The morality of avoiding tax

I see that another politician has come under fire today for setting up a trust with the intention of reducing Inheritance Tax, legally.

I would be interested to hear views on this subject. So here are a few (legal) scenarios. Which, if any, do you think is morally acceptable, and why?

A multinational Company (that has a legal obligation to act on behalf of its shareholders) takes steps to reduce tax in individual countries that it operates in (such as the UK) and where it has created 000's of jobs.

A British company does the same in the US and it's British shareholders (including pension funds) benefit in higher dividends and returns.

A small British company employs an accountant to ensure that not an extra penny is paid in tax than is necessary, using trusts and creative accounting methods such as ensuring a profitable deal occurs within a tax year where a loss is being made and staging of various purchases of capital equipment at certain times with the direct intention of avoiding paying tax.

A family man who has paid tax all his life, creates an Trust arrangement to preserve his worldly goods from Inheritance Tax at 40%, for the benefit of his children.

A working class married couple take steps such as the equalising of family assets and investments at crucial times to reduce income tax, capital gains tax and IHT, even though they effectively jointly benefit from the assets.

A middle aged couple who take steps to gift their assets (including their home) to their children in plenty of time before their home may have otherwise have been necessarily sold to fund Care Home costs.

I actually see little difference between any of these scenarios and tend to blame the unnecessarily complex tax rules and the high levels of taxation.

Does anyone actually pay too much tax on purpose.

Any views please?

 

We are taxed more in this country than anywhere else WORLDWIDE!! with VAT we pay tax on already taxed income for just about everything we buy and we are paying supplements, duties and hidden taxes often without ever knowing it. Council tax is ridiculously high compared to what it brings but instead of refunds council bosses prefer to plough the surplus into offshore accounts and give then themselves huge salaries and bonuses for doing so. We pay more for fuel and for power, even water when we have much more than most countries. The whole system is bent to favour the wealthy and punish the poor and like lambs we are just supposed to follow.

I would much rather let Europe decide on one set of rules even if they are basically just those of the dast@rdly Germans ... They cannot be more unfair than ours!!

 

So are you saying that it is morally Ok, to avoid paying tax, as in the above examples?

 

Difficult to compare tax country to country. We for example benefit massively from having a free national health service.

I do think it's the rich that benefit and the poor get clobbered but that's life. Both parties seem keen on taxing heavily and wgen taxws get introduced they rarely get repealed so don't see much change more's the pity.

 

Harry Redknapp is my idol.

 

No I'm saying they should tax the wealthy more and the poor less. In the region of 95% of the wealth in this country now belongs to just 5% of the population.

I know this will be controversial but inheritance laws and attitudes have become the biggest blight of our economy. Bad enough as it was with just feudal land rights being passed from generation to generation, now it's practically the whole wealth of the country by the select few and the rest of it just gets exported, mainly to the US or hidden in tax friendly foreign banks.

I've always been an advocate of giving your kids a kick start in life but not to the point where they are set up for a life of luxury without lifting hardly a finger, a life where they can't spend a tenth of it and a life their own kids will inherit later .... It stinks. To me that kick start should be limited to the deposit on the first house, a place in higher education and a second-hand VW Golf as their first car..... The rest should rightly go to building the infrastructure of the country they live in and to feeding the poor (by poor I do not mean the lazy!).

 

I don't think its good or ones duty to avoid tax but as long as it doesn't break the law then it's permissible. It's the governments duty to close loopholes and chase up evaded tax, but only if closing a loophole brings in more money. Closing a big loophole may force companies abroad to save money in which case it isn't the best thing to do because overall revenue is lost. The government's duty is to maximise tax revenue whilst keeping a happy balance of keeping the country a good place to invest and own a business in.

 

An interesting spin on the tax system - http://www.ijreview.com/2012/04/688-tax-system-explained-beer/

 

Have you got a source for 95% of the wealth? I don't think it's that high. And wealth is not the best indicator of fair distribution. I have a few grand saved from placement for next year at uni and more than many I know who have jobs. Does that mean I'm better off with a paltry loan than some one earning 25k a year?

Unequal distribution is natural. Its called the pareto principle and occurs all over nature as and life.

 

Why do you think that the rich benefit and the poor get clobbered? Surely, if the rich get taxed at 40p or 50p in the £, then it is them getting clobbered?.

 

If the government stops me from storing my portfolio on Jersey I'll just buy all of them on 1p free transfers anyway. You're all deluded.

 

Well I would disagree with most of this but why, if you owned your home after working hard, and paying your higher taxes all your life, shouldn't you be allowed to decide who gets it when you die. Why do you think the State should decide?

 

Yep, I agree with this.

 

Yep, I like that.

 

The figure might be a little misleading, maybe I should say the have control of 95%. Never-the-less I can't see the real figures being less than 90 and 10 after government wealth is accounted for which is pretty much all debt. When you consider the mean salary was 48k five years ago nationwide yet the vast majority of the population were earning less than 18k it is clear there is a huge disparity no matter how you break it down.

 

I think if you can get away with paying say 5% less of your tax thats ok, anything more and you are taking the pi$$, this goes for all scenarios in the OP.

 

Because it results in ever decreasing circles of the distribution of wealth ... eventually capitalism itself will break down because consumers won't be able to afford consumer goods. Nothing that a good revolution can't cure mind, all those houses being confiscated for the common good!


Besides that, if that extra inheritance money actually goes into the country and not some bigwigs pocket then the quality of life shoots up for all including your kids ... that means less poverty, less crime, nicer surroundings, better services, cheaper houses etc. for everyone.

 

I think he is way out, I don't know the figure for the top 5%, but the top 10% has 44% of the wealth, and 31% of the income.

 

In the OP, the scenarios would be that they save as much tax as they can - so I assume you would say that they are all acting immorally. Interesting, and thanks.

 

So, you would suggest that the State should remove all incentive for people to better themselves and their families then?

Interesting!

 

Not at all ... the incentives are the same.

 

I don't see what morality has to do with it.

I think that when you earn money, it's yours to do with as you please. Tax is a charge imposed on us by the government, but do we really get value for money? If I could avoid paying tax without going to prison, I'd do it in a shot. I would still pay something, as I do benefit from the state with the NHS and I had a state education, but if I didn't pay tax, I'd easily afford a good health insurance policy and to send my kids to private school.

Why is it a moral obligation for the rich to fund the lazy and inept?

 

When people use the word bigwig or fatcat I find it weakens their argument. Similarly going around saying the poor are scroungers and chavs.

 

Sorry, I don't understand. I'm lost.

But don't worry, I understand the direction you are coming from, so thanks, anyway.

 

Most people I know had to work for what they've got, is it not fair to assume their offspring will do the same?
I want my daughter to have a kick start but I don't owe her a life of luxury. That means the rest gets spent by me ... and why not, I earned it?

 

But no-one is saying that you 'owe' her a life of luxury. If you made a lot of money then, in my opinion, it should be your choice as to what happens to it when you've died - not the States. You say that, as you earned it, you can spend it, but why should you not have the choice of spending it on your daughter?

 

Quite, but what about the sick and vulnerable? Who looks after them and is that where you might find a link with morality?

 

If you are spending it it actually helps the economy but if you are hoarding it it helps no-one. There are no pockets in a shroud as they say.

Don't misunderstand me ... For all my 'bad policy' it has to start at the top otherwise it just ends up in their pockets but if it could then we would all be better off in the way we live. Conservative attitudes are on the whole selfish and damaging and should rightfully be discouraged.

 

I think I am right in saying that the entire benefit spend is around 23% of public spending. If the tax bill was reduced, it wouldn't necessarily hit the sick and vulnerable, if handled correctly. Also, if I paid less tax, I could spend more elsewhere, paying more Vat, I could also employ more people and there could be other similar benefits.

 

Do not kid yourself, in the current climate very little of your extra spend would benefit the sick and vulnerable and it will be a very long time before it did. Britain is a trillion in debt, debt that could be eradicated if that top 10% gave up a quarter of their "hard earned" wealth.

 

But no-one should be hoarding their money under the bed. It should be invested in other things, property, funds (stocks and shares), new businesses, etc, etc, so the money does get spent somewhere.

 

You are forgetting that some if the Tories that you so roundly condemn are also some of the greatest givers to good causes. For example, Lord Ashcroft, has already given away hundred of £millions and will be giving away the vast majority of his remaining fortune to good causes through his charitable trust. I doubt if he would be feeling quite so generous, if the Government snatched it away and used to fill their bottomless black hole.

 

But that's not really spending, all that goes into the economy is what's creamed off the top by the agents etc. and tax on your profits which you all so begrudgingly don't like to pay.

 

I understand but he is just one of of a hundred thousand and it would need a concrete and definitive policy to persuade the bulk of them. They need to see the figures showing just how they will be richer with less money. Oh and I never mentioned the Tories btw, only conservative attitudes which is not the same thing. Politics really has little to do with economics.

 

I didn't include the sick and vulnerable for a reason. It's difficult to see how the morality of caring for those incapable of looking after themselves justifies the morality or otherwise of the other 95% of my taxes (I make no claim that that % is accurate or researched or anything other than made up).