Timmy elsewhere

At the ASI.

Would there actually be any revenue loss from abolishing corporation tax?

3 thoughts on “Timmy elsewhere”

  1. The problem with this is that a large percentage of companies are owned outside the UK, and any dividends received would not be subject to UK tax. Even if you imposed a dividend withholding tax (as the UK did up until 1999) this would be reduced or eliminated under most of the UK’s double tax treaties. There would be a significant revenue loss, unless the tax was recouped another way e.g. by a higher land value tax on companies.

  2. The tax credit on dividends is much lower than the rate of corporation tax normally paid on profits. You’ve also forgotten that pension funds don’t pay tax on dividends received, nor can they reclaim the tax credit. Abolishing corp tax would therefore not be a net nothing.

  3. Sam

    And a lot of the subsidiaries of UK groups are in low tax jurisdictions and dividends up to the UK parent can come in tax-free. So the tax-suffered assumption has long since broken down. So UK tax probably will increase under Tim’s suggested scheme.

    Perhaps an even more interesting question arises from this: it would seem to end the debate on tax incidence, if you only tax the distribution then the incidence is all on Capital. Why isn’t Ritchie publicly shooting his load at the prospect?

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