The FT reports this morning that:
The UK has lost its top slot in a league table of multinational companies’ favourite tax regimes, in spite of George Osborne’s flagship policy of cutting taxes to attract business to Britain.
The UK’s popularity increased slightly but it was leapfrogged by Ireland, which is expected to be less affected than some rival countries by the international crackdown on tax avoidance, according to a survey by KPMG, professional services group.
All of which only proves the sheer futility of engaging in tax competition. Any supposed ‘victory’ is short lived and the cost high.
Umm, the cost and the victory belong to whom?
When we observe competition in the oil industry we do not think that Exxon, Chevron and Total benefit from said competition. Quite the contrary, we think that they are constrained in their actions by the effect of that competition. Competition costs those producers, most certainly. It is consumers who save and consumers to whom competition provides the victory.
The same is, of course, true of governance. Governments are the producers of government. When there is competition between governments this does, of course, limit their potential actions. We can even describe this as a cost to those governments. But who are the victors? That’s us, the consumers of governance and the people who have to pay for it through taxation.
If Exxon were a monopoly then we’d all be paying rather more for oil. If government were a true monopoly, rather than one that is only a monopoly if we don’t vote it out or leave the jurisdiction, then we’d all be paying rather more for government than we do now.
Tax competition is just great precisely because it does allow us taxpayers “victory” by reducing the cost to us of government.
Hmm, another “both sides but for Ritchie” moment for me. The more mobile a taxable thing is, the more governments will compete to offer the lowest rate on it but there is no incentive to compete on less mobile stuff. Thus labour tends to be quite highly taxed (but a lot of places will make some exception for some period of time for especially highly-priced labour moving in from outside). Land, property, can’t escape taxes on that. Globally-mobile capital? Absent some kind of rules, which as I repeatedly bang on the G1-X, OECD, UN, and Uncle Tom Cobbleigh’s aunt are all desperately trying to tighten up on, it will all move to the newly established lunar colony of BigIstan, with its tax rate of 0.0001%. Then Worstallland will come in and offer 0.00001%. We did have serious proposals some time back for someone to set up a big cruise ship that various multimillionaires could spend 183 days a year on to save tax, though I think that one never left dry dock.
So we do have a question here – do we want our globally mobile capitalists to be able to place themselves outside of society or , given that Merkel takes over 50% of my labour to give to her clients, shouldn’t we get the capitalists in on the paying for all this wonderful government stuff too?
Mr Merkel (German alimony that high?)
Tax rate, rule of law, stable governance remember. It’s a combination of the two and you can compete across that spectrum to attract the capitalist pi-dogs that are going to invest and lead to higher wages and living standards in your company.
We know that this is exactly the sort of thing which annoys Ritchie so much, that he can neither force Parliament to serve his progressive agenda beyond a Labour government (although they have tried), but more importantly that people can avoid being screwed by him and his cohorts for tax until the grave by the expedient of going abroad.
This is why he wants Citizenship-based Taxation, just like the United States of America and Eritrea (there are only two practitioners, all others practising residence-based taxation).
The reason that he wants this is obvious, so that, just like the United States and Eritrea he can come after your income, wealth and assets even if you try to run away from him.
Hangings too good for collectivist cunts like Ritchie.
The point is the pigdogs can do the investing in a place with high taxes and have various ruses to get the returns on capital taxed in places with low taxes.
Yes, I know Tim et al deny any of it is going on, that all transfer pricing is fair and just and so on, but G+ and every other pigdog talking shop agrees it is going on and is making efforts to reduce it. This doesn’t put me in Ritchie’s camp, but it doesn’t put me squarely in Tim’s either.
“We did have serious proposals some time back for someone to set up a big cruise ship that various multimillionaires could spend 183 days a year on to save tax, though I think that one never left dry dock.”
I think it did leave dock – a former colleague told me that his v wealthy retired in-laws cruise around on it.
I am your father
The one you’re referring to is called “The World” and it was the first “Private Residential Cruise Liner”. Launched in 2002, so in it’s 12-year of circumnavigation.