Richard Murphy in The Guardian

He\’s still not really got it:

As a result tax burdens are shifting from companies to ordinary people, whose effective taxation rates in the UK have risen as corporate contributions have fallen.

He\’s missing the idea of tax incidence. Sure, it looks like the corporations are paying all of that tax. But they don\’t really. The corporate income tax is paid by investors, by workers or by customers: the company is just that convenient legal fiction that the cheque comes from. As is detailed here.

Which is why we should abolish coproation tax altogether and simply tax the income when it arrives with the workers or the investors.

3 comments on “Richard Murphy in The Guardian

  1. Personally I believe the government should abandon all transfer taxation, and just tax property at a %age of the value.

    Property and intellectual property are the right to exclude people from use, so you might as well pay people for that right, rather than the current system of subsidising property rights.

  2. It is nonsense to suggest that corporation tax is ultimately paid by the workers. Its incidence falls partly on the owners of the business, its customers and all the providers of inputs to the business. Only one of these is labour.

    Who pays the tax depends on the various price elasticities.

    Tim adds: “The corporate income tax is paid by investors, by workers or by customers”. You missed that bit then? Or didn’t click through to the post that details investigations into the relevant elasticities? You know, like a proper peer reviewed paper and all? The one that says that the majority of the tax is paid by labour?

  3. And there was I thinking, when I read the G this morning ,that what would get Tim going would be the stuff about corporate taxation being a proper return on the State’s investment in national infrastructure.

    It is one of those superficially plausible statements that really just makes no sense at all.

    I’m not a tax expert, but I understand the ideas that we tax (a) things we want to discourage (cigarettes), (b) things with a low elasticity to minimise deadweight losses (houses?) and (c) for redistributive reasons (income). Maybe there are others, I don’t know. You can argue about all of those, many wouldn’t like the last, but there’s a credible intellectual story behind each.

    But taxation as a return on an investment? Are we going to be taxed in future according to how much profit we have made out of public spending? Not obvious that corporations are the main targets there…

    Does he just make it up as he goes along?

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