Let\’s abolish corporation tax!

When a system is broken, the best approach is generally to scrap it and try something else, and that’s precisely what the solution to the corporate tax problem is – not further meddling, but to get rid of it entirely. In fact, it’s more than broken; it’s also poisoning the rest of the tax system in the round.


Just get rid it. No more taxes on profits, no more allowances, no more distortions.

Instead, business needs to be coaxed back into fulfilling its proper social function of investing in new ventures and creating well paid employment. Again, this purpose is best fulfilled by making profit a tax free zone, thereby providing the incentives for vibrant private sector expansion.


Part of the quid pro quo for an enlightened tax regime should be the steady introduction into low paid employment of a “living wage”.

The joy is that this would happen quite naturally. Given that well over 50% of the incidence of corporation tax is upon wages, the removal of corporation tax would, over time, mean that wages rise.

Hurrah, trebles all round!

6 thoughts on “Let\’s abolish corporation tax!”

  1. But what would HMRC do with all those accountants they employ to try to collect the tax? God help all those well paid accountants companies employ to avoid the tax! And all these people are well connected. They will pound the idea that people don’t pay the tax (don’t expect honesty, not when rich livelihoods are at stake) and the mass of people will believe them.
    That is the whole purpose of the tax, so that people pay it without realising that they do.

  2. View from the Solent

    I’m surprised that you overlooked
    “Instead, business needs to be coaxed back into fulfilling its proper social function of investing in new ventures and creating well paid employment”

    What is this vacuous ‘social function’? Is not the function of a business to satisfy the need(s) of its customer(s)?

  3. I believe in the US the owners of small companies (no idea if that is by staff or turnover) can elect to be taxed as if the company’s earnings were theirs’ so the co pays no corporation tax or equivalent.

    But the US taxes its citizens wherever they are. I suspect that’s the price of no corp tax, or it’s too easy to fiddle. Doesn’t mean it’s a bad idea.

  4. Luke

    Just think of all the other taxes that businesses pay as well as Corp Tax. The take from business rateswas about 50% of the corp tax take in 2008/9 – so just double business rates. It’s almost impossible to avoid business rates, unlike corporation tax, and the collection costs must be far cheaper.

  5. Luke: I believe you’re thinking of an S Corporation.

    It’s basically a partnership with a corporate shell used to shield the partners from liability.

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