Why should a man in a shed know how much tax Facebook paid?

How much tax should Facebook have paid?
Who knows? I don’t. All we know is that right now we have a tax system that lets it get away with paying very little tax and accounting standards that do not require that it properly explain why this is the case.

Blame the company and blame the accountants by all means. But really this is all about the politics of power, and our politicians are letting accountants and companies get away with this by deliberately letting them leave us in the dark. So it is Westminster that has to carry the blame. The real questions are, then, why are our politicians doing this, what is it they don’t want us to know, and why?

After all, Facebook doesn’t know how much tax the man in the shed paid, does it?

97 thoughts on “Why should a man in a shed know how much tax Facebook paid?”

  1. Rather than hoarding their money and paying corporation tax, they gave it all away to the workers who will pay income tax and VAT on anything they buy with it.

    If a coal mine gave all their profit to their staff it would be a wonderful organised collective of the workers. If an IT firm do it, it’s shady.

  2. Now if Mark Zuckerberg owned 99% of Facebook and his wife owned the other 1% then I’m sure all would be tickety-boo.

  3. “Because of this uncertainty I can already hear the responses from rightwing defenders of corporate tax abuse getting their comments ready to roll. They will say tax is not paid on the sales figure but on profit, and that is true.”

    It is now rightwing trolling now to point out the obvious fact in Law? I mean, what a complete and utter cunt.

  4. “Do these accounts allow us to really form a view on the right amount of tax Facebook should pay? The answer is glaringly obviously no, or the outrage would not have happened.”

    A bit optimistic there. Murphy is trying to convince us that the outrage is genuine and based on events, whereas of course it is completely manufactured and using Facebook as an excuse. Facebook could have paid £12m in corporation tax and it still “would not have been enough”.

  5. “Surely this is as good excuse as any to block facebook here.

    Make UK the first facebook-free country.

    More people may holiday here just for that.”

    ??

  6. @Rob,

    blocking a website like China because they don’t pay as much tax as a bloke taxturbating in a shed thinks they should, despite admitting not knowing whether they paid enough?

    I think there’s a word for that. Begins with F, rhymes with Moustacheism.

  7. For those with knowledge of accounting (rules Murphy out), a point of interest: will the staff pay tax, NI on those payments? Will they pay them now or when they are realised (I think they were share options?).

    I think one of the comments pointed out that the actual tax yield might be twice that from corporation tax, but the Left aren’t interested in that. Tax as punishment.

  8. I think one of the comments pointed out that the actual tax yield might be twice that from corporation tax, but the Left aren’t interested in that. Tax as punishment.

    IIRC Murphy stated previously that he considers doing something that reduces one tax yet causes more tax (net) to be paid on a different tax or in another jurisdiction is still tax avoidance.

  9. Tax Research is an LLP so doesn’t pay any tax at all. Ever. Even though it’s high profitable.

    The End.

    Any further explanation (such as Murphy paying income tax on the LLP’s distributions) is neoliberal sophistry. Just pay some tax.

  10. dunno, think I’m with Murph here. Why not require companies to explain how they set the price for inter-group transactions that determine the top line of this business?

    (and really, why let Facebook say that it does not have a UK advertising business?)

  11. But we know all of this. All advertising sales are done by Facebook Ireland. Which EU law says they’re entirely allowed to do. And Facebook tell us they do. Facebook Ireland then pays into Facebook UK enough money to pay the engineers. There’s never any money flowing from UK customers into Facebook UK. So there’s just no inter-group transactions of the sort you’re talking about.

  12. (and really, why let Facebook say that it does not have a UK advertising business?)

    Cos that’s how the European single market works – anyone can sell advertising into anywhere from wherever.

    Why not require companies to explain how they set the price for inter-group transactions that determine the top line of this business?

    Err, they are, are they not? They have to explain it to the various tax authorities. And since it’s highly business-critical information, it’s right that it’s not publically available. And it would only interest a handful of sweaty taxturbators anyway.

  13. > Facebook doesn’t know how much tax the man in the shed paid, does it?

    Given everything else Facebook seems to know, I wouldn’t be so confident.

    Nevertheless, if Our Murph doesn’t know how much tax Facebook should pay, then he can’t say that £4,000 is too little. Perhaps it’s too much. Perhaps Facebook ought to be booking losses that they can carry over to future years. As he says, who knows? Clearly not the World’s Leading Tax Expert(TM), who doesn’t suffer fools gladly but, inexplicably, is at ease in his own skin.

  14. Tim

    first, obviously, saying things are legal under current arrangements does not mean we cannot question those arrangements.

    second, from here
    https://jolyonmaugham.files.wordpress.com/2015/10/capture.png

    principle activity is providing sales, marketing and engineering support to the Facebook Group. So where does it’s revenues come from, if not the Facebook Group, and how are prices for those services determined? That looks like an inter-group transaction to me, please explain where I am going wrong

  15. and really, if I am not on here saying “but this is illegal!” then why not assume that I know it’s how things work under existing laws, EU and all that, hence do not need telling that.

  16. abacab

    “And since it’s highly business-critical information, ”

    I do not think so. with caveat I am not confident about this, so ready to be corrected, you are supposed to price intergroup transactions like this by reference to prices a third party would charge. So your choices of price is not business-critical, you are merely explaining how you came to choose price used for accounting purposes, which gives nothing away to your competitors. No reason why this stuff should not be public.

  17. LE: I think maybe it’s a thin end of the wedge situation; companies today, individuals tomorrow. I certainly don’t want every Tom, Richard and Harry knowing how much tax I pay, because then they’d know how much I earn, which is nobody else’s business.

  18. “Luis Enrique

    dunno, think I’m with Murph here. Why not require companies to explain how they set the price for inter-group transactions that determine the top line of this business?

    (and really, why let Facebook say that it does not have a UK advertising business?)”

    Explain? To who? You?

    Are you a transfer pricing expert? If you had the vaguest beginnings of knowledge of TP you’d know that any TP undertaken by Facebook will be explained to TP experts within HMRC.

    It’s the same with CBCR. Murphy stamps his feet and demands that companies declare how much profit and tax they pay in each country. Well, this they do. In the UK they declare it to tax experts at HMRC who, also, will know whether Facebook as a UK advertising business.

    What Murphy wants and you seem to support is that this information is made to the public who by and large show virtually no understanding of the tax system.

    It’d be like some middle ages lynch mob trying to burn a modern day doctor for knowing ‘witchcraft’.

    And as others have pointed out, this ‘openness’ he demands of others, he doesn’t seem to think he needs to be a part of by opening up his own tax affairs.

  19. LE: It is much harder for HMRC to argue that an amount received from a third party was insufficient, and thereby impute a higher amount of income than that reported in the tax return, than it is for them to disallow (part of) a payment to a third party on the basis that it is above market rates and therefore not wholly incurred as a necessary expense of the business.

    Contrary to any impression given by Mr Murphy, they are not able to just fix a figure that they think appropriate. They have to act within the terms of the legislation.

  20. Andrew C of course I know companies have to explain (or show) their TP decisions to taxman, the point of transparency, openness etc. is to ward off risk that taxman and companies are coming to agreements that we might want to question. Honestly from a bunch of government sceptics, I would have expected suspicion of behind closed doors government corporation interactions and support of openness, Perhaps if it wasn’t RM advocating it, you might. And try to be less rude.

    Alex, well fine but that’s at heart of policing TP isn’t it

  21. Honestly from a bunch of government sceptics, I would have expected suspicion of behind closed doors government corporation interactions and support of openness, Perhaps if it wasn’t RM advocating it, you might.

    Err, nope.

    Tax affairs are private between the payer and the tax authorites. This obviously applies not only for individuals, but also for companies.

  22. abacab,

    not obviously applies to companies. there are already plenty of reporting requirements for companies, and given highly contested nature of MNC taxation and well known scope for shenanigans, can for more transparency is easy to make and not preserve of loony left. Are you against things like EITI?

  23. “first, obviously, saying things are legal under current arrangements does not mean we cannot question those arrangements.”

    Yes it does actually. We may well say that we wish to question the rules. If, however, a firm’s arrangements comply with the rules then who the hell do we think we are to challenge those arrangements?

  24. I happen to know a fair deal. About transfer pricing. So I feel entitled to say that a group’s particular arrangements are very commercial illy sensitive and most definitely should not be subjected to public scutiny.

    We’ll be demanding the right to see the tax returns of shed-dwellers in Norfolk next.

  25. Could anyone explain the government’s current plan for a “google tax” on firms that “take money out of the UK”? It’s not Facebook UK that’s taking money out of the UK, would we be able to tax Facebook Ireland?

  26. The free market requires as much transparency as possible to ensure the most efficient allocation of capital.

    If companies are doing deals with HMRC or whoever, then the potential trader will not be able to make an informed choice whether they are suitable for doing business with.

  27. “If companies are doing deals with HMRC or whoever”…then HMRC would be acting illegally and corruptly.

    Unless Arnald or Ritchie have clear evidence to suggest that then they are slanderous little fuckwits.

    Actually, they are fuckwits anyway, no caveat required.

  28. “…then the potential trader will not be able to make an informed choice whether they are suitable for doing business with”.

    The potential trading partner simply doesn’t need that information. You are a fucking cretin.

  29. Moronman

    So why exactly are a firm’s TP arrangements commercially sensitive. Surely they would be operating under the same criteria as everyone else within the sector? And are you seriously saying that MNCs don’t do deals with HMRC?

  30. Arnald, you really might want to consider what he does for his living before making those sorts of comments.

  31. Why not, Iro? It would shine a light on potentially dubious practices. Who wants to trade with a company that has the potential to incur investigations by the authorities?

  32. Worstall, since there is no transparency on this site, how the hell am I supposed to know.

    But my statement stands.

  33. @Arnald

    ‘The free market requires as much transparency as possible to ensure the most efficient allocation of capital.’

    Why? I don’t need to know how you spend your money to know that you spend it in a way which is best for you. I may think that spending £50 on a new sweater (say) is inefficient, but I cannot know what pleasure you derive from the ownership of that sweater. Only you can know how you want to spend your money, and any interference by me would be deleterious to efficiency, not supportive of it (unless I suggested you buy precisely the sweater you wanted all along, in which case my involvement in your affairs would be redundant and also wasteful).

  34. And where’s the slander?

    You have a short fuse, Ironman. A bit like that Dave really.

    Pavlovian reactions to my moniker.

  35. Ironman,

    can you explain what the commercial sensitivity consists of?

    I can see why, for example, if you have any particularly advantageous arrangements for minimising tax liabilities then you might not want your competitors to copy them, but of course that’s exactly the sort of thing we’d like to expose in the public interest.

    other than that, I cannot see how transfer pricing gives away sensitive information in the usual sense of secret ingredients, processes, deals with third parties etc. that you might legitimately want to keep secret.

    And in any case, commercial sensitivity does not always trump other considerations.

  36. Inty

    We’re not talking about individuals spending cash on nik-naks. You twat.

    It’s like you people don’t believe in the free market. Surely you should be advocates for wanting as much information as possible in order to have that free choice.

  37. @ Luis Enrique, abacab, Arnald, etc.
    It is a requirement under IAS 12 for every quoted company to “reconcile” (explain) the actual tax paid/payable with the amount that would be due if it simply paid the standard tax rate on its accounting profits. In nearly every case one part of the reconciliation is “expenses disallowed for tax purposes”.
    There aren’t a lot of cosy deals between companies and HMRC – most companies spend a lot of time and effort trying to minimise their tax liability and HMRC tries to get every penny that’s due. There is a substantial company whose primary business is insuring SMEs against the cost of a HMRC investigation.

  38. “other than that, I cannot see how transfer pricing gives away sensitive information in the usual sense of secret ingredients, processes, deals with third parties etc. that you might legitimately want to keep secret.”

    The arm’s length transfer price can be arrived at using ‘comparitives’. These comparitives may be precisely the deals with third parties that the business does want to keep secret, which it doesn’t want other third parties to see. In fact much information supplied to HMRC in general is exactly the sort of information he business wants and needs to be kept confidential. It would be interesting to see the effect on the nation’s tax base of Murphy and Co winning g the right to see the information they want and businesses knowing HMRC may well put it in the public domain. Investment decisions would have a new dimension as well.

    But perhaps you would like to continue the discussion with Armald; in contrast to you he believes this is exactly the sort of information business partners should get to see.

  39. Ironman,

    well companies changing how they do things because they know the information will be public is not necessary a bad thing from an economic welfare perspective.

    I am afraid i don’t understand your point, I thought the point about third party comparatives is that they are supposed to be representative of a market price, not based on special arrangements a firm might come to with its trading partners.

  40. To add to Ironman’s comment.

    Transfer pricing means that the various subsidiaries should trade with each other at market prices. OK.

    That means if everyone gets to see the price at which Apple UK buys kit from Apple Eire…..OK…..then that also means that everyone gets to see the price at which Apple Eire sells to Macworld Distribution, doesn’t it? Because those two prices have to be the same under the transfer pricing rules.

  41. @Luis Enrique “the point of transparency, openness etc. is to ward off risk that taxman and companies are coming to agreements”

    Is that Murphy’s concern? Then what about the taxman and LLPs coming to agreements? The Taxman and individuals? It’s one of my criticisms of Murphy. Hypocrisy. He guards his own tax affairs.

    HMRC has the right to go snooping through your private financial affairs. Are you saying this right should be extended to anyone?

    Besides, you really think it would make any difference. Murphy doesn’t want to make sure the current rules are being applied, he wants to change them.

    And do you really think, even if everything was published people would understand it well enough to appreciate what was happening. The sort of balaclava wearing oiks who through bricks at Next shop windows?

  42. Andrew C,

    I realise I did not express myself all that well – coming to agreements is not quite right, it’s more that over time what parts of governments and private counterparts do can diverge from what people think they ought to be doing, and when attention is drawn to it, there’s a lot of fuss and rules get changed. The presumption ought to be for openness. Yes I am sure stupid and misinformed people will fail to understand what they see. I do not accept the “snooping into private affairs” characterisation in this context. I don’t care about Murphy, instead of him why not engage with actual tax experts who advocate greater openness.

    Tim, thank you that gets at what I am asking about. I do not understand it. Firms are allowed to sell to different third parties at different prices. Say there a 5 distributors in Ireland, Apple is allowed to sell to them on 5 different pricing schedules, so how can prices for inter-group transactions equal something that is not a single thing?

  43. “Apple is allowed to sell to them on 5 different pricing schedules, so how can prices for inter-group transactions equal something that is not a single thing?”

    HMRC would look for the agreement that was made with the third party which most resembled the Apple subsidiary if that were a ‘standalone’ third party.

    Or use the average figure.

    The main point is that Apple would NOT be allowed to fix a price that it would never fix with a third party.

  44. Apple’s transfer to subsidiaries price is what they think is fair market value. That’s what they’ve got to defend to HMRC after all.

    Now, who at apple wants the five distributors to know that?

  45. @ Luis Enrique
    The publication of the transfer price will mean that if Apple’s transfer price is lower than the price it charges Dixons Carphone then Dixons will know it’s charging somebody else less and demand a price cut. Likewise, Harrod’s, Selfridges, John Lewis, Uncle Tom Cobbeley will want to renegotiate if they find they aren’t getting the best deal. So the transfer price IS commercially sensitive.

  46. Andrew,

    yes I understand your main point, and transfer pricing ought not be terribly contentious when physical goods are traded and there are obvious third party comparables.

    However if the transfer prices do not have to actually equal the prices at which Apple trades with third parties (perhaps because they are an average, perhaps because the resemblance is not exact) then the commercial sensitivity of these prices is diminished.

  47. Looking at the accounts again, I think I’ve resolved a nagging issue, which is why there is £4k of tax to pay when we’re looking at such large numbers of RSUs.

    From closer inspection of the tax reconciliation in note 6, it seems that what we have is a £35m accounting charge for the RSUs, but when you disallow this there is a taxable profit which is set off by £25m of losses brought forward. The £4k tax seems to be on the interest receivable, which can’t be covered by trading losses brought forward.

    So we seem to go from £7m or so of underlying profit (ignoring the RSU charge) to £25m of taxable profit. That’s a very large jump. They’ve got no intangibles on the balance sheet, and tangible assets are already allowed for. So I suspect that what they’re doing is treating the credit they get from their parent in respect of the RSU charge as if it’s taxable income. Only part of this is then set off by the tax deduction they get on the issue of RSU shares.

    So:

    – Underlying profit £7m (accounts and tax)
    – Deduct RSU charge of £35m, for new RSU’s granted and the increase in share price for existing ones. This is disallowable for tax, so the accounts show a £28m loss but tax stays at £7m profit.
    – Receive £35m credit for the RSU charge. This is going through the reserves, but they seem to be taxing it, so the accounts show a £28m loss and there are taxable profits of £42m.
    – Get a tax deduction for RSU shares issued. This seems to be around £17m, bringing us to an accounts loss of £28m and taxable profit of £25m, of which £20k is interest and the rest is trading.
    – Use trading losses brought forward to eliminate the trading profit, leaving a taxable profit of £20k, on which £4k of tax is due.

    Deferred tax then includes:
    – remaining losses carried forward
    – the accounting charge for outstanding RSUs, for which they expect to get a future deduction
    – unclaimed capital allowances (they seem not to be claiming any, presumably to give some flexibility in the future)

    So in fact what we have with the RSUs is that the tax deduction is lagging seriously behind the accounting position, so the old tax losses are being used up rapidly.

    These losses seem to come from 2012 (when an awful lot of RSUs were settled) and 2013.

    Incidentally, the 2014 accounts don’t have a cashflow statement, but the 2012 ones do, and they show the company receiving cash in respect of the RSUs. This might support my idea that the UK company is receiving sums not shown in the P&L but which are still being taxed.

  48. @Luis Enrique

    The prices agreed between Apple and independents will be commercially sensitive but Apple will, I am sure, be telling each they are getting the best deal.

    Kinda blows that concept if it’s then revealed if Apple’s TP price is then revealed to be lower.

    If the 3rd party price is commercially sensitive so has to be the TP price.

  49. What is, of course, lost on fools like Murphy and Arnald is that transfer price between subsidiaries is both highly regulated and highly scrutinized by tax authorities in every developed country on earth. And England, too.

    Multinationals don’t just make it up as they go along: They have specific tax law they must follow and massive documentation requirements for substantiating the correctness of all transfer pricing bookings. In essence, any multinational doing any transfer pricing would presume that at least one taxing authority (and probably more than one) would be reviewing the documentation that substantiates the basis for the amounts transferred on a regular basis.

    Were Richard Murphy professionally competent (and/or intellectually honest), he’d acknowledge this. The fact that a clueless wannabe musician and all-purpose leftist tool like Arnald – who has no education, training or experience in accounting or taxation – doesn’t understand the actual mechanics of transfer pricing shouldn’t come as surprise.

  50. The transfer pricing with third parties can also be very sensitive.

    Imagine that car company A manages to get a really good rate on brakes from a supplier. They then use this as their transfer price basis within group. Revealing this information will reveal to competitors that car company A has managed to get really good rates from that supplier. This harms the supplier (who may be charging more to other customers) and the car company who lose a competitive advantage. This is pretty much the definition of commercially sensitive.

  51. Let’s also remember that what Richard Murphy really wants – being the good fascist that he is – is the ability to stick his nose into everyone else’s affairs.

    That’s what drives his mania about country-by-country reporting.

    It’s also what drives his mania about multinational transfer pricing.

    It’s what drives his mania about tax havens.

    Ritchie must be shown all so he can judge all!

    Hell, I can remember less than a decade ago when he was raving about the fact that he couldn’t view the tax returns of U.S. partnerships he had no ownership interest in!

  52. Peasant

    So you’re not interested in having a free market then?

    Yes there are rules there, but the rules allow too much secrecy to the detriment of a more efficient free market.

    I still don’t understand why so many of you are kicking off…it’s hardly ‘leftist’ to want clean business relationships.

    And how can I be a “wannabe musician” when I am actually a musician?

  53. When you’re begging folks to give you a listen on a web site, you’re a wannabe.

    Free markets hinge as much on the expectation of privacy as it does on the expectation of the free exchange of information. If you knew anything about business or economics you would know that. Unfettered access to all information held by others is not a requirement to the efficient working of free markets. Perfect information is an assumption economists make to bend a non-linear dynamical system into a linear non-dynamical system; it is not reality (and never will be).

    And at least be honest, Arnald, you don’t give a fuck about the efficiency of the free markets, you want access to that information so you can control others… just like every other fascist on the planet.

  54. Pellinor

    I’m comparing your analysis above with Richard’s ‘I haven’t got a clue’ version over at the Graun.

    He looks to have ‘jabbed’ at a few numbers, but the numbers clearly hit back, and successfully!

    And (I presume) he actually got paid for that..:)

  55. Arnald

    Full information is a component of perfectly competitive markets, which would help with capital allocation (and indeed is a component of modern portfolio theory and CAPM).

    However, whilst perfect competition is the state that a regulator might want to achieve (to maximise productive and allocative efficiency), entrepreneurs are looking to achieve market power. And given the benefits of market power to dynamic efficiency (eg economic development), it may not be socially optimal to reduce the market power of entrepreneurs. This is an aspect of the standard equality and efficiency trade-off made by Arthur Okun.

    From an economic perspective, it is not clear where the line should be drawn with regard to transparency here. It is not clear that increasing transparency would be good for efficiency of markets in a dynamic context.

  56. DtP

    I disagree. Arnald is sometimes short tempered, but his points are of decent quality in many cases. The point he makes above is valid depending on the weight one places on efficiency today vs. efficiency in the future.

  57. Nothing seems to excite Lefties more than Corporation tax. I really cannot understand why it gets them so excited. For most of us who have had to deal with it, it is a vast tangle of complicated rules that delivers a stunningly low amount of revenue. Look up the definitions of things such as “close company” or “consortium relief” and you feel your life ebbing away as you try to get through all the contradictions and conditions. Income tax is almost as bad but at least it brings in something like £1.5m per word of legislation. Corporation tax brings in about £0.5m per word. What a waste of time and effort! I would not be surprised if the compliance and collection costs almost outweighed the revenue from this stupid tax.

    So the Lefty taxsturbators are excited about Facebook and people seem to want greater insight into a company/group’s tax affairs. Well have a look at what Rio Tinto do.

    http://www.riotinto.com/ourcommitment/taxes-paid-in-2014-14598.aspx

    I can imagine Maugham and Murph taxsturbating furiously as they read through this 22 page document. The howls of orgasm are ringing through Norfolk.

    However, what benefit does anyone get from this? The professional economists who visit this site, how much benefit did you get from this carefully prepared information? How many investors derive any benefit? The cost of preparation is a considerable overhead and for what?

  58. Peasant

    “Free markets hinge as much on the expectation of privacy…”

    You’ve just made that up.

    “And at least be honest, Arnald, you don’t give a fuck about the efficiency of the free markets…”

    Well, yeah I do, because I believe that free markets can deliver to improve one’s lot in the developing world. What I disagree with is the notion that the MNCs making a lot of money there are benevolent.

    In cahoots with corrupt regimes and blind-eye financial services, those asset rich nations are being screwed.

    CbCR would shine a light on those MNCs and the way they carry out their business on a global scale.

    What possibly can be wrong with that.

    In which possible way could “you want access to that information so you can control others… just like every other fascist on the planet.” actually happen by seeing a report?

    Murphy is obviously hiding under your bed.

  59. ‘Inty

    We’re not talking about individuals spending cash on nik-naks. You twat.

    It’s like you people don’t believe in the free market. Surely you should be advocates for wanting as much information as possible in order to have that free choice.’

    I introduced the example of ‘individuals spending cash on nik-naks’ to scale it all down to a level you might just (possibly) be able to understand. OK, a sweater is still too sophisticated. Try a penny chew.

  60. Well, yeah I do, because I believe that free markets can deliver to improve one’s lot in the developing world. What I disagree with is the notion that the MNCs making a lot of money there are benevolent.

    Admit it – we are dragging you, kicking and screaming, into the light!

    🙂

  61. it’s a shame as he was on the right track with this being a political issue, but just couldn’t resist trying to throw corporations and accounting profession under the bus as well.

    I’ve been continually shocked by his lack of accounting knowledge, but claiming it’s impossible to reconcile, which Pelinor does so succinctly, is another low.

  62. Arnald

    The issue with CbCr of payments for resources is that in the most corrupt countries, we would expect to see relatively clean (and regulated) multinationals being driven out – as the host country is opposed to reporting of any sort. This is the likes of Angola. Where the reporting is disaggregated (a demand made of MNCs) it is possible that this will divulge commercially sensitive information – basically companies cost bases for extraction.

    As it happens companies that participate in EITI are reasonably positive about transparency – they worry about not being able to win business, but are keen on a level playing field. They worry about the lack of enforcement mechanisms to make sure that countries spend the money they are paid on stuff that they are meant to (eg development for host communities).

    In general, the big extractive firms are in fierce competition for access and I suspect the payments made are in general about right in terms of relative bargaining power. This is a pretty free market. And yes, I am sure that there are probably exceptions to this view.

  63. You’ve just made that up.

    If you’d ever actually been in business you’d know what I said was completely true.

    How many companies do you know of that publicly disclose salaries and/or hourly rates for all of their employees? Wouldn’t such information be key to have a truly efficient labor market? If so, why aren’t both employees and employers clamoring for such disclosures? It would be in the best interest of both to do so, right?

  64. Well, yeah I do, because I believe that free markets can deliver to improve one’s lot in the developing world.

    Ha! Scratch a British lefty and what do you get? A good old fashioned racist yearning for the good old fashioned days of British colonialism. As with Murphy, you just can’t imagine black, brown and yellow folks being able to properly manage their own affairs without the concerned help and guidance of white folks just like yourself. Hence the “concern” for making sure “developing markets” run the way you think they should.

    As if you had a clue about what the Africans, Asians and South Americans want or need.

  65. @ Arnald and DtP, something for both of you…

    Wage transparency and performance: A real effort experiment

    Without transparency about peer wages in a real effort experiment, a change of wages does not affect performance. With transparency, however, higher paid workers tend to work more accurately, and lower paid workers shirk more under piece rates.

    http://www.sciencedirect.com/science/article/pii/S0165176511000656

    On the other side.

    Are Workers Paid their Marginal Product? Evidence from a Low Wage Labour Market
    Because of labour market frictions, the supply of labour to a firm does not fall instantaneously to zero if an employer cuts wages. This gives employers some monopsony power. In the absence of trade unions, minimum wages and efficiency wage considerations a profit-maximising employer will set a wage below the marginal revenue product of labour so that workers are, to use the terminology of Hicks and Pigou, exploited. This paper presents a method for computing the rate of exploitation. This method is then applied to a unique data set on workers in residential homes for the elderly on England’s sunshine coast. We conclude that, on average, firms pay workers about 15% less than their marginal product.
    https://ideas.repec.org/p/cep/cepdps/dp0158.html

  66. I don’t understand!

    Pellinor has explained quite clearly what the £7m and £28m represent, and all Richard can ask (almost accusingly) is:

    “That is two very different figures for profit

    Now, which one is right?”

    He’s an FCA! Any decent, reasonable person might try and thank Pellinor for getting under the skin of it and for taking the time to help / clarify?

  67. @PF: you went wrong at ‘decent reasonable person’………..RM is nothing to do with decency, reasonableness or truth, and everything to do with using ‘facts’ exactly as he wishes to make his predetermined political point.

    He is the Ellsworth Toohey de nos jours.

  68. @PF
    I’ve tried having this discussion with him before, he cherry picks definitions them flips between high level and specific even being at times incapable of accepting that there can be more than one definition of profit depending on the purpose of the reporting.
    Quite how he reconciles this with the concept of multiple stakeholders which he backs I’m not sure, possibly he believes there can some sort of magical global report that has everything on it for every stakeholder and is simple to understand.

  69. I see he has now published a new blog which is effectively says ‘not me guv, I’m just saying we need different accounting, nothing wrong with what Facebook’s done’ It is by far the most boring and cringing post of his in, oh, 12 hours.

    Presumably, lawyers have called him.

  70. You have to hand it to Murph – knowing he is in a hole, he keeps digging and insisiting that he is right even though he is clearly in the wrong. He clearly does not understand the accounting for share options. I don’t either but I freely admit it – it is probably the most counter-intuitive set of rules that have ever been thought up by the standard setters.

    TBH Jolyon Maugham also made a complete arse of himself on this topic. Maugham and Murph are starting to show their lack of credentials.

  71. Ken.
    Thanks for that v interesting looking Machin paper, I notice it did not published wonder what story is there.

  72. This is getting silly.

    Max / Diogenes – Underneath that new blog, Richard has now told Andrew that he is totally wrong and that Matt Usselmann has worked it out – honestly! It’s not entirely evident that Matt has come across items such as losses b/f before…

    I despair that anyone can take any of this seriously. Perhaps if that nice Mr McDonnell chap changes his mind “again”, Richard might find himself a suitable role after all…

  73. @Max. From Our Murph’s own keyboard:

    > Let me stress straightaway, and not just for legal reasons, that this does not mean that I am saying that there is any wrong doing going on here… (emph. mine)

    Yep, the lawyers definitely called.

  74. I can’t quite believe it but it looks as if Murph has now switched into apportionment accounting…. ie working out what he thinks Facebook transact in the UK, ignoring the invoiced realities. He just wants the whole tax take of the world to come to the UK.

    Candidly, he is an international Tax Thief.

  75. Christ Tim you manage to get some rightwing nutters on this blog none of whom have any idea about the tax system in the UK. But then this ignorance extends to yourself does it not?

  76. In his latest blog it’s all some giant conspiracy by the oecd, accounting firms and corporations. Biggest surprise is he managed to avoid using the word cabal.

  77. So Much For Subtlety

    Dennis the Peasant – “Ha! Scratch a British lefty and what do you get? A good old fashioned racist yearning for the good old fashioned days of British colonialism.”

    Hey, that is totally unfair. You can’t smear racists and/or those yearning for the good old days of Empire by associating them with the Left.

    “As with Murphy, you just can’t imagine black, brown and yellow folks being able to properly manage their own affairs without the concerned help and guidance of white folks just like yourself.”

    Well it is kind of embarrassing, you know, some hate facts should not be noticed, but it is kind of, well, true isn’t it? Apart from parts of East Asia there are in fact no non-White populations that are capable of managing their own affairs without the guidance of White people. Even where they have some guidance, things often don’t work out well – Detroit, Puerto Rico etc etc.

    “As if you had a clue about what the Africans, Asians and South Americans want or need.”

    I think it is fair to say none of us know what they need. They may know what they want, but that has not worked out for them. There must be a path from Nigeria being Nigeria to Nigeria being a half decent place to live, but there is no sign anyone has a clue what it is.

    Mind you, the last politician to pronounce on what the non-White population wanted got fired. Poor Earl Butz.

  78. “theoldgreenfascist

    Christ Tim you manage to get some rightwing nutters on this blog none of whom have any idea about the tax system in the UK”

    Care to elaborate?

  79. Penis the Penis attempted:

    Ha! Scratch a British lefty and what do you get? A good old fashioned racist yearning for the good old fashioned days of British colonialism

    How did you infer that from me stating that free markets should help raise developing countries out of poverty? Isn’t Worstall constantly saying as much?

    How is that racist or wanting colonialism?

    Woof woof dribble dribble

  80. So Much For Subtlety

    Arnald – “Woof woof dribble dribble”

    This is why we all love you so much Arnald. It is the witty and sophisticated repartee.

  81. Arnald –

    The implication of your new-found devotion to free and open markets has nothing to do with free and open markets and everything to do with attacking multinationals for being, well, multinationals. And instead of being honest about your prejudices, you attempt virtue signaling by saying the only reason you want to attack multinationals is because they exploit “developing” countries.

    That’s both racist and good old fashioned colonialism. And it is because what isn’t heard in all of this is the governments of Africa begging the likes of Richard Murphy (and you) to help them battle multinational exploitation.

    Your answer to that, I suppose, will be that the oppressive, non-democratic kleptocracies of Africa and elsewhere have been bought and paid for by the multinationals. This, of course, thwarts true democracy, as well as fairness and transparency.

    All of which is, more racism and colonialism in the form of “the poor wogs just can’t get it right themselves, so we’ve decided to help them”.

  82. ken –

    The Machin & Manning paper isn’t available without payment, so I can’t claim to have read it. Having said that, the abstract managed to get both and eyeroll and a chuckle out of me. And a quick read of Machin’s c.v. told me all I needed to know about the relative worth of the paper… You could have predicted his findings before he actually did the research.

    It’s very much worth noting that hiring, firing, supervising and setting wages for employees in a for-profit environment of any kind is well outside his professional experience.

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