Timmy elsewhere

A short interview.

It is becoming more common for jurisdictions throughout the world to go after multinational companies for back taxes purportedly owed. What’s at the root of this trend and will it continue? How can companies fight back?

TW: The root of the trend? Idiocy. There are people out there, all too many of them in politics, who really think that companies pay tax. Rather than it being that combination of shareholders and workers who carry the economic incidence. A result we’ve known since 1899, which should be long enough for even politicians to catch up.

14 thoughts on “Timmy elsewhere”

  1. Timmy –

    Politicians, ever those as stupid as Corbyn, understand that shareholders and workers bear the cost of corporate taxation.

    They choose to ignore the fact because it is in their interest to do so.

  2. The public clamours for higher corporation taxes, not knowing they are going to be paying the tax. In demanding that companies “pay their fair share”, they increase their own share of the burden!

  3. Do the customers of said companies not fully bear the weight of any tax? They are the ones who pay the money for the goods and services, the workforce and shareholders/owners are paid from this and the profit left is then taxed. Simplistic I know, but?

  4. > it is imports that make a place rich

    You keep saying that, and I agree with you. But every time Brexit moves forward, the pound drops another notch. That makes our imports more expensive, and therefore makes us poorer.

    Perhaps in the long run the pound will right itself, but in the long run we’re all dead.

  5. ” The correct solution is just to abolish corporation tax and tax income as income and be done with it.”

    Does that mean no corporate taxes and capital taxed at the same rate as labor?

  6. “Do the customers of said companies not fully bear the weight of any tax? […] Simplistic I know, but?”

    Tax incidence is divided according to the elasticity of supply and demand.

    If the demand for the product being sold by the company is inelastic (people have to buy it, whatever it costs) then yes, the customers pay most of the cost.

    If on the other hand the customers can take it or leave it, and are liable to go elsewhere if the price goes up, but the workers have no choice but to work there, whatever the wages, then obviously it would be business suicide to raise prices, but makes more sense to cut wages.

    Similarly with the willingness of investors (like pension funds) to invest elsewhere. If there’s some reason they can’t simply invest their money overseas, cutting dividends would be less damaging.

    In general the tax is paid in part by all three groups, in proportion to the gradients of the three different supply or demand curves. But it falls the most on the group least able to find alternatives.

  7. TW, or anyone:
    Can you suggest a short, simple, no-bullshit, introduction to economics book? Hmmm, Up to “A level” standard I suppose.
    I rather like some if TW’s writings but I’m often left with more questions than answers.

    And also: what does “neo” in neoliberal indicate? (what’s the difference between liberalism and neoliberalism?)

  8. Henry Hazlitt. “Economics in one lesson” (or is it one chapter?). It’s biased but I’ve seen at lefty profs praise it too. It’s free on the web too. If you want to go further any of the undergraduate guides are just fine. None are perfect but Krugman, Lipsey, Samuelson, Cowen and Tabarrok, any and all give a decent overview of both micro and macro. All have their biases but they are all less so than the prejudices of the writers themselves. The older ones with less “interaction” are probably more useful. As an introduction there’s pretty much nothing wrong with a 30 year old Samuelson for example. Just don’t take it as gospel. There will be plenty of these around for pennies at second hand places.

    Originally the “neo” in neoliberal meant Hayek, Friedman and so on, people reviving the classically liberal interaction of economics and liberty along the lines of Adam Smith, David Hume, JS Mill and so on. It all needed reviving by the 1940s through 70s.

    There’s a slight difference in the American meaning which is people who favour rather lefty goals but consider markets etc (ie, classically liberal economics) as the way to get there. It’s only slightly different in that all of the first type of neoliberals would have said that they think the same way.

    Today though the “neo” is just there as an insult to be spat out. Quite seriously, it means nothing more than that.

  9. One of the things that has always aroused my suspicions about economics is that there seems to be lots of room for “bias”.
    In other words, the answer to an economics problem can change depending on which side of bed one gets up. Then there cannot be an answer, just opinion.

    Anyway, it looks like I have some reading to do …

  10. There’s not actually that much bias in “economics”. Maybe in macroeconomics there is, but much less so in micro. the bias comes from the goals you want to pursue and the questions you ask rather….

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