UK: The wealthy businessman who paid just £35.20 in tax

[Ghostpanther]

Except that 10% sales tax to a person making $4k a month is a hell of lot more relative to their income then the guy making $20k a month. Higher taxes on luxury goods don't make up for it unless they work like property taxes and you pay them every year. It also doesn't do much to people that are just upper middle class. They don't typically buy a ton of luxury goods.

If someone making $4k a month spends $500 a month on food, they're paying 1.25% of their salary in that sales tax. The person making $20k a month may buy better/more food so let's say $1000 a month. That's still only .5% of their salary in sales tax.

Higher sales tax disproportional affect the poor and lower class.

There is ways it could be bracketed to make it less of a impact on the poor. Food products under a certain dollar amount for one, could be exempt. Even now, we do the same thing you are complaining about with local sales taxes. Esp on fuel. Billions of unreported income escapes every year being taxed. You think drug pushers pay taxes on their income? Or how about the estimated 14+ million illegal immigrants? Many work and do pay sales taxes because they have to. But income taxes?

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How is that more fair than a flat tax ?

It is much easier for a rich person to pay 10% ( flat tax ) of their income than it is for a poor person. A sales tax can be set so as to be less of a impact on the poor by exempting some vital items they need to have. Like homes below a certain value could have a lower sales tax %. Same for automobiles, food, etc.

[prwraith]

It is much easier for a rich person to pay 10% ( flat tax ) of their income than it is for a poor person. A sales tax can be set so as to be less of a impact on the poor by exempting some vital items they need to have. Like homes below a certain value could have a lower sales tax %. Same for automobiles, food, etc.

So a rich person who doesn't buy anything other than the essentials would be contributing far less to society than someone of their wealth should. They're effectively removing money from the economy.

Additionally the rich person could quite literally just drive over the border (especially in say, the UK) make a purchase in a place without this tax and haul it back in. Yet again removing that money from their country's economy.

This is great in theory, but in practice it would really just screw the host country.

[Ghostpanther]

So a rich person who doesn't buy anything other than the essentials would be contributing far less to society than someone of their wealth should. They're effectively removing money from the economy.

Additionally the rich person could quite literally just drive over the border (especially in say, the UK) make a purchase in a place without this tax and haul it back in. Yet again removing that money from their country's economy.

This is great in theory, but in practice it would really just screw the host country.

Rich people generally do not stop buying expensive stuff. And yes, you would have issues with it as you pointed out with the drive across the border and buy something there which has no sales tax. But as it is, this thread topic proves it, the rich now effectively and legally, escape paying their fair share of income taxes. A flat tax on them would be a way I guess to stop it. Or have a higher flat tax on the rich and a lower one on the poor is another thought.

But a flat tax does nothing to address the income which is often hidden. A sales tax would.

[jeezusisacasual]

A better proposal is to scale back higher scale deductions and impose a min. tax. This would not solve the issue ( no singular action will mind you ) but it would give corporations and the like to pay something far more then they are currently paying. You could even tie deductions and the like to various other tax proposals that could be branded by an investment act to which ever party wants to place said tax. Also funding the IRS fraud division to track down those who escape taxation ( like those exposed in the Panama papers ) would be a net gain also.

Another step would be to impose a VAT tax on specific amounts to target the more expensive items like boats that house mini boats and the like. Also taxing capital gains as income would also help provide a more far tax system. Another way to stymie the large sell offs in the markets is to have a per share tax on sale to begin with ( this would also make sure the FED does the right engineering of its QE programs ). We can get alot more creative with our tax code and thankfully people are waking up to that kind of idea it just takes some explaining to do.

[tehdef]

What about taxes on his business? Just because he doesn't pay much taxes personally, doesn't mean he's not paying taxes as business. As far as I'm aware, in Europe (and that includes UK) it is not possible to get 0% business tax deal. All companies pay same taxes and they are quite high.

In US it would have been an issue because of corrupt system that allows local politicians to decide which companies pay taxes. Then almost no tax from person and no tax from business would have been an issue. But this is not US company.

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Jailed for what? What fraud? He's paying his taxes. If he was in Denmark, it wouldn't be any different.

You've missed the point completely. Point is everything is a business expense. Point of article is to cause outrage by completely and intentionally ignoring that business do get taxed, so he does pay taxes as business. Many business do that, many have done that for decades. Its normal business practice. This is basically a slow news day.

I don't think you understand. If he takes 1$ salary and then expenses everything he does/buys and finds ways to get comped, write off, lie, whatever, he's not paying taxes. Money gets taxes as it changes hands. When you don't let it change hands, but still use it in a situation where it would have changed hands, you're breaking the law, or at least being an asshole. It sucks, and it's not how it should work. His behavior needs to be made an example of, as long as what he did was 100% factual.

[Trifle]

There is ways it could be bracketed to make it less of a impact on the poor. Food products under a certain dollar amount for one, could be exempt. Even now, we do the same thing you are complaining about with local sales taxes. Esp on fuel. Billions of unreported income escapes every year being taxed. You think drug pushers pay taxes on their income? Or how about the estimated 14+ million illegal immigrants? Many work and do pay sales taxes because they have to. But income taxes?

Drug pushers can pay tax if they want to, but I'd agree it is unlikely. As the proceeds of crime though, asset forfeiture is a relevant thing that takes lots of money from drug pushers and gives it to the government (without getting into all the controversies around it...)

Illegal immigrants do pay income tax. Eg https://www.vox.com/2018/4/13/172290...ants-pay-taxes

The most recent IRS data, from 2015, shows that the agency received 4.4 million income tax returns from workers who don’t have Social Security numbers, which includes a large number of undocumented immigrants. That year, they paid $23.6 billion in income taxes. That doesn’t even include workers who paid taxes with fake Social Security numbers on their W-2 forms, which is also common.

They actually have a pretty big incentive to pay tax, it helps them potentially achieve legal status eventually, through programs like DACA.

Only way to have a fair tax is a sales tax. Everyone pays some tax that way. You could bracket it, with the more expensive items only the rich can afford, have a higher % tax rate. No income to write off or hide.

If you consider a poor person paying 100% of their income, vs someone who's wealthy who spends say 40% and saves/invests the other 60%... how high do you think sales taxes would need to be to capture enough of the wealthy persons income? Especially when a portion of their purchases will also be food items, etc, same as the poor person.

How complicated are you planning to make the tax system? 5% tax for budget brand ice cream, 20% tax for name brand ice cream? I'm not sure that would even be legal, and the more complicated you make the system the more expensive it is to run it... so you need to bring in more taxes to cover those costs.

There are issues with current tax rules, but moving to straight sales tax brings issues of its own.

[Dald]

ITT people who end up defending super wealthy people that contribute nothing or less than nothing to society

[Gsara]

There's far more to paying taxes than just income tax and anyone making a ton of money doesnt really care about income tax because there is a thousand legal ways to lower it. Where wealthy people make there money and accumulate wealth has far more to do with stocks and investment returns which are taxed substantially lower than income tax. There is a reason people like Steve Jobs only took $1 a year salary but was making 30-40m a year just on stock options alone. With just playing around capitol gains tax law(rolling over) and real estate write offs you can hit below 15% taxable income pretty fast.

[exochaft]

I don't think you understand. If he takes 1$ salary and then expenses everything he does/buys and finds ways to get comped, write off, lie, whatever, he's not paying taxes. Money gets taxes as it changes hands. When you don't let it change hands, but still use it in a situation where it would have changed hands, you're breaking the law, or at least being an asshole. It sucks, and it's not how it should work. His behavior needs to be made an example of, as long as what he did was 100% factual.

From what the article said, the taxes mentioned in the article are personal income taxes, not corporate income taxes. There was no mention of what his actual total personal income really is, and there was only mention of the off-shore trusts. It also depends if that £35 is total taxes paid or how much the individual owed after paying the standard tax rate and owed that much after filing. Simple example as it relates to the US: standard W2 income is usually taxed 25% automatically before you personally receive a dollar, and when tax season rolls around all you're doing is seeing if you paid too much or too little over the entire year. Now, you can opt out of automatically deducting 25% to the IRS, but chances are you're going to own a decent chunk of money at the end of tax season if you aren't prepared. When it comes to this story, it's not clear whether (assume he was paying taxes in the US) the touted 35 number is how much he owed after paying 25% the entire year or if he paid nothing the entire year and his filed taxes showed he only owed that little amount. This doesn't even get into other write-offs that can occur.

The details get pretty vague, as the claim is that he back-dated loans made against the trust distributions instead of having them as income, although I'm going to assume the article is correct concerning how the UK deals with trusts when it comes to tax (could be wrong, I'm just assuming for brevity). The details surrounding the meeting are sketchy, but that's based upon the documents obtained by the BBC Panorama (which honestly has some shady dealings of its own when it comes to obtaining information and the validity of said information). All that being said, if everything is legit, then that is that. If illegal things occurred, then it would be warranted to be upset about this.

As a random aside, is the personal income tax rate in the UK really 40-45% above £46k? If I was taxed that high, I'd certainly find ways to legally avoid paying as much as possible. If my quick math is correct, that roughly $58k USD. Off the top of my head, I think $500k USD pays 37% personal income tax, and that's the top bracket, with 25% being the default rate everyone tends to pay automatically before your tax filings sort out the brackets. I've never done UK taxes before, so I haven't the slightest concerning adjustments to taxes beyond the basic rates. Also, I think people would be outraged a lot more at how much taxes they actually paid if it wasn't done automatically in the background, as generally your "refund" is basically money the government took from you over the year without interest... and the irony is the IRS will demand interest if you hold out on money for a year.

[DSRilk]

Under the same laws that non-rich people pay taxes?

At this point I'm ready to say slash the fucking tax code and make it a flat tax, even if it does harm the poor due to relative earning power. We can finally get some money from these rich assholes using every loophole in the book to get out of paying their fair share, and roll that into an actually decent welfare program like UBI.

The problem is that not only will a flat tax crush the poor, it will also not touch the rich in the slightest. The majority of their wealth does not come from income. You want to tax the rich? Increase taxes on the capital gains and the value of stock options granted as compensation. There's a reason executives can easily drop their salaries to $1 per year. It may look like they're generous, but their salary is a pittance of their compensation.

Even then though, there's still stuff you can't really touch easily, because a lot of the wealth also comes from free benefits associated with executive jobs. Travel, food, clubs, etc. end up being gifted by companies in order to "do business" with others in the same situation. And with all that, you also end up with free air miles, hotel miles, etc. that make travel and other luxuries far more affordable without any actual expenditure of income. Sales tax doesn't work for the same reason - the companies end up paying for a lot of it. Tax the companies for that kind of thing, and the cost ends up getting shifted down to the peons or the work gets outsourced to 2nd world nations where labor is beyond cheap to make up for it.

Estate tax is also a great way to deal with it. For those people who make such an obscene amount of money that they literally can't spend it all in a life time and die with millions laying around, tax the left overs to feed the money back into the system instead of having it sit for generations in a few families, allowing them to position themselves in the upper echelon of society that ends up continuing the laws that perpetuate the situation.

It's still possible to do. Until the people making the laws aren't the ones benefiting from said laws, good luck making it happen though. :-/

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But a flat tax does nothing to address the income which is often hidden. A sales tax would.

Sales tax costs the poor far, far more than the rich because it cannot really be progressive. In addition, while the rich continue to spend, there's a ton of money that just sits around. You still need things like estate taxes to address that situation. Part of the sales tax issue is that when corporations are buying their execs tons of stuff, it's actually a write off, effectively nullifying any tax they would be paying on it. Changing the way businesses are taxed for things would help in that department. That carries its own complications though.

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Or how about the estimated 14+ million illegal immigrants? Many work and do pay sales taxes because they have to. But income taxes?

Even Fox admits illegals pay a crap-ton of income tax: https://www.foxnews.com/world/undocu...s-study-claims.

[Ghostpanther]

The problem is that not only will a flat tax crush the poor, it will also not touch the rich in the slightest. The majority of their wealth does not come from income. You want to tax the rich? Increase taxes on the capital gains and the value of stock options granted as compensation. There's a reason executives can easily drop their salaries to $1 per year. It may look like they're generous, but their salary is a pittance of their compensation.

Even then though, there's still stuff you can't really touch easily, because a lot of the wealth also comes from free benefits associated with executive jobs. Travel, food, clubs, etc. end up being gifted by companies in order to "do business" with others in the same situation. And with all that, you also end up with free air miles, hotel miles, etc. that make travel and other luxuries far more affordable without any actual expenditure of income. Sales tax doesn't work for the same reason - the companies end up paying for a lot of it. Tax the companies for that kind of thing, and the cost ends up getting shifted down to the peons or the work gets outsourced to 2nd world nations where labor is beyond cheap to make up for it.

Estate tax is also a great way to deal with it. For those people who make such an obscene amount of money that they literally can't spend it all in a life time and die with millions laying around, tax the left overs to feed the money back into the system instead of having it sit for generations in a few families, allowing them to position themselves in the upper echelon of society that ends up continuing the laws that perpetuate the situation.

It's still possible to do. Until the people making the laws aren't the ones benefiting from said laws, good luck making it happen though. :-/

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Sales tax costs the poor far, far more than the rich because it cannot really be progressive. In addition, while the rich continue to spend, there's a ton of money that just sits around. You still need things like estate taxes to address that situation. Part of the sales tax issue is that when corporations are buying their execs tons of stuff, it's actually a write off, effectively nullifying any tax they would be paying on it. Changing the way businesses are taxed for things would help in that department. That carries its own complications though.

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Even Fox admits illegals pay a crap-ton of income tax: https://www.foxnews.com/world/undocu...s-study-claims.

From the Fox News article.....

The study by the Institute on Taxation and Economic Policy, said that undocumented immigrants paid some $11.8 billion in state and local taxes in 2012. That included $7 billion in sales and excise taxes, $3.6 billion in property taxes and $1.1 billion in personal income taxes.

Seems they paid a lot more in sales and local taxes in the states where they are compared to income taxes.

Also....

Efforts to reach the authors of the study were unsuccessful.

MarketWatch noted that, “While the wealthiest U.S. taxpayers may have a lower tax rate at the state and local level, they’re hardly off the tax man’s hook.”

“When it comes to federal taxes (including income, estate and payroll taxes), the top 1 percent of households paid 35.7 percent of their income in 2013, according to data cited last week by the Tax Policy Center. That compares to an average for all Americans of 21.3 percent.”

But your overall comments are noteworthy and well thought out. Thanks for your reply.

[Acidbaron]

Tax what one posses, throw it all in one pile. Cars, Houses, Assets, stocks and tax that. Not simply what one officially makes each year as that can be manipulated.

And tax breaks you get is based of how much you own in total, once you own above a certain amount you no longer apply and breaks that apply to other people that need it no longer goes wasted on those who don't.

Shame it's a hubclap thread though.

[noidentity]

A wealthy businessman who lived a life of luxury paid just £35.20 income tax, a BBC investigation has discovered.

Frank Timis rented a £14,000-a-month penthouse and spent thousands dining in London's finest restaurants.

But his personal tax return for 2017 shows he paid just £35.20 in tax, after claiming that he had hardly any income from his worldwide business empire.

Mr Timis's lawyers say he has fully complied with all of his tax obligations.

Documents leaked to BBC Panorama and Africa Eye also reveal how Mr Timis managed to do this.

They show that in 2017, Mr Timis received payments totalling £670,000 from his offshore trust.

These were mainly payments called distributions, which should have been taxable. But shortly before he submitted his tax return, Mr Timis allegedly asked the trust to turn the distributions into untaxable loans.

A backdated loan agreement was created making the loans look legitimate.

John Christiansen, from the Tax Justice Network, said it looked like Mr Timis was dodging tax: "It all points to this being a manoeuvre to cheat the tax man. And, if that is the case, because it's been done retrospectively, there seems to be prima facie evidence that this is tax fraud and it should be investigated."

Leaked documents
The BBC investigation has also spoken to the man who ran the trust that helped Mr Timis with the apparent tax dodge.

Philip Caldwell is named as chairman at the meeting in Switzerland that agreed to backdate the suspicious loans.

His signature is on the minutes, but he says the meeting never happened and that the minutes of the meeting are fake: "It has my signature on it but what I can say is that no such meeting ever took place. I wasn't there. I wasn't in Switzerland at the time."

The leaked documents also suggest that Mr Timis didn't pay a single penny in UK income tax in 2016.

Mr Timis's lawyers say the allegations are denied in the strongest possible terms: "Mr Timis has fully complied with all of his tax obligations and at all stages has taken professional advice to ensure that he has done so."

The Romanian businessman is no stranger to controversy. He has two convictions for supplying heroin in the 1990s and has been involved in a series of failed mining ventures in Africa.

Frank Timis has floated two mining companies on the junior stock exchange in London.

One of them - Regal Petroleum - was hit with the exchange's biggest ever fine in 2009 after misleading investors about an oil discovery.

Regal Petroleum told investors it expected to find oil in Greece, even though it knew the well in question was dry.

Mr Timis's lawyers said he only held a minority stake in Regal and was not on the board at the time the company received the fine.

They said: "Mr Timis was personally investigated and cleared by the FCA in relation to his role in Regal Petroleum."

Bold for emphasis.

He committed fraud by taking income from people while classing it as a loan, except he never had to pay back the supposed loans.

[DSRilk]

Seems they paid a lot more in sales and local taxes in the states where they are compared to income taxes.

No doubt. Then again, so do most people who make extremely low salaries as most illegals do. My point was that obviously many pay income tax. The article is also not great, I will give you that. There are far better sourced articles. I only chose the Fox one as a way of saying (perhaps unnecessarily) that even a group that doesn't like illegals admits they are part of the tax base.

But your overall comments are noteworthy and well thought out. Thanks for your reply.

I find it fun to have thoughtful and respectful conversations about complex topics. Thanks for keeping up the other end

[TrollHunter3000]

There is ways it could be bracketed to make it less of a impact on the poor. Food products under a certain dollar amount for one, could be exempt. Even now, we do the same thing you are complaining about with local sales taxes. Esp on fuel. Billions of unreported income escapes every year being taxed. You think drug pushers pay taxes on their income? Or how about the estimated 14+ million illegal immigrants? Many work and do pay sales taxes because they have to. But income taxes?

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It is much easier for a rich person to pay 10% ( flat tax ) of their income than it is for a poor person. A sales tax can be set so as to be less of a impact on the poor by exempting some vital items they need to have. Like homes below a certain value could have a lower sales tax %. Same for automobiles, food, etc.

Some states don't even have income tax. Having less tax on certain items is a decent strategy but it's also overly complicated. I don't think food from grocery stores should be taxed at all (healthy ones anyway). Only prepared food such as restaurants. Basic necessities such as toilet paper, cleaning supplies, etc also shouldn't be taxed.