Pure bollocks again

Trump’s tax reforms – designed to enrich Apple by at least $47 billion

We can’t enrich a company. We can only enrich those who own it, buy from it, sell to it or work in it. Incidence.

Of course the Senior Lecturer will never admit this because that would then mean studying the incidence of who pays taxes.

That is a reasonable question to ask. That’s because this whole plan is premised on the idea that if rates are reduced then business will invest more, jobs will be created, and growth will follow. There is, however, implicit in that assumption another, even more implicit, assumption, which is that Americans pay the tax that they owe already.

No, it’s not implicit at all. But it gets better:

As they note, in the US just 81.7% of the taxes that are owed are actually paid. Admittedly not every tax is considered, but all the important ones are. The research covers individual income, corporation income, employment, estate, and excise taxes.

The amounts lost are staggering

Excellent, so reduce tax rates because humans do react to incentives. Lower taxes aren’t worth the risk of jail to avoid/evade so therefore fewer people will. The tax gap falls with lower tax rates. Lower tax rates will reduce the tax gap. Ritchie wants to reduce the tax gap – why isn’t Ritchie in favour of lower taxes?

27 comments on “Pure bollocks again

  1. “why isn’t Ritchie in favour of lower taxes?”

    Because the he thinks the geese aren’t hissing enough?

  2. Ritchie wants to reduce the tax gap – why isn’t Ritchie in favour of lower taxes?

    Because his fundamental desire is to maximise the tax take. His chosen method is to reduce the tax gap because he knows that if he went around pontificating about tax rises, very few even of the ignoramuses who currently drool at his feet would remain.

    Not, of course, because they are not in favour of tax increases (mostly) but because Corbyn and his Maoist stooge present a better target for sociopath worship.

  3. I do wonder what the point is of reading Spud’s blog or the Guardian.

    I know that pointing out their mistakes allows them to not go without being corrected. However, they make so many it obvious they don’t care.

    Plus the readership of these won’t accept the corrections anyway.

  4. There is, however, implicit in that assumption another, even more implicit, assumption…

    Oh look a babuschka doll of assumptions!

    …,which is that Americans pay the tax that they owe already.

    How many assumptions can you see there?

  5. @TMB “Oh look a babuschka doll of assumptions”

    I hate those babushka dolls.

    So full of themselves.

  6. Paying less tax is, in Snippa’s mind, the government giving you money. He should really stick to his train set and clarinet

  7. For the last few weeks he has been moaning about minuscule interest rate increases, on the grounds that there is no inflation in the economy. Why should tax rates not adjust to have a similar impact? After all, isn’t he the one who insists that tax exists to take surplus money out of an economy? So if there is no inflation, taxes should reduce, surely?

  8. Objection, TimW!

    ” Lower taxes aren’t worth the risk of jail to avoid/evade so therefore fewer people will.”

    You’re following Richie & conflating two entirely different things. No one is going to do jail time for tax avoidance. No laws have been broken. They’re paying what the law requires, when the law requires, where the law requires.

    It’s from blurring this distinction, Richie & his pals get their traction. The line should always be made crystal clear.

    There’s a totally separate case for reducing taxes to reduce tax avoidance. Where the tax saved is less than the cost of implementing a tax avoidance scheme. taxes should never be at a level & of a complexity, creates an industry of sharp accountants, both creating them & advising on avoiding them.

    Those who think this is the point of overly complex tax legislation are obviously seriously mislead.

  9. My taxes for 2016 have been finalised, and instead of getting a couple of k back, I’m basically even. My utterly mind-garglingly useless tax preparer / accountant hadn’t applied the shiny new capped transport-to-work deduction and had applied the full whack under the old rules.

    Won’t be using them ever, ever again, cos that’s just totally crap right there. Plus, I don’t like having to do 4 go-arounds to make sure they applied the same exchange rate in different parts of the return, and that it’s correct…

    Anyway, on-topic – indeed, avoidance schemes *should* cost more to implement than they return, otherwise your taxes are a) too high, b) too complicated. If you can reduce these two, these complex schemes basically go up in smoke as uneconomic. Presto, less tax avoidance.

  10. If companies don’t view low taxes as incentives (as the Spud claims) how does he explain his tax havens?

  11. @ Mr Yan

    I do wonder what the point is of reading Spud’s blog or the Guardian.

    I know that pointing out their mistakes allows them to not go without being corrected. However, they make so many it obvious they don’t care.

    Plus the readership of these won’t accept the corrections anyway.

    Indeed. Reading the comments in The Groan I often wonder how a ‘serious’ newspaper has quite such a preponderance of very stupid people reading and commenting in it.

  12. As they note, in the US just 81.7% of the taxes that are owed are actually paid. Admittedly not every tax is considered, but all the important ones are. The research covers individual income, corporation income, employment, estate, and excise taxes.

    And if one climbs into the IRS and HMRC tax gap estimates, what one finds is that both estimate that most evasion occurs in the areas of employment and individual (including unincorporated businesses) taxation. The estimates of evasion by both large and small corporations runs in the neighborhood of 7% to 10%, which large corporations at somewhere around 5%.

    That being said, evading tax on dividend income and gains from the sale of stock by individuals is virtually impossible. The paper trail is impervious to manipulation by individuals. These days even gains and losses on stock trades are calculated and reported by brokerage houses. So once again, we get Murphy making a claim based on “facts” that have nothing to do with the issue at hand. If Apple and other multinationals are going to use taxes saved to enhance shareholder value, the two avenues available to shareholders in receiving that value are basically evasion proof.

  13. I’m surprised that Trump didn’t abolish the massive avoidance scam of allowing State income taxes to deducted from Federal income tax. It means that rich States with high State income taxes are forcing poorer Sates to contribute more than they should.

    That would have got Spud’s head spinning.

    (To save Dennis and Gamecock time I’m well aware of the argument that the Feds shouldn’t be raising income taxes. I’m just pointing out the reality)

  14. I’m surprised that Trump didn’t abolish the massive avoidance scam of allowing State income taxes to deducted from Federal income tax.

    Actually I love the idea. If you’re going to vote for high taxes, then you should have to actually paid said high taxes. Alas, there was too much resistance from House Republicans in blue states to get it.

  15. @DtP

    I’m reading “No Country for Old Men” at the moment. If that’s what America is like, I’m not sure I want to go on holiday there.

    If you’ve not been to the UK – it’s a bit like the Mary Poppins film.

  16. Andrew C,

    I’ve often wondered if smalltown America is just a haven for biker gangs and serial killers.

  17. There’s Bollocks, pure Bollocks, Ritchie Bollocks and Pure Ritchie Bollocks, a sequence of increasing asininity

  18. errr, BiND: the state taxation exemption is being removed. Governors of socialist States like California are already threatening lawsuits (although what their standing is to sue over Federal tax policy is unclear).

  19. I’m reading “No Country for Old Men” at the moment. If that’s what America is like, I’m not sure I want to go on holiday there.

    That book (and movie) is set along the Texas border with Mexico. That is the Wild West. Only a fool would live there, and only a greater fool would visit for the fun of it. That’s why the vast majority of ‘Mericans don’t go there… They (a) aren’t in the drug trade, and/or (b) aren’t Mexican.

    I’ve been to Britain several times (and Scotland and Ireland once each) and suspect our time in the Cotswolds and the tonier parts of London was far more pleasant than if we ‘d decided to spend that time vacationing in the slums of Manchester.

    Finally, if you haven’t seen the Coen Brothers’ adaptation of No Country For Old Men, find it and watch it. It arguably the best thing the Coens’ have done… Which is saying something. A brilliant, brilliant film.

  20. I’ve often wondered if smalltown America is just a haven for biker gangs and serial killers.

    That’s kind of like wondering whether all bankers and corporate executives are tax cheats and fascists.

    If any thought you have can be easily modified to sound like a thought Richard Murphy as expressed, you might want to think again.

  21. errr, BiND: the state taxation exemption is being removed.

    There is no law yet. The Senate has passed its version of tax reform. Now it goes to conference with the House for review and most probably, modification. Then it is presented to both the House and Senate for a vote.

    In my opinion there will be significant opposition from House Republicans to ending the state tax deduction. The best one can hope for is, I think, that the deduction gets phased out based on taxpayer adjusted gross income.

  22. BiCR,

    I missed that bit, thanks, but as DtP says, still unlikely to happen.

    Ref small town America – in 2007 we did a tour of all the great canyons and Monument Valley over 3.5 week’s. As part of it we spent a few days in a small town called Kernville. I chose it so we could see small town America.

    I loved it. Nice people, lovely area (it was also so we could see sequoia tres) and I’d be happy to live in a place like that. But then my I choose to,live out here 🙂

  23. DtP, I think you missed the tongue-in-cheek tone of my comment. Perhaps next time I’ll be a bit more specific.

    However, watching Criminal Minds, I’m not so sure…

  24. @Dennis the Peasant

    That’s kind of like wondering whether all bankers and corporate executives are tax cheats and fascists.

    Are they not?

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