The Truth About Corporate Tax Dodging, BBC 1, Monday May 14th @ 8:30pm

Kemik · 12 May 2012 at 23:38

Freakbro said:
Take Boots for example, it traded perfectly well for 160 years paying UK corporation tax until being bought out by private equity who transferred the HQ, and used tax laws for start up business to offset debt interest against tax, and now pays the UK 90% less corp tax. Perfectly legal, but not actually within the spirit of what the law was intended for. Other countries, like Australia as one example, have simple other caveats to stop things like this happening, something we could simply do here.

The debt interest that the off-shore company charges (basically an extraction of profits) has to be classified as arm's length (i.e. a bank would charge that amount of interest, for that loan, on those terms). They can't get away with charging 15% interest if it's senior debt secured to assets. There also has to be commercial reasoning behind the loan (i.e. would an independent party go to a bank for a £100m loan it doesn't need?).

Freakbro · 13 May 2012 at 02:35

The Halk said:
Inheritance tax....<snip>

What a great post. I've never thought about Inheritance tax in that way, and I must say you have changed my viewpoint on it.

I will say though that the thresholds have probably not responded as they should due to the artificial 'wealth' created by the house price increases over the last 15 years which has pushed people into this band who are neither wealthy or have any tangible assets other than an inflated house price.

Hatter The Mad · 13 May 2012 at 11:16

I think inheritance tax should be 75% above £100k.

[TW]Fox · 13 May 2012 at 11:24

Hatter The Mad said:
I think inheritance tax should be 75% above £100k.

Seriously?!

Hatter The Mad · 13 May 2012 at 16:30

[TW]Fox;21904596 said:
Seriously?!

Yes. My not-even-beer-mat logic:

You don't need money when you die.
People put up less of a fight when they are dead.
The majority of 'inheritable' wealth in this country is the cumulation of middle class wealth (< £1m).
People will most likely work around the inheritance tax by giving it to their children early on/sharing it in bits, or will be more inclined to spend more of it.
Younger people tend to spend more (younger people quite often need it more).
The redistributory effects will be greater when you either tax most of it or force the money to be redistributed before death.
£100k is enough to change the lives of most people.
I hope it would slow down the accumulation of wealth in a particular blood line (disrupting establishment a bit).

Ok, 75% and £100k for the entire estate isn't going to be optimal, I get that, but I do think the inheritance tax threshold needs to either be very low for the estate or substantially capped per beneficiary, and the tax rate whacked up (perhaps using two rates).

I don't know how much you know about me or have seen me post in political threads, but my opinion on this might come as a surprise as I probably come across as economically conservative (Yellow Booker) if socially liberal.

But I think money is a tool, and if there is one thing that is unfair about society, socially unjust and is an active process which undoes the work we do towards 'equality of opportunity', it is inheritable wealth.

Hatter The Mad · 13 May 2012 at 16:34

Let me work on it a bit, but I'm sure I am on a good track.

The Halk · 13 May 2012 at 16:49

75% is too high but broadly I'm in favour.

People do want to be able to leave money to their children and I'm not bothered about that. What I am bothered about is the accumulation of wealth across generations to the point where it's such a gravitational pull on other money that it makes society fundamentally unfair.

I don't think we're anywhere near the bad end of things, and I don't think it needs drastic action. We just need to make sure that there's as few loopholes as possible, and that IHT is enough to level things out over time.

50% is plenty in my opinion (perhaps even too much)- we just need to make sure it covers everything.

It may also be desirable to have it tiered, so perhaps above a certain amount it does go to silly levels - the 75% you mention.

As far as my political opinion, I'm a classic liberal. That means I'd be an orange booker (I don't know what a yellow booker is), although I tend to be economically a bit more right than the people who call themselves orange bookers. I'm socially very liberal. I'm for peace, retrenchment and reform. I don't consider the LibDems to be a liberal party any more.

IHT is there for two reasons, raising revenue as an alternative to taxing earnings, and to ensure wealth does not gather to the point where it has such a gravitational pull that it cannot help but attract more.

Hatter The Mad · 13 May 2012 at 16:50

@The Halk - my idea is to make it so high most people are forced to release it much earlier or in drabs. Smaller accumulations of cash (like bonuses) tend to be spent more readily than salary.

dazzerd · 13 May 2012 at 17:16

This is why income/corporation tax doesn't work tax should be paid on goods and services rendered and that's it.

spudbynight · 13 May 2012 at 17:18

stockhausen said:
Too damned right! When is any Government going to do something about this thoroughly immoral tax-dodging?

It would require us to withdraw from the EU. I can't see how this sort of practice can be stopped as long as we remain members.

spudbynight · 13 May 2012 at 17:19

Hatter The Mad said:
I think inheritance tax should be 75% above £100k.

I wouldn't have an issue with this if the family home and land was excluded.

The Halk · 13 May 2012 at 17:21

spudbynight said:
I wouldn't have an issue with this if the family home and land was excluded.

I think that could be an exclusion that would work.

Hatter The Mad · 13 May 2012 at 17:21

spudbynight said:
I wouldn't have an issue with this if the family home and land was excluded.

Why shouldn't it be? That's where a lot of middle-middle an upper-middle class wealth is.

spudbynight · 13 May 2012 at 17:24

The Halk said:
I think that could be an exclusion that would work.

As an example my sister in law has sacrificed most of her adult life to stay at home and care for elderly parents. She hasn't been able to work during that period.

When her mother dies the family home will pass to her. A large tax bill on that would render her homeless. It isn't a palace - it is a rural home with attached farmland.

The Halk · 13 May 2012 at 17:27

spudbynight said:
As an example my sister in law has sacrificed most of her adult life to stay at home and care for elderly parents. She hasn't been able to work during that period.

When her mother dies the family home will pass to her. A large tax bill on that would render her homeless. It isn't a palace - it is a rural home with attached farmland.

Not a good example really. The implication there is that your sister in law has earned the house by looking after the people in it, I don't know that I'd agree with that, from an IHT point of view. As a carer though she's not getting a good deal from society.

However at the basic level, I don't have a problem with her keeping the home. It's not as if the home is going to attract wealth to it, other than increase in the value of it.

The problem is if there's so much wealth that the next generation can live off it and pass more down the line. The family home, as far as I can work out, isn't going to factor there.

Hatter The Mad · 13 May 2012 at 17:31

spudbynight said:
As an example my sister in law has sacrificed most of her adult life to stay at home and care for elderly parents. She hasn't been able to work during that period.

When her mother dies the family home will pass to her. A large tax bill on that would render her homeless. It isn't a palace - it is a rural home with attached farmland.

She could sell it/buy a place with the rest/your parents could have been providing her with allowance up until this point/she could mortgage it to pay the tax bill like anyone else has to.

spudbynight · 13 May 2012 at 17:32

The Halk said:
Not a good example really. The implication there is that your sister in law has earned the house by looking after the people in it, I don't know that I'd agree with that, from an IHT point of view. As a carer though she's not getting a good deal from society.

However at the basic level, I don't have a problem with her keeping the home. It's not as if the home is going to attract wealth to it, other than increase in the value of it.

The problem is if there's so much wealth that the next generation can live off it and pass more down the line. The family home, as far as I can work out, isn't going to factor there.

I am not suggesting she has earned the house. I just strongly feel that it has been paid for in full and society doesn't have a right to make her homeless over it. Society has no valid claim on it.

Hatter The Mad · 13 May 2012 at 17:33

spudbynight said:
I am not suggesting she has earned the house. I just strongly feel that it has been paid for in full and society doesn't have a right to make her homeless over it. Society has no valid claim on it.

She doesn't have to be homeless, and yes society does have a claim to it because its very value now is largely the product of society, not your parents.

spudbynight · 13 May 2012 at 17:33

Hatter The Mad said:
She could sell it/buy a place with the rest/your parents could have been providing her with allowance up until this point/she could mortgage it to pay the tax bill like anyone else has to.

It actually is not sellable at the moment. The house is in rural Ireland. It simply would not sell. Her mother doesn't have money to give her "an allowance"

The Halk · 13 May 2012 at 17:34

spudbynight said:
I am not suggesting she has earned the house. I just strongly feel that it has been paid for in full and society doesn't have a right to make her homeless over it. Society has no valid claim on it.

You could though, make that argument about any possession. The big pile of shares or the 20 rented properties.

The reason to exclude 1 home is because it wouldn't defeat the purpose of IHT.