📝 The Proposal

by Sreetama

Yes, he’s moving to Texas!

Do you remember the time when Musk threatened to move Tesla to Texas? Elon Musk has his Starship development going on in South Texas and the big-new US factory for Tesla is coming up soon in Austin. But Texas does not collect any personal income tax, while California has some of the highest state tax rates in the USA.  This could save the 2nd richest man Billions in taxes! 

📝 The  Proposal

The United Kingdom is battered and spending billions 💰 over the Covid crisis – £280B to support the economy and £73B on job support schemes. So the Wealth Tax Commission along with researchers from Warwick university and the LSE 🎓 decided to step up to articulate a tax plan that would be fair, efficient, and very difficult to avoid!

🤑 “A one-off wealth tax on millionaire couples paid at 1% a year for 5 years would raise £262B,” they said. Never heard of a one-off tax? It is a tax on a person’s net wealth (all assets minus all debts). It is assessed at a single point in time, but payable over a span of years. The tax would be levied only on the amount of wealth that is above the threshold.

🤜 Crisis savior, one-off taxes have been used during major crises before. France, Germany, and Japan used them after the 2nd World War. Ireland used them after the Global Financial Crisis. The Latin American Senate of Argentina recently passed a ‘tax on wealthiest’ too. The country hopes to raise 300B pesos (approximately USD 3.75B) from its 12k wealthiest citizens.

⚙️ How will this work in the UK? A 1% per year tax rate would be imposed for 5 years on a wealth of more than £1M per two-person household. This will be equivalent to raising VAT by 6p or the basic rate of income tax by 9p for the same period.

The poorest people continue to pay the price for the crisis. 😩 And maybe it is time for the richest to take that burden. But the cash is not stacked in vaults gathering dust. 🔐 It is invested. Taxing those investments would lead to less produced, less produced means lower wages and lost pensions, that means a worse life for all of us! 🙅

“While the [£262bn projected tax take] is an interesting number. What you can never measure is the wealth creators who don’t come here because they are put off by the system.” – Sophie Dworetzsky, partner at Charles Russell Speechlys, a law firm. 

👇Ah, And Also This

㊙️ Government Bonds exceeding $960B! Japan’s tax revenue is deep in red, the finances are tattered and the economic recovery is fragile. The tax revenues of the 3rd largest economy are estimated to fall short by 8T yen which totals to almost 55T yen. Let’s wait and watch if the stimulus package and the bonds can help Japan recover.

🙅‍♂️ “That’s not a write-off!” Heard of the TV Show Schitt’s Creek? A particular scene from the show is going viral in Australia. Every year the ATO (Australian Tax Office) is littered with claims for things like cars and coffee machines. And after the October budget, all but Australia’s very largest businesses can instantly write off almost anything they buy.

🏀 Michael Jordan’s Revenge – Crazy Tax Story

📅 1991 – The Jock Tax came into existence in the 1960s but it was not as prominent until a certain event took place – The NBA finals between Chicago Bulls and Los Angeles Lakers in the year 1991. The Bulls crushed the Lakers. The angry Californian government levied a tax on Michael Jordan and all of his teammates. The tax was specifically on all of the income they earned while playing in California. Enraged, the Illinois government passed its own tax laws that specifically targeted visiting athletes, including the Lakers. The Illinois countermove became known as “Michael Jordan’s revenge.”

🚶‍♂️ Others followed This tax came out to be a very lucrative source of state funding. Taxing ‘jocks’, performers, and other entertainers could generate some serious revenue! States like Arizona, Colorado, Indiana, Louisiana, Maryland, Massachusetts, Ohio, and Pennsylvania implemented this too. Some municipalities, including Cleveland, Cincinnati, Kansas City, Pittsburgh, and St. Louis added them as well. The only states without a jock tax are Florida, Texas, Washington, and Washington, D.C.

👀 The Little Guys – How could taxing these pros that make millions of dollars sound bad? Well, the tax is also levied on team trainers and equipment managers, who only earn a median income. Teams travel to a fair amount of states and these trainers end up having to file 15-20 state tax returns and the cost of having that many returns prepared piles up in a hurry.

🙌 Supports venues – A few states are actually using the money to revamp athletic venues and stadiums. Wisconsin Governor Scott Walker had announced a proposal to impose a tax on N.B.A. players to cover debt payments on two hundred and twenty million dollars for such a project.

This is how His Airness lead to the articulation of an entirely new tax protocol.

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