Seriously off topic now, maybe a new thread! 
Mortgage rates / interest etc
- Thread starter baldkev
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ajs
Established Member
I think this proceeds from a false assumption, namely that you can outguess the markets. Our former Chancellor and soon-to-be former PM are evidence you can't. The "markets" are not a uniform body but are traders in various capacities making much the same forward looking analysis you attempt but they do that professionally and have far better information.
In view of this I don't think you can reasonably expect divine insight, except possibly on the behaviour of the markets themselves. History, even very recent history, has shown them to hate risk and uncertainty. They'll deal with it but at a margin above the risks involved. Now Sunak is confirmed as next PM hopefully the markets will settle down over the next couple of months. Once things are clearer you are likely to have better offers available. They won't be as good as the one you have now because we are in an inflationary economy, worldwide, not just the UK, but they hopefully won't have that risk premium attached.
In view of this I don't think you can reasonably expect divine insight, except possibly on the behaviour of the markets themselves. History, even very recent history, has shown them to hate risk and uncertainty. They'll deal with it but at a margin above the risks involved. Now Sunak is confirmed as next PM hopefully the markets will settle down over the next couple of months. Once things are clearer you are likely to have better offers available. They won't be as good as the one you have now because we are in an inflationary economy, worldwide, not just the UK, but they hopefully won't have that risk premium attached.
Benefits scroungers -
All those hugely wealthy companies relying on the tax payer subsidising the wage of their workforce.
It's all about market economics until there's some cash to be had out of the tax payer. Then it's working tax credits and energy price subsidiaries.
There seems to be a huge notion from a few here who probably don't pay much in taxes that someone else is getting all of the benefits while they're paying pounds and they're taking it from the few who are getting pounds in paying benefits and paying taxes on the the order of a pence.
You can do what a lot of states in the US have done - just keep raising taxes on the notion that nobody will care, and watch your tax base dwindle as those who can afford to leave and head somewhere else do.
Or you could be more fiscally responsible. I think the former will happen - places in the northeast here, as well as some california municipalities seem to be learning the lesson very slowly.
The loudest protests here come from people who pay little into society for what they take back out of it.
You can do what a lot of states in the US have done - just keep raising taxes on the notion that nobody will care, and watch your tax base dwindle as those who can afford to leave and head somewhere else do.
Or you could be more fiscally responsible. I think the former will happen - places in the northeast here, as well as some california municipalities seem to be learning the lesson very slowly.
The loudest protests here come from people who pay little into society for what they take back out of it.
There are definitely areas of enterprise that can’t be moved abroad, however their head offices can be. A common tax havens are Eire, or Southern Ireland and Holland to name two. The head office simply applies a management charge on its satellite company’s, moving taxable profit to another low tax country. It’s costing the UK billions in lost tax opportunity. So take Amazon, whose European headquarters is based in tax efficient Luxembourg. Looking at Facebook, last years UK taxes were £29 million on £3.3 billion of sales. They are legally being tax efficient, and doing it only because the UK has a high level of tax.
The top earners can live anywhere, and they do. They only pay the taxes they want to, by using the tax rules / moving to a favourable tax regime. For instance, if you reside in Portugal (dead easy if you have money even after the UK left the EU), you don’t pay death duty. If you invest in farm land in the UK you don’t pay death duty. If you don’t take a salary and instead get paid by dividends you pay capital gains at 10%, and don’t pay any national Insurance individually or your company on your salary. All perfectly legal and above board. These are simple tweaks anyone can make, not tax efficient structures that involve accountants and legals to create. When your earning millions, you put into place efficient structures. In general (there are always exceptions) Nobody willing pays any more tax than they think they have to, everyone would like to pay less tax.
We live in a global economy not in an isolated island. When we look at UK wages, we have to compare what it costs to employ someone anywhere in the world. The trend towards home-working will only exacerbated the move to off shore jobs that were nice ‘safe in the UK’. If you have someone working from home in the UK, why not have someone doing the same job in a low labour cost country? The answer is, you would! Because if you don’t your competitor will. In the 70’s 25% of the UK GDP was from manufacturing, now we are down to around 11% and it keeps falling.
The developed nations have a problem, is a problem nobody has an answer to. Employment in these countries requires high skills and education than our parents required. However, as we know, not everyone is made equal. Interact like everything has a distribution, those on the low spectrum will find it difficult if not impossible to find meaningful paid work. What as a nation do these countries do with these people? As the education requirement continually increases the number of people trapped in this position grows.
So, the over riding conclusion which is well documented, is the higher the taxes go, the fewer actually pay it, the government throttles how much revenue it could actually achieve. The less there is for the country to spend on the bottom end of society. However, politically, to change the tax system is considered too toxic to touch, the left would scream its lining the pockets of the rich.
The top earners can live anywhere, and they do. They only pay the taxes they want to, by using the tax rules / moving to a favourable tax regime. For instance, if you reside in Portugal (dead easy if you have money even after the UK left the EU), you don’t pay death duty. If you invest in farm land in the UK you don’t pay death duty. If you don’t take a salary and instead get paid by dividends you pay capital gains at 10%, and don’t pay any national Insurance individually or your company on your salary. All perfectly legal and above board. These are simple tweaks anyone can make, not tax efficient structures that involve accountants and legals to create. When your earning millions, you put into place efficient structures. In general (there are always exceptions) Nobody willing pays any more tax than they think they have to, everyone would like to pay less tax.
We live in a global economy not in an isolated island. When we look at UK wages, we have to compare what it costs to employ someone anywhere in the world. The trend towards home-working will only exacerbated the move to off shore jobs that were nice ‘safe in the UK’. If you have someone working from home in the UK, why not have someone doing the same job in a low labour cost country? The answer is, you would! Because if you don’t your competitor will. In the 70’s 25% of the UK GDP was from manufacturing, now we are down to around 11% and it keeps falling.
The developed nations have a problem, is a problem nobody has an answer to. Employment in these countries requires high skills and education than our parents required. However, as we know, not everyone is made equal. Interact like everything has a distribution, those on the low spectrum will find it difficult if not impossible to find meaningful paid work. What as a nation do these countries do with these people? As the education requirement continually increases the number of people trapped in this position grows.
So, the over riding conclusion which is well documented, is the higher the taxes go, the fewer actually pay it, the government throttles how much revenue it could actually achieve. The less there is for the country to spend on the bottom end of society. However, politically, to change the tax system is considered too toxic to touch, the left would scream its lining the pockets of the rich.
sploo
Somewhat extinguished member
Whilst the "they get everything and we get nothing" attitude is a common human problem I'd have to greatly disagree with your final sentence. The groups who pay the least into society vs what they take out of it (in relative terms) are the massive multinationals that make - literally - billions of dollars in profit in a jurisdiction, but do not pay taxes there due to legalised tax avoidance mechanisms. Whether you're talking the road network, the health or education systems, or the rule of law, those organisations can literally only do business because of the taxpayer funded infrastructure present in those markets. Essentially, they eat the meal at a restaurant, but leave the bill to be paid by others.
Personally, having (at least at some previous times during my career) paid more in income tax in a year than the average UK national wage, I don't oppose taxation as it's vital for providing basic services that should be available to all (education, healthcare, transport etc). What I do oppose is those at the wealthiest end of society using their wealth to avoid paying into their society... and for what? Once you have multiple houses and a fleet of nice cars, does it really make a difference to have yet another mil' in the bank?
sploo
Somewhat extinguished member
Or (and I appreciate it could never happen in reality) have a tax system whereby you're taxed regardless of where you are; such that the wealthy are free to use their wealth to live wherever they want, but you can't avoid paying a fair percentage on profits by moving legal ownership to a tax haven, or taking up some special status (e.g. non-dom) in order to avoid paying tax.
Jacob
What goes around comes around.
If true (how would we know?) it's surely not beyond the wit of HMRC to collect more effectively. Would mean investing more in HMRC and pursuing cases more forcefully. Even if not profitable it would act as a deterrent.
Too many people just trotting out mantras about how they'd all go offshore and/or action would be counter productive etc. Well they would say that wouldn't they?
I don't believe it!
Well, that’s simply not true. In fact one of my last jobs was helping to reorganise the structure if a company to reduce significantly taxes in high tax countries, one of which was the UK. We off shored it.
Income is taxed where it is generated in general, so you just organise where your income is generated, it’s not titslky dependant in where you are physically.
sploo
Somewhat extinguished member
I guess it depends on the definition of where it was "generated"; I'm talking about the dodges of selling an item in one country but accounting it such that the profit appears to have been made elsewhere (i.e. a low tax jurisdiction). Which kinda sounds like what you're describing above (unless I've misunderstood).
Again, simply not true. Tax evasion is illegal, tax avoidance is perfectly legal. A more efficient HMRC will only catch more tax evasion……like taking cash for doing a job and not declaring it…..rather than perfectly legal tax avoidance which the wealthy can setup.
So, Jacob, let’s imagine your super wealthy, can live anywhere in the world, take your private jet to anywhere, afford multiple properties in different countries. Are you really saying that you cannot see the attraction of living in a warm barmy climate right now rather than facing winter in the UK? Especially as living their reduces the taxes you have to pay?
I totally understand and agree that we should try to find away for everyone to have a better life, it’s just nobody had come up with a workable system. Socialism kills millions and degrades living standards, capitalism creates larger and Larger inequalities, however, everyone becomes wealthier…..just not at the same rate.
sploo
Somewhat extinguished member
I was with you on that until "everyone becomes wealthier…..just not at the same rate". I'm not sure people using foodbanks and watching their real income drop would agree.
Also, surely you could live wherever you wanted (as a wealthy individual) but also not engage in legal (but immoral) tax avoidance that strips money out of the areas whose resources you used to generate your profit? Ultimately, services have to be funded (education, healthcare etc); so either everyone else ends up picking up the tab, or paying privately - either way, not exactly making those at the bottom wealthier.
Exactly. Now, Eire has a low rate of corporation tax, it’s been the subject of a lot of debate within the EU. The Irish government get a seriously increased cash generation on company corporation tax compared with if they increased corporation tax to the ‘normal’ around Europe. If they did, their revenue would fall……low level of tax is a win for them. They are adamant they are sticking to a low level of tax, otherwise company’s would simply move their head offices to other low tax counties. The UK as well as other countries within the EU miss out on billions on tax revenue as a consequence.
sploo
Somewhat extinguished member
Agreed. Sadly the only solution would be worldwide agreements to not offer such low rates (unlikely) or some system whereby larger (financially) nations prevented companies from doing business in their jurisdiction if that company engages in such behaviour. I wouldn't hold my breath though.
There is always much talk of the poverty line, but not much understanding of what it is. It’s actually what is considered the minimum income level in a specific country to live. So, it’s different for the UK to say a third world country. The international poverty line is set at $2.15 / person / day. On that basis, which we wouldn’t want to be compared with, nobody in the UK is in poverty! What I’m trying to highlight, is that the threshold of what is considered poor in the UK keeps increasing, it’s far higher than most of the world. To out it another way, it now considered necessary for everyone to be have access to the internet. Something in say 1980 it wasn’t.
Money is a token that is related to assets. Money without physical assets is akin to me having a bundle of monopoly cash in my pocket. Its the relationship that the token has to the assets that gives it worth.
So, forget about the very mobile token, and tax the asset that it relates to, as they are, generally, considerably less mobile.
My car example was maybe confusing, as cars seem somewhat mobile. Here in the uk, a significant part of our countries "wealth" is in real estate. The clue for that is, quite literally, in the name - REAL ESTATE, not intangible assets.
That's not going anywhere at all.
The bottom line is that, sure, you get things like facebook or whatever that seem like they are ethereal but the money always ends up, somewhere along the line, being tied to actual "stuff", rather than just being a number on a computer monitor. The actual stuff isn't as easy to move to tax havens as the numbers on the screen.
This thread was about mortgages -
A couple of generations ago, people owned their own homes, with one person working and one person normally staying at home. Working fairly standard jobs.
Then it was two people working fairly standard jobs.
Now we have seen massive price inflation in the property market, such that most people working "standard" jobs, without some cash hand-out from their parents, are excluded from home ownership.
Again, the uk, even more so than other countries, holds its "wealth" in real estate. With spiralling wealth inequality, an increasing amount of the bricks and mortar is being held by a smaller and smaller number of people.
It's not easy to move it to Portugal.
As a closing point, if you have doubts about wealth being held in real-estate, id remind you of the 2008 issue, and what caused that. Real estate is not just a little bit of nothing. Its significant. And not very mobile.
Let’s follow that through. So, say, Microsoft and Apple wouldn’t be allowed to trade in a country…….well that simply wouldn’t work. That’s just two, and I would suggest every major company engages in tax efficiency. So, in other words the country that went down this road would simply stop.
I can’t remember the details, but the EU did start going down the road of trying to set minimum corporation tax rules, it wasn’t if I recall that successful.
I guess if they have other options, what you really need to ask is if your society is better off with them or without them. This is often the claim here in the states, too - that they are not paying enough corporate taxes. They distribute their earnings, and their employees pay payroll taxes. The earnings are distributed to things like private and public pension funds (city government, etc), health benefit funds, etc. The evidence for the real effect here in the states is how fast property values increase when there is a big corporate location being established in a locality. In my opinion, the incentives offered to land these things are problematic, because if they weren't offered, the groups would still establish themselves somewhere. But the cities willing to throw deferrals of costs at them are betting that it won't be them.
All that said, the net effect locally is a benefit, or state wise, or nationally.
sploo
Somewhat extinguished member
I think it's about being able to afford a roof over your head, food, and heating; something that a terrifyingly significant percentage of the UK population now cannot do. I get some exposure to this in my current line of work and it's sobering. Rich countries should not have poor people. Not at that level anyway.
