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Jimmy Carr's tax avoidance scheme - how widespread are its Irish counterparts for our plutocrats?


feargach

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Jimmy Carr, Hiberno-English comedian, only has to pay a penny in the pound or so in income taxes, despite being a member of the global elite of very wealthy individuals. And despite the fact that the market for his product is almost entirely concentrated in the UK and Ireland.

The scheme is fairly simple to understand: all the money he gets for his comedy apparently goes to a Jersey company, which then loans him money. It's classed as a business loan and thus exempt from many taxes.

A quick look at wikipedia confirms what most people would have guessed: there is no precise, agreed-upon definition of income. The wikipedia article itself mentions three different schools of thought on how to define income from the point of view of academic economics. It also mentions a separate definition from the International Accounting Standards Board. It does not state whether the tax authorities of Ireland or the UK have their own variation of the concept. Income - Wikipedia, the free encyclopedia

Quite apart from expert definitions, I suspect that most of us would not consider Jimmy Carr's money to be anything other than income, even if it is classed as something else according to tax regulations.

So clearly, if you're honest, talk about "income" should really be very clearly marked as to what definition you're using, and if you don't specify a definition, then the "common usage" definition should suffice.

Constantin Gurdgiev writes in the latest Village:

"the top 23% of income earners (defined as those on incomes in excess of €50,001 per annum) had a combined income of €46.1bn, accounting for 55.8% of the total income in the nation". 46.1bn divided by 55.8 is 826 million, implying that total income would be €82.6 billion in 2011.

Problem: GNP is given as US$221bn in 2011. I'm using $1 = €0.74 as my yardstick for a rough calculation of the exchange rate. That still gives you a GNP level of €163.5bn.

So whatever it is that Constantin Gurdgiev means by "income", and there are at least three different definitions to choose from, it appears to exclude almost half of GNP!

Of course, not all proximate economic actors are physical people. Some are sovereign governments. Some are fictional persons, usually called companies by you and me. All companies are owned, ultimately, by physical people, though.

So what the blue fsck is going on with the €80bn of GNP that Constantin Gurdgiev does not label as "income"?

Wikipedia again: "GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country."

I strongly suspect that a lot of that €80bn is, in fact, what you and I would call income/wealth/sponds/moolah/dosh/bucks. I also VERY strongly suspect that no more than 20% of that €80bn of GNP that does not get counted as income is under the effective de facto ownership or control of the bottom 50% of Irish individuals.

In what context was Constantin Gurdgiev talking about total income being half of GNP?

You've guessed it: to bolster his argument that we can't tax the rich any more than we currently do.
 
Last edited:

Analyzer

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Feb 14, 2011
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Jimmy Carr, Hiberno-English comedian, only has to pay a penny in the pound or so in income taxes, despite being a member of the global elite. And despite the fact that the market for his product is almost entirely concentrated in the UK and Ireland.
You are an even bigger joker than Jimmy Carr !!!
 

patslatt

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Apr 11, 2007
Messages
13,693
Jimmy Carr, Hiberno-English comedian, only has to pay a penny in the pound or so in income taxes, despite being a member of the global elite. And despite the fact that the market for his product is almost entirely concentrated in the UK and Ireland.

The scheme is fairly simple to understand: all the money he gets for his comedy apparently goes to a Jersey company, which then loans him money. It's classed as a business loan and thus exempt from many taxes.

A quick look at wikipedia confirms what most people would have guessed: there is no precise, agreed-upon definition of income. The wikipedia article itself mentions three different schools of thought on how to define income from the point of view of academic economics. It also mentions a separate definition from the International Accounting Standards Board. It does not state whether the tax authorities of Ireland or the UK have their own variation of the concept. Income - Wikipedia, the free encyclopedia

Quite apart from expert definitions, I suspect that most of us would not consider Jimmy Carr's money to be anything other than income, even if it is classed as something else according to tax regulations.

So clearly, if you're honest, talk about "income" should really be very clearly marked as to what definition you're using, and if you don't specify a definition, then the "common usage" definition should suffice.

Constantin Gurdgiev writes in the latest Village:

"the top 23% of income earners (defined as those on incomes in excess of €50,001 per annum) had a combined income of €46.1bn, accounting for 55.8% of the total income in the nation". 46.1bn divided by 55.8 is 826 million, implying that total income would be €82.6 billion in 2011.

Problem: GNP is given as US$221bn in 2011. I'm using $1 = €0.74 as my yardstick for a rough calculation of the exchange rate. That still gives you a GNP level of €163.5bn.

So whatever it is that Constantin Gurdgiev means by "income", and there are at least three different definitions to choose from, it appears to exclude almost half of GNP!

Of course, not all proximate economic actors are physical people. Some are sovereign governments. Some are fictional persons, usually called companies by you and me. All companies are owned, ultimately, by physical people, though.

So what the blue fsck is going on with the €80bn of GNP that Constantin Gurdgiev does not label as "income"?

Wikipedia again: "GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country."

I strongly suspect that a lot of that €80bn is, in fact, what you and I would call income/wealth/sponds/moolah/dosh/bucks. I also VERY strongly suspect that no more than 20% of that €80bn of GNP that does not get counted as income is under the effective de facto ownership or control of the bottom 50% of Irish individuals.

In what context was Constantin Gurdgiev talking about total income being half of GNP?

You've guessed it: to bolster his argument that we can't tax the rich any more than we currently do.
Feargach,why do you foam at the mouth with envy of your social betters? This could lead to heart attacks and strokes!
 

neiphin

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Feargach,why do you foam at the mouth with envy of your social betters? This could lead to heart attacks and strokes!
are you for real ?
 

Prester Jim

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Crazy horse 6

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Dec 15, 2011
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I'm afraid so. patslatt loves to kiss rich people's arses.

Protect the rich, attack the working poor is his motto.

Agreed. The working poor have no voice and thats why they are targeted again and again.
 

feargach

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Dec 11, 2006
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4,995
Getting on to the substantial point of the OP. This board is full of people who claim to have a working knowledge of economics. So how come there's not a word about the following question:

How can the "total income" of a nation be only half of it's GNP?

Every penny spent by every person or non-human entity is, by definition, a penny of income for a different person or non-human entity.

Yes, Ireland is a very open economy, but not THAT open.

Even in Germany, the most successful exporting nation on Earth, fully two-thirds of economic activity occurs within its own borders.
 

feargach

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Feargach,why do you foam at the mouth with envy of your social betters? This could lead to heart attacks and strokes!
If one of these betters could explain how GNP can be over €160bn while total income is less than €85bn, I'd be satisfied.
 

feargach

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Dec 11, 2006
Messages
4,995
Gross National Income for Ireland in 2011 is given as US$178bn or about €132bn.

So, only about €45bn to account for then.

I think we can comfortably state that Mr Gurdgiev's defence of the wealthy is missing some rather important figures, if his article is to stand as a fair and balanced statement of the facts for lay people.

We can also restate Mr Gurdgiev's assertion thus: "the top 23%'s income at €46.1bn is only 35% of Gross National Income".

Which, it seems to me, is a very suspiciously low figure.

Is there any nation in the capitalist world where the richest 23% only have 35% of the money? Certainly not.
 
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Davidoff

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Oct 4, 2010
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Our comedians don't have to go to elaborate lengths to dodge tax. They just fill out a form, declare themselves to be artists, and avoid a huge chunk of income tax.

Tommy Tiernan will probably sell out Vicar Street every night next month. I don't think it's unreasonable to ask him to pay income tax like everybody else.

More generally, I've heard it said that special tax breaks in this country cost the State 10-15bn a year. Closing off even a part of that would solve a lot of our financial problems.
 

Dub guy

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I agree that a lot of tax breaks need to be curtailed further or totally closed down. But to suggest it would solve a lot of our problems is pie in the sky. There are no easy quick fix remedies to the mess we are in. What is happening to the economy is a kind of ''unwinding'' of the ''Celtic Tiger'' - basically a boom in reverse. A lot of the boom was unsustainable and should never have been allowed happen in the first place, the recession is a reversal to a sort of ''normality''. There are many in the political, financial and trade union establishment that don't ''get it'' yet. They think after a couple of tough years ''normal service will resume''. It won't.
 

Frank Galton

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One thing to keep in mind is that Gurdgiev can only be getting his data from a Household Income and Expenditure Survey(i.e. a survey conducted at the household level which allows an understanding of the differences across the income groups. There are well known issues in every country with matching up income measured at the household level to the national accounts concepts of income (i.e. GDP, GNP etc). For those of you with a stomach for the economics, here's a useful link. One particular issue is that rich people under-report their income in household surveys.

http://www.piie.com/publications/chapters_preview/348/7iie3489.pdf
 

Analyzer

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I wonder what the rock band, that the Irish media grovel, would have to say about this...
 

Davidoff

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Tax avoidance is a much bigger problem than most people realise, and it doesn't get the sort of play in the media or elsewhere that it deserves.

Colm McCarthy in his Sunday Independent column touches on the subject today.

Lot's of people know that we have low rates of corporation tax (just 12.5%). But many people don't know that many large corporations use avoidance measures to pay far less than this.

As McCarthy puts it, 'Profits earned on business in maninland Europe wend a merry dance through Dublin to some spit of sand in the Caribbean, with a jolly weekend in Amsterdam along the way.'

The net result is that many firms pay a small fraction of the 12.5% that they are supposed to pay.

I've always felt that there's a moral obligation on people to pay their fair share, specially at a time of national crisis. Pity there's not more focus on those who don't.
 

optics

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Anyone who chooses not to give more to the parasites in the Irish government should be giving a medal not vilified.
 

feargach

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Dec 11, 2006
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One thing to keep in mind is that Gurdgiev can only be getting his data from a Household Income and Expenditure Survey(i.e. a survey conducted at the household level which allows an understanding of the differences across the income groups. There are well known issues in every country with matching up income measured at the household level to the national accounts concepts of income (i.e. GDP, GNP etc). For those of you with a stomach for the economics, here's a useful link. One particular issue is that rich people under-report their income in household surveys.

http://www.piie.com/publications/chapters_preview/348/7iie3489.pdf
 
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