Isn\’t Ritchie just stunning?

Fascinating post here over HSBC\’s profits and taxes.

As an email correspndent puts it, they\’ve paid tax on the law as it is. He\’s asking why they haven\’t paid tax on the law as he thinks it should be.

The answer being that you\’re not the Tax Dictator yet Ritchie.

But much, much better than that is his stupidity over unitary taxation and country by country reporting.

As you know, Murphmonster wants all companies to report where and how they make their money. So that taxes can be \”properly\” charged where the profit is made. And as you also know, MurphMuppett thinks we should have unitary taxation. Sod where the profits are made, let\’s just apportion the tax where the income, staff and sales are. One third each.

Which gives us this:

Now, let’s look at that a different way. Let’s apply the unitary apportionment formula to group profits. From page 335 I know the company had 48,000 employees in the UK out of 270,000 in all.

And from page 40 of the media release I can get that $9,149 of income out of $68,330 was in the UK, whilst $18,391m of assets out of $79,935 were in the UK.

The classic unitary apportionment formula says that profit should be weighted to a country in proportion with one third of the weighting applying to income, assets and staff. So the maths is:

UK profit = $20,649/3 x ($9,149/$68,330) + $20,649/3 x ($18,391 / $79,935) + $20,649 x (48,000 / 270,000)

Now I make that $3,728 million of profit attributable to the UK on this basis. Tax on that would be $913 million. But $60 million was paid.

So, he\’s got all the information he needs in the current set of accounts to work out how to apply his favoured unitary tax system.

Then he calls for:

The case for country-by-country reporting for banks is compelling.

Why? If we can already apportion a unitary tax with hte information we have then why do we need cbyc?

Which is where we come to the sad truth. Ritchie \”invented\” cbyc. So he says, even though it\’s not true. And he\’s heavily invested in cbyc as a result. He\’s also bright enough, just, to see that everyone else (sorry, all other corporate tax weebs) is thinking about unitary as a solution to the problem. So he\’s hitched to that wagon as well. But he\’s still too dim to realise that if unitary then cbyc is irrelevant. For the tax system will no longer care where the profit is made so we don\’t need accounts which show where it is. Because tax is simply apportioned under the unitary system.

That there are idiots out there is obvious. There\’s nothing else that would explain the Labour Party. But puhleese, as the English that we are, couldn\’t we please have a better class of idiots?

11 comments on “Isn\’t Ritchie just stunning?

  1. And I see that they’ve* set their targets on Rolls Royce now. A lot of their followers will happily follow the meme when it’s foreign companies stealing our tax, but when it’s a British+ company, they might start losing followers who realise that they* are just attacking any company who doesn’t pay corp tax for what ever reason, usually legal.

    *They is the usual group of numpties who can’t add and want 100% for themselves.

    +Yes, I know it’s not that British any more, but like other brands like Mini, it’s still seen as “British”.

  2. Is it just me but in the last week or so many of your posts are unreadable as all your “

  3. It’s worse than I thought. Even my posts are being buggered up by someone’s software.

    I had written that all your “£” signs and similar were being mucked up by the software and were unreadable. Especially annoying as they are usually number related and so important.

  4. My browsers block for days at a time on different posts.

    Only my iPhone is immune, firefox, chrome and Safari all block

    Some Norwich hacker playing silly bu**ers?

  5. I also noticed the attack on Rolls-Royce on the BBC website, including the classic Ritchie quote “Legality is not the question….”

    Also in the report the local Labour MP has written Rolls a letter of concern, presumably because he’s too dense to understand the 125% R & D tax credits introduced by his own government.

  6. Idiocy is party neutral. I give you the Conservative Party electing IDS as leader, or the Lib Dims with – the list is too long, or UKIP and Nigel Farage – good grief, even good ideas sound wing nut crazy from his mouth.

  7. Rational CEO faced with tax calculation based on head count…….

    Reduce head count in countries with high taxes.

    Imagine if HSBC moved a substantial portion of its London workforce to Dubai to escape Murphzilla. Bearing in mind the income taxes of the highly paid workers, would the tax impact be positive or negative?

  8. Seth>

    That’ll put a real restriction on your flight-selections. Different company to the car maker these days, but RR engines power a large fraction of the world’s airliners.

  9. Is he “too dim to realise” or is c-by-c just so important to him that he has to attach it to everything?

    And thinks that most of his followers are too dim to spot the difference.

  10. I’ve got another gripe with the LHTD’s calculation. That’s $3.7bn of profit attributable to the UK, fine. But before you multiply by your headline rate, you deduct taxable allowances, yes?

    Including losses carried forward from previous years, capital allowances, and any number of additional wheezes the politicians have come up with to favour one or other of their patronage groups?

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