Our Wee Wully

Hutton that is.

Are they intervening now, within weeks of a general election, because of their genuine concern to promote employment or because absorbing an increased payroll tax will hit their profits and personal bonuses and a Conservative government will be more congenial for their personal interests?

As any fule kno the incidence of payroll taxes is not upon company profits. It\’s upon the wages of the workers.

The theory of tax incidence has a number of practical results. For example, United States Social Security payroll taxes are paid half by the employee and half by the employer. However, economists think that the worker is bearing almost the entire burden of the tax because the employer passes the tax on in the form of lower wages. The tax incidence is thus said to fall on the employee.

2 thoughts on “Our Wee Wully”

  1. In no wise is NI a tax on company profits: it increases a company’s costs, which potentially makes marginally profitable firms into marginally unprofitable ones.

    It has to be one of the most stupid ways to tax businesses yet devised. Even corporation tax is better, since it ensures that profitable activities remain profitable, albeit at a lower level.

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