Tuesday, July 03, 2007

Buffet pays less tax than his cleaner....

Warren Buffet has blasted the US tax system because he says that he pays less tax on his earnings than his secretary or his cleaner. I take his point and if I was worth $53bn I wouldn't mind paying a little more tax either, I mean how many Lamborghini's can you own?

However, I worry that because we are living in the information age that reports of private equity billionaires and dot.com zillionaires will give the governments of this world more reason to raise taxes from entrepreneurs. If a tax system is weighted against business and its owners then employees and economies suffer.

It was Sir James Goldsmith, I believe , that wrote a book called 'The Trap'. This book was essentially aimed at the evils of globalisation. His basic philosophy was that if a company is able to move its facilities to a country with cheaper labour and taxation costs, then when costs in that country rise the company can just move onto the next cheap country leaving behind a ruined economy. Of course he was caned in the press and by 'economists' but wrote another book called 'The Response' putting his thoughts forward on each of the naysayers points.

Arguments could be made for or against whether he was right, but one thing that is for sure is that we ARE in a global economy now and governments, especially places like the UK, need to be very careful that taxes are kept right for the individual business owner, if not it is not difficult to move to a less 'taxing' jurisdiction. Indeed 'death and taxes' (well at least the personal 'taxes' part) is no longer a certainty, input 'offshore tax planning' into Google and you get 29,900 hits, basically business owners can access expertise in minutes. I did this same exercise years ago, pre-Internet, and ended up having to take a flight to Gibraltar to sort out my situation.

Of course there are extremes, we wrote about the 'Monaco Boys' and their zero tax lives. This may be taking the issue a little too far, but Warren, do us a favour, now that you have got your billions, don't encourage governments to create a situation where its more difficult for us to do.. thanks.

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