How sad

In free market circles before the crisis, it was commonly argued that it would be better to \”pierce the corporate veil\”, tax shareholders and staff directly, and scrap corporation tax. This argument always ignored the huge benefits that corporates enjoy from social structures such as limited liability, but regardless of its merits this is now a cause for bow-tied bores. Politicians are belatedly catching up with the reality that the electorate regards companies as entities with a moral duty to pay tax.

So the liars have managed to hoodwink the public.

For whether the public thinks the corporation has a moral duty to pay tax or not, it\’s still the workers and the shareholders that actually pay it.

9 comments on “How sad

  1. Odd that a company, an artificial legal person, can have morals. Essentially it is a legal construct, it does not really exist. Its a bit like say my bill of lading has a moral obligation to ensure my goods arrive safely. Its nonsense.

    If there is to be a moral obligation imposed then surely it must be on a natural person or persons. Perhaps the shareholders or directors?

  2. And you can’t even argue this question about when a company pays Corporate Income Tax, who is actually paying?

    You can’t argue that ‘fair’ is subjective, either

    They are not on the horizon.

    Nor can you discuss different ways of raising taxes to see which do least damage. The rich must pay mantra is all-encompassing and you are an evil person supporting even more evil people if you try to point out the incongruencies and the dangers.

    You are heading for mob rule and I reckon it will only be a short while before Spanish woollies jump on the bandwagon.

  3. …whereas income taxes, consumption taxes, wealth taxes etc are paid by little elves.

    I really don’t understand what the point of this argument is. All taxes are incident on all parties to the transaction (a corporation tax is incident on workers and owners, a consumption tax is incident on consumers, shopkeepers, wholesalers and producers, and so on). What particular tax you choose is merely a matter of shifting collection to various points in the production process, from field to supermarket shelf, so to speak.

    It is thus very hard to see why one particular class of economic agents- corporations- should be immune from tax collection. The same argument (other economic agents pay it) can be applied to any class of economic agents.

  4. This stinks.

    We spend a small fortune on trying to get overseas companies to invest in Britain. We offer them what amounts to bribes and other inducements to take the risk of investing and creating jobs, especially in poor areas.

    Then what do we do? We send a signal that they will be pilloried if they are successful.

    Someone needs to think about the political risks; the unseen companies that never turn up for fear of the moral witch hunts if they prove to be successful and the tit for tat response. How much does Britain take in taxes when overseas profits are repatriated?

  5. Ian B

    …..It is thus very hard to see why one particular class of economic agents- corporations- should be immune from tax collection……

    There is a most efficient way to tax, for any required level of revenue. In trying to get there, why would we use a tax that even experts cannot calculate with any certainty, where the incidence actually falls.

    While there are always knock on effects, dividend / capital gains taxes fall on shareholders, income taxes on workers and consumption taxes on consumers. Corporate taxes??? Who knows.

    So how do we know whether or tax code makes sense or not if we don’t even know who is paying?

  6. I have always assumed that the reason governments like taxing corporations, is precisely because it is a stealth tax. Staff, customers, shareholders, they can all add up their total income deductions, but what they can not easily estimate is the pay rise, discount, or dividend they could have enjoyed had the government not raided the kitty first.

  7. They do seem to be lying their way to the top on this one.

    I’m a bit amazed that Amazon etc. seem to take it without a very robust response. The main reason Amazon don’t pay very much tax is they simply don’t make much money. There operating margin is less than 2%. I have no idea what John Lewis run at, but I’d be surprised if it was much under 10%.

    They really should be saying simply that if your not happy with how much tax they pay, that you just need to pop a check off to the Treasury every time you buy something off them.

  8. David – plus the fact they are based in one country and sell across the EU.
    Though even if the entire worldwide company was based here as you say they would pay minimal tax. Massive growth though.

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