In the end that means you and me, since business passes on its share of the tax bill through lower wages, higher prices or reduced dividends.
That\’s Richard Murphy\’s argument that businesses carry the economic burden of corporate taxes buggered once again then, isn\’t it?
We then need to move on to decide which of those three groups does indeed carry that economic burden and empirical studies suggest that it\’s about 70% which is bourne by the workers in the form of lower wages.
Corporation tax is thus not fit for purpose. It\’s sold as a tax on the companies (obviously not true) and if not that, as a tax on capital. Which it also isn\’t. So if we really want to tax returns to capital we need to abolish corporation tax and replace it with something else. As a first approximation I suggest simply treating income from capital as income. No CGT regime for example.
Maybe that\’s the right answer and maybe it isn\’t. But corporation tax definitely is not the answer.
One argument I can see against such a regime is that those who live in a tax haven, such as Monaco, will not pay any tax on their capital income. But since, in time, the absence of corporation tax will lift that 70% of the burden that currently falls on the workers, I say "so what?".
That some do not pay tax might be galling but a rise in the worker\’s incomes is what we all want, isn\’t it?