INCOME TAX DODGING.

Press, Volume L, Issue 15017, 11 July 1914, Page 2

INCOME TAX DODGING.

A FINE ART IN ENGLAND. (y_tOM A CORB-SrON'DENT.) LONDON, May 29. At least two classes of business men in England are delighted with tho new taxation introduced by Lloyd Georgo s latest Budget, which has caused almost universal grumbling. They are the insurance men and those astute individuals who describe themselves variously as "income tax experts," "income tax recovery agents," and "income tax adjusters." Mr Lloyd George has set himself the task of raising £210.203,000 this year to meet the growing cost of armaments, his social reform schemes and all the other incidentals of running the British Government, and to do so he has found it necessary to pile on the taxes to -nth an extent that serious business men declare that he has about exhausted the taxable capacity of the British people, and that in the event of a war or other great national emergency he will have nothing left to fall back-on. There is a proverb m England that nothing is so unavoidable'as taxes— except death-but the latest Budget has set a lot of clever men to thinking up ways to avoid the taxes and it is a good bet that when the end of tiie voar comes -Mr Lloyd George will be a good many hundreds of tliousands ot dollars short on his estimates.. Incidentally the insurance, companies will be a good many more thousands ahead The reason for this is that under the Income Tax Law money P*'d fo -J» e insurance premiums is exempt fromi income tax up to °ne-sixth of the naver's total ncoine. Hitherto tew ESis_men »<**™ taken full - advant^ c othis for after all tho income tax did not bear very heavily on the small _!.„ but now that the burden is .inched something like a boom is being avnerienced in the insurance world, the oSSes are taking-full advantage, o the situation and are doing all they uwto helii the boom along by an unpre cedented campaign of advertising, cir-ri-larisinf- and canvassing. ••How to Cut Down Your Income T,v '' I the title of a pamphlet which £ h_in_w idely circulated by one of the biXt English' insurance companies anK show's by typical examples how one can dodge the tax collector alto- : .if however he spent that &J_, r« s &*___•*• for his own old age. Iho man » £240 a year who spent £40 a year o insurance would get oft witli Ji* ■i^'»%^^fr_2^ tZn^^o S ! H-Tfor -tax of £13,040, which is an mcc .ii of £4732 over last _•?■£• rate If however, ho devotes one-sixth, of his incom™ roiighly, £16,0U0-to We insurance, he saves ™-»»|* f,x °" **" to the tune of about £34)0. ,-. But the insurance companies stand to aain almost as much by tho new. Lloyd Georgian death duties as by-the income tax On large estates these now amount to 20 cent, of the total, and it » easy that in the event of two or three death- occurring «/-£**_?" cession, a great estate might be practically swallowed up by .the Grown ora great* business ruined. Even in the case of a single death great loss may be experienced by the necessity of rtaasing , investments on an unfavourable mar- . ket for the death duties must be paid before the will is admKte-. to and the heir can ta£e possession. Mold- j ers of great- estates, therefore, have made a rush to take out special policies covering the amount of the duties to which their estates are liable on their death, and I am told that policies for many millions of pounds have been written in this class alone in the last month. , If the insurance companies have been doing a flourishing business, what can be said of the ingenious gentlemen whoso business it is to show the taxpaving Briton how to pay as little as possible? It is true that they haven t taken as much actual money as the insurance men, but there, are fewer ot them, and all they take is clear gain. There are no troublesome shareholders - demanding dividends, and comparatively few expenses connected with the business. An office, a supply of stationery, and an extensive knowledge of income tax law are all that are required. The knowledge has usually been obtained at first-hand, for most of these experts are ex-employees ,of the income tax collecting department, just as many Customs attorneys and agents in the United States learned their trade in the Custom houses or appraisers' stores. British income tax law is so complex that none but an expert can understand it. There are so many, and so intricate exemptions, that most lazy men***—and most mon are lazy—don't bother about them, and if the"tax collector's bill is not too stiff, pay it with a grumble. Now that it threatens to be stiflrer than ever, however, they aro flocking to the exports, who aro reaping a golden harvest, their charges bein usually five or ten per cent, of the amount which they are able to save their clients." One newspaper writer of my acquaintance who went to one of these experts was so confident that he had produced a "work of art" in his income tax return that he promised - the expert an additional 2s over and abovo his fee for every £1 he could -at*e 'him. The export looked at the "work of art" and smiled. "I see nothing hero for evening dress," lie said "Of course not. \Vhy should there be?" was the reply. "Well, you occasionally go to the theatre or a public dinner in the course of your work," said tho expert. "Wo will put dpwn £20 for two dress su'tv* a year—expenses of your business you know —and another £20 for dress shirts, tics, gloves, extra laundry. You take taxi-cabs, too, don't you ?-—Several times a week you say—that's good fQr another £20. Did you buy a typewriter this year? Yes—£2o. You _ometimes engage a stenographer to take down your articles —call that £12. Now, how abou*- your house? Ever write at homo? You are entitled to the rent of the room you write in. "When you topk your holiday last summer you -went in search of local colour for that new novel. We will put down the cost «f that holiday. "My boy, the Government will owe you money before we are donu with it." Th© result of it all was that, instead of paying the Government about £2t this year, my friend will pay the agent £3, and send along all his friends. ♦One ingenious agent, however, hadiscover-*! a truly Napoleonic sc_em< for evading the payment of the supei tax of from 6d to ls 4d in the £1 whicl is imposed, over and above the inconn tax, on all incomes over £3000 a. year This is based on the fact that companies aro not liable for the super tax and he proposes to organise all- hi super taxable ctieut- uito companies Under the English company law oultwo shareholders are required, and on of them need hold only one share. Th rvarsrtn -x-fco *_OCrm_ a CO*_T_IT Will b

chairman and managing director himself, and ho can declare what dividend he pleases. It is proposed that he only declare as dividend the amount whica he requires for living expenses, and that all the rest of the company's—or his--~ inc-mo shall go back into tho business," and shall, therefore, escape th- 4 tax altogether. The scheme.looksl good on paper, and may succeed, although tho English judges have a way-at-time* of ignoring the strict letter of the law 2-fS-ur of equity, but if it does it is safe to say that Parliament will stou up this loophole before the next Budwet becomes due. , Given an easy-going tax an ingenious payer, or, rather -oodpayer, it is fairly easy to postpone tho evil day when taxes must be paid oven for years in some cases. One man. a* jeast, has managed to pay bo taxes for four veai* by the simple method ** Sng knotty legal pointsjor discus- _*__. Sith the collector. we raised and discussed by Tetter, one by one, and as fast as one was settled, after months. «f a f««_ TIU may have seen tnrougn Jhe 9 game! but he 7 apparently Myoygf S. discukion, .and consoled himself with the reflection that, in the end, n* 4 Abound to win. Luck was Wiethe non-TXivcr, however, for the <*o llec ?_f months ago, and he has begun the game again from the s.ar«----wit-h his successor.