Really Ritchie?

…..including an increase in the absurdly low rates of corporation tax paid by big business in this country.

Umm, what absurdly low rates are those?

Umm:

The UK (in 2006) got 4% of GDP from taxes on corporate income. The OECD average is 3.9%. EU 15, 3.4%.

So our \”absurdly low\” rates are higher than Sweden (3.7%), Germany (2.1%), France (3.0%) are they?

Oh, and he insists that companies should pay more corporation tax because they benefit from having an educated workforce:

We all benefit from a well trained workforce

There are externalities in economics – some are costs. Some are benefits. This is a massive benefit.

Employers need to contribute to that – heavily

But, as we also know from the economics of taxation, from tax incidence, it isn\’t the employers that pay corporation tax, is it? Companies certainly don\’t and in a small open economy like ours, we in fact know that it\’s the workers, in the form of lower wages, which pay more than the majority of that economic burden.

See the errors which ignorance of basic economics can lead you into?

5 comments on “Really Ritchie?

  1. It’s certainly true that productive workers pay 100% of all taxes, in one form or another. And why wouldn’t higher taxes also depress wages? Where else would the money to pay wages come from?

    Is the ill effect of higher taxes on an economy limited to depressed wages? Wouldn’t higher taxes raise the prices for goods and services? If a company sees an opportunity start up or relocate an operation to a more favorable tax area, why wouldn’t it seek to take advantage, in the attempt to make its products or services more competitive and to improve its returns? How does that help workers in the higher-tax area?

  2. I’m just trying to think this one through.

    We raise taxes on business, to fund free degrees.

    So we get fewer jobs and more graduates.

    Result – more graduate unemployment.

  3. Oh, hang on, I’m missing out the effect of the EU.

    If we offer free degrees, we have to do the same for all EU nationals. So we’ve got free degrees but no jobs, so lots of other EU nationals come here to study and then go home again.

    So those positive externalities that Mr Murphy wants, the benefits of a well-educated workforce, go to other EU countries. But the costs fall on us, through higher unemployment.

  4. Can you not tax companies for government making an educated work force available?
    Rather than the company having to run apprentice schemes.
    Assuming taxes have to be reasonable or logical.

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