Ritchie on corporation tax

First, let me be clear that corporation tax is charged on profits. I am well aware that there are those get this wrong. And there are also those who like to say that the charge is passed on to the customers or the employees of companies. I think the evidence for that is remarkably weak: if the tax charge could be got rid of so easily then I have no doubt at all that much less effort would be put into avoiding it.

Sigh. No one says that the tax charge is “got rid of” nor passed on. We say that the effect of the changed behaviour that the tax induces leads to the economic burden of the tax being split in some manner between capital and labour. The capital in the firms being taxed, the labour in the economy taxing the economy.

What portion is a matter for (vigorous) debate. That it is so divided is not something disproven by the vague musings of 0.2 of a professor.

And of course if his assertion is true, that corporate taxation really is paid only by capital, then we can abolish corporate taxation and just tax investors’ incomes instead. Job done.

Odd that he won’t support that either.

11 thoughts on “Ritchie on corporation tax”

  1. I’ve just read the TJN’s “10 reasons to defend corporation tax”. It basically says that all company owners are rich bastards who should be taxed, as opposed to, say, pension funds. Oh, and CT means that corporate “cash hoarding” is discouraged. How exactly a tax on a flow discourages the existence of a stock is a mystery to me. Perhaps the LHTD can explain?

  2. It is just an axiom of socialism that corporation tax is right and good. They seldom get so worked up against other taxes unless non-doms are involved. Corporations and non-doms are viewed as “the other”, insidious, slimy forces working to undermine our lovely society. Even if corporations pay really high wages, it is not fair unless they pay huge amounts of corporation tax as well. You see this moronic tendency in people such as Jolyon Maugham as well as Murph. It is hard – wired stupidity, envy, resentment of something they think they shouldn’t like.

  3. “Let’s have a tax on wealth creation! And let’s make it really big!”

    “I mean, what’s the downside?”

  4. I’m watching “The Week Ahead” and everyone is nodding in agreement that Google, Boots, Vodafone etc are blatantly avoiding tax and the Tories are letting them “get away with it”. One of these companies needs to launch a libel suit, public perception be damned.

  5. Tim Newman,

    “One of these companies needs to launch a libel suit, public perception be damned.”

    It isn’t worth it. Other than the odd Guardian reader, who is switching from Vodafone to EE because of tax?

  6. It isn’t worth it. Other than the odd Guardian reader, who is switching from Vodafone to EE because of tax?

    It will be if this narrative continues and stupid laws get passed.

  7. Have I read Murph’s blog correctly? He’s complaining that Google has “only” paid 50% tax on its profits.

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