Financial and tax advice for wealthy clients. Positive for society?

mgdavid

I am going to be as brief as the OP is long-winded.
- try hard to not keep repeating yourself
- try even harder to focus on the advice given
- don't work in a capitalist financial environment.

bowlhead99

That Independent article doesn't really help. It is just a link that shows a certain opinion exists. Ed Balls and Larry Summers agree with the viewpoint that richer people should be taxed more heavily because it helps to counter the natural tendency for 'rich to get richer'. Both of those people are from political parties who believe tax rates should be higher. No doubt the people in the Conservatives or Republicans believe they should be lower.

So a viewpoint can be 'valid' but it is not any more 'right' just because people you have heard of, support it. Summers has millions of dollars to his name, having had gigs working in hedge funds and doing lucrative public speaking events and even being president of Harvard before he was drummed out. He is an example of someone being quite happy that the rich can get richer and it is unlikely that he pays more taxes than he needs to.

Certainly the independent article has the hallmarks of someone who is not presenting a balanced view. "Theory: tax cut for rich, increased spending and entrepreneurship ; reality: Tax cut mostly saved and invested in assets and tax havens".

You can start to pick that apart if you can be bothered. Invested in assets? Like a luxury yacht or flash car, that was created by a company with employees and a huge supply chain? Or like a luxury villa which somebody had to build and whose maintenance involves employing local cleaners, housekeepers, groundsmen? Would these staff be employed as doctors and rocket scientists and software developers if they did not have to spend all their time mopping the floor for minimum wage? Or maybe it means invested in assets like company equities and bonds, providing capital for development of employers and producers internationally?

Using tax havens? These are always thrown into simplistic newspaper articles to turn the mood one way or another, because of the wide-held belief that you just put money into a tax haven and it magically turns into illicit gains. What actually happens is that the hundreds of billions each year invested "offshore" result in the investors using those offshore vehicles being able to pool their resources and invest hundreds of billions on a tax-neutral basis ONSHORE - the investee companies pay tax on their usual corporate activity, and the investors pay tax when they get the proceeds back, there is just no tax lost in the middle to the tax authorities of the Caymans or Channel Islands etc.

Picketty's book was a bestseller. It was not without its critics. The basic premise for example that if the rate of return on risk investment is greater than the level of GDP growth, then we must inherently be increasing inequality all the time, seems reasonable. However you could argue some assumptions and definitions - people don't actually invest all their assets and wealth is not synonymous with capital, so for each of us our 'personal GDP' grows slower than the best investment we make. Summers (he of the independent article) was one of the people arguing that there are diminishing returns on capital and that people don't reinvest everything, thereby setting an upper limit on inequality.

Whatever, I would certainly admit the rich are getting richer through their incomes and investments. Is this a problem if the poor don't actually get poorer? If you think the poor are getting poorer and this is a moral issue for you, why not take a job in the charities sector - surely you would sleep easier. If people tell you bluntly to either be a capitalist or a tree-hugger it is not a personal attack, it is just some simple practical advice.

The alternative is to spend the next decades trying to solve the problem of how society should work and where you can fit in. With thousands of theories out there this is not something that can be 'solved' in a few posts on an anonymous forum. The "Capital in the 21st Century" book did not really produce a working model for capital in the 21st century. According to one critic, the proposals for remedies of the inequalities were 'naive if not utopian' and not really compatible with capitalism; hence it is not likely they will happen.

So, sure, there are " ideas based on proper research rather than pure theory and rambling by me!", as you say. But if you are strongly averse to capitalism the worst thing you can do is take a job where you lose sleep at night because you are getting closer and closer to making £100 or saving £100 on behalf of a whale who already has enough pounds, in your opinion.

Personally I think that if an elected government sets a level of taxes which it thinks are politically acceptable enough to get elected, in the knowledge that some people will pay the bare minimum possible while others will accidentally pay more than they could have got away with, then it is fair game for people to attempt to avoid paying a penny more than that legally agreed minimum level of taxes.

If someone spends £20,000 on administration of a trust structure and accepts some compromises in their freedom to spend their own money, in order to avoid paying £50,000 in taxes, is that 'wrong'? Government know they will do it which is why they set the core rate of tax at 40% instead of 38%, so they still collect in as much cash as they need over the course of the year.

You might think that the £30,000 net savings is only going to "make the rich richer". Well quite. But actually it was their £200k income that made the rich richer. The monster tax bill then conspires to make the rich poorer. The proper planning makes sure they can keep as much of their income as the government allow.

The poor cannot afford to use expensive trusts structures and advisors, right? This is true. But the person is only contemplating spending £20,000 on trust administration because he is paying hundreds of thousands of pounds more tax over the course of his life than the poorer person. The poorest people (minimum wage levels) are already paying no tax. The richest x% pay much more than x% of the taxes.

We could bang on back and forth on all these points for a long time. On a forum there will always be someone to give you a flippant counterpoint to any of your points. If you are genuinely confused, being bombarded with opinion from all sides will probably not help. If you are stressing about a job you don't have yet for the potential for it to cause harm to society then you are probably thinking harder about it than most.

One way to think about it is that if you take the financial services gig you might easily save someone £50 on his insurance policy which is just enough for him to accumulate £100,000 in his savings account and decide he is going to make a great big charitable donation of a piece of hospital equipment which the NHS would have taken another three years to get round to buying. So, you might indirectly save a life!

Of course, the person whose life you save, might turn out to be a serial killer so you indirectly end twenty lives prematurely. It is quite difficult to forsee all consequences of everything you get involved in.

IronWolf

You say it could be a depression/anxiety issue, how do you feel about other jobs, do you always obsess like this or is it this job in particular?

It sounds like it does and will bother you, so I would look for a different career path which you will actually enjoy and find fulfilling.

bowlhead99

mgdavid wrote: »

I am going to be as brief as the OP is long-winded.
- try hard to not keep repeating yourself
- try even harder to focus on the advice given
- don't work in a capitalist financial environment.

While I don't really have form of engaging without being long winded I think this is quite a good summary

It seems that the last one may be the sticking point - even if you don't see yourself as a commie , if your personal ethos is that you generally don't like wealth generation or wealth preservation you are heading for exactly the wrong field of work. Perhaps it's just that your view has been tilted by a few things you've read and you would benefit from broadening your horizons.

But it is often the case that things we read which resonate with us more, are the ones that align to our personal world view, and you don't have to change your outlook if other outlooks don't sit comfortably with you. Ironwolf is right that there are plenty of career paths where you would be less conflicted - there is no point going to take a particular career just because people on an anonymous forum were able to convince you that it might not be too bad really. Look for something you actually like.

Or, if the job offer is on the table right now and you would otherwise be unemployed, you could always take the job and look around for something else once you have started. You might like it if you can get over your prejudices.

Ken68

Hi Scholes...too late, according to Private Eye, Price Waterhouse et al are already in charge at the Treasury and the various Regulatory bodies are run by officials formerly employed by their industry. The borough councils who are calling for more independence are even more corrupt that Westminster.
The best you can do is take the job, earn as much as you can, then do a Snowden.

Stroot1

Thank you for all your responses especially your in depth one Bowlhead. Certainly food for thought, I do believe I am genuinely confused but with some genuine leanings towards certain viewpoints because of my values/prejudices. As you say being bombarded with opinions (which I asked for!) might be overwhelming me a bit but if I get the time and am inclined to later, I will write a more in depth reply. Thanks to all again.