Jimmy Carr talking about his tax avoidance
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truthseeker
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Well mandelbrot is saying the law is being abused. If this is so, its more likely to be the accountant abusing it than Jimmy Carr.
mandelbrot
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That's tantamount to saying that if some bright spark found a loophole in the law so that they could legally kill people, and you availed of their service to bump off someone you don't like, then that's OK because
i) It's legal, and
ii) It's they who are abusing the law rather than you.
truthseeker
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That analogy doesnt work unless Jimmy Carr went to the accountant and said 'I want you to pay only 1% tax for me'.
Its far more likely it was the accountant who said 'I know a way that you can only pay 1% tax legally'.
The intent hardly came from Jimmy Carrs side - unless he knows tax law which I doubt.
Id also make a serious distinction about the morality surrounding tax laws and money and the morality surrounding murdering people! Apples and oranges.
mandelbrot
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I never said who approached who in my scenario! Lets say they approach you after seeing you being abused by your mother-in-law, and offer you their perfectly legal service...
There may be a distinction between the degree of immorality of the 2 things, but aggressive tax avoidance to ensure that you personally don't pay what by any yardstick would be a "fair" share of tax proportionate to your income while people who earn an awful lot less than you pay much more tax, is certainly immoral IMHO.
truthseeker
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If the abuse was bad enough.........
Its a level of immorality I can live with tbh. I see it more in terms of being clever enough to get a good tax accountant.
I'd imagine Jimmy's 1% was still way more than many, if not most people pay. If you take he broader tax base and not just hone in on income tax...
Whether you condone this tax planning or not is irrelevant IMO, because it is largely subjective....some from the left would argue for higher taxes whilst some on the right would say even 1% is too much. IMO, if he is opertaing within the law then more power to him. If he is not then he should be prosecuted. Taxes should be continually review by government to ensure that whatever breaks are given bring in more money than what they cost....if this particular tax break is costing more money than what it brings in then it should be changed.
In any case this particular incident is pretty small fry - what about Denis O'Brien declaring his residence as Portugal and thus avoiding 50m in Capital Gains Taxes from the sale of ESAT? Perfectly legal at the time...wasn't the result the introduction of the whole Not Ordinarily Resident thing which has tightened tax avoidance in this country??
In any case this particular incident is pretty small fry - what about Denis O'Brien declaring his residence as Portugal and thus avoiding 50m in Capital Gains Taxes from the sale of ESAT? Perfectly legal at the time...wasn't the result the introduction of the whole Not Ordinarily Resident thing which has tightened tax avoidance in this country??
mandelbrot
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There's a big difference between a tax break and a loophole in legislation!
A tax break is deliberately inserted into tax legislation, to encourage investment or transactions of a certain type - Section 23, SSIA etc...
A loophole is where someone manages to find sufficient looseness in the wording to facilitate circumventing the intent of legislation, often through what are essentially artificial transactions.
So if you take the example of Denis O'Brien avoiding 50m, if you say there were 2m taxpayers in the country at the time, indirectly they each had to stump up an extra €25 to cover the hole left by his avoidance.
I'm genuinely at a loss at the attitude of people who say "more power to them" and "fair play to them" about people who manage to contrive their way out of paying tax - if you are a taxpayer in the country where they've avoided the tax then they are costing you money (unless you're managing to avoid as well
). To me it's like being out with a group of people, and saying fair play the fella who always manages to dodge his round!There's a big difference between a tax break and a loophole in legislation!
A tax break is deliberately inserted into tax legislation, to encourage investment or transactions of a certain type - Section 23, SSIA etc...
A loophole is where someone manages to find sufficient looseness in the wording to facilitate circumventing the intent of legislation, often through what are essentially artificial transactions.
So if you take the example of Denis O'Brien avoiding 50m, if you say there were 2m taxpayers in the country at the time, indirectly they each had to stump up an extra €25 to cover the hole left by his avoidance.
I'm genuinely at a loss at the attitude of people who say "more power to them" and "fair play to them" about people who manage to contrive their way out of paying tax - if you are a taxpayer in the country where they've avoided the tax then they are costing you money (unless you're managing to avoid as well
+1. Aggressive tax planning like this is simply wrong. It doesn't matter if the 1% he paid was more in absolute terms than my 52% of income.
However, companies do it all the time and we don't seem to have a problem with it. Indeed many companies use Ireland to lower their tax bill in their home country. I know of one person working in the tax department of a UK financial institution who got a bonus bigger than most of their traders because of the tax he saved the bank using various legal loopholes.
At this stage, most countries tax codes need to be ripped up and written again. They are so complicated and with increasing globalisation, tax arbitrage has become a big issue.
I accept that, but the fact is that the whole thing comes down to whether the action is in accordance with the law. If someone finds a loophole, then it might be morally wrong (as in the case of Denis O'Brien IMO) but if it's within the law I don't see a problem. The onus should be on having water-tight laws in the first place.
I agree with you...the rest of us had to pick up the tab here. However, I don't think Denis O'Brien or his tax advisors are at fault here, rather whoever is responsible for maintaining the tax law.
I'm genuinely at a loss at the attitude of people who say "more power to them" and "fair play to them" about people who manage to contrive their way out of paying tax - if you are a taxpayer in the country where they've avoided the tax then they are costing you money (unless you're managing to avoid as well
I understand you point, and I suppose as someone who believes that we would be better served with a low tax economy with cheaper (not necessarily smaller!) government I was drawn to making those remarks. Again though, whilst I probably shouldn't be saying "more power to them", I nevertheless don't blame them, just like I don't blame anyone for sitting at home on the dole when they should be out working....I don't blame them individually for this, but blame the system as it allows this to happen.
I like the last analogy too...that guy usually gets found out pretty quickly...no legislation needed here
truthseeker
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I'm genuinely at a loss at the attitude of people who say "more power to them" and "fair play to them" about people who manage to contrive their way out of paying tax - if you are a taxpayer in the country where they've avoided the tax then they are costing you money (unless you're managing to avoid as well
I think its because of this: People hate paying taxes. Yeah, we know we need them for services and to keep running the country, but in this country we seem to get little for our money and a lot of it seems to get squandered. We hear story after story about politicians and ink cartridges and expense accounts etc....
Maybe if we lived somewhere where the government used the taxes wisely and provided good public services people would feel differently.
Dodging the round isnt the same. The analogy would work if we all paid for our round and got served up half filled glasses of some swill concocted from the left overs of other peoples drinks. In that case, I applaud the guy who manages to dodge his round.
Id like to have your idealistic view of taxes Mandelbrot, unfortunately reality in Ireland has soured my viewpoint.
We are all entitled to our opinions on this, but it is incorrect to say it's wrong when in fact it's legal.
Individuals do it too and it's not just the rich. Not focusing on you Sunny, but did you take out an SSIA? Same thing on a lesser scale, but still costed the taxpayer several hundred million in the aggregate.
I agree.
So take the recent John Gallagher case. He used a legal loophole to walk free. Is it incorrect to say that is wrong? I know its off topic but just pointing out that not everything that is legal is right
The SSIA is not the same thing. It was not a loophole. I still paid every cent of tax I owed as the money I put into the SSIA came from after tax income. It was also available to every citizen of this country and not just those who could divert income into corporate structures and then hire a good tax accountant to divise a scheme. You try doing exactly the same thing that Jimmy Carr did to lower your tax bill. Can you do it? Bet you can't.
I agree with you...I think what happened with the John Gallagher thing was a disgrace. I don't blame him our his lawyers though (even though I would despise both of them). I blame the law, and those responsible for maintaining it, for allowing this to happen in the first place and would hope that it is changed as a result.
Edit: I also think what Denis O'Brien did was a disgrace too...no way should he have been allowed to get away with that level of tax avoidance. But he operated within the law so I don't blame him personally. Ditto for U2 and the rest. And ditto for all the multinationals operating here....
I agree that the SSIA was not a loophole but a tax incentive...the end result is the same though....less money going legally into the system. The taxpayer ends up footing the bill, which in the case of the SSIA was actually hillarious as everyone was in on it / availed of it.
I agree. The rich will always find ways of protecting their wealth and the richer you are the more you have to gain by protecting your wealth. I don't have any problem with this for the individual(s) concered, and as I agreed with you earlier, it's the tax codes should be changed.
I'm genuinely at a loss at the attitude of people who say "more power to them" and "fair play to them" about people who manage to contrive their way out of paying tax - if you are a taxpayer in the country where they've avoided the tax then they are costing you money (unless you're managing to avoid as well
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?!?!
There's a great clip on YouTube that shows. Icely where taxing the rich would end up: http://www.youtube.com/watch?v=661pi6K-8WQ
mandelbrot
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I actually agree with the point you've made there Chris (if you look at my posting history you won't see me posting any of that Sinn Fein / ULA "tax the rich" nonsense anywhere, although I doubt I lean as far right as you!), and I appreciate you're not singling me out - my issue is with people who create contrivances and artificial transactions in order to avoid what I see as being the tax they should be obliged to pay, if they were playing fair!
Reclassifying money that has been earned as income (and should be taxed accordingly by any fair-minded interpretation of the intent of tax legislation), as something different in order to reduce the liability is wrong in my opinion. And it costs other high earners (who haven't managed to game the system) as much as it costs the little guy!
Hence my analogy of the group of people out having drinks could be tweaked to say, you are out with a group of people, one of whom is Jimmy Carr, and every time it's his round the fecker vanishes... but he did buy some peanuts at one stage..!
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Why the focus on income tax? Look at the big picture, including VAT, which was bringing in more that income tax recently.
The reason is that this thread is about Carr's taxes on income not on spending.
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.
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. If tax codes weren't such a mangled mess of one law trying to stop unintended consequences of another law then there would be no loop hole or avoidance wrangling. But the day a government will actually simplify the tax code is the day pigs will fly; and I would rather bet on evolution helping out pigs.