Scottish Parliamentary Elections Sweepstake

[Sanjøy]

I had a Swiss exit plan if we went Indy. This dabbling in taxation to try to win a majority could see me looking again. We are already worse off in Scotland compared to my peers in London.

[campbell]

North Yorkshire for us.

[rossybee]

Penrith for me

[thinfourth]

Probably yorkshire for me too

[tut]

"The problem with a flat rate tax is that it is very unfair on the lowest paid workers."

I'll go along with that Robin.

tut

[campbell]

Appealing from a simplicity point of view. Interesting analysis here:

https://en.m.wikipedia.org/wiki/Flat_tax

If we were starting from scratch, what tax rules might we set which would be fair to all?

[Dominic]

No scams here, my friend. Unhappy about that accusation actually, but c'est la vie.

I don't mean scams per se, I mean using legal options to minimise your tax bill through your company that are unavailable to those of us on PAYE. No need to take offence, I'm not accusing you of anything illegal.

...tax avoidance Vs tax evasion.

The press has been guilty of creating a big storm over well known companies "tax dodging",... when they are actually working within the law / tax rules. These companies are doing nothing wrong (by the rules not by morals), but it is the rules that need to be looked at - which they are... slowly. I do my best to minimize clients' tax liabilities and from time to time have someone moaning about having to pay their tax, while Amazon (or whoever else) doesn't. I then point out that, firstly, said company is operating within the rules, but agree they could pay more tax if the wanted, then explain how that client is being taxed, and what decisions have been made to minimize their tax, and offer them the option of paying more tax by structuring things differently - funny enough, they don't want to pay more - so why should they expect others to do so to?!

The issue is, that for offshore monies (and accounting practices like the Dutch Sandwich) to work and be cost effective, you need to making a pretty big amount of money. I would think that for the vast majority of peeps on here, it would not be cost effective. Where it might work, would be to have an organisation where average earners could collectively pay into, use the off-shore tax avoidance, and take their share of the monies back out, tax free. Something that I have discussed the finer details of with a good friend, who happens to be a former senior tax inspector. Of course, it is an area which the government are clamping down on, but it is sufficiently complex that they will not close off all avenues. Or course, if everyone did start engaging in such schemes, where would the country get it's revenue from? You makes your money, you pays your taxes.

Anyways, it's a Sunday and I am currently sitting in my office, so should really do some fee earning work so that I cover my next tax bill

[Dominic]

If we were starting from scratch, what tax rules might we set which would be fair to all?

That would never be possible! One man's "fair" is not the same as another man's "fair".

[Mikie711]

And there in lies the problem, the tax system is to complicated and must cost a fortune to administer. A marginal flat rate tax would be the way forward IMHO. Your taxed on what you spend anyway (VAT0 so the overall tax take would likely climb as per the example of Russia. That and all the people who left Scotland or are working non resident would in most cases return again adding to the tax take. It would also simplify tax calculation and administration.

Just a shame they would never be that forward thinking plus the majority of the electorate would never buy it as they would just see it as tax break for the well off.

[robin]

Just a shame they would never be that forward thinking plus the majority of the electorate would never buy it as they would just see it as tax break for the well off.

In what sense would it be anything but a tax break for the well off? For everyone below the effective taxation mid-point it would have to be a tax rise. Worst hit would be those who have essentially no disposable income today. In fact without some remedial measures you would push a whole set of people into poverty with such a simplistic scheme. So now you have to offer tax breaks (or benefits, take your pick) to the lowest paid somehow or another and before you know it, you're back on the path to the scheme we have today.

Consider it this way, we do have a flat tax rate of 40%, just that we discount it for the lower earners

Cheers,
Robin

[mckeann]

...tax avoidance Vs tax evasion.

The press has been guilty of creating a big storm over well known companies "tax dodging",... when they are actually working within the law / tax rules. These companies are doing nothing wrong (by the rules not by morals), but it is the rules that need to be looked at - which they are... slowly. I do my best to minimize clients' tax liabilities and from time to time have someone moaning about having to pay their tax, while Amazon (or whoever else) doesn't. I then point out that, firstly, said company is operating within the rules, but agree they could pay more tax if the wanted, then explain how that client is being taxed, and what decisions have been made to minimize their tax, and offer them the option of paying more tax by structuring things differently - funny enough, they don't want to pay more - so why should they expect others to do so to?!

The issue is, that for offshore monies (and accounting practices like the Dutch Sandwich) to work and be cost effective, you need to making a pretty big amount of money. I would think that for the vast majority of peeps on here, it would not be cost effective. Where it might work, would be to have an organisation where average earners could collectively pay into, use the off-shore tax avoidance, and take their share of the monies back out, tax free. Something that I have discussed the finer details of with a good friend, who happens to be a former senior tax inspector. Of course, it is an area which the government are clamping down on, but it is sufficiently complex that they will not close off all avenues. Or course, if everyone did start engaging in such schemes, where would the country get it's revenue from? You makes your money, you pays your taxes.

Anyways, it's a Sunday and I am currently sitting in my office, so should really do some fee earning work so that I cover my next tax bill

I'm not complaining about the rules, it was more the "I'm the squeezed middle" sentiment that I was disputing.

[Mikie711]

Just a shame they would never be that forward thinking plus the majority of the electorate would never buy it as they would just see it as tax break for the well off.

In what sense would it be anything but a tax break for the well off? For everyone below the effective taxation mid-point it would have to be a tax rise. Worst hit would be those who have essentially no disposable income today. In fact without some remedial measures you would push a whole set of people into poverty with such a simplistic scheme. So now you have to offer tax breaks (or benefits, take your pick) to the lowest paid somehow or another and before you know it, you're back on the path to the scheme we have today.

Consider it this way, we do have a flat tax rate of 40%, just that we discount it for the lower earners

Cheers,
Robin

It would depend on what point you set the threshold at. If say you set it at £18k before you start paying tax then no you wouldn't and many would be better off. Then a flat rate above that aimed at encouraging higher earners to come to the country and thus improve your skill base as well as investment. Simplistic I know but much could be done to radically change our tax system to encourage growth and benefit everyone without reducing the overall tax take.

[c8rkh]

I think there is some mileage in simplifying the tax rules for people, for companies, it will always be more difficult though i do personally struggle with how one man companies, or a band of contractors, appear to get a better deal than those who PAYE.

If we really wanted to make work pay then we would provide better protection for the lower paid, and provide a simpler system for the higher paid. However, if we want to create an aspirational society than surely people need to feel that by working harder/smarter/whatever you want to call it, then they get to keep more of the rewards for the extra harder/smarter/whatever work they do - otherwise what is the point of them working harder to get a better life if they need to surrender a disproportionately larger amount of the extra reward? Bear in mind we are not talking about inheritance here, but payment for working. To tax people a proportionally higher level just because they earn more has as much logic as paying people more benefits than the average working wage for not working!

So for instance, why can't we have a flat rate of 0% for the first £40k, that everyone earns? Then, EVERYTHING you earn above this rate is taxed at 40%. If you look at the figures, that would hardly dent to the overall tax collected as the majority is well and truly paid by the higher earners anyway. Singlehandedly you would have taken probably 50%, even 60% of the working population out of income tax, and almost 85% of all pensioners who had paid tax all their working lives anyway! Now that's progressive, surely?

Then use VAT as a way of taxing those that want "luxury" items which was what VAT, I thought, all about in the first place. So, essentials like food, childrens clothes, heating and fuel (for the home not car) would be zero rated.

Little extra's like TV, entertainment, eating out, fuel for car etc would be say 20%.

But then big extra's you could hit harder - the so called real luxury items, used and paid for by people who earn more usually, and so a way of getting them to pay a propotionally higher rate of their earning in tax based on what they spend as opposed to what they earn. So, a £20k new car would have vat at say 10%. A £40k car at 20%. A £50k car at 25% and a £60k car at 30%. New cars costing above £60k could ether then either increase in increments based on value, or, say on bands. So a £75k car or above could have tax at say 40%, a £100k car at 50% and a £125k+ car at 60%. So, the higher earners might whinge at paying more tax for their Range Rover, but that is their choice to buy one and they have more cash after tax anyway to fund it - so, what's the problem?

I've heard an awful lot of sh*t over the past 2 years from the SNP about "progressive policies" but to be honest, if anything, they are just like any other party and are not really offering up anything that is progressive at all. They're just "tweaking" the established rules to make the majority THINK they are doing something. I mean, a government who actually takes pride in not spending it's full budget allocation from Westminster and then argues about to cuts to this and that is hardly operating very ethically and truthful, yet alone in a progressive manner. meh, politicians of parties of all colours and agendas and are the bloody same these days. It's all about them. It is most definitely not about us.

[campbell]

I'm not complaining about the rules, it was more the "I'm the squeezed middle" sentiment that I was disputing.

Let's pick that up offline, Neil, if you would like to resolve your dispute.

[mckeann]

It's not a dispute. It was just a comment, not something I care about at all, just an opinion. It's obviously different from your opinion, but I'm not trying to change anyone's view.