Why are we ruled by complete numbnuts?

The Prime Minister said HM Revenue & Customs should “look carefully” at cases where international corporations have legally been able to pay no corporation tax – or very small amounts – on billions of pounds of UK revenue.

Asked by MPs if it was “morally wrong” for big companies like Starbucks and Apple to avoid paying tax, he said he was “not happy” and companies should pay “fair taxes.”

“This is an international problem that all countries are struggling with, about how to make sure that companies pay tax in an appropriate way,” he told the House of Commons. “I am not happy with the current situation. I think the HMRC needs to look at it very carefully. We do need to make sure we are encouraging these businesses to invest in our country, as they are, but they should be paying fair taxes as well.”

Sigh.

Tax on the returns to investment reduce the amount of investment. Thus the more you tax the returns to investment the less investment you\’ll get: making the country poorer in the long term.

There thus isn\’t a possible compromise between tax and investment.

12 thoughts on “Why are we ruled by complete numbnuts?”

  1. Simples: he’s one of those idiot Heathites that thinks they should rule by right of social acceptability and learned precious little from the period 1945-1979.

  2. “There thus isn’t a possible compromise between tax and investment.”

    I’d differ. The fact that they directly opposed _requires_ there to be a compromise – govts have to recognise that there is a direct trade-off. This is surely the very essence of a compromise. You can’t have both.

  3. I was thinking the same, PG. Although it does rule out ‘fair’ taxes, however that’s being defined today.

    Art of the possible, and all that.

  4. When I hear Cameron, Milliband or Clegg speak, I realise why they got rid of the talking clock.

    Too much competition at the ballot box…

  5. learned precious little from the period 1945-1979.

    The period where the UK posted the strongest economic growth of its history, while also achieving the greatest ever reduction in poverty, increase in equality, and improvements in public health and education? Compared with the following 30-year period where economic growth was weaker, solely benefited people at the top of the distribution, and health and education stagnated?

    I agree there’s plenty to learn from that, but I suspect we differ on exactly what that might be.

    Tim adds: Yup, lots to learn. Like even a planned and half nationalised economy will grow swiftly when everyone spent the previous 6 years trying to blow everything up. Or we might even take Keynes point (opening of economics possibilities for our grandchildren) that the 20s and 30s were a time of huge technological advance. ICE and electrification of industry. Mechanisation of agriculture. The effects of which we saw in unemployment in the 30s. And str4ong growth in the 50s and 60s.

  6. Not a mystery.

    See for example The Road to Serfdom, chapter X, “Why the Worst Get on Top”.

    Nothing significant has changed since, oh, 4,000 BCE.

  7. Compared with the following 30-year period where economic growth was weaker, solely benefited people at the top of the distribution, and health and education stagnated?

    So the poorest in society are no better off now than they were in 1979?

    Bollocks.

  8. Universal housing, generous benefits to the unemployed and in-work alike, high working-class wages, job security, stable pensions: yes, I’d say so.

    Or at least, the only improvements in lifestyle have been caused by technological advances that are almost entirely exogenous to the UK (ie the UK had been obliterated in 1979, assuming the obliteration event didn’t feature nuclear winters etc, then the world today would look much as it does in terms of flatscreen TVs, mobile phones, computer networks, SSRIs and so on), and which therefore would have been available irrespective of the economic model followed.

  9. Universal housing, generous benefits to the unemployed and in-work alike, high working-class wages, job security, stable pensions: yes, I’d say so.

    Hmmm.

    Universal housing: can you cite figures to show the increased levels of genuine homelessness since 1979?

    Generous benefits to the unemployed and in-work alike: as opposed to now?!

    High working-class wages: I thought we were talking about the poor, not the well-paid.

    Job security: which applied mainly to those who were lucky enough to enjoy public sector or protected industrial jobs. I’m not sure how the poorest being taxed to support the well paid working class was a good thing.

    Stable pensions: again, for those who were in protected industries and public sector, or were old enough to be collecting pensions before the whole unsustainable mess – caused by the policies you are praising – came crashing down.

    Or at least, the only improvements in lifestyle have been caused by technological advances that are almost entirely exogenous to the UK …

    Which, thanks to free-markets and trade, allowed poor British folk to buy them at a fraction of what it would have cost were the protectionist policies of the preceding era kept in place.

  10. “Tax on the returns to investment reduce the amount of investment. Thus the more you tax the returns to investment the less investment you’ll get: making the country poorer in the long term.”

    True, but where taxes paid are creditable against taxes in the parent country, it makes little difference to the investor (apart from cash flow timing differences), but it can make a big difference to the tax revenue of the parent and overseas host countries.

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