Re: OT more tax mystification

BrritSki wrote:
Linda Fox wrote:

Further on this subject, I just checked my last (for some years to come we hope !) UK tax return and found no box 18.8A either.

But we always did our returns by the September deadline so that the nice tax people (NTP) would do the calculation for us and then we got a statement showing what was due for the year, what we'd paid for the previous year, the balancing payment due and the two installments to pay for the next year.

I refused to use the online forms or do the calc. myself (except to check) since those NTP had buggered me about for so long over IR35 that I refused to do anything that would help them, although I have to say that apart from the NTP directly involved with that fiasco and who turned up at the Special Commisioners hearing, everyone else I've ever dealt with before or since at the IR (as was) and NI offices have been very helpful, pleasant and informative. As have the people waife has been dealing with in Newcastle (I assume from the accents) over her soon-to-start (oops, TMI) state pension.

Incidentally, to reply to Rosie elsewhere, we don't get ANY benefits in Italy except healthcare (and for that I have to be a dependent of waife as my low salary [1] as a contractor meant I didn't have sufficient NI contributions myself, despite the 37 years I paid in full and the fact that I would have been covered if I'd stayed in England). But those charges are all passed back to the UK anyway aiui.

<rant>
[1] If IR35 hadn't happened I would not have joined PCG and learned of this possibility or even thought that it was morally right. When you've been hounded by the NTP over something so wrong though your perceptions change. Now I will do anything legal to reduce my tax bill, including reducing my income by about 80% :)

I see that El Gordo is still hounding contractors - what they don't seem to realise is that most companies will not employ contractors UNLESS they have a Limited company due to legislation from the 80s. And the tax benefits are somewhat limited - even with the low salary, I still paid around 2 thirds of my company's gross income to the Treasury in either VAT, Corporation Tax and Income Tax.
</rant>


Coincidentally, this arrived in my inbox this morning. Gordo's solution would be to have even the 1st 4 men pay $2 at first, recoverable via tax credits (which only one of them would actually claim) and increase this to $3 when the barman reduced the bill. :( <oops, rant extended>

The last para/sentence is particularly prophetic in our case:


Since it is tax season....
Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100. If they paid their bill the way we pay our taxes, it would go something likethis:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. "Since you are
all such good customers," he said, "I'm going to reduce the cost of your
daily beer by $20."Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. They would still drink for free. But whatabout the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

"I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.


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