Is there no beginning to Ritchie\’s talents?
So, he decides to tell students in the uni magazine all about his clever new plan to finance student fees.
The suggestion I am making is that companies
should pay an additional tax to provide university education for all those
wishing to participate, and that they do so from payment of an additional
corporate tax payable only by large companies in the UK (the UK
corporate tax system is already split
so that large companies – basically
those making profits of more than
£1,500,000 a year). According
to the theory of tax incidence
companies do not actually pay tax
at all, but do only do so as agents for
Since, however, the shareholders
of large companies are, almost
invariably, amongst the top 10% of
income earners the suggestion I am
making creates a progressive tax
alternative which meets the needs
of society, and which also reflects
the fact that large companies are
the biggest beneficiaries of students
trained by the state because they
employ more of them than anyone
else to enhance their own profits.
OK, someone has at least managed to get him to grok to the existence of tax incidence. That\’s good. but he\’s still getting it howlingly wrong, isn\’t he kiddies?
In a closed economy, yes, capital, meaning the shareholders, will bear the burden of corporation tax. But we don\’t have a closed economy, do we? We have an open economy. One with the free movement of capital. Which means that it isn\’t shareholders that carry the burden of corporation tax: at least most certainly they don\’t exclusively do so.
In fact, here in the UK, most estimates are that it\’s the workers who carry the majority of the burden. What\’s even more fun is that in theory (but unlikely to be so in practice currently) the burden upon the workers can be more than the amount raised in tax: yes, incidence can be over 100%.
No, not some neo-liberal: Joe Stiglitz.
So well done Ritchie. Even after someone\’s been shouting to you about tax incidence for years, insisting that you have to take account of it, you still get it wrong.