Err, well, no, Senior Lecturer

In the case of reducing rates of corporation tax a number of deeply destructive consequences arise. First of all, tax revenues fall. I do, of course, know all the arguments based upon modern monetary theory that suggests that tax is not needed to fund the government expenditure, but as a matter of fact a sum total of tax has to be raised within any system, including that described by modern monetary theory, to counter the effects of inflation. In that case, and as a matter of fact, if companies pay less tax then someone else will have to pay more: modern monetary theory does not change this logic. And as such what Boris Johnson is seeking to do is to shift the burden of tax from capital onto someone else, which will inevitably be ordinary people.

That assumes that corporation tax falls upon capital. Something which isn’t true, not in the slightest.

How much it doesn’t, even why it doesn’t, is argued over. But that it doesn’t is just a well known piece of reality.

In 1998 the Organisation for Economic Cooperation and Development began a programme to attack what they described as ‘harmful tax competition’. That program was misguided. That was because the clear implication of its title was that there might be a benign form of tax competition. There is absolutely no evidence that a benign form of tax competition exists. All of it is harmful.

No.

Think theoretically for a moment. There are bad forms of taxation. Or perhaps there are types which are worse than other types. Equally, we could say that there are harmful levels of taxation – type and level being distinctly different points here.

A place that uses the good types at not harmful levels does better than that the bad at harmful. This is obviously tax competition. The outcome of which will be that the bad is outcompeted by the good and thereby replaced by it. If only becuase people start to mutter, well, bugger me, hadn’t we better start doing it that way?

Do note that this doesn’t depend upon what we say is good or bad taxation, nor what the judicious level is. On that second places which don;t tax enough, thereby failing to produce enough government, would equally be found out.

So, is it possible for there to be a good form of tax competition? Sure there is.

The Senior Lecturer is therefore wrong. But then we knew that…..

10 thoughts on “Err, well, no, Senior Lecturer”

  1. Bermuda
    Whenever someone spouts off about the ill-effects of reducing taxes on income point at Bermuda, the most prosperous country over Her Majesty reigns, which has raised itself from relative poverty under the economically beneficial regime of zero tax on earned income.
    One may also point out that Geoffrey Howe increased receipts from Higher Rate Tax when he reduced the rate from 98%/83% to 60%

  2. First of all, tax revenues fall. I do, of course, know all the arguments based upon modern monetary theory that suggests that tax is not needed to fund the government expenditure

    Genuine lol. That’s the problem with irrationalists – once they believe one fucking stupid thing there’s no reason not to believe another equally as stupid, or hundreds, because you have no foundation of reality on which to base a judgement. Then one day you have to make yourself look like a fool trying to reconcile them all.

  3. Dennis, He Who Has Never Done Blackface (Unfortunately)

    In the case of reducing rates of corporation tax a number of deeply destructive consequences arise. First of all, tax revenues fall.

    There’s a serious error right there.

  4. In 1998 the Organisation for Economic Cooperation and Development began a programme to attack what they described as ‘harmful tax competition’. That program was misguided. That was because the clear implication of its title was that there might be a benign form of tax competition

    Two fucking laughs in one post. First, a bunch of high taxing governments is hardly an unbiased source, but our intrepid and courageous expert is still outraged! HOW DARE THEY?!!

  5. It’s an odd one to point at John77. Been ideally placed for tourism since the 1920s. Made a living out of being a tax haven since the 60s. Not everywhere gets those opportunities.

  6. Has anyone else noticed that Murphy and Greta Thunberg share a similar angry and dogmatic attitude?

    As have a significant and fairly steady minority of the population for centuries, millennia probably. Only the ideology draped over the urge to control and dominate changes.

  7. @ bis
    Bahamas better place for tourism, fraction of Bermuda’s GDP per capita. Lots of tax havens in the Caribbean, ditto.
    Partly to stop itself being overwhelmed with immigrants using it as a tax haven, Bermuda has a law that you cannot employ a non-Bermudian if there is a Bermudian qualified to do the job

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