Ritchie\’s new report

Yes, another one for the TUC.

It\’s a cracker as well. In the opening lines:

This paper does four things.
• It assesses the reforms the UK Government has proposed in that period to tackle
tax avoidance. It estimates that measures undertaken by the Government since Budget
2008 have saved the taxpayer £1bn.

Ooooh, goodie! We like it when the taxpayer saves money. So, what have they done? Reduced spending? Well, no not that. Have they become more productive? Well, no, not that either.

Actually, they\’ve raised more tax money.

Yes, seriously, in Ritchie world, collecting £1 billion more tax is the same as \”saved the taxpayer £1 billion\”. As opposed to the real world meaning of \”cost the taxpayer £1 billion\”.

Higher taxes are, you know, a cost to taxpayers?

Speaking with forked tongue

Today\’s Ritchie installment:

Alistair Darling is under pressure to slap a punitive new income tax rate of up to 70 per cent on top earners in a “tax-the-rich” mini-Budget next week, it emerged last night.

Gosh! But put your mind at rest:

This is nonsense: I am certain there is no such plan at all


But what\’s this?

Well, I rather hope that is what the Treasury is thinking in due course – because much of it comes from the Compass tax report

Ah, yes, that\’s right, the Compass report that insists that we should raise marginal tax rates on the top decile of households to 75%.

So, what we\’ve got is the man who wrote the report calling for 75% marginal tax rates insisting there are no plans or pressures to create marginal tax rates of as high as 70%.

Consistency is so undervalued in today\’s world, don\’t you think?

This is fascinating

Leave aside that it\’s about trucks and look at the general principle:

Simon Nicholls, Mr Denby’s lawyer, said: “There appears to be a lacuna in the regulation. There is a general principle that if there is an ambiguity in the law it should be read in favour of the defendant.”

That\’s the bit that Ritchie wants to overturn with his insistence that any ambiguity in the tax law should be read in favour of the prosecution, HMRC.

He\’s nothing if not ambitious, is he, desiring to overturn one of the basics of Common Law.

Today\’s Ritchie

Certainly a bee in his bonnet.

And all those who support the secrecy these places provide to facilitate this abuse should be ashamed of themselves. By offering your excuses you will, undoubtedly, be causing hardship beyond imagination and death as well.

Which is why I campaign for the abolition of secrecy jurisdictions – the BVI and Cayman included.

Strong words about an organisation using the courts to enforce their legal claim to an unpaid debt really.

In fact, there\’s nothing about secrecy jurisdictions facilitating this at all. Richard Murphy himself, as an individual UK citizen, could use exactly the same prcedure to insist upon payment of a lawful debt in exactly the same way.

Indeed, I think it odds on that in his business career he did so.

The hard right and a secrecy jurisdiction acting in concert: no surprise there.

Secrecy jurisdictions are captured states that are used to promote the hard right.

There will be howls of protest – but let’s be clear.

Err, perhaps howls of laughter at that absurd conjunction. For this is about the Swiss voting to ban the building of new minarets. And I\’m having an extremely hard time thinking up any manner at all in which Swiss bank secrecy makes the population a group of religiously intolerant xenophobes.

I can think of something interesting that could be said about this story:

The 57 per cent approval of the minaret ban

That there\’s a difference between human rights, perhaps liberty, and what we can get the masses to vote for on any particular day or subject. But then, you see, if we admit to that, that the expressed will of the hoi polloi is not to be listened to in some circumstances then we then need a system of deciding when it will and when it won\’t be listened to.

As in, for example:

But she’s wrong about the electorate. Compass did some polling with YouGov on a sample of more than 1,000 people to support this report, which I co-wrote. The polling was pretty emphatic……..The finding to this one was 78% strongly in favour or agreeing;…….Here the finding to this one was 59% strongly in favour or agreeing…….And the finding to this one was 62% favoured the first statement…….

As we\’ve already noted, just because the people will vote for it does not mean that it\’s something we should do. Which is a teensie little problem for Ritchie there who is arguing that we should do it because the public seem to like it.

Richard Murphy bans me from his blog

For a comment to be published I must be satisfied that:

1. It is legal;

2. It is polite;

3. It includes an argument that adds value to readers;

4. It appears factually accurate;

5. That the commentator is genuine;

6. It is not promoting an opinion usually associated with the far right political fringes (for these purposes the UK Independence Party and beyond within the UK domestic environment);

7. It is not posted by a person I consider to be usually associated with the far right of the political spectrum.

That\’s his revised blog comment policy.

It is of course his blog, his property, and he can do as he wishes with it.

But it is indicative of a certain mindset, isn\’t it?

Adding up Ritchie\’s numbers.

Finally, we actually get a reply to the question.

How does Richard Murphy make his sums work about how much revenue will be raised by increasing the tax rate on the top decile of families by 60%?


Good to note you agree the tax could be raised

Your only query seems to be how much tax is raised

Your way of expressing this is to question our assumption on elasticity

For reasons we have given – and which iI have explained here – we think there will be behavioural changes – which may result in more, not less effort

I think there may be a greater demand for work – for example from the second partner in a high earning household that will – in accordance with all observed social behaviour – including the wish to ‘keep up with the Jones’ or to simply pay the mortgage – which is widely ignored in the blackboard economics you favour developed, rather oddly, by economists who have never worked in a market in their lives

That pressure to earn more to cover fixed obligations will, I (we) think counterbalance any tendency to reduce work

Leaving the outcome we predict

And of course we may be wrong

But that’s our prediction

And I stand by it


The effect of any tax change upon revenue is (amongst other thing but these are the two relevant ones) determined by the following.

1) How much people target their post tax earnings as the determinant of how much they work. If people have a number, \”x\”, that they desire, if you tax them more will they go out and work more to get to that post tax \”x\”?

2) How important marginal tax rates are in setting incentives. Do you offer to do more work if the Government is getting 30% of your marginal income or 75% or your marginal income? At what point do you trade more leisure for that decreasing percentage of extra income that you get to keep?

There is really no firm answer to either of these questions. Different people will react differently, the same people will react differently at different times. It is also true that the short term and long term effects are likely to be different. Someone locked into a current spending pattern (say, a particular mortgage, or some number of kids at private school just as examples) may well find that 1) is the appropriate response. However, the same person over time might reorganise life leading to the second effect becoming more important. Trade down the house and take more leisure for example.

(I\’m not sure if I\’ve got this quite right but I refer to those two as the income and substitution effects. Might be me garbling the jargon though….update….and I have, a bit, but not badly enough to affect the argument.)

The nett effect of any tax change is going to be the sum of these two effects.

Richard is assuming in his calculations that the income effect will predominate. That (vastly) higher tax rates will lead to an increase in work and thus an increase in revenue over and above a straight line calculation of that tax change.

That, it has to be said, is an extraordinarily brave assumption to be making. I certainly wouldn\’t want to have to try and defend it. And, sad to say, nor really does Ritchie. He\’s muttered something about the Treasury being allowed to see the sums but not anyone else.

What I do love though is the arrogance of the suggestion that \”blackboard econmoics\” of the type I favour doesn\’t consider such matters.

Gosh, lookee here!

Supply of labour in the short-run: choice for the individual between income and leisure,
including the backward-sloping supply curve.

It\’s part of the A Level economics syllabus. Well, fancy that, I guess \”blackboard economics\” really does ignore such things!

Update: One more thing here. Ritchie is specifically expecting the second part of a household to take up extra work (ie, married women for the most part). But we know that married women are \”more\” sensitive to tax rates than either the single or men. Thus whatever the effects of raising tax rates are generally on either of the two effects, we know that for married women the subsititution effect is stronger than it is for others.

Which really leads us to the conclusion that the specific effect, more married women going out to work as a result of higher tax rates, that Ritchie needs to make his sums balance just ain\’t gonna be there.

Most, most amusing

We\’ve just had Ritchie telling us all that raising the marginal tax rate on top decile of households to 75% will bring in untold billions. That an average tax rate of 55% on such households won\’t either change behaviour (ie, trade income for leisure) nor prompt any to bugger off and leave Darling grasping at thin air rather than the expected wallets full of dosh.

One point he makes in his report is:

Of course the right will argue that higher taxes
will just lead to higher rates of avoidance or the
flight of talent. Research by theWork Foundation
busts the latter myth.60

And that research looks at how international the market for high earners is. Not, you might note, at how many Brits (like myself for example) work outside the UK and are thus not subject to the tax regime (except for certain taxes from income arising in the UK). Rather, at how many foreigners there are working in the FTSE 350 companies. Or at the top of them.

And they find that 86% are Brits. Thus, they conclude, there isn\’t an international market and thus lots of rich bastards will not run away with their money.

Now that\’s a pretty weak basis upon which to \”bust a myth\” especially as we get this information from Jeff Randall today:

More than 40 per cent of London\’s FTSE 100 companies are led by executives from beyond our borders. Just as Arsenal, Liverpool and Chelsea have foreign managers, so too do Lloyds Banking Group (an American), Rexam (a Frenchman) and Vodafone (an Italian). Burberry, which promotes itself as an icon of British fashion, is run by a woman from New Palestine, Indiana.

Now of course, just as the original study relies on looking at who is here rather than how many of us are elsewhere, so does this. But if evidence of few foreigners here is evidence of there not being an international market for talent then we do have to insist upon the reverse: lots of foreigners here is evidence of there being an international market for talent.

And thus is the myth busting busted.

We may well be able to find other evidence elsewhere that there is no great market for British talent overseas (and Randall himself hints at it). But we cannot rely upon that Work Foundation report, can we?

Today\’s Ritchie

Ritchie responds to the criticism of his assumption that a 60% rise in average tax rates will have no impact upon behaviour.


Here\’s the comment I left there:

So, what you\’re saying, in formal terms, is that moving the average tax rate up by 60% (from 34% to 55% as you describe it at one point) will have no effect upon the following equation:

C = w (T – l)

Which is an extremely brave assumption to make and one that would require, before it being accepted as true, a certain amount of empirical research. You are, in effect, stating that no one would subsitute leisure for market income with such a tax change and that everyone has a fixed desired income which they will work to fulfil.

Yet you do seem to miss the logical implication of that latter part. If it is true that we all have some fixed income that we work to fulfil (or that this top decile do) then your tax changes will increase tax revenue over and above static changes. For as post tax incomes will be lower people will work more to get to their desired post tax income.

And as you\’ve not included such a tax rise as a result of your impression of the income effect we have to conclude that you don\’t actually believe this point either.

But as to the major point. Don\’t you think it might be a good idea to base our estimates of the revenue to be had from tax changes on the empirical research of the past couple of centuries rather than the societal impressions of a retired accountant?

OK, Compass roundup

So, Compass insist (it\’s really Richard Murphy, again) that we can raise taxes on the rich and everything will be just hunky dory. There are a few leetle problems with their assumptions though, it should be said.

There are strong grounds for
supporting reasonable proposals to limit the
capacity of corporations to avoid tax by moving
their tax base to national regimes with lower
corporate taxation rates. This would require
international co-operation, probably initially at
an EU level.

Well, there\’s ambition for you. They want to tear up one of the defining characteristics of the European Union. The free movement of labour, goods and capital across the 27 countries. Good luck renegotiating the Treaty of Rome guys.

On a financial transactions tax.

London’s $2–3 trillion a day in transactions is
speculative, the effective tax rate increases
substantially for repetitive transactions, thus
reducing the incentive for speculators to trade
and so reducing price volatility. At times of significant
price change in the market, the effective tax
rate rises, thus dampening speculation and acting
as a disincentive to the herd instinct.68

Yes, they believe that speculation increases price volatility: when every fule kno that it dampens it.

There are, however, other forms of FTT. A tax
could be imposed on all debits – that is payments
– in bank accounts. The rate might be very low –
say, 0.1%. The GDP in the UK is at present
approximately £1.4 trillion per annum. To
achieve this level of national income, several
times this volume of debits is required in bank
accounts (for example, wages paid are a debit, and
when those who receive them spend that cash
they are a further debit). Speculative activity also
creates substantial cash movement for little
income generated. If it is supposed that debits run
at three times the level of GDP, a tax at 0.1%
would raise £4.2 billion, costing the average
household less than £20 a year, far less than most
households pay in bank charges.

You recall how the financial crisis was brought on by people taking their money out of ATMs, tenner by tenner do you? No, me neither, but that\’s what they\’ve decided they\’d like to tax.

The simplest reform would be the
most effective: all UK passport holders should
pay UK tax on all their worldwide income
whether or not they are in the UK.

Congratulations, you\’ve now become a slave of the State. Whatever you do, wherever you go, you\’ve got to pay Alistair Darling. This is to move to the US basis of personal taxation and it does seem perverse to pick up on the very worst part of their system (so bad that they\’re the only country that does it) as the one thing you\’d like to copy.

I also have a feeling that this would fall foul of EU rules: you\’re not allowed to discriminate between different national origins. But if a Latvian (or Frenchman) working in Latvia pays 20% flat tax (or whatever their rate is) and an Englishman working in Latvia has to pay 40%, that looks like discrimination to me.

But finally, here\’s the great guffaw.

They intend to raise the average tax rate (that is, the percentage of total income paid in taxes….this is not the marginal rate) for the top 10% of households from around 34% to 55%. That\’s an over 60% rise in taxation on this group of 2.3 or so million households.

We also see marginal tax rates rise substantially (as of course they would have to). I can see something over 70% easily: top rate of 50%, two sets of NI adding something like 23/25 % (for they will lift the NI cap).

In fact, with their \”minimum tax rates\” of 40% at £100,000 and 50% at £150,000 (ie, withdrawal of personal allowances and of perhaps even the lower rate allowance) we might well have bands where marginal tax rates are above 100%.

Now, we might think that there could be some changes in behaviour over such changes in rates. You know, this Laffer Curve thing: yes children, it really is true, the Laffer Curve exists. The argument is not over whether but at what rate we move from maximising tax income to diminishing it by raising the rate further. That\’s an empirical matter of course but recent rough estimates would put it in the 40-50% rate area (note, for marginal tax rates, not average). So what do our brave boys and girls think of this, the possibility that their tax rises would lower revenue rather than increase it?

Our view on avoidance is
that if the top rate is increased while at the same
time reforms are made to the tax system,
minimising avoidance and evasion, the taxable
income elasticity is likely to be small, if not zero.

Correct, they simply claim that it won\’t happen. That no one will trade leisure for lower income. That hoicking tax rates by 60% will not change work patterns at all.


Today\’s Ritchie

The requirement is clear: that we dedicate our work as Christians to Christ – not the making of money. Thsi puts all Christian teaching at odds with neo-liberalism, per se

And those who have skills must use them in pursuit of the creation of Chsritian ideals – including relief of poverty


Let\’s agree, for the moment, with Ritchie\’s oft stated contention that the last 30 years have seen the rise of this \”neo-liberalism\” stuff.

OK, so what else has been happening in the past 30 years? The largest reduction in poverty that our species has ever seen. Hundreds of millions, if not billions, rising up out of the destitution of peasant agriculture into a middle class lifestyle.

To thus claim that neo-liberalism is incompatible with the Christian injunction to reduce poverty is thus, umm, well, odd….or should we perhaps go a little stronger and say barking lunacy?

Today\’s Ritchie

I\’d forgotten he was a Godbotherer.

And it also quite contrary to the message of Luke’s gospel. In Luke 4, starting at verse 18 Jesus says:

The Spirit of the Lord is upon me, because he has anointed me to bring good news to the poor. He has sent me to proclaim release to the captives and recovery of sight to the blind, to let the oppressed go free, to proclaim the year of the Lord’s favour.

This is the clearest statement of Christian duty there is. Support for progressive taxation fulfils that duty.

How easy it now is to be a Christian! As long as you support the taxation of the rich bastards you\’re done!

Tax and developing countries

Ritchie has a bleat about how taxes don\’t seem to be capturing much more money in developing countries.

The reason is that import duties have been lowered (much the easiest tax to collect but they do horribly hamper trade), corporate taxation levels are being competed away and so the tax load has to go onto personal and consumption taxes like VAT.

OK, so why has this move been made? Well, it appears that it is this sort of tax system which actually builds a functioning society:

In colonial Nigeria in the last years of the 19th century, a strange quirk of history led the British rulers to draw an arbitrary boundary line along the 7?10? N line of latitude, separating the population into two separate administrative districts.

Below the line, the colonial government raised money by levying taxes on imported alcohol and other goods that came through Southern Protectorate’s sea ports. Above the line, the administrators of the landlocked Northern Protectorate had no sea ports, and instead raised money through direct taxes. In the areas near the border, this took the form of a simple poll tax, where tax officials collected from each citizen the equivalent of between $4 and $20 in today’s dollars.

Could this seemingly minor difference—created over a century ago by a long-defunct colonial administration, and long ago erased by subsequent administrative divisions—possibly still matter today?

Yes, it could, according to Daniel Berger, a PhD student in politics at NYU. Berger’s paper, Taxes, Institutions and Local Governance: Evidence from a Natural Experiment in Colonial Nigeria, finds that the “simple act of having to collect taxes caused governments to be forced to build the capacity which can now provide basic government services.” As a result, governance today is “significantly better” in areas just above the line than in those just below it.

If people actually see and feel the taxes they have to pay then they\’ll demand that they be better spent perhaps?

As ever it appears that we all want the same thing: better governance in these nations and thus more economic growth in this instance. However, Ritchie is, as ever, arguing for the counter-productive policy, the one which will not improve governance and thus will not improve economic growth.

Plus ca change.

Today\’s Ritchie

This is simply gorgeous from Mr. Murphy.

Your comments on markets shows just how naive the whole basis of your thinking is

Get over first year undergraduate economics

There are no supply and demand curves

Firstly – they don;t slope consistently, if they exist

Second – advertising, monopoly power and externalities destroys them for most commodities

Third, you assume the existence of homo economicus – which is sweet but utterly ridiculous of you – maximisers aren’t out there – so the market you think exists is simply a fiction

I could go on, and on

I don’t need to – all you prove by your comments is that all you and your like say is based on a profound fallacy – and therefore irrelevant.

In one fell swoop, centuries of economics is overturned by our hero!

Markets don\’t exist nor do supply and or demand curves!

Is there nothing this man doesn\’t know?

I think in fact that he\’s heard some scraps of this or that and then leapt to these truly insane conclusions. For example, of course supply and demand curves don\’t slope consistently. No one has ever tried to say that they do: consider the demand curve for water. At the level of a litre or so a day we\’ll pay damn near anything for it. At the level of millions of litres pouring through the front door it inverts as we\’ll pay people to pump it out of the front room for us.

It would be a very strange economics indeed which didn\’t recognise this sort of thing: and of course economics does indeed recognise it. That the curves change shape at different points, even that they have inflection points, doesn\’t mean that they don\’t exist or that they can\’t be useful at times.

He might also be thinking of the fact that the curves are not continuous (rather than consistent) and that they are discrete. This does complicate matters it is true, but doesn\’t obviate them.

You can fill in the rest for yourselves really: advertising for example doesn\’t destroy demand curves, although it might change them (indeed, the point of it is to shift them….meaning that the existence of advertising rather proves the existence of demand curves which is something of a blow to Murphy\’s thesis).

The very description of monopoly power rests on the way in which the monopolist faces a different supply curve than firms in a competitive market which again is something of a blow to the idea that the existence of monopoly power disproves the existence of supply curves.

Etc, etc and so forth.

Ritchieism of the day

Sorry – but until we get rid of consumerism this just won’t happen

When Cameron calls for a serious tax on advertising, the end of tax relief on advertising and restrictions on the power of the media to limit such absurd publications as the FT’s How to Spend It you’re just living in cloud cuckoo land.

Now he wants to end free speech as well?

Even more Ritchie

I commented yesterday on Richard Murphy\’s plan for a financial transactions tax on money that moved through CHAPS. One point was that the effect would be to entirely close down the short term money markets.

I could add much the same of a great deal of what is done by corporate treasury functions – many of which will have had the primary purpose of distracting attention from the real goal of the entity – which is to ensure profit is earned in real markets – not financial ones.

They are not the same thing

And I’d wholeheartedly agree that the net sum of much money market and inter bank activity – however originally contracted is not a zero sum game but a net loss, possibly of serious amount to the economy.

Far from him seeing this as a problem, he actually thinks that this would be a benefit.

And yes, this is indeed someone who advises the TUC on tax matters.

Just think through what he\’s saying here. If British Aerospace has money lying around (a not unlikely occurence, they get their revenue in huge chunks from the leasing companies as planes roll out, they pay out money over time for wages and materials. Heck, people pay up front fees to book a place in the order book, years before they actually get the plane.) then he thinks it better that that money simply sit in an account somewhere rather than be lent out to someone else to make use of.

That\’s the implication of closing down corporate treasury functions. In fact, looked at this way (for of course the money sitting in a bank account will be lent out, the margin going to the bank, not to BAe) he\’s trying to ensure that the banks become even more important as intermediators of cash flow, rather than the disintermediated money markets.

It\’s very difficult indeed to work out which economic planet he\’s living on for it certainly ain\’t this one.

The Financial Secrecy Index

Oh, my word, Ritchie Murphy has really outdone himself this time with his new Financial Secrecy Index.

It\’s simply a quite glorious fuck up even by his standards.

By his method of ranking the worst in the world is Delaware. So children, shall we see how they\’ve scored the place?


There are twelve measures used. The more negative scores you\’ve got the worse you are: plus, there\’s a weighting to see how many people use whatever naughty laws you\’ve got. So somewhere that was very secret indeed but only three people used would not be as high (or low if you prefer) on the index as somewhere that many people used but which was only mildly naughty.

That, as it happens, is about the only sensible part of this index that I can see.

So, one by one:

This weak opacity score arises because the USA (Delaware):
1. Provides banking secrecy;

So what is the definition of bank secrecy used?

1 Is legal banking secrecy banned (i.e. Is there no legal right to banking secrecy)?

Ah, now the two things are really not quite the same now, are they? It\’s entirely possible for there to be no law banning bank secrecy while there might be other laws insisting upon bank openness. Now I\’ll admit that I\’m not an expert on US law (as of course Ritchie is not) but there are myriad laws in the US where a bank should not only inform the Feds about movements in your accounts (for example, every cash transaction over $10,000) but I\’m similarly sure that there are myriad laws where the bank *must* inform the Feds about your bank transactions (that $10,000 cash one being one of them).

I would be absolutely astonished if under any reasonable test the US had anything approaching bank secrecy: that it doesn\’t have a law against it is not evidence that the US does indeed have bank secrecy.

We also seem to have something of a misunderstanding (which will come clearer later) of the US system, which is that it is a Federal one. Only some things are regulated at State level, many others at Federal. State chartered banks at State level for example, but all of the larger ones also have Federal oversight. So the test of whether there is bank openness or not is something which will depend upon Federal, not Delaware, law.

2 Does not put details of trusts on public record;

I have no idea: anyone else?

3. Does not comply sufficiently with international regulatory requirements

Again, dunno, their definition is: 3

Does the FATF rate 90% largely compliant and with no non-compliant ratings?

4. Does not require that company accounts be available on public record;

Well, not quite, the definition here is:

Are company accounts available for inspection by anyone for a fee of less than US$10?

Anyone know whether Delaware accounts are indeed publiclly accessible and if so, for what fee? I have a feeling our own dear Companies House would fail the £7.50 test…

5. Does not require that beneficial ownership of companies is recorded on public record;

Again, it\’s not quite what they say. Their actual test is:

Are details of the beneficial ownership of companies available on public record online for less than US$10?

Again, I have no idea about what happens in Delaware on this point but perhaps someone would like to tell us?

6. Does not maintain company ownership details in official records;

Similarly, does Delaware allow anonymous ownership? Dunno. Their test is:

Are details of the beneficial ownership of companies submitted to and kept updated by a competent authority?

7. Did not respond to Tax Justice Network requests for information;

Oh, that one must hurt. That the authorities do not respond to a survey sent by self-appointed puffed up egomaniacs.

8. Does not participate in the European Union Savings Tax Directive;

Hmm, that, under this Federal system of theirs, is something for Congress to deal with, not Delaware. Under the Constitution States are expressly forbidden from signing their own foreign treaties. no?

They pass number 9 because they have many tax information sharing agreements (because the US does).

10. Does not have adequate access to banking information;

Hmm, what does that mean?

Has the jurisdiction\’s authority effective access to bank information for information exchange purposes?

Again, that\’s Federal, not State.

11. Allows company redomiciliation;

Eh? You mean that thing which every corporate within the EU (and EFTA) has, the right to move jurisdictions? This is evidence of them being naughty boys? Plus, I would suspect (do not know, but would suspect) that redomiciliation to another US state is easy, but redomiciliation out of the US altogether would come up against some fairly stiff Federal tax laws.

12. Allows protected cell companies.

Who knows what this means?

But shall we also look at the \”other data\”? Yes, why not.

Financial services as a percentage of GDP
Not Available
Not Available
Number of multinational company subsidiaries in the jurisdiction
Not Applicable
Not Applicable
Number of Big 4 firms in the jurisdiction

Number of lawyers in the jurisdiction
Number of accountants in the jurisdiction
Not Available
Not Available

Wow, that really is something. Delaware has more lawyers than it has head of population. Quite incredible really. Of course, what they\’ve done is use the number for all lawyers in the US. The actual Delaware Bar seems to be around 4,000 people or fewer.

And the Big Four accountants are in Delaware (assuming they\’ve not made the same mistake about the US etc)? Well, that might just be because of the Delaware Court of Chancery. And if you don\’t understand the implications of that then you\’ve really no business at all commenting upon companies or incorporation in the jurisdiction. Absolutely none at all.

This data shows
1. That the USA (Delaware) may have a significant dependence8 upon financial services;
2. That the Big Four accounting firms do have a significant presence9 in the USA (Delaware), suggesting that it does host significant international activity;
3. That the USA (Delaware) does exhibit a significant number10 of lawyers accountants when compared to other secrecy jurisdictions, suggesting the relative significance of its activities.

Well, actually, no. The evidence does not show that Delaware has a significant dependence upon financial services*, the presence of the Big Four does not show significant international activity and the number of lawyers is so hoeplessly wrong that we can conclude nothing more than that this exercise has been put together by someone with absolutely no clue what they are doing.

But then that\’s our Ritchie, ain\’t it?

There\’s one small get out for Murphy\’s army here. That they are using some US wide information. However, the idea that the presence of the Big Four and lots of lawyers in the largest economy in the world is evidence of it being a secrecy jurisdiction is simply insane. Sorry, but it really is.

*Other evidence does most certainly show that Delaware makes good money out of being a centre for the law about corporate governance. But as the above doesn\’t even try to delve into that, let alone understand it, that can\’t be what they\’re referring to as part of their evidence, can it?

Today\’s Ritchie

Yes, it\’s our favourite retired accountant again.

It has been commonplace for tax to be charged in accordance with “law”. For example, it was decided in a legal opinion given in the House of Lords in the United Kingdom in 1869[1] that:

If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute what is called an equitable construction, certainly such a construction is not admissible in a taxing statute.

This principle remains enshrined in most British tax law (in particular)and appears to heavily influence taxation thinking in general.

OK, established principle of British law, been there a century and a half at least but Ritchie wants that to change. Got to say he doesn\’t lack ambition at least. But why? Why change it?

But the profession will hate it. They want certainty. We need principles to ensure tax is fair.

Well, apparently tax shouldn\’t actually be certain: shouldn\’t be about what the law says it is, it should be about whatever the taxman decides on the day it should be. Bugger all that rule of law stuff, that democracy (you know, the bit about having to go through Parliament?) shtick is simply too, too, old fashioned.

Tax should be what ever is demanded and pay up quick Sonny Boy.

Fuck that for a game of soldiers quite frankly. And the horse it rode in on.

Rather than that sort of dictatorship of the bureaucracy we\’d be better off scrapping corporation tax altogether (for of course the vast majority of all of this is about that very corporation tax). And there\’s no particular reason to think that there would be much revenue loss to the Treasury if we did as well: given tax incidence (yes, even St Cable of Vince is on board with this one) the money not collected in corporation tax would pop up elsewhere, almost certainly in dividends (and capital gains….and yes, part of the change here would be to equalize CGT with income tax rates at the same time as abolishing corporation tax) to shareholders and higher wages for workers: both of which are taxed and at or above the marginal rates of corporation tax (40% for higher rate payers for example).

But wait! There\’s more!

Yes, we should slap the banks with loads more tax so that they have less capital and thus can lend less! Truly, the work of a genius in the middle of a credit crunch, don\’t you think?

And I am quite convinced it is the right thing to do. Banks have to repay society. Banks are liquid now – using government money. If they need new capital they should raise it, not save it. And HMG needs the tax – plus to cost of doing business for banks has to increase.

Interestingly, when Lloyds\’ announced plans for a rights issue (you know, that raising more capital bit) Ritchie was against that too.

There is a sadness here as well as the hilarity. There really are people in The Treasury who listen to this guff without guffawing in laughter. Sadly so.


You cannot, for example, make a nurse and (I assume he means \”an\”-Tim) added value supplier by transferring them to the private sector.

Our Ritchie.

Private nurses exist: is he saying they don\’t add value? That people pay them because they don\’t value what they do?


The rest of it is that everything truly valuable is supplied by the State, those things provided by the market mere trinkets.