Ritchie in t\’Guardian

Yup, usual stuff. Entirely ignores that corporation tax is largely bourne by the workers, not the shareholders, and certainly not by the company itself.

Trots out his known to be wrong estimate of tax avoidance. This is fun too:

These big companies\’ tax rate will fall from 28% to 24% over the next four years – a move that seems generous, but quickly becomes ludicrous when it is appreciated that the effective tax rate of the largest companies in the UK is now 21%. This means that over the next four years, it is likely that their effective tax rate (that is, the rate they really pay) will fall to 17%.

And he\’s wrong there for the same reason that his estimate of tax avoidance itself is wrong. For of course some (according to taste, most, nearly all, a tiddly bit, but certainly not Ritchie\’s insistence that none of it is) of this difference between the headline rate and the actual rate is because of the various allowances that Parliament builds into the tax law.

And part of the deal over corporation tax being lowered as the headline rate is that those allowances are reduced as well. So this change will actually lead to a shrinking of the tax gap as Ritchie measures it.

Just seems odd that he\’s not celebrating what he\’s working so hard to achieve.

But the biggie?

This is all about profits that Vodafone made in Germany. And according to Ritchie\’s plans for the corporate taxation system, such profits should be taxed where they arise, where the economic substance of the transaction is.

In Germany.

So, if RitchieWorld were to be consistent there would be no money owed at all to the UK Treasury.

Ain\’t that interesting?

4 thoughts on “Ritchie in t\’Guardian”

  1. Murphy is a cock.

    He is irritating to the point of distraction.

    I don’t mind genuine social democrats (or even Marxists) that one can have a reasoned debate with. Some of them have interesting things to say.

    But Murphy isn’t one of them – he is a strange small time accountant with too much time on his hands and a bizarrely (and grossly) exaggerated view of his intellectual abilities. He refuses to engage in any sort of discussion, accusing anyone who doesn’t exactly agree with him as being a closed minded right wing fascist. He even accuses other left wingers of this! He would have made a perfect commisar in the NKVD rounding up kulaks in the Ukraine.

    The man is a menace.

  2. “corporation tax is largely bourne by the workers, not the shareholders”

    Firstly, it’s ‘borne’ and not ‘bourne’.

    Secondly, there is plenty of evidence that VAT is borne by the supplier, not the consumer. Or that Employer’s NIC is borne by the employee. But conversely, that as employees work for their net wages, not their gross wages, all taxes deducted from gross salaries are in fact borne by the employer. And so on.

    Seeing as it is only ‘people’ who can bear a tax, why not cut to the chase and say that ‘people pay tax’? Or far more importantly, that most taxes are levied on wealth creation and the free exchange of goods and services?

    How about you put on your thinking cap and come up with a tax that neither relates to an individual’s wealth creation nor the free exchange of goods and services?

  3. Have I pointed out in the past that Murphy’s Tax Justice Network International Secretariat Limited reported that as at 31 December 2008 it paid 2,160,000 on income of 10,317,000 or 20.93%. Disgusting! Disgraceful! The face rate is 28% and Murph ought to have his companies pay it. He got a break with trickeries and deceptions such as “Administrative Expenses” (a likely story) and “Depreciation” (Bah! Humbug!).

    Mr. Wadsworth is 100% correct in his simple assertion that it is only people who pay tax: owners, employees, customers or suppliers. There is nobody else. He asks for a tax “that neither relates to an individual’s wealth creation nor the free exchange of goods and services?”

    I suggest that wealth creation is virtually the same thing as the free exchange of goods and services because a valuable thing is not really wealth until exchanged. I suppose a man could build a useful tool, and then use it himself to create his final product, or live hermit wise doing everything himself, but these cases are fringe matters.

    Before I get lost, my point is that we tax wealth creators for the same reason that Willie Sutton robbed banks, ‘because that’s where the money is’. Taxing those who do not create wealth is not useful if you want to actually collect taxes.

    The real issue is how much to tax the wealth creators, and in what manner to tax them, so as to keep them creating wealth and paying maximum taxes. So sayeth the left.

  4. But conversely, that as employees work for their net wages, not their gross wages, all taxes deducted from gross salaries are in fact borne by the employer.

    Well that depends on the other options potential employees have, and what other options the potential employers have. If the employment is tied to a particular location (eg a natural resource) and the employees in question can move around freely internationally, then the employer will have to bear the tax burden from said wages, because the employee will only look at the net return to the employee. (Although, if the tax burden is too high relative to profits, then the employer won’t invest and the employees will stay in their alternative jobs).

    But, if the employment is free to move around internationally, and the employees are stuck (eg they can’t get work visas for other countries), or if the employees really like living in a particular place, then the employees will have to bear the burden of taxes, because the employer will only employ them if the profit the employer gets after paying gross wages is equal or higher than that in other countries. (Although if the tax burden is too high in relation to wages, at some point the potential employees will only work under-the-counter, or will prefer to go on the dole, or will, in extremes, sit down and die.)

    Although then, after this, you have to consider the willingness of the consumer versus the employer versus the employee. If people have to buy the good, then they’ll probably bear more of the tax than the employer or the employee.

    (This assumes that the tax on wages with the country is equal regardless of the nature of employment, if you wish to dump this assumption, go through and replace “country” with “employment” or “sector” or whatever).

    How about you put on your thinking cap and come up with a tax that neither relates to an individual’s wealth creation nor the free exchange of goods and services?

    A tax on the unimproved value of land, as an annual rate paid independently of whether the land has been traded in the last year. (This has its downsides as a tax, attempting to finance a war or a welfare state that way I think would create serious liquidity problems, there are also definitional problems with identifying the unimproved value of land, all I put this forward is as an example of a tax that meets the specified criteria, and it’s quite a famous one, it only required a very small thinking cap).

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