In which we answer Richard Murphy with one wordDecember 19, 2010 Tim WorstallRagging on Ritchie16 Commentsthat I can recall no company has ever gone into liquidation because it paid more tax than was necessary. Yukos. previousHow not to open a comedy gig in MontrealnextFascinating blog bit of the day 16 thoughts on “In which we answer Richard Murphy with one word” Adrian December 19, 2010 at 12:09 pm The most frightening part of the post is his wish (in comments) for a law in which a person can close down someone else’s a company simply because it ‘failed to operate ethically’ and failed to pay its tax ‘willingly’. Scary bloke. Kay Tie December 19, 2010 at 1:35 pm @Adrian That’s precisely how business in Russia operates of course. Poor little Richard thinks that he and people like him are going to be the officials. The reality is that they soon are replaced by much nastier people (well, more violent – Richard is pretty nasty already). Phil December 19, 2010 at 2:32 pm Has anyone pointed out to Ritchie that such a law would lead to the Guardian being closed down for all it’s offshore fun and games? Tim Newman December 19, 2010 at 3:56 pm Well spotted, Tim. Hugo December 19, 2010 at 5:15 pm This is silly of Richie. There are obviously thousands of otherwise-profitable companies which were tipped over the edge into bankruptcy by taxes, even if we don’t know what they are. I wonder if Richie reads this blog, including the comments. Luis Enrique December 19, 2010 at 7:34 pm under current rules, it cannot be very easy to be tipped into bankruptcy by tax, seeing as you only have to pay taxes if you are profitable. on that note, i saw a good argument from dsquared that this is one reason why the popular idea to stop interest payments being deductable for tax purposes is a duffer: if you couldn’t deduct interest payments then you really could be pushed under by your tax bill David Gillies December 19, 2010 at 7:36 pm He really is a nasty piece of work. He is a huge fool, but his foolishness is greatly outweighed by his knavery. He’s the sort of grey man that prospers under Communist rule, and who would cheerfully sign an execution warrant for a ‘class enemy’. pete December 19, 2010 at 8:08 pm The aspect that draws my attention is the juxtaposition of this post with the one above. That is about real people in the real world getting their hands dirty trying to make it a better place. This is about the masturbatory fantasies of a nonentity who has never contributed anything of value to the world in his entire life. I would tend to include his genes in that statement David Gillies December 19, 2010 at 10:55 pm There’s one word I usually respond to Murphy with, suffixed with an exclamation mark, and it rhymes with a flat-bottomed river-boat popular in the Cambridge area. Dennis the Peasant December 20, 2010 at 3:56 am I keep waiting for him to start writing long, cliched and somewhat disorganized essays about the evils of Judaism and syphilis… Surreptitious Evil December 20, 2010 at 11:05 am “it cannot be very easy to be tipped into bankruptcy by tax, seeing as you only have to pay taxes if you are profitable. ” Many companies can be tipped in to bankruptcy by untimely tax demands – remember that cash flow issues are a more common cause of company failure than simple profit & loss, especially in these straightened times for corporate credit. Of course, you are also ignoring the fact that “profits” are not the only thing taxed – from a corporate accountancy point of view, if not necessarily from a macro-economic pov. Import duties, employee remuneration and sales (in the form of VAT) are all taxed as well. Serf December 20, 2010 at 11:14 am Perhaps not as famous as Yukos, but Dogan Holding in Turkey, came very close, due to a tax fine. Only subsequent negotiation reduced it to non catastrophic levels. Its crime was to own newspapers that were not sufficiently sycophantic to the esteemed leader. john b December 20, 2010 at 11:29 am Many companies can be tipped in to bankruptcy by untimely tax demands ITYM “incompetent tax planning”. If you’ve incurred it, you’re gonna have to pay it; if you’ve spent it, then you’re an idiot. But I do agree on VAT especially – as Mark W regularly points out, it’s the worst tax of all. Tim Newman December 20, 2010 at 11:48 am under current rules, it cannot be very easy to be tipped into bankruptcy by tax, seeing as you only have to pay taxes if you are profitable. I don’t know how it works in the UK, but in Russia it works as follows. You get taxed on your profits, which are classed as revenue minus expenses. But your expenses must be approved as tax deductible in order to be recognised as expenses in the tax calculation. A lot of the time this is very difficult, mainly because you need mountains of paperwork signed by all kinds of officials. So in effect you get taxed not on your profits, but on a sum which the Russian government has decided are your profits, which is often a lot bigger sum. It is quite possible to see your entire margin disappear in a tax payment. Serf December 20, 2010 at 12:24 pm ……So in effect you get taxed not on your profits, but on a sum which the Russian government has decided are your profits, which is often a lot bigger sum……. Which is in effect what Murphy and his ilk are campaigning for. I guess that http://www.arussiantaxationsystem.com was already taken, so they went for tax justice network Dennis the Peasant December 20, 2010 at 8:23 pm “it cannot be very easy to be tipped into bankruptcy by tax, seeing as you only have to pay taxes if you are profitable. ” Maybe so in Murphy’s world (although I doubt it), but not in mine. In Ohio, USA, companies pay a series of federal and state payroll taxes which are generated on the basis of company expenditures on wages. These payroll taxes are independent of profitability. Similarly, companies in Ohio pay a Commercial Activity Tax (CAT) that is based on sales, rather than profitability. In fact, the CAT tax was instituted to replace taxes on business profits. Why? To guarantee the state a more predictable revenue stream. Richard, forgive the generalization, but you’re an under-thinking, over-generalizing twat. 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