Paradise Papers claim Hamilton avoided paying £3.27 million in tax on his jet

[TAG]

We like to have a "face" when we get angry, it's easier. The same way it's the default behavior to get angry at the single mother on government assistance, this is "news" because it has Hamilton's name associated with it. If you're going to rail about not paying anything in taxes, at least have the common sense to be angry at the really egregious culprits.

[Vasconia]

I am angry both with those big companies and those personalities. There are millions and millions of dollars/euros in taxes which should be destinated to improve our structures, economy, social healthcare,etc. They must pay.

Its easy to say how proud of being...(insert nationality) they are but they hide their money in those places. Hypocrites.

[Ennis]

F1 drivers aren't a strange breed; they do the exact same thing as basically anyone else who has accumulated enough capital. Even social institutions that promote these tax reforms ironically do tax optimisation.

The strange breed comment was in relation to their type of life, and our perception of that life rather than their tax arrangements in isolation.

We perceive them to be employees when they are much more like corporations. Even most other highly paid sportspeople tend to reside somewhere fairly permanently, it's difficult to tie an F1 driver to a 'home'.

Again, that's not an abnormal thing. For instance, a CEO is by the nature of his title an employee. However, if he has enough capital himself he'll put in it in some sort of holding.

There are more sportsmen and women constantly on the move than you think. Consider Andy Murray or Andre Greipel. They perform their sport across the globe, meaning they will be months away from home. That does make tax affairs a very complicated thing, however.

I'm not saying there aren't others like F1 drivers - elite tennis players, golfers, any well-paid 'touring' sport really, - but elite F1 drivers are amongst a very, very, very small portion of sportspeople (and even even smaller % of the general population) who are always on the move and are likely to end their career with a multi-million fortune amassed. F1 drivers also appear to the outside to be employed by a team rather than earning prize money as you do in most other touring sports.

CEOs I'd class as different entirely. Much more likely to be at their base/home more often, much more likely to be clued up on finance and all the corporate tricks, much less likely to blindly trust someone with their portfolio & much less likely to become the entire front page of The Guardian over a plane purchase.

[Phil]

I am angry both with those big companies and those personalities. There are millions and millions of dollars/euros in taxes which should be destinated to improve our structures, economy, social healthcare,etc. They must pay.

Its easy to say how proud of being...(insert nationality) they are but they hide their money in those places. Hypocrites.

There are a million things you should be more angry about. Don't hate the player, hate the game. E.g. the problem isn't that people/companies/corporations do what the law legally allows them to (= optimise their tax), the problem is with the government that allows this to happen. They are doing what you should be doing too: optimise your tax in the (little) ways you can.

Perhaps you should be more upset about your government and the politics involved of overspending. Simply directing your anger at companies and "those personalities" is a very shallow, simplistic and narrow way of looking at it - and in the wrong place too.

[Moose]

I am angry both with those big companies and those personalities. There are millions and millions of dollars/euros in taxes which should be destinated to improve our structures, economy, social healthcare,etc. They must pay.

Its easy to say how proud of being...(insert nationality) they are but they hide their money in those places. Hypocrites.

Your anger is misdirected. You shouldn't be getting angry at the companies or the people - they're following all the rules.

Instead, you should be getting angry at your MP, and demanding that the rules are changed so that these people and companies actually do have to pay a reasonable amount.

[TAG]

I am angry both with those big companies and those personalities. There are millions and millions of dollars/euros in taxes which should be destinated to improve our structures, economy, social healthcare,etc. They must pay.

Its easy to say how proud of being...(insert nationality) they are but they hide their money in those places. Hypocrites.

Your anger is misdirected. You shouldn't be getting angry at the companies or the people - they're following all the rules.

Instead, you should be getting angry at your MP, and demanding that the rules are changed so that these people and companies actually do have to pay a reasonable amount.

In the US, (probably not unlike other countries) simply more pronounced and visible here, the companies pay the politicians to enact their policies. So there's plenty of blame to go around. There's a lot of oligarchy in the world, but usually it's behind a curtain that's behind a curtain in case someone inadvertently peeks behind the first.

Look at the bright side, at least in the west there's an environment that tolerates to a degree publicly leaking/publishing that type of information. In some old Soviet block countries, the reporter would wake up to a slit throat.

[henry]

Look at the bright side, at least in the west there's an environment that tolerates to a degree publicly leaking/publishing that type of information. In some old Soviet block countries, the reporter would wake up to a slit throat.

Meanwhile in Malta the journalist is exploded in her car.

In the West there’s a chance the culprits will be found out, but only a small chance.

[clownfish]

F1 Drivers are a strange breed. They don't sit in their house in one country and head out to work every day. They live in the air, own multiple homes in multiple locations, and the only time they really settle anywhere is when they're not working (during which time I believe Hamilton tends to go to his house in Switzerland). Where should he pay tax? UK, Monaco (ha), Switzerland, the US, or a small margin to every country where he earns money?

Hamilton is basically a corporate entity, and his tax arrangements are set up as such. His statement is an old one prior to this most recent release where I believe it was more just general complaints about his tax-paying in the UK (because he resided in Switzerland/Monaco) rather than something more specific.

Speaking generally about the press manhunts -
I could be wrong of course but Hamilton particularly doesn't strike me as the kinda guy who wants to be distracted by managing his own portfolio. They hire a guy, that guy provides a return on investment. Ignorance is never the best defence, but really do we believe a bunch of sportspeople and people involved in showbiz are all finance gurus?

I don't agree with this going after Hamilton, nor did I agree with them going after Gary Barlow or Jimmy Carr.

When they get access to data like this, I fully agree with exposing those people who have the capability to influence the rules and take advantage of this. Politicians, media owners, people who donate to political parties, the Queen (!!!) - that type of person. They could be using their influence to not only identify but actually create loopholes for themselves.

For those simply following the rules, often at an arm's length through a financial advisor anyway? Complete distraction from those who should be the real targets.

My understanding is that this was specifically about him not paying (the correct amount of) VAT on his jet.

VAT is paid at the point of purchase. The report I read claimed that he used an elaborate setup where the jet bought by one of his companies then leased through various other companies and a proportion of it marked for exclusively business use. This is VAT free (legal although perhaps morally dubious depending on your viewpoint).

However it is also claimed that he did not pay VAT on the portion marked for personal use, by getting some kind of deal behind closed doors. I understand this to be illegal.

[dans79]

They are doing what you should be doing too: optimise your tax in the (little) ways you can.

My wife and I do it every time we go to toss out something that wasn't trivial to buy new. We donate it, and get a charitable donation deduction.

[oT v1]

It’s a sad state of affairs when the head of state (uk) is doing the same. That’s the biggest shame of the document for me, none of it illegal but it’s a bit of a slap in the face to the peasants like me. I wouldn’t mind the celebs like HAM.....but not the queen for Christ’s sake.

The mainstream should be educated on this though, because it shouldn’t be headline news every time, as long as there’s a legal way to do it, everyone should try and maximise their own capital.

[Just_a_fan]

Lots of people are expressing disgust at the whole thing. Many of those same people will be paying in to a pension of some form. That pension will be invested in similar schemes to the ones used by the rich types. It's tax efficient (aka "pays less tax") which improves their pension pot when they take the pension on retirement. The disgusted people forget this and want the system changed. The ones who will benefit least from a changed system are those same people. The rich will stay rich.

[henry]

They are doing what you should be doing too: optimise your tax in the (little) ways you can.

My wife and I do it every time we go to toss out something that wasn't trivial to buy new. We donate it, and get a charitable donation deduction.

What you don’t do is set up a charity, donate your high value items to it, and then have the charity lend you the item back.

Whilst not a workable example, or at least I hope so, this is the sort of scam some of the wealthy indulge in. They often execute via multiple entities to conceal their relationships.

If a government makes a one step allowance, donate to charity and get relief, and someone uses a scheme that replaces that single step with many it’s probably questionable. Called aggressive avoidance here in the U.K.

[Gaz.]

It’s a sad state of affairs when the head of state (uk) is doing the same. That’s the biggest shame of the document for me, none of it illegal but it’s a bit of a slap in the face to the peasants like me. I wouldn’t mind the celebs like HAM.....but not the queen for Christ’s sake.

The mainstream should be educated on this though, because it shouldn’t be headline news every time, as long as there’s a legal way to do it, everyone should try and maximise their own capital.

How is it a slap in the face? The people named on the paradise papers would pay a 'peasants' tax in a heartbeat.


Suppose that once a week, 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 like this...

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.
And the tenth man (the richest) would pay £59.　
So, that's what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. "Since you are all such good customers," he said, "I'm going to reduce the cost of your weekly beer by £20." Drinks for the ten men would 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 what about 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 not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.　

So, the bar owner suggested that it would be fairer to reduce each man's bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).　
Each of the last six was better off than before with the first four continuing to drink for free.　

But, once outside the bar, the men began to compare their savings. "I only got £1 out of the £20 saving," 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 £1 too. It's unfair that he got ten times more benefit than me!"　

"That's true!" shouted the seventh man. "Why should he get £10 back, when I only got £2? The wealthy get all the breaks!"　

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!" The nine men surrounded the tenth and beat him up.　

The next week the tenth man didn't show up for drinks, so the nine sat down and had their 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 to pay for even half of the bill!　

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

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

[Moose]

Except it's not how our tax system works.

In most of the western world, the very rich pay a lower percentage rate of tax than the middle class, due to being able to do things exactly like Hamilton has done. Create companies, have those companies buy things, and then use the company's resources instead of your own. That way you have very little income, and hence pay very little tax, but the resources to have the life of a rich man.

The rich absolutely do pay the highest rate in absolute terms, but they pay some the lowest rates relative to their actual means.

The result of that is that the equity gap is growing, and has been growing for several decades now. The reason that people are angry about this kind of thing is exactly because there's massive inequity at the moment, and they want something done to force a correction.

In 2010, the richest 1% of people owned 44% of all the world's assets. In 2015, the number was 50%. This year, it's expected to be 52%.

In the past, we've seen the same thing happen, and it's unfortunately pretty much always been the precursor to war. It happened in the early 20th century in Germany, it happened in the early 19th century in France, and it looks worrying like it might happen in the early 21st century in America.

[dans79]

In most of the western world, the very rich pay a lower percentage rate of tax than the middle class, due to being able to do things exactly like Hamilton has done. Create companies, have those companies buy things, and then use the company's resources instead of your own. That way you have very little income, and hence pay very little tax, but the resources to have the life of a rich man.

The rich don't keep nearly as much money as people think they do. They might lower their personal income tax, but they still end up shelling out a lot of money.

• The companies they own have to pay business taxes.
• They have to pay the salaries of the employees of the company (some of that ends up as taxes)
• In the US. they have to contribute towards the employees Social Security and Medicare
• In the US. we have almost incomprehensible laws about how and who they have to offer subsidized healthcare to.

The result of that is that the equity gap is growing, and has been growing for several decades now. The reason that people are angry about this kind of thing is exactly because there's massive inequity at the moment, and they want something done to force a correction.

not to long ago I read a paper that theorized one of the underlying reasons for this was that technology allowed intelligent and/or highly motivated people to more efficiently make money. It also did away with the jobs held by those of lower intelligence or motivation.

and it looks worrying like it might happen in the early 21st century in America.

I think this is highly unlikely, as most of those who are leaning this way are young, and haven't really shown themselves to have the stomach for that kind of violence. Not to mention The percentage of the middle and upper class that are armed is high enough to shock most Europeans.

I was at a social gather a few weeks back that was comprised of middle class couples, and almost half of the men had concealed firearms on them.