% of the annual budget deficit for the year 2011!!!
And where is all that income going to be one year after the tax hike? Gone forever.

Obama summed it all up nicely a while back when he was asked why he was in favour of raising capital gains taxes when the past decade had proven that lowering capital gains tax actually resulted in more revenue. His answer was that for him it was about fairness. So people really believe that we will live in a better world if governments take a higher percentage but as a result have less to spend. It's pure genius, isn't it?!?!?

Britain, Ireland, USA, Germany, France, none of them have a deficit because of tax revenue problems. They all have a spending problem, and have quite simply run out of other people's money to borrow or take in order to finance out of control spending. This might not fit well with your socialist ideology but I think it is time to face reality.

Sources:
http://static.guim.co.uk/sys-images...3/21/1332345654504/UK-deficit-graphic-008.jpg
http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
 
In all fairness, Carr has built a large part of his reputation on taking the high moral ground. Look at his attack on 'tax avoiding bankers' here for context.

http://www.youtube.com/watch?v=WHwjRx2AG8M

Your analysis is still rather selective. You ignore the ability of wealthier people to spend more time overseas, to buy property overseas and to invest in overseas companies. Your analysis of proposed taxes in the UK ignore the option of an asset tax or wealth tax, which seems to work reasonably well in your beloved Switzerland, France and elsewhere.

Obama's CGT move was to close a loophole exploited by many companies, who opted to return investment to shareholders via increased stock prices (attracting CGT) instead of dividends (attracting income tax). As usual, those who were exploiting the loophole squeal a bit when they caught. I think we'll hear a bit more squealing over the coming years.

But nice that we could agree on Bono.
 
Obama's CGT move was to close a loophole exploited by many companies, who opted to return investment to shareholders via increased stock prices (attracting CGT) instead of dividends (attracting income tax).
He also wants American companies to pay tax in America (rather than here). In the context of this discussion I presume you support this. Will you also support the pay cuts for public servants and reduction in services to the public that would result if US companies pulled out of this tax haven?
 
In all fairness, Carr has built a large part of his reputation on taking the high moral ground. Look at his attack on 'tax avoiding bankers' here for context.

http://www.youtube.com/watch?v=WHwjRx2AG8M

Your analysis is still rather selective. You ignore the ability of wealthier people to spend more time overseas, to buy property overseas and to invest in overseas companies. Your analysis of proposed taxes in the UK ignore the option of an asset tax or wealth tax, which seems to work reasonably well in your beloved Switzerland, France and elsewhere.

Obama's CGT move was to close a loophole exploited by many companies, who opted to return investment to shareholders via increased stock prices (attracting CGT) instead of dividends (attracting income tax). As usual, those who were exploiting the loophole squeal a bit when they caught. I think we'll hear a bit more squealing over the coming years.

But nice that we could agree on Bono.

I think you need to do a bit more research on the points you are trying to make. Switzerland's wealth tax is only on assets held in the country which essentially makes it voluntary, as you can live and work in Switzerland and have all your assets in a country with no wealth tax, making it by all means a voluntary tax. I'm also sure that rich people in Britain would gladly sign up for a wealth tax of 0.3% if they had the same income taxes as Switzerland.

France does not have a successful wealth tax as rich people keep their assets largely outside of France. But I'm not surprised that you would advocate seizing people's private property through wealth taxation with the blinkered view of the effect that will have on people with large assets; how long do you think those assets or people will remain in the UK? And just to demonstrate how futile a wealth tax would be take a look at these facts:
- £225bn is the total wealth of the top 100 in the UK
- that would cover the UK's budget deficit for 20 months if all of the wealth were seized
- £40bn is the wealth of the top 3 who are of Indian and Russian origin and would be gone before the announcement of a wealth tax was completed
- so with £185bn left the deficit would be covered for only 16 months
Of course all this ignores what would happen when those people that make the investments, that make all the jobs possible suddenly, didn't have the capital to invest.

Obama's planned move on CGT has nothing to do with loopholes, he said so himself. In the US it was always more attractive to pay out dividends as qualified dividends are taxed at 15% irrespective of your total income while short term capital gains tax rates go up to 35%. The undeniable truth is that when CGT rates went down CGT revenue went up, how can that possibly be a bad thing that needs rectifying?

It is also total nonsense to suggest that it is in any way more difficult for the average Joe to invest overseas or buy goods from anywhere in the world. For equities you don't even need a foreign broker and just look at the droves of Irish people that got caught up in property investments in Spain and Bulgaria and god knows what other dodgy places. And I've said it before, it doesn't matter where an Irish resident invests, any income and gains from abroad are taxable here.
The idea of being able to close deficits by taking from rich people is so far removed from reality that it really baffles me how little people understand about how much governments are overspending!
 
I'd be first to admit that I don't know much about wealth taxes, but you have made a convincing argument for rationalising these taxes across Europe and the developed world. There are good reasons why the Russian and Indian millionaires live in UK or the US etc. They prefer it to living in their home countries. There is indeed a tipping point that will push many of them away, but there is also room to get some kind of tax revenue here without reaching tipping point for most of these folk.

In relation to CGT, your analysis is very superficial. Your 'undeniable truth' does not show cause and effect. Look at what else was happening in the world. Was the increase in overall income due to the drop in rates or to market recoveries, or was it due to people taking the opportunity to cash in gains on the expectation that rates may well go back up again. Is it due to the movement in the rate rather than the absolute level of the rate.

Perhaps we live in different worlds Chris. 'Average Joe's in my world don't invest in equities, at home or abroad.
 
Perhaps we live in different worlds Chris. 'Average Joe's in my world don't invest in equities, at home or abroad.
Given your location I suspect that many of the average joe's in your world have a pension and therefore have invested in equities, at home and abroad.
I'd also suggest that many retired people invest their lump-sum. That would also go into equities at home and abroad.
 
I'd be first to admit that I don't know much about wealth taxes, but you have made a convincing argument for rationalising these taxes across Europe and the developed world. There are good reasons why the Russian and Indian millionaires live in UK or the US etc. They prefer it to living in their home countries. There is indeed a tipping point that will push many of them away, but there is also room to get some kind of tax revenue here without reaching tipping point for most of these folk.
Complainer, your posts on this thread simply highlight the problem with people advocating higher taxes on rich people to solve the fiscal mess. You are constantly making assumptions and claims to desparately support your beliefs that either do not stand up to fact or are based on completely false premises.
When it is pointed out that taxing even 100% of the income away from wealthy people is not enough to solve the problem you point to taxing their actual wealth. When it is pointed out that taxing their assets away is (a) not enough to plug the whole in public finances, and (b) would drive away those wealthy people you conclude that having a small wealth tax would not drive them away. But this again ignores the fact that even a small enough percentage of a tax taken on wealth will not plug the deficit!
You also claim that the likes of Laksmi Mittall , Usmanov and Abramovich live in the UK because they like living there compared to their home countries. This completely ignores the fact that they have non-domiciled status where only their UK based income is liable to UK income tax, not their foreign income and that they can use tax schemes like Carr does. These people could just as easily move to Monaco and pay 0% CGT, 0% wealth tax and 0% income tax; and there are plenty of other places where they can do the same.
The big problem with finding that tipping point for a wealth tax you allude to, is that once you find it, it is too late. But of course it is a lot more convenient to believe that you can take from rich people and (a) solve the budget problems and (b) not cause a reduction in revenue.

In relation to CGT, your analysis is very superficial. Your 'undeniable truth' does not show cause and effect. Look at what else was happening in the world. Was the increase in overall income due to the drop in rates or to market recoveries, or was it due to people taking the opportunity to cash in gains on the expectation that rates may well go back up again. Is it due to the movement in the rate rather than the absolute level of the rate.
My analysis is not superficial at all but you are actually on to something in this statement. It is absolutely about the direction of movement in rates, and it is absolutely about people cashing in gains when taxes are down. You do realise that you are making my point here. When taxes go down less people try to legally avoid (e.g. by not selling gains) or illegally evade them. Another measured side effect when CGT was lowered was that more people invested, which is also a good thing.
But the 2003 CGT cut is not an isolated example, the same thing happened in 1981 when Reagan cut the tax, and also when Clinton cut it in 1996. When Reagan increased the rate in 1986 again, CGT revenue fell over the following years. Again, if you are going to claim a lack of cause and effect, at least do some research into the matter.

Perhaps we live in different worlds Chris. 'Average Joe's in my world don't invest in equities, at home or abroad.
Purple has already commented on your claim about average Joes not investing. Anyone with a PRSA has a selection of funds where the choices include Irish, European, Asian, US equities. I am surrounded by average Joes and 80% of them have a private pension, that is the real world, whether you like it or not.
 
I must agree with Chris, I'm an average Joe and I have a private pension which invests in equities around the world.
 
When it is pointed out that taxing even 100% of the income away from wealthy people is not enough to solve the problem you point to taxing their actual wealth. When it is pointed out that taxing their assets away is (a) not enough to plug the whole in public finances, and (b) would drive away those wealthy people you conclude that having a small wealth tax would not drive them away. But this again ignores the fact that even a small enough percentage of a tax taken on wealth will not plug the deficit!
I don't quite get your logic that because any wealth tax would not 'plug the hole', it is therefore not worth doing. I doubt if any individual tax will 'plug the hole', but that doesn't mean they are not worth doing. Every little helps, as they say.
You also claim that the likes of Laksmi Mittall , Usmanov and Abramovich live in the UK because they like living there compared to their home countries. This completely ignores the fact that they have non-domiciled status where only their UK based income is liable to UK income tax, not their foreign income and that they can use tax schemes like Carr does. These people could just as easily move to Monaco and pay 0% CGT, 0% wealth tax and 0% income tax; and there are plenty of other places where they can do the same.
The big problem with finding that tipping point for a wealth tax you allude to, is that once you find it, it is too late. But of course it is a lot more convenient to believe that you can take from rich people and (a) solve the budget problems and (b) not cause a reduction in revenue.
And as I said earlier, the solution to this problem is for developing countries to come together and a common wealth tax, so these guys have nowhere to hide, or nowhere decent to hide, to be more specific. I'm sure you and others will continue to scaremonger to avoid any possibility of such taxes, but it's time to call some bluffs.

My analysis is not superficial at all but you are actually on to something in this statement. It is absolutely about the direction of movement in rates, and it is absolutely about people cashing in gains when taxes are down. You do realise that you are making my point here. When taxes go down less people try to legally avoid (e.g. by not selling gains) or illegally evade them. Another measured side effect when CGT was lowered was that more people invested, which is also a good thing.
So the solution here is to avoid these reactionary drops in rates, so people stop playing the tax system and concentrate on investing. Let them cash in their gains when most appropriate for them, not based on temporary changes in tax rates.

Anyone with a PRSA has a selection of funds where the choices include Irish, European, Asian, US equities. I am surrounded by average Joes and 80% of them have a private pension, that is the real world, whether you like it or not.
I wasn't thinking about pensions when I made my point about average Joes, and I really don't think you were either. You are correct, in that lots of people with pensions are invested in equities. The proportion of these who make active investment decisions about where to invest is fairly low. Most people go along with whatever defaults the fund investment managers suggest. The substantive point remains - the more money you have, the easier it is for you to spend or invest it overseas, rather than in Ireland.
 
Complainer is making the point that a Wealth Tax is desirable from a moral point of view. That's a perfectly valid position to take though I disagree.
Chris is arguing against it from a logical and economic perspective. Also a valid point of view. But one doesn't counter the other.
Complainer is a socialist and so his views will be coloured by that doctrine, it's a bit like a fundamentalist Christian discussing evolution; he may understand the science (or economics in this case) but he drew a conclusion before he was presented with the evidence and so will look at the evidence selectively and take from it what supports his preconceptions.
There’s nothing fundamentally wrong with socialism in its present watered down form but it does ignore economic reality in order to support its preconceptions and so, ironically, it traps people in poverty.
 
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