Taxation Bananas

This is good news don\’t you think?

Richard Murphy, a tax expert who advised the NAO on its report on the performance of the UK Revenue and Customs, said that large companies are effectively now able to set their own tax rates. "Corporation tax is falling worldwide as a percentage of profits. Corporations seem to be deciding what they should pay, not as a percentage like the rest of us, but as a sum above which they don\’t want to go."

John Christensen, a former economic adviser to the Jersey government and director of the campaign group Tax Justice Network, said the Guardian investigation confirmed that the flight of capital was continuing, having reached unprecedented levels in the 1990s. "The trend in the last 30 years has been to shift the burden of tax away from companies on to the consumer and labour. Capital is increasingly going untaxed."

For as we know, the taxation of corporate profits actually leads to lower wages. Proof here. So we can in fact celebrate these glorious upholders of the workers\’ wages at the expense of the predatory State.

We might also note that capital isn\’t in fact going untaxed: it\’ just being taxed where it ought to be, at the level of the individual, when they receive their dividends or capital gains. A good thing all round then.

2 thoughts on “Taxation Bananas”

  1. WTF are they talking about?

    Are they using ‘capital’ in the sense of ‘productive or useful assets’ (tangible or intangible); what Adam Smith referred to as ‘stock’? Stocks are not very mobile at all. Otherwise why don’t Tesco shut down all their supermarkets and reopen them in Ireland or Bulgaria, where corp tax is lower? Why did it take over a decade to relocate large parts of the City of London a few miles to the east to the Docklands?

    Or are they using ‘capital’ as short-hand for ‘finance’, which is merely a way of recording ownership and calculating who gets how much of the profits. Sure, ownership can change at the drop of a hat, and you can shuffle between shares, bonds and so on quite easily. But so what?

    In any event, VAT and Employer’s National Insurance have a far more direct effect on wages and employment levels, it’s those two we should get rid of first.

    Finally, please do not overlook, that in the grander scheme of things, you do not pay corporation tax on reinvested profits.

    My letter to the FT here:

  2. “the Guardian investigation confirmed that the flight of capital was continuing”


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