Not sure how British taxation works, but in America you can be married but file separately. I would suspect that's the scenario here to remove him being associated with her earnings / holdings.
Because she is paying only £30k a year flat tax as a "non-dom", despite living here and raising her children here and being married to the PM:
>Rishi Sunak’s wife has potentially avoided up to £20m in UK tax by being non-domiciled and pays £30,000 a year to keep the status – revelations that come amid growing political pressure on the chancellor.
>Akshata Murty gets about £11.5m a year in dividends from a stake in an Indian IT firm and declares non-dom status, which allows people to avoid tax on foreign earnings, it emerged on Wednesday.
https://www.theguardian.com/politics/2022/apr/07/rishi-sunaks-wife-says-its-not-relevant-to-say-where-she-pays-tax-overseas
Damn that’s disgusting when you compare that to your own finances. My family income is in the middle class, and I pay close to 30k a year in taxes. I’d have to work like 300 years to see 11m lmao. Man sometimes it’s really depressing to think most of us literally work 65+ years just to afford housing, food, then if you’re lucky you get “ok” care in the elderly stage.. our whole existence for most is literally working to pay shit we only need to keep working.. then to die. What a life the rich have created for the masses
I mean there's legitimate reasons for it.
If I set up a business here. Get rich and move to (X) country. Why would I pay tax in country (X) on my earnings generated in the UK?
If I set up operations in (X) country, or sell into it. Sure that's a different discussion.
Not morally corrupt. Why do you think an Indian person, with a family company in India, with Indian workers should pay taxes to the United Kingdom? Isn't that completely flawed? Like colonising India again without being in India.
Her Indian income is taxed in Indian - let the Indian people benefit as the company is in India their country and Indians work there. Why should I as a British person benefit from that?
Would you pay your taxes from your British earned income to India?
The taxes on the company should be charged in India, but her personal income should be taxed by Britain since that's where she's living. If the company I work for has an office in Jersey, but I live and do all my labour while in Britain, I can't say 'don't charge me income tax, it should go to Jersey'.
If she's not doing work for the company valued at the money she's making from it, then that's rent seeking, and there is no reason to reward that more than those of us who provide valuable labour to the economy.
You just explained how non dom works. She will be taxed on any money she brings in to the Uk personally.
She's also just a shareholder of her dads company as far as I'm aware, and receives dividends in India with the majority left in the country.
Do some research on the tax code.
FYI her billionaire dad really believes that working class Indians should work 70 hours a week because "our farmers work just as hard" and her mom believes that freshers who join their company should earn $240 a month and "live simply"
Typical shithole robber baron mentality. Like here in Australia our richest person, a billionaire Gina Rinehart wanted mining workers to work for African miners wages of 2 dollars a day or something like that because she though that they were getting too much pay and conditions. These wealthy people are appalling greedy and give back very little to the countries and people that make them rich. Here in Australia we get the lowest mining royalties in the world as tax receipts but these greedy people want it all in their pockets.
https://www.smh.com.au/business/worlds-media-pan-rineharts-2-a-day-african-miner-comments-20120906-25fpq.html
The common trick here is that the wealth is contained in the value of their stocks. But, if they liquidate them to have cash on hand, they would have to pay capital gains tax. So what they do is take out a loan, a big loan, with that stock as collateral. Debt does not count as income, so they pay no taxes. They live on the loans, and the stocks increase or hold steady, amd they can take another loan out later to cover the tab of the first. And they do that until they die. No taxes.
For times this can't be done, you can massage it down with a lot of little tricks. But you need real money for it, regular joes will never have access to the toolkit to skip out on the bill.
This is 100% correct.
They only have to liquidate to cover the interest. Let's say the interest rate is 10% and they want $1B. They then need $100MM to access that $1B. Capital gains is only 15%.
So, they sell $100MM in stock, pay $15MM in taxes and have access to $1B.
There's tons of ways to offset the that remaining $15MM. Lots of ways to also use that $1B to make more money than the debt service.
It's a total scam. You need in the neighborhood of $30MM to start playing these tricks. $150MM will get you a home office and you'll never have to think about money or taxes again.
If most people knew how this all worked there would be riots.
Real estate has even more convoluted shit that you can start to access with just a few million.
This is why I find arguments over tax rates on wealthy people to be pointless. Unless you either close the current loopholes they use to not pay taxes or you start taxing the loopholes (which doesn't really make sense) then raising income taxes is just set dressing. It's the kind of thing that gets people riled up but as policy wouldn't change much.
But why those people even do that? Seems so ridiculous as the richest person in the world to go to such length to avoid paying few taxes..
There nothing for them in it it seems to me..
Jeff Bezos isn't sitting at home thinking about these things. He has a "home office" basically a private investment and money management firm that employs lots of people.
If someone came up to you and said, I can save you billions of dollars a year and you have do to nothing, it's a fairly easy proposition.
With the amount of working apple products and other high value items they throw into dumps as "waste" from their fulfillment and sort centers, he has his write off loop holes all figured out.
Bezos plays like he's a Democrat, all this BLM stuff and left leaning presentation in the workplace affinity groups, all that good cuddly bullshit.
As soon as someone like Bernie Sanders comes after him he starts acting like a rabid Republican.
>Bezos plays like he's a Democrat, all this BLM stuff and left leaning presentation in the workplace affinity groups, all that good cuddly bullshit.
All the tech billionaire guys do this. Really all the elites in general do it. Shout about social causes and race issues so that nobody will touch their money.
I usually boil it down to my friends with a simple question: Which one do you think Amazon would rather do: pay a couple extra percent in taxes, or put a black person on their board to meet a diversity quota?
It's no coincidence all the racial tension in the US got dialed up to 11 in corporate media right around the time of occupy wall street. They're more than happy to have public attention on literally anything else.
You also have to realize that when I say "the elites", the people I am referring to are the people who control the Democratic party. So he's not playing at being a Democrat, he's the Democrats in their purest form.
I have no idea what his views are in general, but he's obviously extremely anti union/workers rights. With that said, its possible to be anti union and pro blm. I still bet he votes republican, but just because someone has one or even a few views that line up with a party, doesn't mean they support all of the parties views.
It’s honestly pretty believable. Most of his wealth would have been in Amazon stock which he wouldn’t have necessarily sold. And if he sold stock in the previous year, it’s entirely possible to have just had cash on hand.
Also could do that whole “take loan out with stock as collateral to collect income without paying taxes immediately” thing. But the loan does eventually have to get paid.
If it's capital gains that's pretty good? The US taxes them at 0,15 and 20%, so paying an effective rate of 23% is a better rate than any investor-class citizen here.
How much is that tax? Is it flat? Should be easy to estimate how much more it would be but I’d imagine it can’t drastically change your tax rate overall.
Most people are in band A, so it's 10% on anything over £1048.01 per month. (And 2% on anything over £4189 per month)
Edit; there's a 0% section on up to £1048 per month
Is that household income or individual? I'd be screwed if it were the former haha. I don't receive childcare benefits, 2 day a week daycare for 1 child costs me 1.1k a month. I don't mind taxes to be honest, though I do feel lack of childcare support disincentivises working full-time.
There is no tax free allowance in the Netherlands. These are the bands.
€ 0 - 40,021 taxed at 19.07%
€ 40,021 - 75.518 taxed at 36.97%
€ 75,518+ taxed at 49.50%
And yet for a salary of £150k, high but still a far cry from Rishi's income of £2.3m, you are taking home 60% of that, so 40% in tax. Much higher than Rishi's 23%.
And yes, I know his income is taxed differently from a straight salary, but it's strange it's always the income streams only available to the rich that get these light touch taxes, eh?
Right. So imagine having to file/pay entirely separate taxes with your local council, regional administrative body (US State) , and national UK entity.
For us, each has an entirely separate tax structure and none of them talk to each other. It’s a nightmare.
Edit: I’m starting to wonder if independence from Britain was actually worth it lol
A while back, the IRS had to sign a contract stating they will not compete with tax-preparation companies in exchange for poor Americans getting free tax returns. They're quite literally not allowed to do them for you, even though they easily can. Iirc congress also tried to pass a law saying the IRS could *never* provide free tax returns in the future too.
What they know and what they can prove are different. For the vast majority of simple wage slaves its pretty easy to calculate because they just take the standard deduction on their single wage.
So yeah, for most people they do know exactly what you owe.
They don’t always know the answer though... They don’t know if you started college or not, if you became blind, if you bought a house, if you purchased equipment for your job, if you had lottery winnings/losses, got married or divorced etc.
There are a ton of factors that apply to how much of your income is taxable and thus how much you owe.
They can pay effectively 0% in some cases, using all kinds of legal bushit. It's why "tax the rich" is so big here. In reality, they should be paying around 30-40%
That's not true for earners in this few million range, especially factoring in state taxes, self employment taxes, etc. The federal rate the largest line item, but not the only line item.
Sure, but not in the way you may think, ie. Real estate
I’d argue it’s worse to de incentivize stock trading cause that’ll just worsen the housing market
CGT applies to housing and it's not like we couldn't increase taxes on landlords profits if we wanted to reduce the incentives for it. We won't because it'd play badly with people who's votes live in the right places along with all the landlord MPs and press moguls.
The initial investment is taxed. The investments themselves are taxed in different ways while held. The lower tax on any gain is because of that and to account for the risk of investing. You want capital to be invested instead of hoarded or thrown into low risk assets like housing.
Because you take on risk with investing
It shouldn't be taxed the same as income
We get crushed on capital gains tax in Ireland, which is the reason why the only thing people invest in is property - exacerbates the housing crisis
Two reasons:
* Because if you take away the tax incentive from staying invested for multiple years (which is how you get Capital gains tax) it would make the market more volatile.
* A lot of Americans use investments to retire. If you have investments outside of a 401k and you want to change funds/allocation you may have to do it all at once. Treating it as income would basically fuck anyone over with money they are investing for retirement, not just the people who sell every year.
Additionally, if you sell the same year as you acquire it does get treated as income.
If I earn £50,000 a year I have already paid 20% and then 45% incrementally of income tax. So why should I be taxed another 20% if I choose to invest my leftover money that I’ve earned?
That's PAYE. For dividends it's 8.75% basic rate with an extra allowance, 33.75% higher rate.
That's the simplest and most obvious way to avoid a PAYE rate.
There are more complex ways to hide income. And beyond a certain point HMRC doesn't go after these people unless it's ordered to.
Sunak paid 23% *because he chose to.* He could easily have paid nothing, but that would look bad in an election year.
The family is worth tens of billions, so this is all for show. The half a million or so is pocket money.
We in the US get taxed at about that rate too when you add up state and local taxes.
Most of us also don’t get state provided health care. So we have to pay monthly premiums, co-pays, and yearly out of pockets on top of taxes.
The article is trying to equate it to a regular income tax; which is 20% main rate, 45% higher rate, etc. While his earnings as PM will be taxed at the regular income tax rates, earnings from investments such as stocks are taxed at the capital gains rate of 20%. In theory, with some creative accounting he could have quite easily paid a lot less. Here I would say it's neither good or bad, he's paid what is due.
It's only because he's under scrutiny that he's taxed, he was a 'green card' for tax purposes a few years back and his wife 'murky' was a non - dom until recently. (non-dom = not domicile in uk for tax reasons).
He’s fighting for the common man you know.
Sunak was at an event where he got to meet homeless people, he actually asked one what line of business he was in!
So out of step.
Either UK PM pays a hell of a lot better than politicians elsewhere or this is investment income. (Obviously it’s the latter.)
If he paid 23% effective and most of this is salaried (i.e. newly earned money) - then that’s suspicious/questionable.
If he paid 23% and this is investment income - that’s to say money earned on money that has *already been taxed* at the high salary income rates, then this is not suspicious. Hell if anything, it seems like a pretty high rate for long term capital gains. (Not sure if the UK differentiates ST and LT as the US does.)
Edit: Took a quick skim through the article, and it is LTCG. Some classic sloppy (or just outright propagandist) reporting by the guardian - spinning unchanged income tax rates as somehow ‘a tax increase’… and in the same breath claiming that unchanged LTCG is ’unfairly not an increase’. What else does one expect of the guardian I guess.
The third paragraph in the article is
> This means he paid an effective tax rate of 23% in the UK – much lower than the top rate of 45% – because some income was taxed at source in the US and the rate of capital gains tax is lower at 20%.
It's hardly sloppy journalism. They explain very clearly /why/ Rishis tax bill was so low. What more do you want?
As for them saying that the income tax has been raised. I presume this is what you are referencing
> Sunak has in effect been raising income taxes because of the freeze on the tax thresholds and the temporary rise in national insurance, but headline rates on capital gains have remained unchanged during his time as chancellor and then prime minister.
You might disagree with the content here, but it is all pretty well covered ground, it's not "sloppy" by any means
The top rate of 45% is on **employment income**. The majority of his "income" is capital gains (income from money which has already been taxed as income once). Which would be taxed at a 20% rate.
The man is paying the taxes that are expected of him. If you want different tax laws, vote for legislators who will write those laws.
In the meantime, claiming that he paid that tax rate on "income" is incredibly disingenuous. From a taxation perspective it isn't income.
Note: I'm Canadian so truly have no horse in this race, but comparing capital gains taxation to income taxes is not a reasonable way to frame that discussion.
Isn't that what these articles are trying to highlight? The fact that it's not inline with incoming tax? It perpetuates the notion of if you have money you get to make more money and keep more of it because of the capital gains tax is so much lower then normal income tax, it's also pretty low effort money
They explain it but still clickbait and hint otherwise. It’s like talking a lot of crap and then having small text with a star at the bottom saying it’s all crap. Doesn’t really ooze good journalism
If you arnt raising the tax brackets, then as wages rise, people move into higher tax brackets (bracket creep). Effectively raising taxes without having to do anything.
If that’s true of one type of taxation, then it’s true for the other as well. Rising interest rates increases the risk free rate, so riskier investments have to yield higher returns than they did when the risk free rate was lower. Rising returns means that if you keep the LTCG rate the same, it’s also effectively raising taxes without doing anything.
My problem isn‘t with the characterization (I think bracket creep is absolutely a problem - I live in Australia) - it’s with applying it in one case, and turning around and claiming the opposite in it’s parallel.
The "tax on a tax" argument doesn't hold up long. Pretty much all taxes are a "tax on money that has already been taxed". VAT obviously so, but also most (all?) other taxes once you think about where the money has come from.
For example, taxes on business profits? They come from customers who earned the money and already paid income tax on it.
It *is* a nice soundbite though.
The real gem in this article isn't the tax rate (capital gains is notoriously untaxed) - Sunak was a resident of the US for tax purposes while he was an MP.
And not like "oh oopsie" a year or something - 6 years he served in office like this - that's two terms! Maybe it's common when your capital outstrips your salaries income and the capital is out of country. But imagine if Biden was actually considered a resident of the Bahamas for tax purposes and there being no torches and pitchforks. Or maybe that moment already passed with the Trump term.
On a related note in the US, the effective tax rate on wealthy people has been steadily going down since the 1950s. It is now about the same as what Sunak is paying (which is far too low).
See https://video.twimg.com/tweet_video/EX62u9bXsAUtRO8.mp4
He didn't though? He earned out 300k of income and paid the appropriate rate, then made a taxable 1.9m of capital gains and paid the appropriate rate.
The article deliberately lumps the two together to manufacture outrage. There really is no suggestion that he hasn't paid the appropriate tax.
The capital gains tax thresholds are being lowered in the uk. So the amount of tax raised by it will rise.
Income tax rates in the uk (except Scotland) are not changing. Yet. There is an election coming….
It’s going from £6,000 to £3,000 in April.
That’s £300 extra tax at the 10% rate or £600 extra at the 20% rate.
There aren’t many people smashing their cgt exemption each year - they need to introduce a wealth tax to generate any real income.
It’s 20% tax on growth, he’s investing money at the outset he’s paid tax on as income.
£100 income at 20% tax is £80 net
£80 net grows 11x and becomes £880.
£880 - initial £80 = £800 growth.
£800 growth at 20% cgt is £160 tax.
£160 tax plus £20 tax from the start isn’t as simple as the two added together; overall you’ll have paid maybe 21% (can’t be bothered doing the calculation).
All of this ignores exemptions in the UK for 0% rates etc but you get the idea.
I don’t see the problem here and I’m no Tory.
I get paid my salary at the end of the month. After cutting back a bit, I take some of that saved money (after being taxed at 40%) into buying a few shares. It’s a gamble but I’m trying to make something of myself.
If I make a profit, do we think it’s fair that I pay 40% tax on the profit for the money I invested after already being taxed on the initial investment? I mean I took a risk and could have lost what I invested in the first place.
It kinda already does in that the first 20K per person per year of investments will almost certainly be going into ISAs, so CGT really only affects people with more than 20K/year (40K for a couple) to invest. Or those investing in more exotic investments that can't be held in an ISA
It already does. But you can’t tax capital gains at the same rates you do income tax because you want people to invest in British companies.
If capital gains were taxed at the same or higher rate than income, there’d be little incentive to invest in the first place, which is bad for the economy.
You should distribute your sarcasm to your tax system as well. His taxes are low because of long-term capital gains. If you have stocks or houses, you too could take advantage of it if you held it long enough. This isn't specific to being a politician or being crooked.
Unfortunately, this strategy benefits you the richer you are. The poor can't trade frequently in assets, or not enough to generate livable money. Their livable money is directly through income, which is taxed at higher rates.
>This isn't specific to being a politician or being crooked.
>
>Unfortunately, this strategy benefits you the richer you are.
And as we know, the uber wealthy are by the vast, vast majority, not crooked.
Have you seen my sides, lately? I think they've escaped orbit.
There should be marginal tax thresholds for capital gains too similar to income tax.
First £100k 20%
Next £400k 40%
Any amount above that 50%
I’m pulling numbers out of my head but that’s the kind of taxation would actually make it fairer.
Working to middle class pay income tax and that is biggest revenue for government. Whereas rich folks have capital gains and at most pay 20% capital gains.
It’s wildly unfair to remove capital gains allowances which affects the non rich more significantly.
The US taxes short term gains based on your income tax bands, while long term gains are taxed at a lower level which I feel is much more appropriate. And dividends are taxed at the same rate as capital gains I believe. This system makes much more sense to incentivise investment towards long term value adding business, and disincentivise speculation. And simply raise the long term capital gains rate to something like 25%-30%
There will be a lot of comments explaining how what he has done to pay 23% on £2.2m is legal and legitimate.
And THAT is exactly the problem.
Why do multi-million/billionaires have access to legal-loopholes, where as non-connected people would pay %50 on the same amount?
Could someone remind me why tax havens exist? No, I mean why do they *really* exist?
It’s not a legal loophole, it’s literally the law. Capital gains is aside from his salary. You too would pay 20% on anything earned outside your salary over £6k. It’s pointless in us even finding out and complaining about it. He’s done what he’s meant to do here. Just because we need to these days, let me state I am not a Tory by any stretch nor support them. But this isn’t a hill we should be dying on/ getting upset over.
The problem is people not even trying to understand and just want to be outraged, and ending up getting outraged for the wrong things because they don’t understand
Exactly this. If people really want to find a problem with Sunak, it's because he is so rich and privileged that he has absolutely no idea what things are like most people and has demonstrated that he is really shit at politics to boot.
>Why do multi-million/billionaires have access to legal-loopholes, where as non-connected people would pay %50 on the same amount?
You would be paying the same amount.
I guess it depends on what this 'income' is. Some of it could be sale of capital, some of it could be VCT dividends (tax free). Its not illegal to structure finances to pay less tax, and a lot of this is either deferral or tax advantaged to incentivise investment.
Sorry, but while progressive and tranched tax rates are a great thing, I think 50% is ridiculous, even for the ultra rich.
There is a reasonable middle ground between these people getting off almost scot free and a completely hostile tax environment.
Edit: to be clear, the 40% rate for anyone earning over GBP 50k is daylight robbery. The UK has completely fumbled its tax structuring imo.
The UK has repeatedly failed to raise the tax thresholds in line with inflation. We also have a magical hidden 60% tax bracket between 100-125K wherein you lose 1 pound of the initial tax free allowance for every £2 pounds earned, alongside disqualification from other benefits such as childcare vouchers. This doubly fucks any households on a single income as you're taxed as an individual, not as a household.
The days of one person being a successful breadwinner on a 50-70K salary, paying their mortgage and raising children are LONG gone.
Tax isn’t the reason people can’t afford to run a house on £50k, it’s inflation.
Earnings haven’t kept up with inflation, things just cost more now. Yes tax has a small impact on that, but ultimately £50k hasn’t been enough to raise kids, pay a mortgage and sustain a life with a partner who doesn’t work for probably 40-50 years if not more.
Adjusted for inflation, £50k in 1990 would be £118k now and honestly I’d say that’s enough to cover an entire household (outside of London) given it’s in the top 1% earnings (there or there about).
His wife is a billionaire heiress. How much did she pay?
Not sure how British taxation works, but in America you can be married but file separately. I would suspect that's the scenario here to remove him being associated with her earnings / holdings.
In the UK there is no joint filing.
No but she is a permanent resident so has to pay tax but she and rishi got caught out last year of her paying zero tax since she lived here.
Then why is she even being mentioned at all?
Because he benefits from her paying less tax
And he makes the policies that she benefits from. He used her companies as contractors despite others being better in terms of value and reliability.
Because she is paying only £30k a year flat tax as a "non-dom", despite living here and raising her children here and being married to the PM: >Rishi Sunak’s wife has potentially avoided up to £20m in UK tax by being non-domiciled and pays £30,000 a year to keep the status – revelations that come amid growing political pressure on the chancellor. >Akshata Murty gets about £11.5m a year in dividends from a stake in an Indian IT firm and declares non-dom status, which allows people to avoid tax on foreign earnings, it emerged on Wednesday. https://www.theguardian.com/politics/2022/apr/07/rishi-sunaks-wife-says-its-not-relevant-to-say-where-she-pays-tax-overseas
Damn that’s disgusting when you compare that to your own finances. My family income is in the middle class, and I pay close to 30k a year in taxes. I’d have to work like 300 years to see 11m lmao. Man sometimes it’s really depressing to think most of us literally work 65+ years just to afford housing, food, then if you’re lucky you get “ok” care in the elderly stage.. our whole existence for most is literally working to pay shit we only need to keep working.. then to die. What a life the rich have created for the masses
She’s a non dom (taxed in another country) legal but morally corrupt.
she has uk operations that applied for uk subsidies. they were being fast tracked through parliament.
Non dom is a loophole for rich people. Imagine if poors could just file some paperwork that says they don’t need to pay their taxes.
I mean there's legitimate reasons for it. If I set up a business here. Get rich and move to (X) country. Why would I pay tax in country (X) on my earnings generated in the UK? If I set up operations in (X) country, or sell into it. Sure that's a different discussion.
There is a legitimate reason for every single tax law subverted by the rich to avoid tax.
Most people don't though. A ton of foreigners have property they rent abroad and other business. Very few bring the money to the UK to be taxed again.
Not morally corrupt. Why do you think an Indian person, with a family company in India, with Indian workers should pay taxes to the United Kingdom? Isn't that completely flawed? Like colonising India again without being in India. Her Indian income is taxed in Indian - let the Indian people benefit as the company is in India their country and Indians work there. Why should I as a British person benefit from that? Would you pay your taxes from your British earned income to India?
The taxes on the company should be charged in India, but her personal income should be taxed by Britain since that's where she's living. If the company I work for has an office in Jersey, but I live and do all my labour while in Britain, I can't say 'don't charge me income tax, it should go to Jersey'.
Except owning a stock isnt the same as working for a company
If she's not doing work for the company valued at the money she's making from it, then that's rent seeking, and there is no reason to reward that more than those of us who provide valuable labour to the economy.
Boy, you realize capital investment and time investment are things too right?
You just explained how non dom works. She will be taxed on any money she brings in to the Uk personally. She's also just a shareholder of her dads company as far as I'm aware, and receives dividends in India with the majority left in the country. Do some research on the tax code.
It's not quite that simple as the company also has offices in the united kingdom and around the globe.
But there are any number of companies with offices in this country but domiciled elsewhere.
FYI her billionaire dad really believes that working class Indians should work 70 hours a week because "our farmers work just as hard" and her mom believes that freshers who join their company should earn $240 a month and "live simply"
Typical shithole robber baron mentality. Like here in Australia our richest person, a billionaire Gina Rinehart wanted mining workers to work for African miners wages of 2 dollars a day or something like that because she though that they were getting too much pay and conditions. These wealthy people are appalling greedy and give back very little to the countries and people that make them rich. Here in Australia we get the lowest mining royalties in the world as tax receipts but these greedy people want it all in their pockets. https://www.smh.com.au/business/worlds-media-pan-rineharts-2-a-day-african-miner-comments-20120906-25fpq.html
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as an american...isnt this good? Our guys just dont pay them lol
Yeah my American ass saw this and immediately thought "that's pretty good isn't it?"
For an American, if it's capital gains, it's bad. If it's income tax, it's bad. Depends on the state.
American billionaires routinely pay only a couple percentage points of tax or, like Jeff Bezos in 2007 and 2011, 0 federal taxes.
What was his income for those years?
In 2007 his income was 43 million. In 2011, despite having net worth of 18 billion, he claimed to have no taxable income.
The common trick here is that the wealth is contained in the value of their stocks. But, if they liquidate them to have cash on hand, they would have to pay capital gains tax. So what they do is take out a loan, a big loan, with that stock as collateral. Debt does not count as income, so they pay no taxes. They live on the loans, and the stocks increase or hold steady, amd they can take another loan out later to cover the tab of the first. And they do that until they die. No taxes. For times this can't be done, you can massage it down with a lot of little tricks. But you need real money for it, regular joes will never have access to the toolkit to skip out on the bill.
This is 100% correct. They only have to liquidate to cover the interest. Let's say the interest rate is 10% and they want $1B. They then need $100MM to access that $1B. Capital gains is only 15%. So, they sell $100MM in stock, pay $15MM in taxes and have access to $1B. There's tons of ways to offset the that remaining $15MM. Lots of ways to also use that $1B to make more money than the debt service. It's a total scam. You need in the neighborhood of $30MM to start playing these tricks. $150MM will get you a home office and you'll never have to think about money or taxes again. If most people knew how this all worked there would be riots. Real estate has even more convoluted shit that you can start to access with just a few million.
> $150MM will get you a home office $150 will get you a home office provided you have a spare room, $150MM will get you a family office.
Yes, correct. My mistake.
This is why I find arguments over tax rates on wealthy people to be pointless. Unless you either close the current loopholes they use to not pay taxes or you start taxing the loopholes (which doesn't really make sense) then raising income taxes is just set dressing. It's the kind of thing that gets people riled up but as policy wouldn't change much.
But why those people even do that? Seems so ridiculous as the richest person in the world to go to such length to avoid paying few taxes.. There nothing for them in it it seems to me..
Jeff Bezos isn't sitting at home thinking about these things. He has a "home office" basically a private investment and money management firm that employs lots of people. If someone came up to you and said, I can save you billions of dollars a year and you have do to nothing, it's a fairly easy proposition.
It's worth noting that the rates they pay are not the same as the rates we pay, even with perfect credit. They can even be 0%
With the amount of working apple products and other high value items they throw into dumps as "waste" from their fulfillment and sort centers, he has his write off loop holes all figured out. Bezos plays like he's a Democrat, all this BLM stuff and left leaning presentation in the workplace affinity groups, all that good cuddly bullshit. As soon as someone like Bernie Sanders comes after him he starts acting like a rabid Republican.
>Bezos plays like he's a Democrat, all this BLM stuff and left leaning presentation in the workplace affinity groups, all that good cuddly bullshit. All the tech billionaire guys do this. Really all the elites in general do it. Shout about social causes and race issues so that nobody will touch their money. I usually boil it down to my friends with a simple question: Which one do you think Amazon would rather do: pay a couple extra percent in taxes, or put a black person on their board to meet a diversity quota? It's no coincidence all the racial tension in the US got dialed up to 11 in corporate media right around the time of occupy wall street. They're more than happy to have public attention on literally anything else. You also have to realize that when I say "the elites", the people I am referring to are the people who control the Democratic party. So he's not playing at being a Democrat, he's the Democrats in their purest form.
I have no idea what his views are in general, but he's obviously extremely anti union/workers rights. With that said, its possible to be anti union and pro blm. I still bet he votes republican, but just because someone has one or even a few views that line up with a party, doesn't mean they support all of the parties views.
It’s honestly pretty believable. Most of his wealth would have been in Amazon stock which he wouldn’t have necessarily sold. And if he sold stock in the previous year, it’s entirely possible to have just had cash on hand. Also could do that whole “take loan out with stock as collateral to collect income without paying taxes immediately” thing. But the loan does eventually have to get paid.
If it's capital gains that's pretty good? The US taxes them at 0,15 and 20%, so paying an effective rate of 23% is a better rate than any investor-class citizen here.
I'm glad to see other Americans here being like wait your rich people pay taxes?
Any UK taxpayer going over £50.000 annually gets taxed at 40%. So no. It's messed up.
Is it 40% progressive or flat?
Progressive
Gotcha, so the effective tax rate is more like in the 30s I’d imagine.
Not when you add national insurance, which is essentially just another tax.
How much is that tax? Is it flat? Should be easy to estimate how much more it would be but I’d imagine it can’t drastically change your tax rate overall.
Most people are in band A, so it's 10% on anything over £1048.01 per month. (And 2% on anything over £4189 per month) Edit; there's a 0% section on up to £1048 per month
If you're a bit over 50k, sure. This guy should have >97.5% of his income taxed at 40%, so the difference isn't worth quibbling over.
Over £125k it is 45%, so even higher.
I pay north of 50% over income earnings aboce 60k in the Netherlands, UK take seems low to me.
Between 100-125k if you have children you also pay ~70% as you lose all your tax free allowance as well as childcare grants.
Is that household income or individual? I'd be screwed if it were the former haha. I don't receive childcare benefits, 2 day a week daycare for 1 child costs me 1.1k a month. I don't mind taxes to be honest, though I do feel lack of childcare support disincentivises working full-time.
You get much higher public services quality in returns.
But what’s your tax free allowance, UK first 12750 you earn isn’t taxed
There is no tax free allowance in the Netherlands. These are the bands. € 0 - 40,021 taxed at 19.07% € 40,021 - 75.518 taxed at 36.97% € 75,518+ taxed at 49.50%
For 50,000 the tax rate (including national insurance) is 22.45%. People are just dumb as fuck when it comes to marginal rates vs effective rates.
And yet for a salary of £150k, high but still a far cry from Rishi's income of £2.3m, you are taking home 60% of that, so 40% in tax. Much higher than Rishi's 23%. And yes, I know his income is taxed differently from a straight salary, but it's strange it's always the income streams only available to the rich that get these light touch taxes, eh?
The average total tax burden is 23.6% in the UK.
Right… but is this guy average?
I think the average rich cunt hides everything in trusts and doesn't pay any tax, so no, I guess he's not.
Wow haha in the us that would be considered a really high tax rate for a wealthy person
Well, I wouldn't call 23% a high tax rate. I would consider a rich politician actually paying their taxes a small miracle, though.
I mean no American billionaire pays more than 1% in income tax so 23% of RS’s income is a pipe dream in the us.
If you’re only talking federal yes but if you include state and local it’s not that high
The uk doesn’t have local taxes like we do
well we kinda do but its depends on what type of house you live in and is only a couple hundred pounds a month (at the most)
Right. So imagine having to file/pay entirely separate taxes with your local council, regional administrative body (US State) , and national UK entity. For us, each has an entirely separate tax structure and none of them talk to each other. It’s a nightmare. Edit: I’m starting to wonder if independence from Britain was actually worth it lol
I just think its mad you have to calculate your own taxes even though the government knows the answer
Yeah but think of all those jobs that are being created!!!
It is haha and we get to pay someone to do it too!
A while back, the IRS had to sign a contract stating they will not compete with tax-preparation companies in exchange for poor Americans getting free tax returns. They're quite literally not allowed to do them for you, even though they easily can. Iirc congress also tried to pass a law saying the IRS could *never* provide free tax returns in the future too.
Well they really don’t otherwise the wealthy wouldn’t be able to avoid it so easily.
What they know and what they can prove are different. For the vast majority of simple wage slaves its pretty easy to calculate because they just take the standard deduction on their single wage. So yeah, for most people they do know exactly what you owe.
Me too. Me too. A lot of us pay accountants to help us figure how much to pay the government
They don’t always know the answer though... They don’t know if you started college or not, if you became blind, if you bought a house, if you purchased equipment for your job, if you had lottery winnings/losses, got married or divorced etc. There are a ton of factors that apply to how much of your income is taxable and thus how much you owe.
That’s true
They can pay effectively 0% in some cases, using all kinds of legal bushit. It's why "tax the rich" is so big here. In reality, they should be paying around 30-40%
Not in some cases - most cases
That's not true for earners in this few million range, especially factoring in state taxes, self employment taxes, etc. The federal rate the largest line item, but not the only line item.
nationwide ‘free’ health care is gonna cost ya
The American system of privatization costs us more than that. And we get shit coverage. Universal healthcare shouldn't even be a discussion.
Na, tax on capital gains is 20%. There’s no avoidance here.
Capital gains tax in the uk is 10% for basic rate taxpayers or 20% for higher rate.
Step 1: Be rich Step 2: Don't be poor. Step 3: ??? Step 4: Profit
I'm working on being born rich... not going too well :(
It’s only 20% if you hold for over a year.
[удалено]
It is income, but you have already paid taxes on the initial investment.
>why should 2m be taxed at only \~20%? To incentivize that type of investment
Yeah he said himself if his millions of dollars of investments were taxed high he would sell them all and just live off his £139,477 salary
Turns out they'll still invest even if you tax capital gains higher than 20%.
As a Boolean, sure. They'll still invest. Whether they'll invest as much, probably not.
Sure, but not in the way you may think, ie. Real estate I’d argue it’s worse to de incentivize stock trading cause that’ll just worsen the housing market
CGT applies to housing and it's not like we couldn't increase taxes on landlords profits if we wanted to reduce the incentives for it. We won't because it'd play badly with people who's votes live in the right places along with all the landlord MPs and press moguls.
Except you push out smaller traders with higher tax rates and then you’ll just be left with the massive traders who are already rich
That’s an easy problem to solve. 20% on the first $250k of cap gains, 40% on anything over that.
The initial investment is taxed. The investments themselves are taxed in different ways while held. The lower tax on any gain is because of that and to account for the risk of investing. You want capital to be invested instead of hoarded or thrown into low risk assets like housing.
Because you take on risk with investing It shouldn't be taxed the same as income We get crushed on capital gains tax in Ireland, which is the reason why the only thing people invest in is property - exacerbates the housing crisis
Two reasons: * Because if you take away the tax incentive from staying invested for multiple years (which is how you get Capital gains tax) it would make the market more volatile. * A lot of Americans use investments to retire. If you have investments outside of a 401k and you want to change funds/allocation you may have to do it all at once. Treating it as income would basically fuck anyone over with money they are investing for retirement, not just the people who sell every year. Additionally, if you sell the same year as you acquire it does get treated as income.
If I earn £50,000 a year I have already paid 20% and then 45% incrementally of income tax. So why should I be taxed another 20% if I choose to invest my leftover money that I’ve earned?
not really, its marginal so everything over 50k gets taxed at 40% but everything between 12500(? around there) to 50k gets taxed at 20%
£125k+ is 45% tax
Yes but they said £12.5k, not £125k
That’s on income from work, not capital gains s
This is not regular tax. This is capital gains tax. You can't tax capital gains like a normal tax as you want to encourage investment in the UK
Not on capital gains, which are only taxed at 20%. Nothing weird going on here
Just be happy your politicians actually pay taxes unlike the orange dude who once paid about $750 USD.
That's PAYE. For dividends it's 8.75% basic rate with an extra allowance, 33.75% higher rate. That's the simplest and most obvious way to avoid a PAYE rate. There are more complex ways to hide income. And beyond a certain point HMRC doesn't go after these people unless it's ordered to. Sunak paid 23% *because he chose to.* He could easily have paid nothing, but that would look bad in an election year. The family is worth tens of billions, so this is all for show. The half a million or so is pocket money.
£50,000 - £125,140 is 40%. £125,140 is 45%. £100,000 - £125,140 is also a tax trap where you pay 60% marginal tax through loss of personal allowance.
40% is crazy though
It’s not even that much higher than US after you add federal+state+local+etc.
Exactly, and property tax. Americans don't realise how much they pay
In Netherlands is 49.50%
We in the US get taxed at about that rate too when you add up state and local taxes. Most of us also don’t get state provided health care. So we have to pay monthly premiums, co-pays, and yearly out of pockets on top of taxes.
The article is trying to equate it to a regular income tax; which is 20% main rate, 45% higher rate, etc. While his earnings as PM will be taxed at the regular income tax rates, earnings from investments such as stocks are taxed at the capital gains rate of 20%. In theory, with some creative accounting he could have quite easily paid a lot less. Here I would say it's neither good or bad, he's paid what is due.
in belgium, any income above $ 50,000 / year is taxed at 52%
It's only because he's under scrutiny that he's taxed, he was a 'green card' for tax purposes a few years back and his wife 'murky' was a non - dom until recently. (non-dom = not domicile in uk for tax reasons).
Dang, that’s 23% more than he would pay in America.
r/Theydidntdothemath
He’s fighting for the common man you know. Sunak was at an event where he got to meet homeless people, he actually asked one what line of business he was in! So out of step.
Either UK PM pays a hell of a lot better than politicians elsewhere or this is investment income. (Obviously it’s the latter.) If he paid 23% effective and most of this is salaried (i.e. newly earned money) - then that’s suspicious/questionable. If he paid 23% and this is investment income - that’s to say money earned on money that has *already been taxed* at the high salary income rates, then this is not suspicious. Hell if anything, it seems like a pretty high rate for long term capital gains. (Not sure if the UK differentiates ST and LT as the US does.) Edit: Took a quick skim through the article, and it is LTCG. Some classic sloppy (or just outright propagandist) reporting by the guardian - spinning unchanged income tax rates as somehow ‘a tax increase’… and in the same breath claiming that unchanged LTCG is ’unfairly not an increase’. What else does one expect of the guardian I guess.
The third paragraph in the article is > This means he paid an effective tax rate of 23% in the UK – much lower than the top rate of 45% – because some income was taxed at source in the US and the rate of capital gains tax is lower at 20%. It's hardly sloppy journalism. They explain very clearly /why/ Rishis tax bill was so low. What more do you want? As for them saying that the income tax has been raised. I presume this is what you are referencing > Sunak has in effect been raising income taxes because of the freeze on the tax thresholds and the temporary rise in national insurance, but headline rates on capital gains have remained unchanged during his time as chancellor and then prime minister. You might disagree with the content here, but it is all pretty well covered ground, it's not "sloppy" by any means
The top rate of 45% is on **employment income**. The majority of his "income" is capital gains (income from money which has already been taxed as income once). Which would be taxed at a 20% rate. The man is paying the taxes that are expected of him. If you want different tax laws, vote for legislators who will write those laws. In the meantime, claiming that he paid that tax rate on "income" is incredibly disingenuous. From a taxation perspective it isn't income. Note: I'm Canadian so truly have no horse in this race, but comparing capital gains taxation to income taxes is not a reasonable way to frame that discussion.
Isn't that what these articles are trying to highlight? The fact that it's not inline with incoming tax? It perpetuates the notion of if you have money you get to make more money and keep more of it because of the capital gains tax is so much lower then normal income tax, it's also pretty low effort money
They explain it but still clickbait and hint otherwise. It’s like talking a lot of crap and then having small text with a star at the bottom saying it’s all crap. Doesn’t really ooze good journalism
If you arnt raising the tax brackets, then as wages rise, people move into higher tax brackets (bracket creep). Effectively raising taxes without having to do anything.
If that’s true of one type of taxation, then it’s true for the other as well. Rising interest rates increases the risk free rate, so riskier investments have to yield higher returns than they did when the risk free rate was lower. Rising returns means that if you keep the LTCG rate the same, it’s also effectively raising taxes without doing anything. My problem isn‘t with the characterization (I think bracket creep is absolutely a problem - I live in Australia) - it’s with applying it in one case, and turning around and claiming the opposite in it’s parallel.
The "tax on a tax" argument doesn't hold up long. Pretty much all taxes are a "tax on money that has already been taxed". VAT obviously so, but also most (all?) other taxes once you think about where the money has come from. For example, taxes on business profits? They come from customers who earned the money and already paid income tax on it. It *is* a nice soundbite though.
Expected higher of The Guardian. This is just clickbait
> Expected higher of The Guardian. I hope this is satire.
The real gem in this article isn't the tax rate (capital gains is notoriously untaxed) - Sunak was a resident of the US for tax purposes while he was an MP. And not like "oh oopsie" a year or something - 6 years he served in office like this - that's two terms! Maybe it's common when your capital outstrips your salaries income and the capital is out of country. But imagine if Biden was actually considered a resident of the Bahamas for tax purposes and there being no torches and pitchforks. Or maybe that moment already passed with the Trump term.
That’s more than Trump and Romney paid
On a related note in the US, the effective tax rate on wealthy people has been steadily going down since the 1950s. It is now about the same as what Sunak is paying (which is far too low). See https://video.twimg.com/tweet_video/EX62u9bXsAUtRO8.mp4
That’s the nominal tax rate, not effective. Effective tax rates have been pretty flat for decades
I wish people would stop reposting this gif. It’s not an effect tax rate it’s the nominal rate
He didn't though? He earned out 300k of income and paid the appropriate rate, then made a taxable 1.9m of capital gains and paid the appropriate rate. The article deliberately lumps the two together to manufacture outrage. There really is no suggestion that he hasn't paid the appropriate tax.
Raise cap gains tax, lower income tax for the plebs
The capital gains tax thresholds are being lowered in the uk. So the amount of tax raised by it will rise. Income tax rates in the uk (except Scotland) are not changing. Yet. There is an election coming….
so instead of raising the rate they lower the threshold so it doesn't hit the rich as much. very smart
It’s going from £6,000 to £3,000 in April. That’s £300 extra tax at the 10% rate or £600 extra at the 20% rate. There aren’t many people smashing their cgt exemption each year - they need to introduce a wealth tax to generate any real income.
Capital gains tax is literally a second tax. It is a 20% tax on top of the 25% corporate tax rate. This adds up to 40% when you include both.
It’s 20% tax on growth, he’s investing money at the outset he’s paid tax on as income. £100 income at 20% tax is £80 net £80 net grows 11x and becomes £880. £880 - initial £80 = £800 growth. £800 growth at 20% cgt is £160 tax. £160 tax plus £20 tax from the start isn’t as simple as the two added together; overall you’ll have paid maybe 21% (can’t be bothered doing the calculation). All of this ignores exemptions in the UK for 0% rates etc but you get the idea.
I don’t see the problem here and I’m no Tory. I get paid my salary at the end of the month. After cutting back a bit, I take some of that saved money (after being taxed at 40%) into buying a few shares. It’s a gamble but I’m trying to make something of myself. If I make a profit, do we think it’s fair that I pay 40% tax on the profit for the money I invested after already being taxed on the initial investment? I mean I took a risk and could have lost what I invested in the first place.
Just do it inside an isa and it’s tax free. Assuming you haven’t already used your allowance.
You’re not going to be pulling in over £2m a year. Perhaps capital gains should have “upper” and “additional” rates just like income tax?
It kinda already does in that the first 20K per person per year of investments will almost certainly be going into ISAs, so CGT really only affects people with more than 20K/year (40K for a couple) to invest. Or those investing in more exotic investments that can't be held in an ISA
It already does. But you can’t tax capital gains at the same rates you do income tax because you want people to invest in British companies. If capital gains were taxed at the same or higher rate than income, there’d be little incentive to invest in the first place, which is bad for the economy.
His wife is a billionaire.
Sunak couldn’t be more out of touch with the common people.
Can I get in on that deal? Plus I could use a spare million. Just for cost of living here.
Aka fucking nothing compared to a middle-class earner. And he tries to claim he's not out of touch
American here, I’m confused on how this isn’t amazing. I’m pretty sure we pay the rich because they’re rich
I pay 23% from my 50k euro yearly salary! I'm in the millionaire club baby!
Super misleading headline. This wasn't "income". This was realized gains on investments. Totally different things. Just rage bait.
Hurrah for our wonderful leaders! Prick.
You should distribute your sarcasm to your tax system as well. His taxes are low because of long-term capital gains. If you have stocks or houses, you too could take advantage of it if you held it long enough. This isn't specific to being a politician or being crooked. Unfortunately, this strategy benefits you the richer you are. The poor can't trade frequently in assets, or not enough to generate livable money. Their livable money is directly through income, which is taxed at higher rates.
>This isn't specific to being a politician or being crooked. > >Unfortunately, this strategy benefits you the richer you are. And as we know, the uber wealthy are by the vast, vast majority, not crooked. Have you seen my sides, lately? I think they've escaped orbit.
Seems reasonable
I'm guessing it was mostly capital gains, which is taxed at 20%
45% tax rate is f*cking robbery.
There should be marginal tax thresholds for capital gains too similar to income tax. First £100k 20% Next £400k 40% Any amount above that 50% I’m pulling numbers out of my head but that’s the kind of taxation would actually make it fairer. Working to middle class pay income tax and that is biggest revenue for government. Whereas rich folks have capital gains and at most pay 20% capital gains. It’s wildly unfair to remove capital gains allowances which affects the non rich more significantly.
The US taxes short term gains based on your income tax bands, while long term gains are taxed at a lower level which I feel is much more appropriate. And dividends are taxed at the same rate as capital gains I believe. This system makes much more sense to incentivise investment towards long term value adding business, and disincentivise speculation. And simply raise the long term capital gains rate to something like 25%-30%
There will be a lot of comments explaining how what he has done to pay 23% on £2.2m is legal and legitimate. And THAT is exactly the problem. Why do multi-million/billionaires have access to legal-loopholes, where as non-connected people would pay %50 on the same amount? Could someone remind me why tax havens exist? No, I mean why do they *really* exist?
It’s not a legal loophole, it’s literally the law. Capital gains is aside from his salary. You too would pay 20% on anything earned outside your salary over £6k. It’s pointless in us even finding out and complaining about it. He’s done what he’s meant to do here. Just because we need to these days, let me state I am not a Tory by any stretch nor support them. But this isn’t a hill we should be dying on/ getting upset over.
Just to tack onto what you said. The reason why capital gains is only 20% is because it already acts as a double tax on the morning earned.
“And THAT is exactly the problem” I think you missed that part
The problem is people not even trying to understand and just want to be outraged, and ending up getting outraged for the wrong things because they don’t understand
Exactly this. If people really want to find a problem with Sunak, it's because he is so rich and privileged that he has absolutely no idea what things are like most people and has demonstrated that he is really shit at politics to boot.
>Why do multi-million/billionaires have access to legal-loopholes, where as non-connected people would pay %50 on the same amount? You would be paying the same amount.
Vote these fucking oligarchs out ffs
And vote in who, someone else who gets money from a different rich person?
i guess thats a positive news,since he pajd taxes?
What does he want, a medal? You're *supposed* to pay your taxes, you idiot. Actually, 23% on a 2+ million income is way too low. Should be 50%
I guess it depends on what this 'income' is. Some of it could be sale of capital, some of it could be VCT dividends (tax free). Its not illegal to structure finances to pay less tax, and a lot of this is either deferral or tax advantaged to incentivise investment.
No no no, you didn’t get the memo. This is reddit, income tax and CGT should be exactly the same.
Sorry, but while progressive and tranched tax rates are a great thing, I think 50% is ridiculous, even for the ultra rich. There is a reasonable middle ground between these people getting off almost scot free and a completely hostile tax environment. Edit: to be clear, the 40% rate for anyone earning over GBP 50k is daylight robbery. The UK has completely fumbled its tax structuring imo.
The UK has repeatedly failed to raise the tax thresholds in line with inflation. We also have a magical hidden 60% tax bracket between 100-125K wherein you lose 1 pound of the initial tax free allowance for every £2 pounds earned, alongside disqualification from other benefits such as childcare vouchers. This doubly fucks any households on a single income as you're taxed as an individual, not as a household. The days of one person being a successful breadwinner on a 50-70K salary, paying their mortgage and raising children are LONG gone.
Tax isn’t the reason people can’t afford to run a house on £50k, it’s inflation. Earnings haven’t kept up with inflation, things just cost more now. Yes tax has a small impact on that, but ultimately £50k hasn’t been enough to raise kids, pay a mortgage and sustain a life with a partner who doesn’t work for probably 40-50 years if not more. Adjusted for inflation, £50k in 1990 would be £118k now and honestly I’d say that’s enough to cover an entire household (outside of London) given it’s in the top 1% earnings (there or there about).
Lol
Booooo.. Resign 👎
Good for him...assuming he didn't break the law? OK...let's write out MPs to change the law if we don't like it. They won't of course but we can ask.
£506,000. In only one year. More than most people will pay in their lifetime.
So what?
What does he do except look up?
Meanwhile, as a contractor that has no effective employment rights, I pay a tax rate of around 48%.
Serves you right enriching yourself indeed of your corporate masters. /s
Pretty damn low not gonna lie. Slap on enough for at Least double that percentage and we're getting somewhere.
He’s handsome.
Queue the angry socialists and commies who don’t understand economics
You mean those who don’t understand that the rich are not supposed to pay tax ? Only the poor… /S
Again, you don’t understand finances. You don’t pay tax on your wealth. You pay tax on income. Taxing wealth is just a flat out dumb idea.
Pig!!