Wealth taxes add enormous economic complexity and collect little



Patslatt1

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I'd prefer we went after the rule that if you live in a country you must contribute to it.

It is the ones who pay nothing at all and still access services, drive on roads they don't contribute to, under streetlights they don't contribute to, and where there is an accident or emergency still expect to access services that everyone else pays for.

There are some cardinal rules of taxation which have been conveniently forgotten when it comes to wealthy and their imaginative accountants- that taxation should be equitable and be seen to be equitable and that is not the case with the wealthy who can manipulate their tax affairs down to the minimum.

The same goes for corporations who claim back what little tax they do actually pay, make constant demands for infrastructure paid for by the taxpayer and are effectively warehousing an employment scheme through their books so that they can make those demands.
The taxman (taxperson?) is more demanding than you realise. For every 100 pretax profit in a big corporation, the taxman taxes 12.5 in corporate tax. When dividends are paid out, they are usually taxed at top marginal rate of half. So a dividend of say half of the 87.5 net profit after 12.5% tax would be 43.8 and the income tax on it would be 21.9. So the combined tax of 12.5 plus 21.9 is 34.4 or 34.4% of the pretax 100. Reinvested profits of 43.8 would grow the company and be taxed at capital gains rate of 33% if the company is sold. That 33% doesn't allow indexation to inflation for tax on false inflationary capital gains.
A majority of big companies make less profits than could be made on US government bonds according to an international study that highlighted the extreme disparity in returns on investment, with the top 10% of profitable companies earning about 60% of the total profits. So taxes on that majority that have poor profitability can be very burdensome.
Some multinationals, especially in intellectual property, have reduced tax burdens through clever tax avoidance. That approach is not available to the majority of companies that aren't multinational.
 

Patslatt1

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The only reason wealth taxes are complex is because such people employ accountants specifically to add complexity.

Tax massaging is cannibalising onshore economies, whether it is corporations able to avoid tax altogether or the wealthy shareholders and officers of those corporations avoiding tax.

For example there is the new game of securitisation of pharma royalties where a load of private equity investors can now buy into the pharma royalties sector via a special purpose vehicle established in Dublin and pay zero tax on any profits arising.

That would be US investors mostly, warehousing investments through a Dublin special purpose vehicle which actually produce nothing for any onshore jurisdiction except non-taxable investments for foreign investors. The Irish exchequer gets nothing out of it.

Except a round of applause from very wealthy tax avoiders.
So the Irish taxman is stupid? Clever taxation has been hugely stimulative to economic growth since the late 1950s opening of the economy and a very low manufacturing tax rate. This royalties vehicle likely has an angle you overlooked.
 

Patslatt1

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I think it's fair to say complex wealth taxes add economic complexity and the reality is that our government, and most governments in so-called democracies seem to make any form of wealth tax complex and in many cases avoidable with the right advice.

I have to admit that over the past decade I've been ground down by the glaring inequity of the recovery and have little faith any longer in our democracy. PAYE workers are sheared every month, but the mega wealthy - those canny investors in REITs and facilities management companies, bankers, developers and legal professionals seem to have recovered unscathed.

How about a new 50% VAT rate on luxury cars? Nice and simple, not complex at all. How about 100% VAT rate on foreign travel (it would be reclaimable if it was genuine business travel? How about we tax inheritance as income - again very simple, but our "democrats" would run a mile from such an idea that would benefit the vast majority of people.
We don't want to get a reputation for begrudgery of the rich and successful.
 

Patslatt1

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There's two different points here:

1) The vast majority of income tax is paid by high earners. That is an indisputable fact



2) Are the highest earners paying tax on all their income? The top 1% probably are not, but they are availing of tax shelters that are legal. I've no issue with closing of tax loopholes, but in many cases they were put in place for sound reasons; generally to encourage investment in specific areas of the economy.
As economist Samuelson said, capitalism breathes through loopholes in the tax laws. That comment was justified in the era of high US taxes before Reagan.
 

Patslatt1

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That is not 'indisputable fact'. It is an ongoing con.

How it works is that lobbyists for this sector simply come up with a 'provisional' figure for tax income from that section of the community as if they were all paying tax at the higher levels and never, ever look at how much that cohort claim back.

If tax loopholes are created in order to increase investment in an economy, then why are many of the tax loopholes irretrievably tied in with 'offshore' investment funds?

The PAYE sector are the only sector which gets their tax deducted at source. The wealthy individual and corporations have the advantage of manipulating their income largely to ensure that the portion of their incomes on which they are due to pay tax is minimised at all times.
A lot of tax deductions are designed to spur investment in socially desirable ways. Would you like to see that investment killed off?
 

Patslatt1

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They don't pay VAT, Excise Duty, VRT, Stamp Duty on cards and cheques, PRSI, USC or for a TV license.

Lucky them.
Our 23% VAT is 6% higher than the UK's 17% but property tax is big in the UK and is reflected in rents.
 

Watcher2

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CG tax is based on actual selling price of assets and avoids hugely complicated business valuations in wealth tax.
Property tax is efficient because immovable property can't easily avoid the tax, being stuck in place. Also, the monopolistic profits that many properties enjoy in growing urban areas can be taxed without loss of economic efficiency. In Ireland, valuations of housing are made difficult by the great variations in styles and designs.
And houses in other countries are all the same????? Jesus wept.
 

Lumpy Talbot

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No
A lot of tax deductions are designed to spur investment in socially desirable ways. Would you like to see that investment killed off?
I'd like to see those numbers validated. Because there is a Rowley mile of horsehsyte claimed for taxes from the wealthiest individuals and corporations which is just that- horseshyte.
 

Lumpy Talbot

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There's a term in economics referred to as 'real terms'. It is the gap between the theoretical tax take from wealthy individuals and businesses and the actuality that is the bit that interests me.

And there is no way that the figures in column A match anything in column B with this calculation.
 

Lumpy Talbot

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You'd think we of all people would know that estimating a person's wealth based on how much they've borrowed to buy a house is somewhat problematic.

Mainly because it doesn't take into account the large debt they are carrying on the asset.

Astonishing how someone can be defined as 'High Net Worth' based on their ability to borrow. There's something radically wrong with that system and we've seen it in spades in the last decade or so.
 

Watcher2

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The taxman (taxperson?) is more demanding than you realise. For every 100 pretax profit in a big corporation, the taxman taxes 12.5 in corporate tax. When dividends are paid out, they are usually taxed at top marginal rate of half. So a dividend of say half of the 87.5 net profit after 12.5% tax would be 43.8 and the income tax on it would be 21.9. So the combined tax of 12.5 plus 21.9 is 34.4 or 34.4% of the pretax 100. Reinvested profits of 43.8 would grow the company and be taxed at capital gains rate of 33% if the company is sold. That 33% doesn't allow indexation to inflation for tax on false inflationary capital gains.
A majority of big companies make less profits than could be made on US government bonds according to an international study that highlighted the extreme disparity in returns on investment, with the top 10% of profitable companies earning about 60% of the total profits. So taxes on that majority that have poor profitability can be very burdensome.
Some multinationals, especially in intellectual property, have reduced tax burdens through clever tax avoidance. That approach is not available to the majority of companies that aren't multinational.
Indeed. 99% of registered companies in Ireland are SME's.
 

Patslatt1

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And houses in other countries are all the same????? Jesus wept.
German tourists were quoted some years ago that they were surprised at the great variety of Irish housing architectural styles. That variety reflects the small population and the regulatory attitude that conformity isn't needed in relatively small Irish cities.
 

Patslatt1

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I'd like to see those numbers validated. Because there is a Rowley mile of horsehsyte claimed for taxes from the wealthiest individuals and corporations which is just that- horseshyte.
So you think Revenue is stupid even though it is generally seen as a highly efficient department of government.
 

Patslatt1

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There's a term in economics referred to as 'real terms'. It is the gap between the theoretical tax take from wealthy individuals and businesses and the actuality that is the bit that interests me.

And there is no way that the figures in column A match anything in column B with this calculation.
And a sample of the figures can be found where?
 

Watcher2

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German tourists were quoted some years ago that they were surprised at the great variety of Irish housing architectural styles. That variety reflects the small population and the regulatory attitude that conformity isn't needed in relatively small Irish cities.
Bwahahaha, you're some yolk. Anecdotal statements of some German tourists make way for you to make this blanket statement:

In Ireland, valuations of housing are made difficult by the great variations in styles and designs.
 

Patslatt1

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You'd think we of all people would know that estimating a person's wealth based on how much they've borrowed to buy a house is somewhat problematic.

Mainly because it doesn't take into account the large debt they are carrying on the asset.

Astonishing how someone can be defined as 'High Net Worth' based on their ability to borrow. There's something radically wrong with that system and we've seen it in spades in the last decade or so.
High net worth after mortgage debt doesn't necessarily mean high debt.
 

Patslatt1

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Bwahahaha, you're some yolk. Anecdotal statements of some German tourists make way for you to make this blanket statement:

In Ireland, valuations of housing are made difficult by the great variations in styles and designs.
You'd have to be blind not to notice the variety of Irish housing architectural styles once alerted to it. Being used to it, Irish people don't notice it.
 

Watcher2

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You'd have to be blind not to notice the variety of Irish housing architectural styles once alerted to it. Being used to it, Irish people don't notice it.
Yes, there is variety, but we are not the only country FFS. And your little anecdote prove nothing. Maybe they thought all they would see are mud huts. Jesus wept. The variety of style wouldn't necessarily make it difficult to value either. You're grasping at straws.
 

making waves

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The taxman (taxperson?) is more demanding than you realise. For every 100 pretax profit in a big corporation, the taxman taxes 12.5 in corporate tax.
roflmao.gif


8 of the top 100 companies in Ireland paid 0% tax in 2017 (some got a tax rebate) - and another 5 paid as liitle as 1% tax. Two years after the ‘double Irish’ loophole was closed to new entrants, Google continued using the system to funnel billions in untaxed profits to Bermuda. In 2017 Google had $14.5billion in untaxed profits funneling through Ireland. Abbott paid zero tax on profits of €1.2 billion declared in Ireland in 2015.

Ireland has the highest rate of profits running through company books in comparison to wages paid to their Irish workers (significantly higher than any other tax haven) - and it also has the lowest effective corpo tax of these same tax havens. In 2016 pre-tax profits amounted to almost 900% of the wages paid.

I could go on - But this stuff is blatant.
 


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