Labour, as the main dealer of welfare heroin to the hopelessly addicted for the last 13 years in return for a vote, it comes as no surprise that those who feed from tax stolen by force from those on minimum wage are “uneasy” that they may not be receiving their daily fix from Socialists. Sitting on the sofa all day at the expense of others is no longer affordable. God knows, we’ve borrowed enough from our grandchildren without asking already.

If the Soviets and the East Germans can free themselves of the “all providing” state, so can we. Forced taxes in return for services neither requested or needed are simply theft. Ask any Sicilian mafia man

Whats the picture of the people who had CS Spray on them after the demo on january the 31st got to do with this article, were the yUk Uncut members ,if so surely you could have got a better picture, if they’d listened o the police in htat video the cop says don’t put water in your eyes it only makes things worse.

How about you try rebutting his argument? Or even addressing it? Or is ‘yeah, but you smell’ par for the course at UKuncut?

So… your big argument is ‘there are loads of us and we can shout louder than you’? I guess that’s what socialism comes down to in the end – force.

“There are about eight people who would support a demonstration to abolish corporation tax”

Does that effect whether it’s wrong or right?

Sorry I meant to say affect. I just made a deliberate mistake so you didnt think I was a sock puppet

[1] “Sitting on the sofa all day at the expense of others is no longer affordable. God knows, we’ve borrowed enough from our grandchildren without asking already” – I see the current financial climate can be attributed to the scroungers can it?

I assume the elderly are the biggest offenders given the liabilities associated with pensions?

Fortunately a robust libertarian campaign to concentrate even greater wealth into the hands of the few will make everything better …………. ahh, it almost brings a lump to your throat, doesn’t it?

@ 1 Old Holborn – What are you going on about? By my reckoning you are not making much sense.
Please expand and express in detail how peoples lives are better in the ex Soviet union and East Germany, were a lot of people have moved from East Germany to West Germany who also has a large welfare system.
And is the UK all providing?

“the success of the UK Uncut”

Eh? Name one success that the economically and financially illiterate UKuncut have achieved?

Forest sell-off? Nope, reversed to head off Tory heartland revolt.
Amendments to NHS plans? To be minor changes, contrary to the post LibDem conference hubris.

So, nothing then.

Ad populum (or is it ad unpopulum?) is rarely an enlightening argument. Shall we go back to the 1950s and see how people react to, say, an argument for feminism or gay rights?

you’ve changed the picture ,.good

BenSix – its even worse than Ad populum, its an appeal to the loudest and most shrill and disruptive, ad modum maybe (my Latin isnt great)

“Tim then discusses four case studies, and I’ll leave it to the UK Uncut people to respond to the points he makes, because I want to skip to the really funny bit.”

Possibly a bit soon but I couldn’t find any response to Tim’s arguments on the UK Uncut site. Perhaps neither you nor they wish to engage because the arguments do appear valid?

Note to tory trolls: Tone Trolling is *so* last decade.

[10] nobody is claiming that the strength of an argument can be be justified on the basis of how popular it is – it’s just that in this instance popularity, or success may have been one of the factors provoking TW and other libertarians to trot out their usual hobby horse?

You know the usual stuff about scroungers and poor old board members being down to their last few mil?

Ah yes, the ‘no tax, no benefits’ utopians are around I see, still beating themselves off with their ‘invisible hand’.
You’re quite right in one thing Old Holborn, nobody asked for benefits or services – we fought for them. What’s more we’ll fight to keep them for as long as the rotten capitalist system keeps producing so much waste and misery.

@1 Poorly-managed and abrupt economic changes in East Germany were actually devastating and led to decades of unemployment, alienation and a growth in right-wing extremism. And that was a transition to a welfare state far more comprehensive and well-funded than Britain’s. The suggestion that Britain’s modest welfare state is somehow equivalent to authoritarian dictatorships is ludicrous.

What’s “Welfare Heroin”? Sounds like something you would hear in an episode of Brasseye.

You “fought” for diversity coordinators? You can fight for the right to pay their wages from your own pocket, not mine then

We’ll meet in battle every single time you decide to that I must be FORCED to pay for what YOU desire. You want it, you pay for it. And about time too.

The incidence of corporation tax is very complicated. Tim is arguing from a quite weak hand here. There is a good beginners reading list here:

http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/05/corporate-income-taxes-a-primer.html

and a more comprehensive list here:

http://www.ecn.ulaval.ca/~sgor/cit/

Neither of which I am going to pretend to have read.

Basically corporations obviously can’t pay tax, just like they can’t actually kill someone or pilot a plane in an emergency, they don’t exist, they are legal fictions.

But that doesn’t mean the incidence of corporation tax falls does not fall on profits, and it is in fact quite complicated, and depends on many many factors, to work out who pays, rich owners of capital, people employed by rich owners of capital, or people who buy things made by the people employed by rich owners of capital.

Tim treats the argument as though it is over and deserves to be mocked. However, I would like to see people play the ball not the man on this one.

Well this seems to be the most germane bit from his report:

“We have known for over a hundred years that it is some combination of the customers through higher prices, the shareholders through lower returns and the workers through lower wages that actually carry the burden of corporation tax. There have been a number of attempts over the years to work out exactly who and in what proportion the burden is borne. Joseph Stiglitz (who went on to win the Nobel Prize for economics) pointed out in 1980 that it is theoretically possible for this burden upon the workers to be greater than 100%: that the amount the workers lose from their wages is higher than the total amount of corporation tax that is raised (Atkinson and Stiglitz, 1980). Mike Devereux at Oxford University has calculated that this is true in the UK today: that the burden of corporation tax falls on employees and may be greater than 100% (see, for example, Arulampalam et al., 2009). Other estimates are lower. For example, the Congressional Budget Office in the USA, estimates that the burden of corporation tax falling on workers is around 70% (Randolph, 2006).”

So it is probably more sensible (if you have to) to tax the owners directly rather than indirectly and, if the research he cites is correct, counter-productively.

But, hell, as a shareholder myself, more power to ukuncut and their wrongheaded campaign I say!

And this is a lefty take on it:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/04/corporate-tax-incidence-some-evidence.html

Who cares what libertarians think? They’re only slightly more relevant than Trots.

We already pay our taxes thank you very much and yes we prefer to see them spent on diversity coordinators than on bombing the shite out of other countries. But then it’s not about us, it’s all about you, isn’t it?

In Tim’s leaflet it says – “The allegation here is that Philip Green paid a huge dividend from the company Arcadia. But, instead of the dividend payment going to him, it went to his wife, Tina Green. As she does not live in the UK this dividend was not taxed, meaning that HMRC lost perhaps £300 million. This, apparently, is tax dodging. Firstly, we do not tax dividends from UK companies which are being paid to foreigners who do not live in the UK”.

In other words no laws are being broken – I’m sure the long running war of attrition between lawyers and accountants in both camps (corporations and tax office) will continue to draw and redraw lines about what is and isn’t permissible when it comes to hanging onto as much as possible.

As I see it there are 2 camps here – those losing sleep over the fact the supa-rich are not coining in a few extra mil each year (even though a substantial proportion of the country’s wealth already lies in the hands of a minority) while others are more concerned about a large population struggling to manage on the breadline.

I’m sure if we look back over our tax laws there must have been various scams and loopholes that were eventually closed – the case made by ukuncut is simply following in this tradition?

20 – left outside

are you saying that Tim’s objections to the specific examples that ukuncut have demonstrated against are weak? That seems to fly in the face of all the informed analysis that I have seen. And as the ultimate corroboration, since Richard Murphy supports these campaigns, they must be wrong-headed.

There is obviously a much more profound debate to be had about the least destructive ways of raising tax revenue. Pointing out that corporation tax works in an insidious way is an obvious startpoint. But that would appear to be too complex for the author of this post.

presumably if the abolition of corporation tax was to be contemplated, other taxes would have to be introduced or existing taxes increased to replace the lost revenue.

(I suspect some “libertarians” imagine we could see corporation tax abolished with no offsetting tax increases, but I suspect Tim would talk about things like a progressive consumption tax or higher taxes on labour and capital income. I don’t know).

presumably the author of this post would have no objection to abolishing corporation tax if it was replaced with taxes that hit the rich harder – if the change made the overall tax system more progressive?

I’m sure the author is correct that very few people would support the abolition of corporation taxes, which I think is explained by woolly thinking about “corporations” needing to pay their fair share and not thinking about what the alternatives might be (i.e. that there might be better ways to hammer the rich, if that’s what you wish to do).

[does anybody have a good link to that form of consumption tax where the rich have to fill in a tax return detailing there expenditures during the year, and get hit with a progressive consumption tax so they pay higher rates on their consumption than the poor? I can't find one.]

Crikey, they got quite the comment-flash-mob in on here too didn’t they. One minute the left is devoid of humour and yet when you have a laugh at ‘em its all, ‘what about the issues, what about the issues’.

And only yesterday someone was berating me for claiming such economic fundamentalists exist – and hold some sway with those in power, to put it mildly. George will be reading the ‘cancel all corporate tax’ idea with a sad sigh that he can’t and instead he has to come up with silly taxes on paper planes.

If you are going to write a pamphlet about how naive and silly UK Uncut protesters are, it is best not to finish it off with a set of policy proposals which no democratically-elected government would touch with a barge pole.

yes to that, by the way.

Aha! Tim Worstall is a libertarian! That explains *so* much. I’ve seen his tedious commentary on the G with him in his little pin-stripe shirt. Tosser.

I’ve yet to encounter a libertarian that does not neatly fit in to Iain Bank’s definition:

* “Libertarianism. A simple-minded right-wing ideology ideally suited to those unable or unwilling to see past their own sociopathic self-regard.”

> …matters are a little more complex than they might seem down at the golf club after a couple of G&Ts.

I imagine Tim to be someone who still aspires to the golf club. Any day now the committee will accept his application. Any day now the Masons will call him up. Perhaps he needs to wear red braces with the pin-stripe shirt? Perhaps more tireless cheerleading for corporate gluttony?

> …“solve the lack of affordable childcare by scrapping child protection regulations”.

Jesus. Under Tim’s free-market utopia, Fred and Rosemary could have opened a nursery.

If you like, you can pronounce his name a bit like Wurstel. Which makes him Tim Sausage.

This would not be the most grown-up critique of his carefully honed arguments though.

@27 Luis Enrique

Isn’t the problem with libertarian plans to abolish corporation tax and replace it with something else not just the fact that you have to somehow plug the gap in public finances caused by the sudden disappearance of all that money, but that many of the alternatives posited are only going to work if imposed across the board in every country…. which hardly seems realistic?

In previous threads many people like Tim have shown an almost touching naivete in believing that since “companies don’t pay taxes, people do”, the abolition of corporation tax would lead to lower prices, higher wages and better conditions for workers, and increased dividends for capitalists.

Am I the only one that thinks that’s probably bullshit?

# We have a tight comments policy aimed at fostering constructive debate.
# We believe in free speech but not your right to abuse our space.
# Abusive, sarcastic or silly comments may be deleted.

“> …“solve the lack of affordable childcare by scrapping child protection regulations”.

Jesus. Under Tim’s free-market utopia, Fred and Rosemary could have opened a nursery.”

Yes, but probably only one for poor people, as no doubt the rich would also be free to background check anything and anything at will.

@25 “As I see it there are 2 camps here – those losing sleep over the fact the supa-rich are not coining in a few extra mil each year (even though a substantial proportion of the country’s wealth already lies in the hands of a minority) while others are more concerned about a large population struggling to manage on the breadline.”

Or to put it another way; there are two camps here – one that supports the rule of law and has some understanding of what that is while the others would like to punish people for following the law because they are jealous of their success.

Campaigning to make changes to the tax system is one thing but UK Uncut is not ‘simply following in this tradition’, they want the law to reflect what they think it should be without going through any of this pesky legislation business.
———————

I note that there appear to be no rebuttals of Tim’s criticisms.

Galen,

umm, not sure. I don’t really know what libertarians would propose – I mean, the small subset of them that aren’t just frothing idiots. You could, for example, just propose increasing VAT and all bands of income tax. That wouldn’t be progressive, but I don’t see that it would require cooperation from other countries. But I haven’t given it a great deal of thought. (I still haven’t read the Mirrlees report, which is where I think anybody ought to start if interested in taxation).

yes, I agree that optimistic forecasts of what would happen if corporation tax was abolished and replaced with something else have little basis – I don’t know whether it’s probably bullshit to say that some feasible redesign of the taxation system that involves abolishing corporation taxes might lead to higher real wages, somehow. A lot hangs on the nature of what replaces them. I’ve got a vague suspicion that the true justification for corporation tax is as a some sort of “second best” solution but I’ve never followed these thoughts through.

sorry, using jargon again. by “second best” I was referring to this
http://en.wikipedia.org/wiki/Theory_of_the_second_best
although that’s a rubbish jargon laden wiki page that probably won’t help

Um, when did Worstall become a “Libertarian”? He’s always said he’s not, and his analysis on what it means to be one is sound–he’s a classical liberal, and normally a well informed one.

Left Outside, thank you for actually addressing the points he makes correctly–like you I’m not 100% sure on the tax incidence argument, but it is the core of the argument being made, from the Chris Dillow post CJCJC links to:

I don’t say all this to make a partisan political point; as I say higher employer NICs don‘t raise wage costs only because they lower wages – a point which hardly supports Labour’s policy. I say it merely to emphasise the importance of the idea of tax incidence – that taxes don’t necessarily fall upon the people that they are formally levied upon. An inability to grasp this point is one of the features that distinguishes economists from non-economists.

He’s pretty right there–I have no way of knowing where the incidence of corporation tax falls, but am very much inclined to believe that Chris Dillow, a regular contributor to LC for a reason, knows a lot more about it than I do and is broadly much more likely to be correct.

If cutting corporation tax increases the wages of employees, surely we should favour that? If instead it leads to higher profits to shareholders, then we can tax that instead, right?

Who wrote the original article BTW? It comes across as a very poor attempt at humour hiding behind a veil of ignorance and petty partisanship, and is definitely a very poorly thought through ad hominem that doesn’t manage to make a solid point in any real way.

(aside: to BlueRock’s golf club bollocks, um you might want to do a bit of basic research on that sort of subject given one of the businesses Worstall is, fairly publicly, involved in. FFS, the ad hominem brigade really do love to attack those who’ve bothered to research their subject more than actually engage).

Again, Left Outside and CJCJ are actually discussing the points raised, which is actually a useful discussion–LO, hadn’t seen one of those articles before, interesting reading; won’t pretend to understand it fully, but can aspire to doing so, right?

[35] “others would like to punish people for following the law because they are jealous of their success” – no, not punish, but advocate for a more even distribution of wealth, one that reflects the endevours of the wealth generators (i.e, those that do the actual work)

I have already acknowledged that Philip Green et al, are acting within the complex and mysterious corporation tax laws so I think your comments about not upholding the rule of law is unfair.

[38] “I have no way of knowing where the incidence of corporation tax falls” – I might be wrong but I don’t think they are meant to be understood by the little people?

Chare nurse, exactly where the incidence falls is subject to debate within the very higher reaches of economics professors–I understand their arguments, they’re looking at evidence, but I, as a mere layman with a strong amateur interest in these things don’t know. Because, as those linked by myself and others to the thread show, the evidence isn’t conclusive.

Nothing to do with the size of my belly. I have tried to both read and engage with the arguments put forward, perhaps a “little person” is someone who can’t be arsed?

[41] an economics professors is not required to decide how much tax I pay at the end of the week although the government is sanguine with imposing a two year pay freeze on us poor old nurses – yet we need a cadre of specialists to decide how much Philip Green can hand over to his wife without her paying a penny in tax despite trousering something like £300 million (to quote TW’s figure).

Yes, it’s all too complicated for me.

@39 Yes you did acknowledge that the various examples have been acting within the law but your subsequent writing ignored that admission. The criticisms I put forward are not unfair because firstly, your division into two camps was unreasonable and ignored the role of the rule of law and secondly you appear to be supporting UK Uncut on these points and they either do not agree with the rule of law at all or wish to make retrospective changes to the law, (almost the same thing anyway).

On a further point, how are we to recognise these ‘wealth generators’ as distinct from ‘people earning lots of money’? I am not saying they must be the exactly the same thing but how do you intend to tell them apart?

Given that that’s got nothing to do with corporation tax, yes, obviously it is. Seriously, tax incidence is a very important part of this discussion. Whether the owner of a company based overseas should be paying more tax on her profits made within the UK is not what I’m talking about, at all, in any way. Like the original article, I’ll leave that to others.

But if you want to go talk about that, feel free, just it’s not anything to do with what I’ve said anywhere in the thread, therefore your point is, well, irrelevent.

How many times do we need to say this. There are no such things as libertarians. Many of the so called Libertarians are cheering on as we fire cruise missiles at brown people. They are all fake. And Tim Worstall, dear oh dear they really are scraping the bottom of the barrel.

Just because you can regurgitate Adam Smith does not make you an expert in anything.

[44] a discussion that directly affects only 66% of the UK’s largest firms.

Apparently “a third of the UK’s largest companies pay not a penny in corporation tax” – “with a little financial wizardry, you can make your profits do a disappearing act”.
A recently retired City grandee used to often joke over lunch that paying tax, so far as his company was concerned, was a largely voluntary pursuit.
http://www.telegraph.co.uk/finance/migrationtemp/2815013/How-to-make-1bn-go-up-in-smoke.html

“The incidence of corporation tax is very complicated. Tim is arguing from a quite weak hand here. There is a good beginners reading list here:”

From that beginners’ list:

“It might be argued that since all taxes generate distortions, there’s no particular reason to object to corporate taxes. But it turns out that corporate taxes are among the most damaging policy instruments in a government’s toolkit. The optimal tax mix is heavy on consumption taxes, light on corporate taxes, and somewhere in between on personal income taxes.”

One of the very points that the paper makes.

Well, I’m impressed we made it this far without it, but can I be the first to suggest a LAND VALUE TAX!

@25 “In other words no laws are being broken”

No, you need to go a little futher in the report. The only way that the UK could tax Tina Green’s income is if the tax system said that wives are indeed not economically separate from their husbands. Only if women are simply chattels of men.

Yes, I know that R. Murphy does argue this but I think the economic freedom of women is worth more than whatever tax might be grasped by reducing it.

“[does anybody have a good link to that form of consumption tax where the rich have to fill in a tax return detailing there expenditures during the year, and get hit with a progressive consumption tax so they pay higher rates on their consumption than the poor? I can't find one.]”

The Economist championed this for decades. The great joy being that when the rich start spening their (inherited perhaps?) incomes then you get tax as they run down their savings.

“If you like, you can pronounce his name a bit like Wurstel. Which makes him Tim Sausage. ”

Yes! I like that! So much better than the “worst of all” which I remember from the primary school playground….and which one UKuncutter has seen fit to deploy as the height of adult wit…..

@27….BTW, forgot to say, in the paper I actually suggest that, the progressive consumption tax, as an alternative.

“Well, I’m impressed we made it this far without it, but can I be the first to suggest a LAND VALUE TAX!”

Suggested in the paper…..

Tim Worstall to take time out from his busy schedule of leaving comments on Comment is Free, Liberal Conspiracy and other blogs

He also writes a very popular blog of his own, though, doesn’t he? And on it he makes logical arguments about various matters political and economic with which you can agree or disagree. This blog, on the other hand, has said nothing about the issue except that getting rid of corporation tax is not going to happen. Why even bother?

“He also writes a very popular blog of his own, though, doesn’t he? ”

In your dreams.

“This blog, on the other hand, has said nothing about the issue ”

Don’t you just love the moronic trolls who come on here and demand things. Nobody gives a shit about your views, and nobody is interested in your brownshirt theories.

He’s number 19 on Wikio. Suggests a fairly big readership.

http://www.wikio.co.uk/blogs/top/Politics

I’m not demanding anything, just expecting better.

“He’s number 19 on Wikio”

Which just confirms that there are some very stupid people on the right.

“I’m not demanding anything, just expecting better.”

Nobody is remotely interested in what you are expecting. If you don’t like what is on this site, then set up your own blog. Not that anybody with any sense would read it.

barrington:

“He’s number 19 on Wikio. Suggests a fairly big readership.”

Whereas this blog is #1…

“I’m not demanding anything, just expecting better.”

Um, ‘do the math’, as they say.

the thing with most torys is they haven’t worked in their life. They talk Crap and think every one has a well payed job or can get one.have any in the Tory lead govermemt ever had to do a shit job ? Like wipe sumones ass for 5.90 a hour I doubt it. Or had to pay their way with out mumy giving them a nanny becase they can’t be arsed with the Tory little brat.

Not one has had a real life like the millions they take heart on name calling.

Ucut has gone to show how a big social out cry for fairness.
Sumthing Tory money is scared of.

and what is your line of work eattherich?

I always love it when sally comes along to lower the intellectual discourse. maybe she even wrote the original article, so stupid as it is. I am more and more convinced that she is really George Osborne in disguise.

Corp Tax is a poor revenue generator and very very complex to administer. trust me, or even better try to wrork a tax omputation fopr the average group of companies., with loads of foreign subisidiaries. It is difficult – all those reliefs and allowances and set-offs and loss-making sbs in the Uk claiming group or consortium relief. LVT is the way to go.

Corporation tax is a cottage n(nay, mansion) industry for tax accountants. I wager that the true economic cost is at least the same as the tax claimed.

Do we have an author of this article or did they request to be kept anon?

34. Cynical/Realist?

> Yes, but probably only one for poor people, as no doubt the rich would also be free to background check anything and anything at will.

Of course. I always forget that part with the libertarian argument: if your children are buggered and buried under a patio, it’s your fault for being poor which is always as a result of you being lazy and feckless.

Similar arguments apply if you can’t afford healthcare, housing, food and other similar luxuries.

@BlueRock,

are you the same BlueRock who said to Sally:

“Why not try contributing something more than your usual drive-by childish insults? Give it a go. Surprise everyone. You’ll feel better about yourself and people won’t think you’re such a pointless twat.”?

Supposing that you are, now read back what you just wrote, and tell me how that isn’t a childish insult.

You guys do crack me up

I’m not left wing, so I MUST be a far right Tory.

My version of Libertarianism sees:

No borders. No wars. Cooperatives and Mutual societies, bad banks left to go bust, no corporatism, no enforced religion, protection of the vulnerable, volunteer charities- still want to label me right wing?

Forced Taxation is slavery, simple as that. Watch the plantation owner in action today at the Despatch box if you have any doubts.

“No borders. No wars. Cooperatives and Mutual societies, bad banks left to go bust, no corporatism, no enforced religion, protection of the vulnerable, volunteer charities- still want to label me right wing?”

You’re a hippy, then.

Fucking hippies…

@64 Fascist!!

I love Libertarians, they are such fun aren’t they. Bless them, bless there little cotton socks.

@65 Yeah bloody hippies, always ‘high’ and always getting ‘the munchies’ get a job you bloody hippy

Who wrote this?

Yeah, come one, give us a name – this blacklist isn’t going to write itself, you know!

OP,

“solve the lack of affordable childcare by scrapping child protection regulations”.

Anyone might infer that Tim Worstall said we should scrap all child protection regulations. However, follow the link and we discover that he didn’t actually say that (he used this exact phrase, “lifting some of the more absurd regulations”, clearly a subset of all). What a surprise that someone is misrepresented here.

It’s no surprise that UK Uncut are a successful and growing political movement and the “abolish corporation tax” movement isn’t.

Millions of flies can’t be wrong, eh?

Left Outside’s first link leads to,

It might be argued that since all taxes generate distortions, there’s no particular reason to object to corporate taxes. But it turns out that corporate taxes are among the most damaging policy instruments in a government’s toolkit. The optimal tax mix is heavy on consumption taxes, light on corporate taxes, and somewhere in between on personal income taxes.

And each abstract linked to there says something to the effect of ‘high corporation tax depresses wages’ or a ‘substantial portion of the burden of corporation tax is largely borne by labour’ or ‘the burden isn’t borne by capital’.

Left Outside’s second link leads to,

[who bears the burden of corporation tax?] The answer is not ‘corporations’. Taxes are ultimately paid by people; the question is which people. … in a dynamic, open economy with access to highly flexible capital markets – in other words, a country such as Canada – savers can respond to higher corporate income taxes by shifting investment to other jurisdictions. If the country is small enough to not affect the world rate of return – Canada, again – then investors will always receive the world rate of return. The reduction in productive capacity reduces the demand for labour, and reduces the supply of goods. These changes have the effect of reducing wages and increasing consumer prices.

The article links to several more papers and those from the previous article. I think one abstract says the burden isn’t borne by labour, one abstract I’m not sure I understand, and the rest say a substantial portion of the burden is borne by labour.

Let’s go with the paragraph I quoted from the article. When you call for banks, Vodafone etc to pay more tax, if corporation tax does cost workers, aren’t you calling for the wrong thing? If corporation tax does cost workers, wouldn’t it be great if there is movement towards something that doesn’t? That ‘optimal tax mix’? I know it’s a harder sell – “what do we want? an optimal tax mix” – but wouldn’t workers be better off instead of (possibly) being made worse off?

Forgot to add, “tax incidence” does not appear to be discussed at all on the UK Uncut site.

So what is stopping us having a Land Value Tax, apart from every powerful person in the country?

No one is forced to pay taxation in the UK. If someone objects to being taxed well they are perfectly free to decant to another country. So there is no coercion in relation to tax.

Every time this issue comes up the same ludicrous arguments are trotted out by lefties. The corporation tax that the government collects can only come from capital, labour or higher prices. The incidence depends entirely on the type of business. Moreover, it is impossible to say for certain who is paying the tax. Quite possible that the burden is spread amongst all three with different weightings depending on the type of firm. What you are not doing is taxing capital. A highly competitive sector like retail will see the burden of corporation tax falling on labour. Abolishing CT would result in lower prices for consumers and higher return for capital with little effect on wages. However, retail workers are also consumers so their real purchasing power would rise. A less competitive sector like utilities with organised labour sees the burden of CT falling on labour and prices. Abolishing CT would result in lower prices and higher wages. Only in uncompetitive sectors with no regulation and no organised labour would capital get all the return from abolishing CT.

To not believe abolishing CT would result in higher wages is to believe that firms do not compete with each other for labour. Not a credible argument. Moreover, if firms do not compete for labour why are wages currently rising so slowly? The fact is we are seeing evidence of the reverse of labour competition because firms have lots of available labour to choose from and can hold down wages. The reverse is evidence of the prior competition.

Corporation tax is only 9% of the government tax take so it is not a huge revenue generator. Maybe some people have ulterior motives but most people who argue against corporation tax genuinely believe it is a destructive and distorting tax. As Left Outside said a LVT would be much more effective and it would be unavoidable by the enigmatic Mrs Green.

No borders. No wars

Really? Pretty sure you are/were vociferously anti-immigration Old Holborn.

I’ll write a proper response to this whole issue later, but the simple response is this.

Getting rid of corporation tax will allow wealthy individuals to disguise their income via their corporations, so they pay less income tax.

On the point about tax avoidance – this isn’t just a about avoidance – but about tax havens

And I’ve already written why tax havens are so bad for us (to which I’ve not had one rebuttal yet).

https://liberalconspiracy.org/2011/02/14/four-reasons-why-tax-avoidance-makes-us-all-worse-off/

Sunny,

Getting rid of corporation tax will allow wealthy individuals to disguise their income via their corporations, so they pay less income tax.

Well yes, up to the point where they try and take income for the corporation for themselves.

You may make a valid point, but the solution is simple – tighten up the rules to make it more difficult for people to disguise personal spending as corporation spending (which should be popular with shareholders anyway – why should they be paying for the boards caviar (to propogate a stereotype)), and ensure that dividends etc are taxed as income. Basically, if all income was taxed in the same way, wouldn’t everything be simpler and much fairer?

I sometimes think too many leftwing thinkers are blighted with a wierd conservatism, whereby there see a flaw in an idea and therefore judge it cannot be done, because they do not realise that you may need to make other changes to address exactly the sort of problems raised as part of the measure. It concerns me that something that the more I read, the clearer it becomes (that the main incidence of corporation tax falls on the worker, not the capital nor the consumer), is ignored in favour of defending the status quo. Has much of the left lost its radicalism and settled down to defend whatever this situation we now find ourself in might be called? It is neither radical nor socialist to protest in defence of measures which hurt the workers unduly.

Getting rid of corporation tax will allow wealthy individuals to disguise their income via their corporations, so they pay less income tax.

yes, this is related to the ‘second best’ idea I mentioned up thread.

however, if a rich person tries to turn themselves into a corporation to escape tax, how would that work?

they could either pay themselves a salary (taxable) dividends (taxable) or benefits in kind (taxable). so whilst I think the possibility that corporation tax is necessary to shut down some avenues of tax avoidance, it’s not necessarily so.

and to repeat, discussing the abolition of corporation tax in isolation is meaningless – what matters is what takes it place.

getting rid of corporation taxes would be one way to render corporate tax havens reduntant, wouldn’t it? although individuals would still use them to escape from taxes on personal income

sunny @73

I’ll welcome as many Iranian engineers and we can lay our hands on. Alas, whilst the welfare state exists, the queue at Sangatte appears to be full of 1 toothed Somalis with TB intent on getting FREE milk and honey (extracted, naturally from taxes on the very poorest in the UK) for life.

(96% of the UK Somali population is unemployed)

What about Iranian engineers and other qualified professionals who, arriving as asylum seekers, are prohobited from working?

This under restrictions imposed by Labour which the coalition has shown no interest in repealing. Yet it has never made any sense to me to force people to live in penury (even worse off than the native unemployed) when they could be doing something useful. The majority worked, often in well-paid jobs, in their countries of origin, a fact which is not widely known.

@77

Yet it has never made any sense to me to force people to live in penury

You’re forgetting that it’s a big vote-winner among racist cockends. Bearing in mind that the tabloids have done their best to make ‘asylum seeker’ = ‘foreign scrounging work-shy bastard’ in the minds of far too many people.

I did think that. I was wondering about whether they claim to have any valid reasons or whether it was purely a vote-winning strategy and they don’t pretend to giv a fuck what the consequences will be.

@79 I think the justification is along the lines of not wanting the asylum process to be abused as a method of immigration, which if memory serves was the basis of all the “asylum invasion” articles of the late 90′s/early noughties.
So to ensure that only people genuinely fleeing persecution would apply for asylum they made it pointlessly cruel and demeaning. Because if they weren’t willing to put up with our shit they clearly didn’t have it that bad back home, or such.

Plus the fact that the British public at large regards them as vile creatures and that they have very little voice makes them the perfect target for the aspiring demagogue.

“we might well want to abolish corporation tax”

I’ve often wondered where people like Tim think the peak of the Laffer curve might be. Apparently the answer is 0%.

G.O.

“we might well want to abolish corporation tax”

I’ve often wondered where people like Tim think the peak of the Laffer curve might be. Apparently the answer is 0%.

Surely there is enough to argue about Tim’s ideas without having to invent things.

Sunny,

Assume two tax mixes, A and B, raising equal revenue. Tax mix A wreaks great vengeance and furious anger on Teh Bankers etc, but depresses wages. Tax mix B does neither. All else being equal, what should we call for?

“I’ve often wondered where people like Tim think the peak of the Laffer curve might be. Apparently the answer is 0%.”

This is a really interesting question. Some say taxes are too high and cite the Laffer curve, while others say they are too low and *also* cite the Laffer curve. I’d love to know of any objective way of telling who is right without (say) changing the tax rate and seeing what happens over a decade. Intuitively, given that taxes are actually quite high, I’d suspect it may be Worstall, but there may be a key piece of evidence that I’m missing.

@82 – “Assume two tax mixes, A and B, raising equal revenue. Tax mix A wreaks great vengeance and furious anger on Teh Bankers etc, but depresses wages. Tax mix B does neither. All else being equal, what should we call for?”

Shoot the bankers, expropriate their assets (and life assurance policies) and use the proceeds to fund the building of numerous statues of our socialist heroes whilst increasing booze and fag rations…

In all seriousness, I would like to think that in a democracy, the choice should rest with the people – the voters. Ludicrous idealist that I am, etc.

loves the debate…….the pattern in the UK is thqat many wealthy people have their wealth tied up in property rather than income producing assets. The tax base is essentially on income (and that includes corporation tax!). Land Value Tax means that the land-owners cannot evade tax. Why do Lefties hate it so much?

Yes, well we know what will happen. Granny living in a 5 bed house in Chelsea but who has no money to pay the tax. Daily Wail “why are they making granny sell her house of 50 years? There are a lot of people in this country who are property rich, but cash poor.

I think there is merit in it. But you will never sell it to the property obsessed British.

@86

But you will never sell it to the property obsessed British.

Even more to the point, why encourage the property ownership obsession, but also demand that labour be mobile and migrate to where the jobs are. You would think both are incompatible, unless of course the point is that proles aren’t supposed to getting involved in the whole owning homes gig.

@cjcjcjcjcjcjcjcjcjcjcjc etc

Bored of long history of one paragraph wonders…has he any thing else?…er?

http://www.guardian.co.uk/commentisfree/2010/aug/30/charlie-brooker-buzzwords-blowhards

Super post!

“And I’ve already written why tax havens are so bad for us (to which I’ve not had one rebuttal yet).”

Ooooh, Sunny, I loves a challenge, me. So, from there:

“Not necessarily. I’m all in favour of multi-lateral agreements on closing down tax havens, but its not impossible for a country to close tax loopholes that allow it to register overseas and avoid our taxes.”

This is exactly what the Vodafone thing is all about. The conflict between the UK’s own CFC rules and the EU’s rules on freedom of establishment. And no, we cannot change those EU laws, we have to put up with them.

So, we cannot close that loophole, can we, not all on our own?

“Our current laws on tax avoidance make it near impossible for poorer people to avoid tax on their income, but allow multi-national corporations to get away with nearly zero percent tax.”

No, corporations always pay zero tax, only individuals ever carry the eonomic burden. But leaving that aside, assuming that corporations o indeed pay tax, there’s a reason why we put up with it. Because people can bugger off (this has rather happened in the past, look up “brain drain”) and we’d get no tax, so can corporations bugger off and we’d get no tax. Thing is, corporations can bugger off more easily than people (that pesky EU again, all a corporation has to do is file a few bits of paper and have the board meetings elsewhere. EU rules that is on freedom of movement of capital: we’re not even allowed to charge them on the way out or try and stop them. Another thing we cannot do alone.) so we’re entirely happy with the idea that people get taxde more than corporations. ‘Coz it’s easier for the company to bugger off and leave us with nothing, innit?

“Tax avoidance on the scale that multi-nationals practice cannot exist without tax havens. And those secret jurisdictions also make it quite easy for terrorist groups to stash and transfer money. ”

Nonsense. You’ve just swallowed Murphy, hook line and sinker. Vodafone again: it was Luxembourg, recall? Fellow member of the EU? The place whose Prime Minister has an equal vote in the EU as does our own PM over what the law should be in England? If they’re financing terorists then why should they bhave a say in what happens here? And if they’re good enough to have a say on what happens here then obviously they cannot be financing terrorists, can they?

“Tax avoidance also distorts markets by giving an unfair advantage to multinationals and their army of accounts. As a result, it also stifles innovation.”

No, it encourages innovation. for tax competition acts as a brake upon what governments can charge as tax to companies. This keeps all corporation tax rates lower than they would otherwise be (as does the possibility of migration keep personal income taxes lower than they might otherwise be) thus increasing the general level of innovation.

Because people only go through the blood sweat and tears (and uncertainty!) of innovating if they know they’ll keep some of the rewards.

So, a refutation of each of your points for you.

““we might well want to abolish corporation tax”

I’ve often wondered where people like Tim think the peak of the Laffer curve might be. Apparently the answer is 0%.”

I think the correct rate of corporation tax is zero, but not for laffer curve reasons.

Rather, for deadweight cost reasons. All taxes have a deadweight cost, an amount of economic activity that does not happen because of the existence of the tax.

Of course, there are some economic activities we would like to stop happening, thus booze n’fags taxes (here to reduce, rather than abolish, the activities) and similarly the Tobon Tax (how ever stupid I think the tax is, that is part of its purpose).

Then, after those, the taxes with the lowest deadweight costs are repeating taxes on real property. Land Value Taxation for example (and this might come as a shock to Sally, even Milton Friedman agreed here). Then consumption taxes (VAT say) then taxes on incomes, then finally capital and corporation taxes.

Given that my major concern is that there isn’t enough economic activity (this is the same as saying that there’s not enough wealth, average out the world’s GDP and we’re all on around £5,000 a year, not enough) I would therefore like a tax system which raised the money we have to have to run government (even if I’d like less of that too) at the least cost in lost economic activity. Sin taxes, LVT, VAT and perhaps some income taxes.

Replace corporation taxes and even capital taxes with the less damaging income taxes or even a proper consumption tax (no ,not VATgo look up “progressive consumption tax”).