“So, what about business, which obviously pays national insurance? ”
“CBI tax misinformation – employers do not meet the cost of employer’s national insurance contributiuons”
– See more at: http://www.taxresearch.org.uk/Blog/2012/04/21/cbi-tax-misinformation-employers-do-not-meet-the-cost-of-employers-national-insurance-contributiuons/#sthash.0lY5GxjQ.dpuf
That’s true, isn’t it? I thought the incidence was on wages.
They can’t both be true….
Unless it’s a point about how his support for corporate taxes is entirely inconsistent.
Whether the _incidence_ of Employer’s National Insurance falls on wages, prices or profits is irrelevant to who pays it. The employer pays it.
And, in fact, the latest HMRC small business PAYE application doesn’t even split it out by employee any more.
Ah, but they can both be true at the same time according to Quantum Economics:
http://uncyclopedia.wikia.com/wiki/Quantum_Economics
Murphy is clearly a bozon: When a bozon accelerates, it emits morons and can create a field of ignorance.
Alex, shurley you mean the bozo, the person with a small particle for a brain?
I thought “tax incidence” was a neo liberal lie? Has he flipped again?
So the incidence of employer’s NIC is entirely on the employee is it? Curious then Ritchie that in-work tax credits are a subsidy to the employer.
Could it be that the incidence of any tax, or benefit, is exactly where you wish it to be on any given day?
No, he’s not flipped – it’s a neoliberal lie when it’s inconvenient, it’s obvious truth when it’s convenient.
He has always been consistent in this double standard.
that comment and response appear to have been deleted. “I welcome debate” my aunt Fanny!
Incidence in this kind of thing is largely meaningless; it’s best visualised as the taxman snatching the money after it has left person A and before it arrives at person B, in mid flight so to speak.
Like VAT. Who pays it? The shopkeeper or the consumer? The question is meaningless really; the shopkeeper has lost sales (due to the higher price) and the consumer has lost consumption (due to the higher price). They’ve both suffered. The taxman, and only the taxman, has benefited.
@Ian B
And not even the taxman.
The politician benefits, by having more money to bribe voters with.
“Like VAT. Who pays it? The shopkeeper or the consumer? The question is meaningless really; the shopkeeper has lost sales (due to the higher price) and the consumer has lost consumption (due to the higher price).”
Thats quite easy. Its all down to the elasticity of demand for the product in question. Cigarettes for example, demand is not greatly affected by price, so the incidence is mainly on the consumer. The shopkeeper will put the price up to cover the tax, still sell as many packets, so make the same profit, the consumer just pays more for the same amount of product.
Whereas demand for a meal in a restaurant is far more related to price – if a restaurant puts its price up to cover additional VAT, consumers will either go elsewhere to a restaurant that puts its price up by less, or not eat out at all. So the pressure is on the business to eat the tax rise itself as much as possible, and keep the price rise to a minimum. Incidence therefore is more on the business than the consumer.
However, across all producers and consumers, it will afflict them equally (due to reduced consumption of highly elastic goods and services which compensates for the low elasticity product incidence).
The point being perhaps that talk of incidence is a distraction that plays into the hands of the progressive taxation fetishists. If you tax transactions, you’re hurting both parties. Tax sucks both production and consumption out of the economy since after all, as our host pointed out elsewhere, they are the same thing.
Or another way of looking at it; how can a restaurant “eat” a tax rise? Only by reducing spending on other things, thus transferring its incidence into consumption (either directly by buying less, or by paying its staff less, reducing their own consumption). And so on.
Indeed, Ian. Consumers, workers, shareholders are the same people, with different hats on. Consumers are also workers & have pension funds & savings.
Actually incidence of tax is a very important question in designing the overall tax profile. The incidence of transaction taxes are very different to, say, LVT and have a very different impact on economic activity.