Stamp out tax avoidance for the super rich
Posted on: 12 Jul, 21
Further to the announcement of a global minimum corporate tax rate, Oury and Clark debate that the real problem with tax inequality lies between individuals, not companies
Excuse me? I find that to be in incredibly poor taste. Any qualified Brit should know that this is a subject one should never discuss.
Precisely the point I want to make. We Brits play down success, support the underdog and resent the risen star.
I suppose you’re right. Being humble is part of British culture.
Whereas the Americans are comfortable talking about money. They defend the successful because they believe firmly in everyone’s right to achieve that success.
Though I might add, this drive to be as successful as possible can muddy their financial situation from time to time.
But at least it gets them on the Forbes 100!
Fair play to the Brits though, at least they’re honest about their shortcomings. You could ask a British businessperson “how’s it going?” and their answer could be “bloody awful!”.
The UK is also very transparent; a company can be looked up and full details found of its accounts and ownership at a click of a button, for free.
Exactly. Names of those that control entities are all on public record, no matter where they live, or how clever or secretive the structure behind the company. What’s more, you can’t engage accountants, lawyers or banks without a full id check.
And if you don’t comply, you can’t do business in the UK.
And quite right too.
Also, advisors must report any suspicions they have. We’re like the police for the government. It’s not much fun, and you don’t get a fancy helmet, but it makes sense in the end.
In America, anti-money laundering checks do not exist, and financial transparency is poor. So even if you were a gangster, you could get tax advice.
Financial transparency would certainly be a neater solution to international cooperation.
But let’s get back to the main issue: the wealth gap.
I think that the OECD are moving in the right direction. A minimum corporate rate is a welcome announcement and is an impressive achievement. However, a similar effort to set individual tax standards worldwide also needs to be implemented.
You’re talking about the ultra-rich.
You’re right. If you’re earning £500 million a year and are told that if you stay in your luxury house in Monaco an extra few weeks before coming to London, you could save £200 million in tax… you’d be crazy not to follow that advice.
I mean, you could buy another super-yacht for that. And what billionaire doesn’t want another super-yacht?
I’d be happy with just one super-yacht please.
Not for me. I get seasick.
The problem is that once you have houses in at least three countries, the right of any country to tax you become far more limited.
Here is the paradox: the richer you get, the more likely you are to pay reduced rates of tax (because you no longer need to live in one country, and your affairs become more complicated and hence more able to avoid tax). This in turn creates resentment against the successful.
And understandably so. The ProPublica files expose the extent that these billionaires avoid tax. For example, Warren Buffett earned $24.3 billion between 2014-2018, and only paid $23.7m in income tax (0.10% of all that wealth earned).
Oof. I’m not surprised people get miffed.
But on the flipside, there are many successful entrepreneurs who, through their own hard work, have created businesses that provide jobs for multitudes of people. Although they may be high earners, they pay a lot of tax and tend not to put much pressure on the healthcare or education system.
Going back to the ultra-rich though…
Sorry. If billionaires were paying fair tax bills, then the wealth gap would not be such an issue; they would be redistributing their wealth to society. The fact that they don’t, and in fact pay phenomenally little, makes it a bitter pill to swallow.
But how would you get anyone to enforce that? Surely Monaco won’t change what it’s doing (sorry to pick on you Monaco)?
It probably won’t. There will always be tax havens. The answer is more straightforward. For a start, major democratic countries such as USA, CANZUK, Europe, South Korea and Japan could get together and form a treaty that said: you can’t come into our country unless you have a stamp in your passport to verify that you are paying a fair level of tax.
But what’s a fair level? All the ProPublica culprits are paying a fair level based on their “technically” correct income.
Hey, I didn’t say it was going to be easy! The fact is, whatever tax haven you live in, you are always going to want to visit New York, Paris, Berlin, London etc. They’re the place to be. And if you didn’t have a stamp in your passport, how long before a billionaire would miss a New York burger? Or a Paris croissant? Or a Berlin schnitzel?
Or London jellied eels?
Mmmfff.
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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.
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Right, let’s talk about wealth and success.