Snippa’s not even asking the right question

Is there room for more corporation tax when wages comprise a bit over 60% of GDP and profits a smaller part at around 8% in the USA, but disproportionately the rates of tax on them is widely different, with labour bearing a far larger part, as is apparent.

The reasonable question to ask is why is that? And is that fair?

It would seem that the race to the bottom in corporation tax has resulted in a fundamental shift in tax burdens from companies onto individuals. Tax After Coronavirus (TACs) has to tackle this issue.

Companies don;t pay tax. As the Mirrlees Review points out:

Corporations provide a convenient contractual arrangement that allows
groups of individuals to own assets through a separate legal entity offering
the benefit of limited liability. However, neither separate legal identity nor
limited liability provides a rationale for a tax on company profits, since the
terms and conditions under which creditors are willing to lend to companies
will adjust to reflect this legal protection.
Perhaps the most important point to keep in mind when considering
company taxation is that it is not meaningful to think about the effects of
taxes on companies separately from the effects of those taxes on the
individuals associated with companies.

Even Snippa’s question, let alone his answer, isn’t meaningful.

27 thoughts on “Snippa’s not even asking the right question”

  1. Missing the point is the only thing that Spud is good at. That and talking nonsense. That and talking nonsense and contradicting himself continually.

  2. The Meissen Bison

    Tax After Coronavirus (TACs)

    It’s rather dear the way he coins these little gems in the hope that a grateful world will adopt them.

  3. Bloke in North Dorset

    Tax After Coronavirus (TACs)

    One for the grammar pendants, isn’t the abbreviation of Tax After Coronavirus just TAC? You might get away with Taxes After Coronavirus as TACs?

  4. Abolish Corp tax and VAT. That should do something to promote the UK’s recovery.

    More use than reviving the fucking YTS anyway.

  5. He’s asking the wrong question cos he already has what he thinks the answer is. Of course he doesn’t, but that won’t stop him.

  6. And is that fair?

    Life isn’t fair. You would have thought that after 2 failed marriages and umpteen failed jobs Herr Oberst Kartoffel would have realised that by now.

  7. The Meissen Bison

    Henry Crun: 2 failed marriages and umpteen failed jobs

    Seems fair enough, to be honest.

  8. Dennis, CPA to the Gods

    I’m not sure he’s aware of it, but he’s comparing apples to oranges.

    For federal level taxation, profits from disregarded entities, partnerships and S corporations are all taxed at the personal, rather than entity level. In large part this is done for tax avoidance purposes. What this means for Murphy’s little visual is that business income taxes are understated and personal income taxes are overstated. When he talks about corporate taxes, he’s talking about those corporations that have elected to be taxes as C corporations. In my experience, C corporation status usually makes no sense for smaller (and by that I mean gross income under, say, $50 million) companies.

    Either Murphy has never heard of a Form K-1, or he doesn’t understand its purpose.

  9. If his account of his latest YouTube is accurate, the concentration camp guards, Nazi officials and porn stars really ought to find their mojo

    Accounting is, then, deeply political. It makes capital, and the interests of shareholders its priority, by choice.

    Labour is treated as a burden in accounting, by choice.

    The environment is treated as an externality by accountancy, and so is almost entirely ignored, by accounting by choice.

    Is there anything there which is factually correct?

  10. Someone has set the ball rolling on YouTube – a couple of dodgy assertions in the first few seconds

  11. It does seem a bit odd to simultaneously complain about (1) companies avoiding corporation tax [at, what is it now, 19%?] and (2) companies paying out lots of their profits back to shareholders as dividends or share buybacks [taxed at, most likely, 40% or more?]

  12. “Missing the point is the only thing that Spud is good at. That and talking nonsense. That and talking nonsense and contradicting himself continually.”

    Nobody expects the Quaker Inquisition…….

  13. Dennis, Pointing Out The Obvious

    Of course it makes the interests of shareholders its priority. They’re the fucking owners!

    Labor is not a “burden”, its a cost. No accountant I know uses the term “burden”. The term “burden”, in and of itself is “deeply political”. It is also inaccurate.

    The environment is indeed an externality, so he is correct in that assertion. However, the fact that “the environment” (whatever the fuck that means) is and externality is exactly why it is ignored by accounting at the entity level.

  14. I thought this was very good a week ago over on TRUK:

    John Jameson says:
    July 2 2020 at 4:12 pm
    Have you got married again, Richard? That would be for the third time!

    Richard Murphy says:
    July 2 2020 at 4:17 pm

    I am still married to my second wife

    And we talk

    We have not cohabited for five years

    I doubt we ever will

    But we are not divorced and remain business partners.

    Business partners? Disingenuous twat.

  15. I have it on good authority from John Jameson that his tongue was firmly in his cheek when picking up on Spud’s reference to ‘his wife’.

    “business partners.”

    Yep, Mrs Spud gets allocated 1% of the profits of Tax Research LLP. A whopping £47 in 2019, up from £6.62 the year before.

  16. Is that John Jameson, the Warks and England batsman? In truth, Spud comes across as a complete dick on his videos. I wonder if he is going to try to monetise them

  17. @Diogenes “I wonder if he is going to try to monetise them”

    I looked into that. You can get advertising revenue as soon as you start – presumably from ‘click through’ although I don’t pretend to be an expert.

    To do anything else, you need a minimum of 10,000 subscribers. Can’t see that happening.

  18. Dennis, Tiresome Denizen of Central Ohio

    It seems he’s mastered marriage to the extent he’s mastered accounting and economics.

  19. I was told that his first wife was a business partner which is why they had to sell the business as part of the divorce. His second wife is a GP so isn’t his business partner in any real way, just a nominal one so that he avoids personal liability for the debts of the LLP and can walk away from future Libel damages.

  20. A guy on Spud’s blog was trying to tempt him into making a potentially defamatory statement about Mr and Mrs Horlicks and their involvement in a Mauritian private wealth fund. I was amazed he didn’t take the bait

  21. Dennis, Yet Again

    The comments on his Youtube accounting video, while small in number, suggest that this video series is either going to be short in duration or he’s going to end up turning off the comment section pretty soon.

    Go there and either leave a nasty comment or hit the dislike button. Do your duty!

  22. Bloke in North Dorset

    I just did my duty and started watching one of his videos but after 55 secs I’d had enough so I down cited and left.

    Not being an accountant, but having done finance for non financial managers courses and worked many times alongside accountants on due diligence projects, I was reminded of one of the first things you’re taught when joining the army: if you’re going to talk bullshit, talk it confidently. He’s taken that to a whole new level.

  23. In fairness many accountants I’ve known consider some labour, like HR departments, to be a burden, though of course they see a finance department is an asset to the business without which it couldn’t operate.

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