Quite seriously, if this is the level of economic knowledge over at the TJN then they’ve got some serious problems:
Submitted on 2015/08/11 at 2:42 am
The incidence of tripe in this article is astonishing. For example: “we’re also talking about capital which is 100% mobile. That is, we’re highly likely to be in an area where all of the burden of that corporation tax falls upon the workers in that economy levying the tax.”
So let’s take an example, shall we? ExxonMobil produces oil in an African country. $1 billion in revenues annually, $100m in costs, and it employs 1000 locals, who collectively earn let’s generously say $30m annually. Let’s say that the country levies tax at an effective rate of 50 pct, or $450m. How exactly is all the burden of that tax going to fall on those local workers? Please do explain. More generally, ExxonMobil ain’t going anywhere if tax rates are increased: they go where the oil is. US shareholders will have to grin and bear it. And even if they did (they won’t, but if), then the oil is there and someone else’ll come in and invest. Oil is immobile, see? But so is a lucrative telecoms licence. The companies generally have no choice but to cough up. Money flows from rich shareholders to poor country. Where exactly is the problem?
The Fox News approach of simply asserting that the burden or incidence of corporate taxes falls on workers is useful to repeat again and again, if you’re a shill, but it doesn’t make it any more true. It is nonsense. The ‘incidence’ argument, put this way, could be described as “Worstall’s fallacy” (There are a lot of Worstall fallacies out there, but this is clearly one of his favourites.)
On a separate matter, one wonders why Forbes is giving a platform to someone with this unpleasant track record:
Tim Worstall, British attack dog
Submitted on 2015/08/11 at 6:16 am | In reply to Nicholas Shaxson.
Nick, you’ve just described the taxation of a resource rent. Which is something very different (you do know this is different, right?) from the taxation of corporate profits.
If you have a look around you’ll find that I’m all for the taxation of resource rents until the pips squeak. Whether it’s of spectrum to mobile companies, oil royalties or mineral values. Exactly because it really is only a question of who gets that rent: the government of the country where the resource is located or the shareholders of the company that is exploiting it?
This is very different indeed from the taxation of, say, the profits from running a textiles factory.
And if you don’t know the difference about this then I really do worry for the economic knowledge of the TJN. Because it’s first level stuff, undergraduate course level, A level even.