Yes, this looks good

The second would extend the real estate investment trust regime to include all privately owned businesses, freeing them of corporation tax but paying taxable dividends to shareholders.

 

Abolish corporation tax and tax dividends at full marginal income tax rates.

What\’s not to like? Why not do it for all companies?

4 thoughts on “Yes, this looks good”

  1. Wouldn’t that just encourage a load more horizontal expansion of businesses as shareholders take fewer dividends because they’ll be paying more tax, while internal expansion will cost them less and probably boost the price of their shares?

    I think Milton Friedman said that you should attribute all profit, before internal investment, to shareholders and tax them on it, irrespective of whether the money was paid to them or reinvested. Thus encouraging them to take more money out of the business and thus stopping Tesco providing my petrol, insurance, drugs, pets, recording contracts and investing in my coffee shop.

  2. Except for the political difficulties in doing so, far better to abolish the taxation of the dividends. Flat corporate taxation is more neutral and adhering to the principle of taxing all income ones. It gives deductions for investments, which ought to be reformed into full write-offs, making it more like a so called consumption tax.

  3. “Wouldn’t that just encourage a load more horizontal expansion of businesses as shareholders take fewer dividends because they’ll be paying more tax, while internal expansion will cost them less and probably boost the price of their shares?”

    And in what way is this a bad thing? If businesses invest, that in turn should mean more value added to stuff, which means we as a society ultimately are all richer.

  4. Because it’s a distortion of the market created by government action. If the government wasn’t involved, most shareholders would rather the cash was in their hand, which they would then use to consume elsewhere.

    Thus the government, in maintaining the present system, is choosing that x people are unemployed because shareholders don’t consume as much, while y people now have jobs because Tesco is now making buggy whips. The government shouldn’t be making these decisions.

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