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How the super-rich get away with it
"Tax avoidance - everyone does it." That is according to multimillionaire, former hedge fund manager and Tory donor, Lord Fink. While his claim certainly isn't true for the majority of us, amongst the circles that Lord Fink mixes in, it is par for the course.
For the wealthiest in society there are loopholes and quirks in the system that can be exploited to save them billions of pounds in taxes.
One such quirk is 'non-dom' tax status. It's claimed this benefits the country by encouraging rich foreigners to spend time in the UK. In fact this status has loose terms that allow UK residents registered as foreign nationals to avoid paying taxes on their earnings abroad.
Those who are lucky enough to benefit from this privilege can even pass it on to their heirs; there is an emerging class of 'hereditary non-doms'. This means that someone who was born, raised, educated in the UK, and in possession of a British passport could still benefit from this concession - if they have the right parents. Applying for the status is as simple as ticking a box on their tax returns.
Conservative MP Zac Goldsmith may have given up his non-dom claim in 2010, but he still enjoys hereditary tax breaks. His late father, the Anglo-French corporate raider Sir James Goldsmith, distributed his £300 million fortune offshore amongst 15 family members. Zac is the beneficiary of a trust that is administered by an office in Geneva.
Similarly, Lord Fink transferred shares into family trusts for his children, while working in Switzerland, as he "wanted them to have something to help them make their way in the wilder world." Well, what could be more helpful than a tax-free lump of money?
Offshore havens are used to dodge taxes on a massive scale, with trillions of pounds being hoarded. If taxes are high in one location, you can simply register your location as another, more favourable one.
For instance Verton Holdings Ltd - a company which Zac Goldsmith is linked to - is registered in the Cayman Islands, which is now home to more than 85,000 companies. This means there are more registered organisations in the Cayman Islands than there are people!
In addition to aggressive (but legal) tax avoidance schemes, the PCS union has estimated that the cost of tax evasion (which is illegal) to the UK economy will rise to £100 billion by 2018. Meanwhile, we continue to face an onslaught of cuts to our jobs and services as we're told that the money just isn't there. Of course it isn't there, it's all offshore!
The super-rich may defend tax avoidance by saying that these practices are legal, but they are also unfair, immoral and a blunt reminder of the increasing inequality in society.
In The Socialist 18 February 2015:
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