Have you ever thought about minimising the tax on a watch purchase?

Archer · Nov 6, 2017

arcadelt
I take your point and acknowledge your standing here, but I think you are deducing more about me than my posting of the question states or implies. I DO NOT "feel that others gaming the system gives [me] the license to cheat on [my] taxes..." and my question does not state or infer that. My question was:

Have you ever thought about minimising the tax on a watch purchase?

Actually, your question was:

"So, in light of the recent release of the Paradise Papers and the Panama Papers last year, is anyone still feeling morally compromised if they toy with the idea of avoiding or minimising duties and importation taxes when they buy a watch from overseas (or even interstate if you are in the US)?"

And you will note that in my statement above, I said "if you feel that others gaming the system gives you the license..." Note the IF...it's important.

You then went on to say this:

arcadelt
Interestingly, my last three purchases this year have been from overseas, and without doing absolutely anything to influence the shipping or importation process, two came through without having to pay GST and the sender declared a lower value on the third, resulting in me paying less than expected. I certainly was not jumping to change the outcome. I have zero guilt now that I have read some of the outcomes of the ICIJ investigations.

So with regards to this, I'm not exactly sure what it is you think I need to correct:

arcadelt
As a forum member in high standing your opinions are well regarded, and you are influential, both positively and negatively. Therefore, you have a great responsibility to post accurately. While I admit I am not as strict about rules as you declare yourself to be, I do not wish in this forum to be tarred with the views that you have incorrectly ascribed to me, so I calmly and respectfully request that you correct what you have said.

Now you have already made assumptions about what others do, so are you going to correct those?

arcadelt
The point of my post was not so petty as to encourage anyone to flaunt the rules (which most of us do on occasions, to a greater or lesser extent anyway), but to highlight the vastness of the moral void.

To be clear, other than what you have posted in this thread stating what you have about your last three purchases (no judgement from me, just repeating what you have stated), I don't know what you may or may not have done in the way of "avoiding or minimising duties and importation taxes" and as I've said, that is completely up to you. I just don't feel justified doing it myself.

And my views on this have nothing to do with my standing here, whatever that may be - I'm just a member/watchmaker who posts here.

I have had the unpleasant experience on several occasions of being asked by customers if there is a "cash discount" equal to the tax available on service or a purchase, and the answer is always the same - no. I had one customer argue with me quite vehemently that I would not lose any money if he didn't pay me the taxes, so it was clear he expected me to commit tax fraud (not report the income) so he could save a few bucks. That's just not how I do business.

Cheers, Al

sevenhelmet · Nov 6, 2017

I live in CA, and have purposely bought watches out of state to avoid paying CA sales tax. Ordering them online from out of state businesses avoids it as well.

arcadelt · Nov 6, 2017

Archer
I don't know what you may or may not have done in the way of "avoiding or minimising duties and importation taxes"

I said "without doing absolutely anything", so why make the inference otherwise?

Archer
I'm not exactly sure what it is you think I need to correct

You conveniently left out that you also said (underlining by me):

Archer
If everyone took your view that moral rules don't apply to them anymore...

I say again, that's not my view.

Archer · Nov 6, 2017

arcadelt
I say again, that's not my view.

Okay, I was just going by this...

arcadelt
The societal moral and absolute rules do not work in a system that is fundamentally broken because one side is not playing the game.

arcadelt · Nov 6, 2017

Archer
Okay, I was just going by this...

Sure, but I'm neither a millionaire, billionaire or multinational, thus on the side that is playing the game (more or less). Not sure how you therefore came to the conclusion that it was my view that the moral views don't apply to me?

Archer · Nov 6, 2017

arcadelt
Sure, but I'm neither a millionaire, billionaire or multinational, thus on the side that is playing the game (more or less). Not sure how you therefore came to the conclusion that it was my view that the moral views don't apply to me?

Okay this is getting tedious but I'll answer. Your post about societal moral and absolute rules no longer applying was in response to a post I made (not to you) where I said two wrongs don't make a right. You then replied to my post first saying that is "probably" correct, but then adding a counterpoint saying that morals/rules no longer apply because of this power imbalance.

We already know that the rich and powerful use their money to avoid and reduce taxes, so the rules haven't applied to them in a long time, if ever. So the only other party that the rules can no longer apply to in your scenario is the rest of us.

If this is not the message or meaning behind the posts, that's fine. Given the context of this entire thread that is how I interpreted it.

jakeh417 · Nov 6, 2017

sevenhelmet
I live in CA, and have purposely bought watches out of state to avoid paying CA sales tax. Ordering them online from out of state businesses avoids it as well.

I would be careful about stating that (please dont take this as a threat, just more of informing you if you didnt know). In California, by law, you are required to pay a "use tax" on those purchases to the California tax authority, the Board of Equalization. You declare it on your California income tax return.

What is use tax?
Use tax is similar to sales tax and is due on taxable purchases of merchandise that will be used in California. Generally, it is owed when you purchase merchandise without paying California tax to an out-of-state retailer or when a business removes property from its resale inventory for its own use. Untaxed purchases made from out-of-state retailers online, over the phone, or by mail order are often subject to use tax. Use tax is also owed when you purchase a vehicle from a private person.

Source: https://www.boe.ca.gov/pdf/pub452.pdf

The California Board has sent out notices.

https://blog.taxjar.com/states-coming-ecommerce-buyers-use-tax/

Also before being critical of California's liberal ways, note that currently, every state that imposes a general sales tax also imposes a use tax. So yes even Texas, has a "use tax". (https://comptroller.texas.gov/taxes/sales/use-tax.php)

Foo2rama · Nov 7, 2017

Use tax is fuzzy...

Because it’s an interstate issue the federal government is the only person that can force a company in another state to report out of state sales to the respective state, and they do not. Hence why if I own a business in CA and ship to New York there is no sales tax collected.

So how many people self report on their state taxes in the section to report this? Every watch you buy private party is technically supposed to be reported.

Cars work differently but that’s a whole separate issue.

jakeh417 · Nov 7, 2017

Foo2rama
Use tax is fuzzy...

Because it’s an interstate issue the federal government is the only person that can force a company in another state to report out of state sales to the respective state, and they do not. Hence why if I own a business in CA and ship to New York there is no sales tax collected.

So how many people self report on their state taxes in the section to report this? Every watch you buy private party is technically supposed to be reported.

Cars work differently but that’s a whole separate issue.

Don’t disagree that it’s fuzzy. Wanted to put it out there because when the mention of buying watches out of state to avoid tax has come up here. There are hardliners who call not declaring use tax as an act of tax evasion and tax fraud ....

gatorcpa · Nov 7, 2017

jakeh417
There are hardliners who call not declaring use tax as an act of tax evasion and tax fraud ....

I’m not a “hardliner”. I’m a tax professional, and well aware of the difference between avoidance and evasion.

It’s quite simple, avoidance is legal and evasion is not.

If your state requires you to declare an item for use tax and you do not, that is evasion and is illegal.

This is not a moral issue, it is a legal one.
gatorcpa

watchos · Nov 7, 2017

gatorcpa
I’m a tax professional, and well aware of the difference between avoidance and evasion.

Quick question: when you travel to Europe and then come back, they give you the tax back at the airport. If they return that, do you then have to come back and pay taxes on that in your country even if your total belonging and purchases are under the $10k limit?

Tacket · Nov 7, 2017

Last cruise I took I purchased an SMPc on the boat (I know, I know, I totally overpaid) and was personally escorted off the boat and to customs in what I believe was an effort to make sure I paid duty on my purchase. I was already planning on declaring so the big bonus was avoid the regular line at customs/immigration.

I have often thought of purchasing in Oregon as I live in Seattle, but seem to find better deals online or on the used market anyway.

mikesspeedy · Nov 7, 2017

arcadelt
I take your point and acknowledge your standing here, but I think you are deducing more about me than my posting of the question states or implies. I DO NOT "feel that others gaming the system gives [me] the license to cheat on [my] taxes..." and my question does not state or infer that. My question was:

That is NOT a statement of my views, but a question about others' views. This is an open discussion forum and sitting here listening to news reports on the radio I was curious whether other members felt angry and disenfranchised by the revelations revealed in the Paradise Papers. I (perhaps clumsily) attempted to link it to watches because this is after all a watch forum. I will be more literal in my posting of questions in the future.

As a forum member in high standing your opinions are well regarded, and you are influential, both positively and negatively. Therefore, you have a great responsibility to post accurately. While I admit I am not as strict about rules as you declare yourself to be, I do not wish in this forum to be tarred with the views that you have incorrectly ascribed to me, so I calmly and respectfully request that you correct what you have said.

Nor have you been Tarred sir. Your OP seems reasonable enough too me.

MY 2 cents. I think this subject just gets otherwise reasonable people a little touchy. I for one think the whole tax avoidance / minimisation thing is selfish and somewhat short sighted for anyone to feel that not paying your due taxes is a good or even cleaver thing. Without funds to run civilisation how do we even live peaceful productive lives? I appreciate most governments are wasteful and some even corrupt in their own right. I am sure that every individual and company that avoids paying or minimises the amount of tax they pay still expects the countries they live in to provide a stable government, police, fire, ambulance, hospitals, laws, courts, a strong military to protect them and their assets, water supplies sanitary services to name just some of the main things. They then expect the very citizens they have cheated to populate the above services, carry bags for them at hotels, provide water supplies, transport, etc etc.
I don't understand how supposedly wealthy intelligent people square the above circle. I just don't see how its cleaver or even remotely acceptable. WE SHOULD ALL PAY OUR DUES. JMHO (and before you ask I pay income tax, sales tax, I even expect to pay tax on my pension payments when I get them and on my assets when I die) and no I don't avoid or minimise my taxes, not ever the supposed innocent little wheezes you will through up in you replies, so don't even bother going there.

So its also a moral issue MR tax Pro.

gostang9 · Nov 7, 2017

1. How does the elaborate offshoring of business entities by the super-wealthy relate to individuals? I would guess most individuals who engage in such activities pay taxes each year so many magnitudes if what many of us ever pay in a lifetime. That they pay millions in lawyer/tax-consultation fees to find legal means of reducing their massive tax burdens has no bearing on someone earning a simple income (IMO).

2. If you pursue tax avoidance strategies, don’t expect forum members to offer support and encouragement for such behavior. Also, probably best not to post any hints of such potentially illegal activities in a public forum.

3. Tax minimization suggests finding legal means of paying the lowest amount of tax that is owed. When it comes to tax laws, do you really think there are gaping holes allowing citizens to easily reduce their taxes in a legal manner? (Other than internet retailers, I highly doubt it). Tax avoidance suggests finding ways to not pay taxes they are legally owed. In many cases where goods are purchased without taxes being collected at the point of sale, there is a legal obligation to self-declare. Failing to declare is not legal, and doesn’t count as tax ‘minimization’, it is tax evasion. If this is what anyone wants to partake in, see 1 and 2 above.

gatorcpa · Nov 7, 2017

mikesspeedy
So its also a moral issue MR tax Pro.

I was with you right up until your very sarcastic comment above.

My point was that if you don’t comply with the law you are in violation of it. That indeed is a legal issue, although not necessarily a criminal or moral issue, although it can be from a greater sense.

My job is not to preach morals, but to keep otherwise law-biding people in compliance with it.

Taxes are the price we pay to live in a civil society.
gatorcpa

kippyk · Nov 7, 2017

gatorcpa
It’s quite simple, avoidance is legal and evasion is not.

Avoidance can be more immoral than evasion.

gatorcpa · Nov 8, 2017

kippyk
Avoidance can be more immoral than evasion.

Please explain.

Tax avoidance means to pay the amount you are legally obligated to pay and nothing more. If you choose to pay more, it is charity.
gatorcpa

kippyk · Nov 8, 2017

T

gatorcpa
Please explain.

Tax avoidance means to pay the amount you are legally obligated to pay and nothing more. If you choose to pay more, it is charity.
gatorcpa

What you are legally obligated to pay is a gray area. Individuals and corporations can hire lawyers and accountants to create complicated financial vehicles that are designed to limit tax liability. These schemes may be rarely challenged in court due to their complexity. If they are hard to prove, it is not worth the government's time to prosecute. Also, laws are written by lobbyists so loopholes are built into the legislation.

Creating shell companies, equity swaps, shell trust funds, creating an LLC with one employee, are some examples. Mitt Romney had a 100 million dollar IRA in 2012. It might be worth 200 million now. Try to wrap your head around the fact than an Individual is allowed to place about $18,000 a year in an IRA and Mitt Romney has hundreds of millions in his. Sorry, what he did is more immoral than not paying the correct duty on a used watch.

gatorcpa · Nov 8, 2017

kippyk
Individuals and corporations can hire lawyers and accountants to create complicated financial vehicles that are designed to limit tax liability. These schemes may be rarely challenged in court due to their complexity. If they are hard to prove, it is not worth the government's time to prosecute.

If you want to hit me where I live, you just did. This is the way the laws are written. Yes, I agree it is overly complex and we in the US have a nasty habit of promoting social engineering through the tax code. That's a big reason why we have such issues.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes".

"Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

The quotes above are from Judge Learned Hand, one of most respected judges in US history. He probably forgot more tax law than I will even know. I agree with his opinion, you may not.

kippyk
Try to wrap your head around the fact than an Individual is allowed to place about $18,000 a year in an IRA and Mitt Romney has hundreds of millions in his. Sorry, what he did is more immoral than not paying the correct duty on a used watch.

Do you know what investments are in the IRA? I certainly don't. What if it was Apple stock circa 1990? Should we take it away because he was too smart? What's the morality there? When you claim something to be "immoral", that is a value judgment. Why do you just assume that someone did something wrong because they happen to be wealthy?

kippyk
Also, laws are written by lobbyists so loopholes are built into the legislation.

If you have a moral problem with the tax laws as they are, please take that up with your Congressman. If enough people agree with you, the laws will be changed. The issue here is that almost all governments operate on the principle of "The Golden Rule". He who has the gold makes the rules. It's been that way in the US since July 5, 1776 and likely a lot earlier than that.
gatorcpa

kippyk · Nov 8, 2017

gatorcpa
Do you know what investments are in the IRA? I certainly don't. What if it was Apple stock circa 1990? Should we take it away because he was too smart? What's the morality there? When you claim something to be "immoral", that is a value judgment. Why do you just assume that someone did something wrong because they happen to be wealthy?

I made a value judgement about a financial insturment based upon information. You made multiple assumptions (about the IRA and about how I personally view people with wealth) with no facts. You are quite wrong about me I assure you. I recommend that you do not make such assumptions about people in the future.

https://www.theatlantic.com/politic...-on-with-mitt-romneys-102-million-ira/261500/

I consider Romney's tax dodge unfair and immoral. He is not paying his fair share.