Tax Avoidance & Evasion


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Profile Chris SProject donor
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Message 1244003 - Posted: 9 Jun 2012, 16:50:04 UTC

Presumably any loophole in the tax code is there for a public reason.


C'mon!! It is almost virtually impossible to draft legislation as complex as tax laws, without some clever dick finding a discrepancy which can be exploited. Tax laws are meant to ensure that people pay their rightful dues, any loopholes are an oversight.

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Message 1244015 - Posted: 9 Jun 2012, 17:05:30 UTC - in response to Message 1244003.

Tell that to the lawyers & accountants!
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Message 1244033 - Posted: 9 Jun 2012, 17:42:28 UTC - in response to Message 1244003.

Chris, a fair proportion of those loopholes are created by those who actually write the bills. The people who write the bills are NOT the legislators. Often enough they are the lobbyists who craft the bills in draft form for the staffers to work with.

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Message 1244081 - Posted: 9 Jun 2012, 19:31:05 UTC

Here's one loophole that needs urgent closing...

Rich use loopholes

It should become worldwide that anyone who purchase properties in any country, regardless of any offshore facility, pays the tax due in that country.
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Message 1244133 - Posted: 9 Jun 2012, 22:08:35 UTC

One might hypothesise that the loop holes are created by one group of accountants, so that another group of accountants can earn their vastly inflated salaries finding the loopholes. Of course this is an expensive cycle, and has to be kept going, so periodically the first group has to plug a few loopholes, but in so doing create a few more in different places....
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Message 1244193 - Posted: 10 Jun 2012, 0:10:47 UTC - in response to Message 1244003.

Presumably any loophole in the tax code is there for a public reason.


C'mon!! It is almost virtually impossible to draft legislation as complex as tax laws, without some clever dick finding a discrepancy which can be exploited. Tax laws are meant to ensure that people pay their rightful dues, any loopholes are an oversight.

It is trivia to craft such a law. You simply have no exceptions at all. The three line form. How much. Multiply by percent. You owe this much, send it in. Of course such taxes are called "regressive" and that is "bad" because everyone, rich and poor, has to pay the piper.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

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Message 1244196 - Posted: 10 Jun 2012, 0:24:13 UTC - in response to Message 1244193.
Last modified: 10 Jun 2012, 0:25:48 UTC

Here you go -- simple and not regressive.


There might be the simple nine line form similar to what you suggest

How much.

If $0 to $30000 Multiply by 5%
If $30000 to $75000 Multiply by 10%
If $75000 to $150000 Multiply by 15%
If $150000 to $300000 Multiply by 20%
If $300000 to $600000 Multiply by 25%
If $600000 to $1000000 Multiply by 30%
If $1000000 to $5000000 Multiply by 35%
If $5000000 or more Multiply by 40%

You owe this much, send it in.



It is trivial to craft such a law. You simply have no exceptions at all. The three line form. How much. Multiply by percent. You owe this much, send it in. Of course such taxes are called "regressive" and that is "bad" because everyone, rich and poor, has to pay the piper.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

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Message 1244212 - Posted: 10 Jun 2012, 2:22:46 UTC - in response to Message 1244196.

Here you go -- simple and not regressive.


There might be the simple nine line form similar to what you suggest

How much.

If $0 to $30000 Multiply by 5%
If $30000 to $75000 Multiply by 10%
If $75000 to $150000 Multiply by 15%
If $150000 to $300000 Multiply by 20%
If $300000 to $600000 Multiply by 25%
If $600000 to $1000000 Multiply by 30%
If $1000000 to $5000000 Multiply by 35%
If $5000000 or more Multiply by 40%

You owe this much, send it in.



It is trivial to craft such a law. You simply have no exceptions at all. The three line form. How much. Multiply by percent. You owe this much, send it in. Of course such taxes are called "regressive" and that is "bad" because everyone, rich and poor, has to pay the piper.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.


Those numbers are pretty close to what happens on the low end of the scale. They'd work if nobody got and special treatment. But when the wealthy can deduct pretty much their entire lives we end up with a less sliding scale. Its more like a flat line.

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Message 1244271 - Posted: 10 Jun 2012, 6:23:58 UTC - in response to Message 1244212.

Skil, I realize that -- the trick is, as Gary suggested, the elimination of ALL special considerations (donations, home mortgage, reduced rates for dividends and capital gains and -- this one is a biggie -- health care costs.

If you do that for corporations -- you toss health care (as currently conceived) under the bus and force it to be dealt with squarely.

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Message 1244491 - Posted: 10 Jun 2012, 20:27:14 UTC - in response to Message 1244196.

Here you go -- simple and not regressive.


There might be the simple nine line form similar to what you suggest

How much.

If $0 to $30000 Multiply by 5%
If $30000 to $75000 Multiply by 10%
If $75000 to $150000 Multiply by 15%
If $150000 to $300000 Multiply by 20%
If $300000 to $600000 Multiply by 25%
If $600000 to $1000000 Multiply by 30%
If $1000000 to $5000000 Multiply by 35%
If $5000000 or more Multiply by 40%

You owe this much, send it in.



It is trivial to craft such a law. You simply have no exceptions at all. The three line form. How much. Multiply by percent. You owe this much, send it in. Of course such taxes are called "regressive" and that is "bad" because everyone, rich and poor, has to pay the piper.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

Barry, too simple, you know those on the low end and living at or close to the margin would be pushed over the edge with a mere 5% tax. If you are making only $1000 per month they might very well have to give up their luxuries such as electricity or medications. Oh well in the long term it could help with Social Security payments.
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Message 1244499 - Posted: 10 Jun 2012, 20:57:23 UTC
Last modified: 10 Jun 2012, 20:58:41 UTC

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

It's got less to do with exceptions and more to do with allowances. In the UK we have certain tax deductible allowances that can reduce your tax bill. For example as an apprentice I claimed for tools and overalls, which were deemed to be a necessary expenditure relevant to my job. In later years I claimed for fees incurred as a Member of Professional Institutions, again relevant to my employment. Those were genuine expenditures.

What is wrong for example, is where the rules allow a company owner to sell his own private car to their own company, which then becomes a company vehicle, and subject to all sorts of maintenance and depreciation allowances. But the person continues using it as their own private vehicle as if nothing has happened.

I know people who regularly take friends out to lunch on a purely social basis, but claim the expense upon business meetings. Many people employ their wife as Company Secretary, and claim allowances on a notional paper salary that is paid. No money actually changes hands, no work is actually done, but it all helps the tax bill. How about as most people do, designate the spare bedroom as an office, and get tax relief from a proportion of the Council tax and lighting & heating costs. Good fun renting your own spare bedroom from yourself! But all perfectly legal and millions do it.

It is not as simple as you owe this much, so send it in. Only wish it was.

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Message 1244501 - Posted: 10 Jun 2012, 21:04:31 UTC - in response to Message 1244491.

Here you go -- simple and not regressive.


There might be the simple nine line form similar to what you suggest

How much.

If $0 to $30000 Multiply by 5%
If $30000 to $75000 Multiply by 10%
If $75000 to $150000 Multiply by 15%
If $150000 to $300000 Multiply by 20%
If $300000 to $600000 Multiply by 25%
If $600000 to $1000000 Multiply by 30%
If $1000000 to $5000000 Multiply by 35%
If $5000000 or more Multiply by 40%

You owe this much, send it in.



It is trivial to craft such a law. You simply have no exceptions at all. The three line form. How much. Multiply by percent. You owe this much, send it in. Of course such taxes are called "regressive" and that is "bad" because everyone, rich and poor, has to pay the piper.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

Barry, too simple, you know those on the low end and living at or close to the margin would be pushed over the edge with a mere 5% tax. If you are making only $1000 per month they might very well have to give up their luxuries such as electricity or medications. Oh well in the long term it could help with Social Security payments.

Oh so true. Even the proposed rates are still regressive. First off they don't start negative at the bottom end and they also don't go over 100% on the top end. They don't reach the Robin Hood ideal of stealing from the rich and giving to the poor. But at least we got rid of all the exemptions and deductions so no one can play games anymore.

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Message 1244506 - Posted: 10 Jun 2012, 21:30:00 UTC - in response to Message 1244499.

Once you start putting in thousands of exceptions that is when tricky holes get into the code.

It's got less to do with exceptions and more to do with allowances.

Exception, allowance, deduction, exemption, credit all words for some form of special treatment of some kind of funds.

In the UK we have certain tax deductible allowances that can reduce your tax bill. For example as an apprentice I claimed for tools and overalls, which were deemed to be a necessary expenditure relevant to my job. In later years I claimed for fees incurred as a Member of Professional Institutions, again relevant to my employment. Those were genuine expenditures.

As on this side of the pond, subject to a % limitation. However on this side of the pond the employer may elect to pay these expenses as a reimbursement to the employee. When that happens the employee can't claim them, but he also isn't taxed on the amount reimbursed. The cost is transferred to the company as their expense.

What is wrong for example, is where the rules allow a company owner to sell his own private car to their own company, which then becomes a company vehicle, and subject to all sorts of maintenance and depreciation allowances. But the person continues using it as their own private vehicle as if nothing has happened.

Yes. Shame the company has to pay more to keep their key employee. Oh and the IRS takes a look at that pretty hard. Seems that car is supposed to be used for business use only. When they find it isn't, taxes, interest, penalties, and maybe even custody.

I know people who regularly take friends out to lunch on a purely social basis, but claim the expense upon business meetings.

Don't know about HMRS, but on this side of the pond the IRS takes a very dim view of that. If you know of an event, call them on the toll free number and report it. You are eligible for a reward of 10% of what they collect and the criminal can face a custodial sentence.

Many people employ their wife as Company Secretary, and claim allowances on a notional paper salary that is paid. No money actually changes hands, no work is actually done, but it all helps the tax bill.

Harder to do it the USA. Can't be done for a sole proprietorship. Can't be done for a "S" Corporation. Can be done for a "C" Corporation. May be possible with an LLC. But over here money does have to change hands. The wife would have to pay social security and medicare tax.

How about as most people do, designate the spare bedroom as an office, and get tax relief from a proportion of the Council tax and lighting & heating costs. Good fun renting your own spare bedroom from yourself! But all perfectly legal and millions do it.

It is not as simple as you owe this much, so send it in. Only wish it was.

Who says it can't be?


I also think we need to stay focused on legal methods, there are a whole host of criminal methods to cheat on taxes.

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Message 1244527 - Posted: 10 Jun 2012, 23:09:49 UTC
Last modified: 21 Mar 2014, 14:08:32 UTC

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Message 1244542 - Posted: 11 Jun 2012, 0:13:53 UTC - in response to Message 1244501.

Yes, I know the pure cut offs involve games to get from one level to another.

Another approach of course would be to use the same rates for income in each bracket -- which is pretty much what in theory goes now.

First x taxed a a%
Between x and y taxed at b%
Between y and z taxed at c%

And so on.

And yes I know that some on the far left would complain the rates I suggested are still regressive -- but not compared to the current rates.


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Message 1244543 - Posted: 11 Jun 2012, 0:23:46 UTC - in response to Message 1244542.
Last modified: 11 Jun 2012, 0:25:27 UTC

Yes, I know the pure cut offs involve games to get from one level to another.

Another approach of course would be to use the same rates for income in each bracket -- which is pretty much what in theory goes now.

First x taxed a a%
Between x and y taxed at b%
Between y and z taxed at c%

And so on.

And yes I know that some on the far left would complain the rates I suggested are still regressive -- but not compared to the current rates.


Barry, what do you propose to do with the people who are on the edge of the cliff, (the marginal ones), which will be kicked over?
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Message 1244586 - Posted: 11 Jun 2012, 3:16:41 UTC - in response to Message 1244543.

Betreger, not sure what you mean here -- in the first example I suggested, that would be an issue. The second example addresses that something like this


$0 to $30000 Multiply by 5%
Between $30000 to $75000 Multiply by 10%
Between $75000 to $150000 Multiply by 15%
Between $150000 to $300000 Multiply by 20%
Between $300000 to $600000 Multiply by 25%
Between $600000 to $1000000 Multiply by 30%
Between $1000000 to $5000000 Multiply by 35%
Between $5000000 or more Multiply by 40%

So someone at $40K would get a $1500 hit on the first $30K, plus a $1K hit on the next $10K for a total of $2500 on $40K.

Note, this is pretty much like the existing tax schedule -- the big differences - elimination of exemptions and the top quite a bit higher.

There is a marriage and family penalty implicit here I suppose so I suspect exemptions of 1st x dollars per person in a household might muck things up a bit.

An interesting thing, the Ryan proposal suggests 'flattening' the tax rates and reducing the top end, and posits elimination of deductions -- but does not specify which deductions it would eliminate. That gets an 'oh joy' response from me -- since the big ticket deductions have a LOT of Republican advocates and thus, the important deductions would not be eliminated and tax revenues would be reduced -- budget imbalance would grow even faster than it is now.

The same folks in Congress who voted for the Ryan nonbudget (with its implicit deficit increases) are making noises about not allowing any more deficit ceiling increases. I suspect for them it is a matter of poor education, they can't do the maths.

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Message 1244656 - Posted: 11 Jun 2012, 8:03:44 UTC

Many people employ their wife as Company Secretary, and claim allowances on a notional paper salary that is paid. No money actually changes hands, no work is actually done, but it all helps the tax bill.


I've seen this example first hand....

C.E.O's wife gets a check every week. I've never seen this woman in my life.

This is "income" the C.E.O. get's a tax break on because it's being paid out as wages, instead of being taxed.

Cheap scam IMO. Shouldn't be allowed.
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Message 1244658 - Posted: 11 Jun 2012, 8:39:40 UTC - in response to Message 1244656.

Many people employ their wife as Company Secretary, and claim allowances on a notional paper salary that is paid. No money actually changes hands, no work is actually done, but it all helps the tax bill.


I've seen this example first hand....

C.E.O's wife gets a check every week. I've never seen this woman in my life.

This is "income" the C.E.O. get's a tax break on because it's being paid out as wages, instead of being taxed.

Cheap scam IMO. Shouldn't be allowed.

The problem, at least on this side of the pond, is the lawmakers.
First though by simple definition a company must have more than one person in it, or else that person would not have company.

When I returned to the UK, I started work on a limited contract for a large organisation, as a self employed person.
A self employed person is allowed to pay a lot of bills before declaring the remainder as income. Also they are allowed to pay reduced National Insurance, becuse they have to organise there own pensions etc.

The Tax offices and the government assumed they were not getting their due share in taxes etc, so made a law that said if you worked as self employed for only on company for the year, then you had to be classed as an employee. As in most cases this did not suit the organisation, redundancy and penion payments etc, or the employee for the obvious. The option was for the employee to form a company, and become a sub-contractor.

As that person now needs company in that company, who do they choose, the obvious choice is the spouse. And as that second employee has legal obligations it is only fair to pay them. Hence the company pays both its members.

If that arrangement has tax advantages, then blame the law makers, do not try to blame the people who have to work by those rules. And don't forget the vast majority of those people are, in the greater scheme of things, not the 1%ers.

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Message 1244660 - Posted: 11 Jun 2012, 9:27:01 UTC
Last modified: 11 Jun 2012, 9:32:16 UTC

Lets be quite clear here, Tax evasion is illegal, and tax avoidance isn't. I have personally never evaded or avoided any tax that should have been paid, and never will do. All the examples I gave earlier are quite properly allowed within the tax rules, but within certain caveats. The wife as the Company Secretary has a legal duty to return the company accounts each year but this is usually done by accountants on the companies behalf. However she would need to declare that income on her own tax return and pay tax on it.

It is common practice for employees to be given partial use of a company vehicle for private purposes, limited to so many miles a year, but they have to declare that use on their tax form and pay tax on the notional value of it. Further a company that suddenly starts claiming for large entertainment costs is likely to be looked at a bit closer.

HMRC can and do carry our random checks on anyone, so if people are bending the rules they could well be found out. And yes the Tax people here do have a snitch line for people to report things, but I don't know how widely it is used. I think it's a case of proportions here. what is more important is corporations using off shore tax havens and a web of intermingled companies which deprive the Treasury of billions of pounds each year. It would probably not be cost effective for the tax people to go after every small trader, its the big boys they are after.

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