They refused me vermine, therefore

I am frustrated too. That’s mainly with Labour. More so with Corbyn. From his inability to even tell his glasses were wonky onwards (and yes, these things matter) he ran a bad campaign. But the fault was not his alone. Those running the campaign, from Milne onwards, were very obviously clueless as to what was required.

I shall fulminate thusly.

Yep, they’re starting already

When Boris Johnson says he has a clear mandate for BREXIT, he should perform a little arithmetic with the votes cast in the general election.

The total votes cast for anti-Brexit parties and Labour’s soft deal and second referendum comes to : 16,698,075 votes: roughly 55%.

And the total votes for the Conservatives, Brexit Party and DUP comes to 14,846,998: 45%. I ignored the Independents and Others whose total of votes is insignificant.

So Boris doesn’t have clear support for BREXIT, in fact the majority is for REMAIN or at least a soft BREXIT and a second referendum. The majority is significantly larger than the referendum now it is 55 to 45, in contrast to 48 t0 52.

Sigh.

Spuds still not got it, has he?

Andrew says:
December 10 2019 at 11:35 am
This issue is a matter of substantial economic research, so with due deference to Prof Weeks, we don’t have to just take his word for it. What does the literature say? Certainly, when taxes on companies rise, then in the first instance, companies will just pay more tax on their profits, and the shareholders will suffer lower returns. But over time, shareholders will attempt to maintain a level of post-tax return on their capital, which will create pressures to decrease costs including wages paid to employees, and to increase prices charged to customers. So, down the line, who ultimately bears the tax? Answers on a postcard.

Reply
Richard Murphy says:
December 10 2019 at 11:58 am
Read Prof Kim Clausing

https://econpapers.repec.org/article/ntjjournl/v_3a66_3ay_3a2013_3ai_3a1_3ap_3a151-84.htm

The answer? Most likely shareholders

Concerning that Clausing paper, Snippa and I have discussed it before.

In wider terms, it is precisely the jurisdiction shopping that such
companies undertake that explains the lack of evidence of an impact
upon labour of the corporate income tax.

I just wanted to check that that is the implication that you are
making in this part of your conclusion?”

Her response?

“Thank you for your email. Yes, that is the implication.”

Alternatively of course we could just say he’s not doing economics but politics.

Oh dear

Difficult to take seriously someone who says this:

A 2016 IFS report shows that property tax raises relatively little revenue in Britain.

The OECD says that Britain raises more in taxation upon property than any other OECD nation. Some 11 or 12% of tax revenue raised as opposed to a 3 or 4% average. For rates are indeed a tax upon property and they do, together, raise some £60 billion a year or more.

Not believing this bloke also turns out to be wise:

The assertion that increases in the corporate income tax would be paid by employees is if anything less credible than the stockholder argument. Corporations cannot directly charge employees for the tax they pay. The mechanism that the IFS have in mind must be indirect, through wages levels, that higher corporate tax payments by reducing corporate profits reduce potential wage increases. This is unlikely to be important in the UK current context.

No, the argument has been around since 1899, from Seligman.

Capital added to labour is what increases productivity. Productive workers get paid more. If we reduce the amount of capital added to labour we get lower wages. Taxing profits reduces the after tax return to investing in adding capital to labour. Given that there is an average return to capital across taxing jurisdictions those who tax capital returns will see lower wages in that long run.

Across companies the relative bargaining power of employees and employers determines wage outcomes. Since the crash of 2008 private sector real wages have grown very slowly and remain below their pre-crash level. These were years during which the corporate tax rate fell from 28% to 19% (shown in a graph from Trading Economics). If as IFS believe higher corporate tax rates depress wage growth, then lower rates should have increased wage growth, for which there is no evidence. In the abstract, corporate profitability is one of many factors influencing wages changes. It does not appear as an important influence in the UK in recent years.

‘E’s entirely missing the actual argument, isn’t he?

It’s on the tip of my tongue

That is because the evidence is that when the whole of the UK offered a 0% starting rate of corporation tax it encouraged a wave of small business incorporation. I stress, these were new business incorporations, they were not new small businesses. The reality is that the vast majority of genuine small businesses not already set up for tax abuse purposes (as so many so called consultancies that disguise the reality of an employment are) are in fact unincorporated. This pays in all sorts of ways for most genuine small enterprises. But if they’re offered a 0% tax rate you can be sure they’ll incorporate in droves. And they’ll be new companies. So they will qualify for the new rate. And they will avoid income tax as a result.

I can’t tell you how much this will cost precisely, because no one knows. I can assure you that there will be a significant cost. It is already thought tax motivated incorporation costs the UK as a whole about £3 billion a year now, meaning £200 million is likely in Scotland. It is reasonable to think a loss considerably in excess of this would result from the Reform Scotland plan.

Now who was it that wrote a newspaper article suggesting that you do this for your nanny?

Ah, yes, the same person who actually did this himself.

Still, at least we’ve an area of tax that Snippa actually knows something about.

Good question

Then I will pose a simple question: which would you rather live in? France, Denmark, Belgium, Sweden, Finland, Austria, Italy and Luxembourg, or Mexico, Chile, the USA and Turkey?

We’d need to go and check the immigration rates to work out what everyone else seems to think. Just so we’re talking about broadly similar GDP per capita, the emigration rate from France, Denmark, Belgium, Sweden, Finland, Austria, Italy and Luxembourg to the US is what, the obverse rate from the US to France, Denmark, Belgium, Sweden, Finland, Austria, Italy and Luxembourg is what?

Not really a good start

Who’s Credible on Tax?
– Professor Richard Murphy

For the answer is likely to be “Not thee Professor”

Wealth is taxed more, as it is
dramatically undertaxed now. Labour is right to tax it more. The same is true
of corporation tax, where Labour’s proposed unitary tax base for
international taxation will lead the world, whilst the increase in rates will
simply bring the UK back into line with the world. No one is actually going to
change their behaviour as a result of either reform.

Quite, not thee professor.

As an amusement, think back to only yesterday. Where it became apparent that the 6 richest people identified by the Equality Trust were either non-doms or had emigrated for tax purposes. Under our current taxation system that is.

Umm, yes Senior Lecturer

The myth suggests that anyone can build a business from scratch, entering a market of their choice and end up, with hard work and determination, making a fortune.

This is not true. Modern capitalism has evolved to make sure that markets do not work.

This in the year that Google turns 21.

Well, we can in fact change this

This is a statement of fact, and not opinion.

So, every time a politician says it wants the government to run a surplus (as the LibDems do) then the question has to be ‘who do they want to run the deficit instead?’ Right now given that the overseas sector insists on saving in the UK, and I do not see that changing, the answer is the private sector, whether that be business or households.

Elect Jezza, foreign capital will flood out and so government can run a surplus. Not quite how I’d go about it to be honest but it would work.

The stupidity of the Ritchie Diaspora

So, I asked yesterday what was the thing being done wrong by the Fair Tax Mark:

The answer:

You cannot – usefully at least – compare cash taxes paid with expected taxation because corporation tax is due in arrears. The amount of tax for the financial year 2016 is actually due in the financial year 2017 and so on. When companies are growing fast, something we’d agree the SV Six tend to do, this means that there always will be a low tax rate for we’d be comparing tax paid for 2016 with tax due for 2017, that latter being a much larger sum. It’s even possible to test this. When the profits stutter – as has happened to at least one of the companies – then the tax rate rises substantially as the tax payment for the earlier, more profitable, year is handed over in one where the tax due at headline rates falls.

Of course, their report isn’t available as yet so it’s not possible to quote them getting this wrong. But then sending the press release days before anyone can check the claims is proof perfect of flatulent tosspottery going on anyway, isn’t it?

Interesting

In the process inequality, with all the dire social consequences that can flow from it, is increasing.

Is it? ONS tells us that the Gini is lower now than it was in 2008. Global inequality is obviously decreasing as the absolutely poor – finally – get rich.

So which inequality is increasing?

A wondrousness of Ritchiness

See if you can work out what’s wrong with this:

The companies have, of course, denied the suggestions made by the Fair Tax Mark, which I advise. For the record, the Fair Tax Mark press release is reproduced below. What researchers might like to focus on is the difference between cash provided as a liability and cash actually paid for tax liabilities. Questions about the accounting would seem to arise.

Or alternatively, what questions about accounting?

Then, let’s see if your answers are the same as/better than mine in the ASI piece already filed for Tues morning…..

Where the hell does he come up with these ideas?

Johnson is a climate denier. You can’t refuse to engage with this issue and be anything else. No doubt he is so for all the reasons all those on the right who deny the reality of the climate crisis are. They believe the neoclassical economic assumption that nature is a free gift provided to us (presumably by a paternalistic god) to use without consequence, and that if there is any consequence then the market can in any case instantly correct it.

Externalities, Pigou taxation, that’s all neoclassical stuff. Entirely standard stuff too. What is this drivel he’s on about? As I’ve noted before, this stuff is taught in GCSE economics too.

It does?

Surely the printing of more money is why the pound has fallen in values from £1 – $4 to todays rate over the last 50 years ( or from £1 – 40 Deutschmarks to £1- 2.48DM before the Euro).

Richard Murphy says:

Printing money is not in the slightest the issue

The relative value of the currencies reflects differing productivity

Gosh. So, if we start with £100 and $100 and end up with – with no change in growth, productivity, anything else but ceteris paribus – £200 and $100 then the currency values won’t change?

Rilly?

But note the far more interesting policy prescription from Snippa’s insistence. In order to increase productivity we should be more like the US. As that change in relative currency values must be based upon the past changes in productivity…..

Perhaps the Senior Lecturer would care to comment?

Sam Jones

Comment:
O/T but amusing to see the Fair Tax Mark’s posterchild SSE succeed in litigation against HMRC for £200m of tax allowances.

https://www.accountingweb.co.uk/tax/business-tax/what-words-are-worth-for-capital-allowances

It shows how worthless the FTM is if a company with high value litigation and more than a decade of open tax audits can get one. I wonder if the FTM even knew about this or if they just pocketed the fee.

No, not really

And third, the money could be cancelled by way of tax if it is necessary to do so to control inflation. But this is possible because the spend will become someone’s income. And they will be taxed on it. And when they spend the net proceeds after tax the recipient of that spending will also be taxed, and so on, until the tax is recovered. So the spend pays for itself, eventually. But along the way it will create economic growth, redistribute income and wealth in society and reduce hardship. And all by simply letting money flow from the government and back to it, in due course.

If this were true then there would be no outstanding stock of debt from previous government spending. Yet there’s getting on for a couple of trillion of such government debt. Thus the argument don’t work, eh?

Or, alternatively, we could say that we’ve had inflation in the past, therefore government hasn’t been taxing enough. But then that would be to accuse the past of not enough austerity. Possibly an argument that Snippa wouldn’t agree with.