The international tax expert speaks

Richard Murphy says:
April 17 2021 at 9:55 am
But sales taxes are always passed on…

The evidence is very strong that CT is not

Reply

Eh?

Corporation tax must be passed on, a company isn’t a human being and tax always, in the end, hits a human being because we’re the only people here.

Seriously, is the international tax expert trying to say that corporation tax doesn’t come out of the wallet of some live human being?

8 thoughts on “The international tax expert speaks”

  1. Rational Anarchist

    To be fair, I think the general point is that corporation tax isn’t passed on to the consumers, but borne by shareholders and labour. Of course, making oneself clear is not a strength he suffers from

  2. corporation tax isn’t passed on to the consumers, but borne by shareholders and labour

    Are not shareholders and labour consumers? If you tax their money, do they not then consume less?

  3. How is sales tax passed on? Once I’ve paid the sales tax on the biscuits and eaten the biscuits, who/how/where do I pass it on to?

  4. It was already passed on to you when you paid for the biscuits. Because everyone who sold the same biscuits had roughly the same costs and overheads, the tax (and any variation up or down in the tax) is “passed on” (incedes) to you.

    You can’t go somewhere else that’s charging less because everyone buys the same biscuits from the same supplier for the same price, then must charge the same sales tax. If we assume that the market was already efficient before the tax was imposed, then the price you pay will go up by whatever the new tax is.

    >Are not shareholders and labour consumers
    No, not for the purpose of tax incidence. “Tax is always paid by somebody” is true, but it’s also a logical consequence of money not being able to be created by anyone other than the treasury. (Printing money “taxes” everybody by reducing the value of their money). If you lump the providers in one transaction in with consumers because they’re surely consumers in another transaction, then you cut yourself off from being able to analyse the transaction at all.

    It’s usually considered worthwhile to work out what side of a transaction a tax incedes, because it generally has more consequence than what side is charged with collecting it. If, for example, your goal was to tax Amazon over small businesses, you wouldn’t want a tax that immediately gets bundled into the fees Amazon charges small businesses. Just to pick an entirely hypothetical example unrelated to the current Budget.

  5. Dennis, Noted Non-Economist

    To be fair, I think the general point is that corporation tax isn’t passed on to the consumers, but borne by shareholders and labour.

    Tax incidence: The actual cost of taxation is borne by those least able to resist bearing said cost, not those initially incurring the cost of the taxes in question. In some cases it is the consumer, in some labor, and at last resort, shareholders. The point being that Murphy has nothing in the way of meaningful research to support his contention. He’s just yanking it out of his ass… just like everything else.

  6. Dennis, Pointing Out The Obvious

    How is sales tax passed on? Once I’ve paid the sales tax on the biscuits and eaten the biscuits, who/how/where do I pass it on to?

    “You pass it on to a municipal sewer pipe”, he answered hopefully.

  7. Moose: it wasn’t passed on to me when I bought the biscuits, it was charged to me. A charge that is passed on to me is one that is levied on somebody else and they extract the monies to pay it from me. Sales tax is extracted directly from me.

  8. >Sales tax is extracted directly from me.
    In the UK at least, it’s collected by the retailer, rolled into the final price, then delivered by the retailer to HMRC.

    I feel we’re reaching a bit of a philosophical question: if it’s extracted directly from you by a retailer who is then liable to HMRC, how is that directly from you? If he forgets to charge you VAT, the tax man would still claim the amount from him. He would argue, on the basis that he’s the one that sets the prices, and he’s the one a court would force to pay it, that VAT is being extracted directly from him and passed on to you.

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