So, apparently this does mean that I\’ve now published an academic paper.

The professoriate here I come then.

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It\’s an adaptation of the piece I did for the IEA showing why UKUncut are almost entirely wrong in their wibbling about Boots, Arcadia, Vodafone and Barclays.

And just for Arnald: in there, at the end, are some positive suggestions for how to tax. How to raise the same amounts of money while having higher growth.

Don\’t say there aren\’t positive ideas presented around here.

8 thoughts on “So, apparently this does mean that I\’ve now published an academic paper.”

  1. Firstly congratulations on publication, but secondly a query from the Boots section – quote “For while profits and dividends are taxed by those who pay them, interest is taxed by any person who receives it. Further, given that income tax rates can be higher than corporation tax rates, it is even possible that the recipients of this interest are paying more tax than would originally have been paid if interest were taxed in the same way as company profits are taxed”.
    Would not the income tax you refer to be in fact capital gains tax?

    Tim adds: No, interest is treated as income. A change in the capital value of the bonds (say they are £100 each, paying 10% interest. Then interest rates halve to 5% in general. The bonds are now worth £200. Well, only if they’re a perpetual, you’ve got to adjust for yield to maturity and stuff, but you get the basic idea?) will, if you sell, produce a capital gain which is taxed as a capital gain.

  2. Great article. I think I understand the issues a lot better having read it. I was always a bit dubious of these claims about underpaying tax mainly because I could not believe that HMRC would just negotiate and let people away with underpaying..!

    Also interesting to see that VAT is (as I have long suspected) much less harmful than income and corporation taxes.

    What is so sad is, of course, that the politicians’ experts must tell them this stuff and yet they either can’t or won’t make the changes to simplify the system and make it more efficient!

  3. Congratulations, but one minor quibble.

    Switzerland is not in the EEA. But as it is in EFTA, and has various of bilateral agreement stuff with the EU that amounts to the same thing, a company based there might (or might not, doubtless pending various test cases before HMRC’s commissioners) be treated the same as one elsewhere in the EU for the purposes of taxation in the UK.

  4. A question about the Boots thing. The same thing applies to a certain possibly American sports magnate taking over a football club based in a major city in the North-West of England. Or is that three magnates and two clubs? Whatever.

    Any Johnny No-cash can take over a business by borrowing a lot of money for a day or two, to buy out the current shareholders, then getting the company to borrow the cash against their now-established value, and using it to pay out a huge dividend to Johnny No-Cash, so JNC has no debts, and lots of tax-deductible interest payments in the new company. It’s almost standard practice for a PE takeover to work this way – buy the company and burden it with debts that have the effect, intended or otherwise, of eliminating its tax liability.

    Now, this is fine in that in effect the now zero net profit the company turns (because all its surplus is ploughed into interest payments) ends up as profit on the books of the lender and are thus taxed in whatever jurisdiction the lender is resident in. But this presumably means that, with capital rather more mobile than people and those places in which you can do profitable business with people, there is still plenty of room for writing down profits in high-tax jurisdictions where you can actually make money, and transferring them, through this loan stuff, to low-tax jurisdictions.

  5. @BE
    Point of order “Also interesting to see that VAT is (as I have long suspected) much less harmful than income and corporation taxes.”

    VAT is NOT a consumption tax at all, it is a tax on the gross profits of VAT registered businesses (see Mark Wadsworth here http://markwadsworth.blogspot.com/2011/10/vat-incidence-fun.html) – the clue is in the name VALUE ADDED tax.

    And the deadweight economic costs of VAT are MUCH, MUCH higher than any other tax, especially income taxes – this is as you would expect as it was devised by a French socialist Maurice Laure.

  6. @Shiney where in my comment did I say that VAT is a tax on consumption? I was merely interested that Tim’s article (did you read it?) refers to VAT being less intrusive than some other taxes. No need to should. As I’m sure you know I am well aware of Mr Wadsworth’s site.

  7. @BE

    Yep I know, you know about Mr W, just sayin’ that there are consumption taxes (usually to nudge us like fuel/fag duty etc) but VAT is different… obviously. Was trying to avoid confusion for those that don’t know about Mr W.

    Did read Tim’s piece… otherwise I wouldn’t have commented, since I normally just lurk.

    Wasn’t shouting but my editor doesn’t seem to allow me to emphasise without caps. I’m not normally shouty.

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