The diverted profits tax – set at 25%, which is 6% higher than corporation tax – was brought in to prevent international firms from using transfer pricing, where they divert goods and services via a lower tax jurisdiction to avoid paying in the UK.

That’s not the definition of transfer pricing. And transfer pricing is a system of rules companies must follow, not one they mustn’t.



To be clear: There is simply no empirical evidence or plausible economic mechanism to support the claim that cutting top tax rates spurs economic growth.

But then Nick Hanauer always has been an idiot, no?

Really quite stunning

…and the top 20% of the country earn 15 times more than the bottom 20%, before tax and benefits, and about four times after that readjustment.

The complaint being that that’s not enough tax and redistribution.

And ain’t this great?

There were also critics – dismissed by Wilkinson and Pickett as “ideological” – who questioned either the validity of their statistics or the conclusions they drew from them. What struck me, reading the book, was that if the homicide rate was a major sign of inequality then it was noticeable that since 1980, the year that inequality really started to grow in the US after 50 years of flatlining, murders also began to fall. There is now a lower murder rate in America than there was in 1950. What accounted for that apparent anomaly?

“It means there must be other things involved,” says Wilkinson confidently. “But we can say that if those same changes, whatever they are, had happened without the increase in inequality, homicides would have fallen even more.”

That’s religion. We didn’t sacrifice the virgin, the Moon was still disgorged by the Eclipse Dragon, but God decided to do it that way to test your faith.

In any case, he maintains that it’s the general consistency of the data showing the relationship between inequality and mental health, rather than the anomalies, that is most notable.

Snigger. Facts that disprove my theory are just anomalies of no import. That’s not science, is it?

Yet leaving aside whether it’s desirable, there is no such thing as complete equality, and attempts to bring it about have inevitably led to the worst kinds of repression. Still, that’s not an argument for unconstrained inequality. Where, though, to start on narrowing the distance between rich and poor? If they could impose one piece of legislation tomorrow what would it be?

“I would want companies to have to put some of their profits each year into an employee-controlled trust which would then have voting rights on the board,” says Wilkinson.

“I’d go for a Finland-style educational system, completely comprehensive,” says Pickett.

Sigh. Before tax and benefits inequality is higher in Finland than it is in the UK. Comprehensive schooling doesn’t do it therefore.

This just in from Anne Pettifor

The NHS pays for itself, because all the people who work in it pay tax.

Great, that’s easy then. We don’t tax anyone else to pay for the NHS. We only tax those who work in it because, as we’re told, that tax pays for it anyway.

Note what the real error in her argument is. Student loans don’t cost government anything because all the lecturers employed pay tax.

Isn’t this just appalling about the tax law?

Owners are liable for UK tax on the rents they collect from students, but can receive the money before tax and reduce the amount they have to pay by offsetting expenses and debt repayments.

And isn’t this an indictment of the higher education system?

The National Union of Students vice-president for welfare, Izzy Lenga, said UK students were seen as a cash cow by overseas investors, and often had no choice but to take rooms in “overpriced glass towers”.

Lenga said: “Overseas investors make billions of pounds building luxury apartments and charging sky-high rents for students. There is a cost of living crisis and finding good-quality affordable accommodation is a huge barrier for low- and middle-income students attending our world-leading institutions.”

Building more student housing does rather reduce the cost of all student housing, doesn’t it?

Pretty much solved really

HMRC’s figures from 2015-16 showed that 6% of tax due in Britain went uncollected – a whopping £34bn. About £1.7bn of this came from avoiding tax by taking legal steps to minimise one’s liability and an estimated £5.2bn came from evading tax illegally. With our public finances strained, it is an insult to diligent taxpayers that multinational firms and high-net-worth individuals can use a complex myriad of loopholes and accounting gymnastics to minimise their tax bill.

By the time we’re down to a couple of percent we’re pretty much done with government work aren’t we?

More Unherd

A one percentage point increase in wealth taxes – a very large increase indeed – reduces growth by just 0.02 to 0.04 percentage points. Not insignificant, but certainly not the picture of economic doom painted by critics.

Our star editor at the new Unherd appears confused here.

A 1% of GDP increase in wealth taxes would indeed be large. But that’s not what this paper, which she refers to, says. Rather, a 1% increase in the revenue from a wealth tax reduces GDP growth by 0.02 to 0.04%.

The countries studied have wealth tax revenues as % ge of GDP of 0.1% to 1%. Call it, say. 0.3% as an average. We increase the revenue from that by 1%, to 0.31% of GDP. Future GDP is lower by 0.03% of GDP. Marginal tax take is higher than average, of course. So a reasonable guess is that tax revenue would have been 50% of that marginal 0.03% of growth we’re not having. Which is higher than the 0.01% of extra tax we did get.

We’re over the peak of the Laffer Curve already…..

There could be a reason for this

A crackdown on offshore tax cheats has only recovered about a third of the £1bn that the government had predicted, according to estimates.

Possibly, the government has swallowed the campaigners’ insistences about how much dodging there is going on.

And those insistences prove to be wrong?

Daily Mail and union tax avoidance

Unite’s accounts for the year ending December 2016 showed that despite having a share portfolio of more than £50million, which regularly reports a healthy profit, it paid no corporation tax.

For years, Unite has used a loophole that allows it to offset large sums against costs — such as sick pay, accident compensation and employment tribunal costs.

McDonnell told his embarrassingly small audience in Davos that major auditing companies should have the equivalent of a doctor’s Hippocratic oath so they don’t encourage firms to avoid tax.

A dose of such medicine might prove handy for Len McCluskey and his fellow brothers and sisters in Unite.

Offsetting costs against revenues is a loophole these days, is it?


Although I’ve little doubt that one or more among the Ritchie, Prem Sikka etc set have made exactly the same claim at some point.

Trump’s tax reform and the EU’s tax demand on Apple

A little comment by Ben S has triggered a thought.

The EU’s tax demand on Apple in Ireland was based upon he idea that no tax was being paid anywhere. Verstaeger herself has said this. That if Apple paid US tax then that would change the Irish tax case.

One point would be that this shows what bollocks the tax case was in the first place. The other is that apple has just announced that it will be remitting that money into the US nd will be paying US corporate income tax upon it.

Collapse of EU tax case concerning Apple and Ireland, no?

I wonder what Spud is going to say about this? Especially since it pulls the rug from under the feet of most of the whining about tech giant taxes…..

Like this is going to work

Internet giants could be penalised through taxes if they fail to cooperate with government efforts to fight terrorism and online extremism, the minister of state for security has said.

I thought the main complaint was that we can’t tax these internet giants in the first place?

Apple’s profits, tax and transfer pricing

So, Apple has had to pay more tax in the UK:

Apple has paid £137million in backdated taxes after a probe by UK authorities.

The iPhone maker handed over the cash after an investigation into how much it paid the taxman from 2011 to 2015.

Inquiries centred on London-based Apple Europe Ltd, which has nearly 800 UK staff and provides business support and marketing services to Apple’s other companies. HMRC argued it was not paid enough commission for these services, meaning its profits ended up being lower than they should have been.

Apple Europe reported sales of £644.7million and profits of £51.1million for the years 2011 to 2015 but paid no UK corporation tax. It was instead due a £7.3million tax credit.

No, this isn’t as a result of campaigners. It’s not a result of new rules. It’s simply the application of the old rules.

The key here is “transfer pricing.” All a bit complex but essentially, subsidiaries of the same company should price transactions between them as if they’re not subsidiaries of the same company. The “arms’ length” principle. What’s the price a truly independent business would charge for this? That’s what the price should be.

HMRC has the current right to, and has for some time, challenge the prices which people do charge themselves internally. A few years back Starbucks changed the royalty rate it charged itself for example. HMRC was looking cock-eyed at the one they were using (from memory, 6%) and “suggested” that a lower rate was a good idea (4% again from memory) in the sense that nice business here, be shame if something happened form of “suggestion.”

This is what has happened here. HMRC has suggested that Apple Inc (or some part of it) isn’t paying Apple Europe Ltd enough for the services it provides and that a true market price would be a little higher. Thus leading to more profits in the UK and a higher tax bill.

No, this is nothing about selling from Ireland, scooping the money off to Bermuda or anything like that. This is straight transfer pricing stuff, all entirely and wholly already in HMRC’s power.

As shown, obviously, by the fact that they’ve just won, eh?

£30 million a year too. We can pay for a lot of Corbyn with that, right?

Ignorance, ignorance

Not everyone who uses offshore vehicles is a crook. But the main takeaway from the Panama and the Paradise Papers, published again by the Guardian and media partners in November, is that the offshore industry is not a minor, shadowy part of our economic system: it is the system. The burden of taxation has moved away from multinational corporations and the rich to ordinary people. Offshore has made this happen. We – those of us who pay our taxes – are the dupes.

No, it’s the other way around., The vast majority of those who use offshore are not crooks. Instead, they’re – if they’re from the more turbulent areas of the world – those trying to protect their property from their own government. Or, as with those funds of David Cameron’s father, people struggling to make sure that people from different tax regimes can all obey those different tax regimes.

You know, they all were paying tax?

As to the burden of taxation moving away – corporation tax has never been a large portion of the economy in the first place. A few percentage points of GDP, no more. It’s been a larger portion of the tax take, true, but then that was back when the tax take was a smaller amount of GDP. And as to taxation moving away from the rich – the portion of income tax coming from the rich is at record highs in both the US and UK currently.

Amazon’s tax settlement with Italy

They’ve settled for 100 million euros. None of the reports go into the details of what was alleged and so on. So, anyone know?

Excessive royalties perhaps? Over claiming investment breaks? Not arms length transfer pricing?

I ask because varied will start to insist that this shows dodging – which, obviously it does. But is it dodging that’s been rooted out under the rules they would like, or what is dodging under extant rules?

What is this idiot talking about?

Any sufficiently advanced technology is indistinguishable from magic, and the accountants of Silicon Valley have proved Arthur C Clarke’s third law to be as true of tax avoidance as it is of tech. The most recent outrage is Apple’s $252bn offshore cash pile, as exposed by the Paradise Papers investigation. More valuable than the foreign currency reserves of the US or the UK, it represents all the money that the world’s most valuable company has siphoned out of the global financial system for the benefit of its shareholders.

You what?

Money invested in T-Bills an the like (which is where Apple’s money is) is siphoned out of the global financial system?

How does this shit get published?

Isn’t this just the most horrendous scandal?

Theresa May’s husband’s investment bank employer has paid no UK corporation tax in the past eight years, it was revealed today.
Philip May, 60, works as a relationship manager for Capital Group, an American financial services company with assets of £1.1 trillion with offices in Belgravia.
Since 2009 the company has turned over £467million but made losses of £125million meaning they don’t have to pay corporation tax – a levy on profits.
Despite the huge losses it directors were paid £43million in salaries, pensions and other benefits – but it is not know what Mr May earns.

Company making losses doesn’t pay a tax upon profits. And the workers keep being paid all the same!

British Leyland wasn’t paying profit taxes – and the workers still got paid too.

And what the fuck is this idiot saying?

While tax expert Prem Sikka added: ‘It’s very odd a business can pay substantial amounts to directors while not turning a profit.’

No it’s fucking not.

We’ve an 8 year period here. How many directors? 10 say? No, dunno either.

£500 k each? For directors of a wealth management company in the City? That’s not actually large by the standards of the place an time you know.

Then there’s this idiocy:

Labour MP John Mann told the Mirror: ‘It is fundamentally un-British to avoid tax. The Prime Minister should raise this at the breakfast table immediately.’

Paying people a salary or a bonus gains twice (actually, more than that) the tax of making a profit an paying corporation tax instead.

Well, dunno

A Guernsey finance chief has claimed that the release of the Paradise Papers was ploy by left-wing media to influence the first ever tax haven blacklist.

It was most certainly a part of the campaign, that’s for sure.

What a wonderful whine this is

Setting aside the fact that HMRC has already begun to review certain tax arrangements on the Isle of Man, it’s a question that seems as ridiculous now as it was in 2013. Because if there is one big lesson from the Paradise Papers, it’s that currently legal tax avoidance by certain companies and individuals has been shown to be as antisocial, immoral and unfair as many of the arrangements that are banned.

The correct reading of this is “I believe that” antisocial, immoral and unfair and “I’m seriously pissed that everyone else doesn’t.”

Especially as this is from the Guardian’s head of investigations who has just spent a year trawling through those Paradise Papers to find nothing of any great moment.