Tax and Politics

[xaphod]

No, I'm not an accountant, but I see a few oblique references to the taxation policies of each others' countries. OK, guys and girls, let's compare notes. For example, Highluc mentioned that some Dutch people live in Belgium to get around the Dutch property taxes (BTW do the Dutch still have a wealth tax whereby you have to pay the Dutch Government a percentage of your net global worth each year ? ) That sounds like a lovely pan-Europe tax strategy if Euro-State integration becomes a reality. Oh, BTW Dim Wim (Duisenberg) is Dutch, hmmmm. Inga, tell us what really narks you about Australian taxes .... yes, I know your socialist Government is desperate for cash, extracted from an ever-decreasing number of wealth producers (much like our lot). Beeblebrox .... is Swedish income tax still 65% ? Which Swedish idiot dreampt up the idea that unemployment benefit in Sweden is 2/3 of the salary of the person's last job? Did the same idiot consider that people would just love the idea of being made unemployed, so they could go off to have fun on 2/3 of their salary, with every poor sod who was fool enough to work paying for them? A simplistic analysis of this works out at 1/2 of the people work and 1/2 of the people live off the other half. By the looks of this, slightly fewer than half of the people work, so when it comes to a vote, the people who are on benefit outvote the poor sods who still work, so nothing changes.

[Highluc]

In Belgium, VAT is 21% and they take between 35 and 55% of your income each year. On the other hand, our social security is (too) good. Unemployment pay is rather high but no luxury for the poor guys getting it. Numerous jobs are getting lost by multinationals leaving us for cheap labor countries, general recession plus bankrupty of some big employers like our national airline Sabena. I don't complain either, having been serving the government for all my life on an average pay, but now getting a pension of 90% of my last wage.

[Jeff]

On 2002-03-05 00:10, xaphod wrote:

(BTW do the Dutch still have a wealth tax whereby you have to pay the Dutch Government a percentage of your net global worth each year ? ) That sounds like a lovely pan-Europe tax strategy if Euro-State integration becomes a reality. Oh, BTW Dim Wim (Duisenberg) is Dutch, hmmmm.

We have a complete new tax-system since 2001. The wealth tax doesn't exist anymore. Well, at least it isn't called like that anymore. Now you have to pay a percentage of your average global worth in one year. The average is calculated by taking the worth of your property on 1-1-2001 and 31-12-2001, sum them up and divide by two. So if you somehow manage to have nothing on these dates and have a couple of million for the rest of the year, you don't pay a dime..

Anyway, it still pays off to have your money in a foreign bank if you have propery worth more than about 17000 EURO or so.

[IHeels]

Geeze you really come into my domain here. Legislation! Well in Aust they tried to and succeeded to a degree to introduce a new tax system. Essentially this comprised of a not to popular GST (VAT) at 10%. Most of us are just waiting to see when this GST rate is going to be increased, can't be far off as I understand UK for example has a rate closer to 20% and they started off with 10%. Aust is a relatively high tax country top rate 47% for individuals, however people have tried to get around this by various means over time. As one means was discovered it was legislated out, so another was discovered, legislated out and so on. Result: Aust now has a tax legislation that reads like the full oxford dic, 4 volumes. Fortunately I don't write tax legisaltion, although in the past I have had something to do with it. The favorite current products seem to be things like for example, bogus investment bonds, here the investor borrows a small amount (25% of investment value) to finance the purchase of such, an intermediary borrows the rest on a non recourse type arrangement, result bank gets fees and bears no risk because the transaction is round robin, its happy, investor gets inflated tax deduction probably makes money out of the deal he/she is happy. Oh, one thing you need to be rich to do this, I'm not rich enough. I suppose much of the same happens in Europe, like people who are worth billions getting a low income rebate on the tax return. End result massive cheque in the mail. Oh another thing, fortunately there's a resource limitation ie no administration can employ enough people catch those they think are naughty out. This is good because we can all bullshit around the edges a bit. Like enough to buy one pair of shoes a year. You never know I may have given some ideas to play with here. Anyhow said my bit. Now back to talking about shoes and fashion. Inga _________________ Platforms are for standing on, not for walking in. <font size=-1>[ This Message was edited by: IHeels on 2002-03-05 10:39 ]</font>

[IHeels]

Another thing all I think you'll find most western countries have progressive tax rates. So I think in Sweden the 65% is the top rate, this would be levied on the income above say Kr60,000. I might be wrong. Needless to say this high taxing stuff goes a long way to explaining why celebs often choose tax havens as their abodes.

[IHeels]

Here's another one: Politics: they are having a council election around my way at present. The area I live in is basically suburban, however it abut's farmland. Hence we have a Green group and a Pro Development group. One of the candidates standing in his statement called for responsible planning. Great stuff when he owns the first farm beyond the residential line. Just think he might want a bit of re-zoning here so he can sud-divide sell off and line his hip pocket. Most of us spotted this and have voted accordingly. Inga

[IHeels]

It's all a bit sad in Australia today, an airline of approximately 70 years standing went under today, Ansett. Suppose it really paves the way for Sir Richard B to move in big time (Virgin Airlines). How sad it was is illustrated by the fact most of the staff were crying (Teli pics, although they were having a wake - lots of grog) and at the same time booing the Qantas flights as the landed. This was largely a result of the government allowing the wrong buyer to purchase the airline a few years back. Inga

[Highluc]

Sounds pretty similar to our Sabena having been sucked dry by Swissair leading to bankrupty. With our airline there was also a problem with too much people doing not enough, especially all the department directors. The last blow was when the pilots and cabin personel went on strike when they wanted to slim down the company to survive. They all were in tears afterwards but that was too late. Most are still unemplyed now because of the worldwide air travel recession.

[hoverfly]

One thing for sure in life is death, and taxes. Obviously the rich have the money to spend finding loop holes in the tax laws. While the middle income group every year get a bigger burden paying into the pot. In the Unites States, big corporations are moving their head quarters to Bermuda where there is little or no tax. However the truth of the mater is, their head quarters is right where they left it. Right here in the U.S. It’s just no longer called that. They just rent a mail box in Bermuda. So who gets to make up the difference? Why me of course. However in the past few years Congress, and the IRS (Internal Revenue Service) started to get on the closing a lot of the loop holes that the wealthy exploits. Now, realizing corporations are not paying there share (Don't they ever?) They are looking into that as well. However in a global economy this might prove to be difficult if not impossible. <font size=-1>[ This Message was edited by: hoverfly on 2002-03-05 18:11 ]</font>

[xaphod]

Boy, did I push the big red button this time ! I came across an interesting statistic a few months ago. In the UK in the 1930s there was one civil servant for every 10 people. Now there is 1 civil servant for every 3. In the end, of course, there will be more civil servants administering more rules to extract more money from fewer people who create wealth. This leads to my Sweden scenario where the hangers-on outvote the wealth creators. I'm not sure if the Swedish taxes are graduated, but I know of some Engineers who went to work there in the mid 90s. Now, Engineers are paid pretty crap, about $(US) 40k in the UK, maybe double that for the short-term contract in Sweden. Even so, I remember these guys tellng me they got clobbered for 65%. In the end, they reckoned that it wasn't worth the hassle. Of course the agents who set up the job took their 20% and went home laughing, presumably about how the mugs bought the line that the tax aspect had been sorted out. About companies being sucked dry ..... When I first joined the Marconi Company in the 70s there were about 20000 people working in Chelmsford for Marconi. At the time it was not long after GEC (that's the General Electric Company of the UK, not GE of the USA) took them over. Over the next 20 years the workforce gradually dwindled to less than 3000. I won't say why, but, despite all the 'arent we great and aren't we making lots of profit' words promulgated by GEC, Marconis seem now to be a vestige of their former self. Ye Gods, I remember them doing digital television in 1974 at Baddow Research and talking to a guy describing what is now known as mpeg in 1977. Did GEC fund any further development? .... HA HA sob sob. I don't know whether to laugh or cry, because, with their semiconductor fab they had then, they could have been banging out GEC-Marconi mpeg chips years before anyone else. Finally, here's a nice little one from Alderney in the UK Channel Isles. Over the last couple of years, great debate has raged over the Admiralty Breakwater, a 3/4 mile long wall built in about 1850 across a large bay. The big idea then was that Cherbourg which was, and still is a French naval port, is just around the corner .... hell even in my sailing boat the trip takes me less than 4 hours. Now in 1850 the British and French didn't entirely see eye to eye, so it was thought a good idea to have a big harbour to park a few warships in, just round the corner from Cherbourg. Over the years work has been necessary to maintain the harbour wall, and if I remember right, about $150k is spent on maintenance annually. Out of the blue, some bigwig in Guernsey decides this is costing too much money and commissions a study of the future of the harbour. It seems that the best thing to do is to let this venerable structure fall into the sea and build a modern shorter harbour wall inside the old one, thereby reducing the sheltered water area to 1/3 ish, and pissing off a lot of yachties into the bargain. For some reason the rock for the new wall has to be shipped in from far away, despite the fact that Alderney is a huge lump of granite sticking up out of the Atlantic and the old Victorian railway between the old quarry and the harbour is still there (it's used to give kids steam engine rides in Summer). Some 'research' was done and, if I've got my facts right, it turns out the Guernsey bigwig's wife was a director of the company who would ship in the rock from far away (or something like that). Call me an idealist, but I think the world would be a better place if a lot of politicians met up with some high-speed lead, then the wealth creators taxes would get, unadulterated, to the less fortunate people who really need some help in life. PS .... Highluc, tell us the story of how the MV-Augusta helicopter affair brought down the Belgian Government. (Was it MV-Augusta or some other, I forget).

[IHeels]

Like that rock = principality, ie, your own private country. Might even have you own private currency too. There's an example of that here in Aust. Hutt River Province it actually a guys large farm, but he gone as far as to produce his own currency. Inga _________________ Platforms are for standing on, not for walking in. <font size=-1>[ This Message was edited by: IHeels on 2002-03-06 09:33 ]</font>

[IHeels]

Highluc, Yeah, I work for the Aust Gov't, develop legislation, ie, research and 1st draft. 14 years time when I'm 55, I'll go on same basis as you unemployed but get 90% of last salary. The airline, almost an exact duplication of what happened in your neck of the woods. Inga

[IHeels]

Fall into the sea, probably a result of the feasability study costing a lot more than E$150k. Typical! Sweden experience, may'be interposing an entity between your employer and yourself might help. Might pay no tax here. Inga _________________ Platforms are for standing on, not for walking in. <font size=-1>[ This Message was edited by: IHeels on 2002-03-06 09:49 ]</font>

[IHeels]

On 2002-03-05 18:10, hoverfly wrote:

"In the Unites States, big corporations are moving their head quarters to Bermuda where there is little or no tax. However the truth of the mater is, their head quarters is right where they left it. Right here in the U.S. It’s just no longer called that. They just rent a mail box in Bermuda. So who gets to make up the difference? Why me of course. However in the past few years Congress, and the IRS (Internal Revenue Service) started to get on the closing a lot of the loop holes that the wealthy exploits. Now, realizing corporations are not paying there share (Don't they ever?) They are looking into that as well. However in a global economy this might prove to be difficult if not impossible."

The Bermuda problem: Don't they have residency tests in the, like a permanent establishment test. Most countries I think have such embedded in their legislation. This test means you have at least got to have an office in that country, perform transactions through such etc etc. This is the start point of breaking down the problems associated with international transfer pricing, ie, shifting income to low tax countries etc. I could go on forever, like a 100 page academic paper here, but I'm not. Most of the problems associated with revenue agencies world wide really stem from under resourcing. So there's always going to be some scope to get away with it.

Anyhow one of ours, I'm Australian, Pat Rafter, the guy who won 2 US Opens recently, lists his abode as Bermuda, just says it's closer to the US where 65% of the ATP tour is played, actually, don't think you'll find him in Bermuda for much of the year.

Wonder how many other super wealthy people you'll find there?

Inga

_________________

Platforms are for standing on, not for walking in.

<font size=-1>[ This Message was edited by: IHeels on 2002-03-06 12:17 ]</font>

[Highluc]

Hi Xaphod, regarding the Agusta scandal in Belgium the following. More than a decade ago the Belgian Army decided they wanted anti tank capability on helicopters. Our old Alouettes could not carry loads so they invited offers. Finally only 2 offers were retained, the excellent proven and potent German Bolkow 105-107 and the new sleek Italian Agusta 109. The Italian mafia connections in Belgium did their job and the contract was allocated via our Walloon aircraft industry to Agusta to develop an anti-tank version of their passenger carrying helo. As usual when the finished product was delivered they were grossly overweight and very limited in use. The basic weight is so high that no passengers can be carried efficiently anymore. To reduce the weight they eliminated the retractable landing gear reducing the top speed. The Army ended up paying a lot of money for a product with limited operational value but soon the scandal broke out. The socialist party had received substantial money from the Italian Agusta factory. While a parliamentary commission was doing an inquiry, a minister (Cools) was murdered, leading to the arrestation of other socialist polititians involved in the liquidation through the mafia. The flamish socialist party got their share as well. An influential member of the party declared he had just burned the money for the party and no trace could be found of it. He resigned from his function and went studying in Oxford UK for 3 years. He now is back as the minister of social affairs. The head of the party at the time of the money transfers was in the meantime head of NATO (Claes) and also resigned quitting political activities forever, leaving his chair vacant for Mr Solana. During further hearings a retired general (lobbyist for Agusta) committed suicide in a hotel in Brussels. All this never led to the fall of our government, but to a drastic decrease in the number of votes for the socialists in Flanders. Most of their votes went to the liberal party but to no avail. After the election the liberals with 24% of the votes were still in the opposition while the socialists with only 17% formed the government together with the Christian democrats, their loyal allies. So far for democracy and useful spending of taxpayers money.

[hoverfly]

Dang!!!! The one above is for me.

[hoverfly]

All we have to do is to simplify the tax system. Sounds so easy dose it? However that not going to happen. Why? Two things. One: It’s creates jobs. The more complicated it is, the more jobs created to run it. As well give the politicians smething to nag about to keep their jobs. Two: So the rich can weasel their way out of paying their fair share. <font size=-1>[ This Message was edited by: hoverfly on 2002-03-07 01:37 ]</font>

[IHeels]

Hiya Hoverfly, You wrote: "The United Stated right now have no law governing where corporations have moved out side the United Stats but still have a info structure in the U.S." I was'nt actually talking about laws that make it illegal to set up offshore, I was talking about laws that make for the tax being paid in the country where the actual income source is. What I will say it's very hard to get these laws to work. Just how hard, well in Australia there's two volumes of the tax act devoted to just this, not many people can understand the stuff anyhow. Myself, well I'm a lawyer (attorney), am involved indirectly the legislative drafting process and I'm lost on occasion. Not much hope for the Mr/Mrs/MS average. Inga

[IHeels]

Moving a away from the serious stuff. Here's a bit of humour from MPFC on the subject of taxes, and yes, politicians seem often to work it out this way. Politician: Bravo, Madge. Well done. Taxation is indeed the very nub of my gist. Gentlemen, we have to find something new to tax. Second Official: I understood that. Third Official (Terry Jones): If I might put my head on the chopping block so you can kick it around a bit, sir... Politician: Yes? Third Official: Well most things we do for pleasure nowadays are taxed, except one. Politician: What do you mean? Third Official: Well, er, smoking's been taxed, drinking's been taxed but not... thingy. Politician: Good Lord, you're not suggesting we should tax... thingy? First Official: Poo poo's? Third Official: No. First Official: Thank God for that. Excuse me for a moment. (leaves) Third Official: No, no, no - thingy. Second Official: Number ones? Third Official: No, thingy. Politician: Thingy! Second Official: Ah, thingy. Well it'll certainly make chartered accountancy a much more interesting job. Inga

[hoverfly]

I agree that where the money is being made is where the taxes should be paid. But some countries gouge these corporations so much it actually forces them to take measures to find a way not to pay else were. A good example is that the oil companies here in the U.S. pays big time tax to those in the Middle East on the profits from the oil. It's not enough for them that we buy their oil, they tax the profits as well. So in the U.S., there is a tax break for oil companies. They pay next to nothing!! Nice.....

[Dr. Shoe]

So why don't the oil companies look for oil elsewhere or invest in researching alternatives? That's what I would do.

[hoverfly]

That's what you would do... But money talks, BS walks.

[IHeels]

That's economics, most administrations provide incentives in some way or another to boost their economy (get money moving around faster etc). I can probably think of a better one than petrolium products as these have an inelastic demand curve (ie, the ultimate price maker's, that is you could double the price and people would still purchase the same quantity). Inga

[IHeels]

Hiya Highluc & Xaphod, Agusta & Mafia: Were'nt they riding MV Agusta's (or some Italian Motorcycle could be wrong here - minor technicality) on a marble surface in the "Italian Job", they sort fell foul of the gyroscopic effect. Also, in this film they beat the mafia (I think), but stuffed up as a result of ambitious bus driving. From what I remember it was quite entertaining. Inga

[Dr. Shoe]

On 2002-03-08 01:26, hoverfly wrote:

That's what you would do... But money talks, BS walks.

That's what I meant! The Oil companies have all the money so why give it all to blanket heads who have gotten rich just by living in a certain part of the world. Esso, BP, Shell etc have more than enough resources to look at alternatives for which they would not be taxed by anyone.