But, but, this is impossible!

There is also the plan to cut corporation tax which heavily biases the best off.

As Spudda keeps telling us, the incidence of corporation tax is upon the company. So how can cutting a tax paid by the company benefit richer people?

27 comments on “But, but, this is impossible!

  1. He means richer companies. I see Barclays Bank on his yacht in Cannes every year, usually with a blonde under each arm.

  2. I thought Barclays Bank was a Quaker. He must have lapsed if he’s splurging all his money about in his dotage. No wonder Tuppenny is going after him.

  3. But Tim, in the Murphyworld only very rich people own companies. He probably doesn’t know about pension funds and individual shareholders.

  4. “He probably doesn’t know about pension funds and individual shareholders.”

    Pensions funds don’t invest in shares. They invest in government bonds, which is why more government debt makes pensioners richer, whereas only rich people every buy stock in publicly traded companies.

    It all makes sense.

  5. Honest question: does an increase in corp tax devalue the market value of a company? I know a few people who have made a fortune from selling their brand to some big conglomerate. E.g. The guy who started Reef, that flip flop company started with about a thousand dollars and sold out for 600 million 25 years later. Now he chills on a beach in Mexico and pearl dives for fun.

  6. Those two guys yoy see on the field over there Tim are Murphy’s grounds raff moving the goalposts. Of course he understands tax incidence, never argued otherwise. To say he has and to claim he has written long posts explaining why the company pays the tax is jist a straw man argument.

    What he is saying IF YOU COULD JUST LISTEN is that it always and everywhere falls on Capital. Unless it’s employer’s NIC in which case it always and everywhere falls on the workers.

    And people never behave differently if you change the rates at which tax is charged; only tax abusers say they do.

  7. @ Dongguan John
    Yes
    The value, as distinct from price, is the discvounted present value of all future dividends and share buybacks plus the discounted value of the price paid to take it over. If corporation tax is increased the profit after tax and cash available to pay dividends and reinvest to grow the company will be decreased so eith current dividends are cut or investment is cut leading to lower growth and smaller dividends in future. So the value of the company is decreased and the market capitalisation *ought* also to decrease – but this decrease may not be visible due to random fluctuations in the stock market.

  8. What he is saying IF YOU COULD JUST LISTEN is that it always and everywhere falls on Capital. Unless it’s employer’s NIC in which case it always and everywhere falls on the workers.

    Timmy – as well as the rest of us – did LISTEN. That isn’t the issue. The issue is that Capital (as you call it) usually has the ability to pass along the tax to others… be it customers (higher prices), employees (lower growth in wages), or even vendors/suppliers (lower prices paid). This fact is inconvenient to Spud’s worldview, so it is misrepresented.

    You know, you wouldn’t be Ironman if you couldn’t look a fundamental error by Spud square in the face and then ignore it, now would you?

  9. And people never behave differently if you change the rates at which tax is charged; only tax abusers say they do.

    Beyond stupid. Now you’re in Arnald territory.

    Congratulations.

  10. Pensions funds don’t invest in shares.

    They do in the US of A. Pension funds like CalPERS throw their weight around corporate ‘Merica all the time on the basis of how many shares they have in their portfolio.

  11. DtP, my browser seems to be rendering Ironman’s posts with heavy tags. Isn’t yours?

  12. Thank you John77. It’s interesting to learn. I meet a lot of guys who have started companies and often are looking to sell but even themselves seem unable to explain how their company is valued.

  13. Tim – how very neo-liberal of you.

    Spud’s manifest virtue excuses any need to be consistent, as has been pointed out more than once.

  14. DJ, do you mean corporation tax or capital gains tax, since you mention founders looking to exit? John77 is right, particularly in the fact that you might not notice due to noise. You should see a noticeable effect though when a specific duty is levied on a particular sector, say oil and gas producers, vs the rest of the market.

  15. DtP

    If your irony/sarcasm isn’t distinguishable as such, maybe you need to write better.

    Lord knows it can’t be me.

    FWIW, it’s not you, but it can be a culture difference?

    Brits generally don’t use sarc (or other) tags, North Americans do. When Brits do use them, it’s generally one of the less welcome imports from across the pond.

    Therefore, a North American mindset may be more one of expecting to see one when needed. Whereas we know there won’t be one, and therefore are perhaps more inclined to read a text less literally?

  16. @PF
    Didn’t someone suggest using \non-sark tags on Tim’s site? But got voted down as there’d be too little use for them.

  17. Dennis, Ironman is a juvenile and obnoxious tit but I’m pretty sure he was offering a pastiche of Murphy there, not agreeing with him.

  18. PF:

    I’m American, and I picked up that Ironman was engaging in sarcasm.

    But you have to love the attitude of “We’re British; the way we do things is right and how dare we do anything the way Americans do it!”

  19. +1 TedS
    English is the world’s most common 2nd language, but it didn’t achieve that status because of the English.

  20. Ted S

    But you have to love the attitude of “We’re British; the way we do things is right and how dare we do anything the way Americans do it!”

    Agreed.

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