5 ms·

In the UK some people are taxed at >100% on income, but that aside If you have 100 shops, and rent 11 at $10k a month, and the rest are empty, you get $110k a

In the UK some people are taxed at >100% on income, but that aside If you have 100 shops, and rent 11 at $10k a month, and the rest are empty, you get $110k a month If you have 100 shops, and rent 60 at $2k a month, and 40 are empty, you get $120k a month Now lets assume a 50% tax In the first example you keep $55k In the second example you keep $60k Great, go for the second. But now if you make the empty shops a tax writeoff, you instead first example, $110k income, $850k loss. No tax to pay, total income $110k with no tax (and a £750k loss to offset other income) second example, $120k income, $80k loss. Tax to pay on $40k which is $20k, so total net income $100k This is assume that you can claim that unrealised rent as a loss. I believe there are ways of doing that (charity shops for example)

DanBC 8y ago
> In the UK some people are taxed at >100% on income Do you have any examples please?
- isostatic 8y ago
  If you're a couple who transfer some of one earner's tax free allowance to the other via the marriage allowance, and the higher earner earns £46,350, they will pay £11,211.32 in income tax and national insurance If they earn an extra £1, the marriage allowance vanishes, and they pay £11,449.54 in income tax and national insurance That's a 23,822% tax rate on that pound.
  - allannienhuis 8y ago
    there's a big difference between claiming > 100% tax rate and > 100% MARGINAL tax rate for a specific circumstance. Many jurisdictions have specific deduction boundaries where the next $ earned would bump someone into a very high marginal tax rated on that next dollar. In reality the net tax change for that person in your example isn't a significant material change - a couple hundred pounds on their yearly tax bill.
    - isostatic 8y ago
      Earn some money from your savings, say £100, and you get taxed nearly £300. That's more than 100% tax. You've also got the state where you have 7 kids (say you had 4 from a previous marriage and your partner had 3), and earn in the £50k-£60k range, where you attract a "High Income Child Benefit Tax Charge" which, combined with income and NI, works out to be 102% marginal rate, over a range of £10k. As the OP said: "A wise colleague told me that until effective income tax rates reach 100 percent, a dollar of income is worth more than a dollar of deduction" There are cases in the UK where that's demonstratably false. A dollar of income is actually worse than nothing. At the marriage threshold a pound of income is worth £-230. A pound of deduction is worth 33p.
kgwgk 8y ago
That wouldn’t fly, at least in the US: http://www.habifproperties.com/can-landlords-take-a-tax-deduction-for-the-donation-of-leased-space/ http://www.habifproperties.com/can-landlords-take-a-tax-dedu...
- isostatic 8y ago
  If the landlord donated $50k to a charity, is that a writeoff? If that charity rents $45k of space from the donor does that count? A similar loophole was being used in the UK a few years back: https://www.bbc.co.uk/news/business-16692556 https://www.bbc.co.uk/news/business-16692556
  - kgwgk 8y ago
    I'm not sure if you read the link I sent. If I give $100k to a charity and they use the money to rent something from me for $100k I won't be paying any less taxes that if I had not done the whole "tax dodging" scheme... [1] Maybe it was possible to deduct "virtual" donations in the UK, but it's not hard to disallow if people abuse the system. I could also donate a stone to a charity saying that it's worth $1bn to get a deduction. Would that count? Edit: reading your link it seems unrelated to deductions on taxable income. It's about council taxes on businesses, which are lower for charities than for regular businesses or unoccupied stores. So it makes sense for the owner to let a charity use the space rent-free and pay their 20% of the tax instead of paying 100% of the tax for the empty property. [1] Actually I may end up paying less taxes if my costs raise, because I will be making a lower profit. But that would result in lower after-tax profits, which is probably not the objective of the scheme.

DanBC 8y ago

> In the UK some people are taxed at >100% on income Do you have any examples please?

isostatic 8y ago
If you're a couple who transfer some of one earner's tax free allowance to the other via the marriage allowance, and the higher earner earns £46,350, they will pay £11,211.32 in income tax and national insurance If they earn an extra £1, the marriage allowance vanishes, and they pay £11,449.54 in income tax and national insurance That's a 23,822% tax rate on that pound.
- allannienhuis 8y ago
  there's a big difference between claiming > 100% tax rate and > 100% MARGINAL tax rate for a specific circumstance. Many jurisdictions have specific deduction boundaries where the next $ earned would bump someone into a very high marginal tax rated on that next dollar. In reality the net tax change for that person in your example isn't a significant material change - a couple hundred pounds on their yearly tax bill.
  - isostatic 8y ago
    Earn some money from your savings, say £100, and you get taxed nearly £300. That's more than 100% tax. You've also got the state where you have 7 kids (say you had 4 from a previous marriage and your partner had 3), and earn in the £50k-£60k range, where you attract a "High Income Child Benefit Tax Charge" which, combined with income and NI, works out to be 102% marginal rate, over a range of £10k. As the OP said: "A wise colleague told me that until effective income tax rates reach 100 percent, a dollar of income is worth more than a dollar of deduction" There are cases in the UK where that's demonstratably false. A dollar of income is actually worse than nothing. At the marriage threshold a pound of income is worth £-230. A pound of deduction is worth 33p.

kgwgk 8y ago

That wouldn’t fly, at least in the US: http://www.habifproperties.com/can-landlords-take-a-tax-deduction-for-the-donation-of-leased-space/ http://www.habifproperties.com/can-landlords-take-a-tax-dedu...

isostatic 8y ago
If the landlord donated $50k to a charity, is that a writeoff? If that charity rents $45k of space from the donor does that count? A similar loophole was being used in the UK a few years back: https://www.bbc.co.uk/news/business-16692556 https://www.bbc.co.uk/news/business-16692556
- kgwgk 8y ago
  I'm not sure if you read the link I sent. If I give $100k to a charity and they use the money to rent something from me for $100k I won't be paying any less taxes that if I had not done the whole "tax dodging" scheme... [1] Maybe it was possible to deduct "virtual" donations in the UK, but it's not hard to disallow if people abuse the system. I could also donate a stone to a charity saying that it's worth $1bn to get a deduction. Would that count? Edit: reading your link it seems unrelated to deductions on taxable income. It's about council taxes on businesses, which are lower for charities than for regular businesses or unoccupied stores. So it makes sense for the owner to let a charity use the space rent-free and pay their 20% of the tax instead of paying 100% of the tax for the empty property. [1] Actually I may end up paying less taxes if my costs raise, because I will be making a lower profit. But that would result in lower after-tax profits, which is probably not the objective of the scheme.