This is a really, really, terrible justification:
They have lower costs of capital than smaller companies because they tend to be able to borrow more at lower cost than smaller companies, which ability also allows them to invest more than their smaller rivals which in turn tends to reduce the tax rates that they might otherwise pay.
Big companies invest more therefore they must pay more tax.
MOAR TAX!
Jeebus cockamammie horseshit. This is the same Solanum who insists that Britain doesn’t have enough investing going on.
This is the equally entertaining assertion:
There would be only limited behavioural responses to this proposal because it only applies to UK-generated profits and it is increasingly difficult to relocate profits to other countries or tax havens for taxation purposes.
Of course people closing down their UK operations is not apparently an option they might consider. I work for a large US Investment Bank. He is delusional if he thinks they won’t factor in additional taxation when considering where to place people.
As a consequence, it is likely that this proposal might raise an additional £6 billion per annum from large companies and more than £1 billion from smaller companies, providing total additional revenues of £7 billion per annum as a result.
Might raise £6 or £6 billion but the likelihood of it raising that sum per year is in cloud cuckoo land. Presumably he’s planning to nationalise the assets if they threaten to relocate.
I think we all know, with any Spud proposition one needs to start with the conclusion & work back to the evidence.
Beginning to wonder if the accountant in question is engaged in some sort of performance art project, or maybe he is just a master troller.
“additional revenues of £7 billion”
Enough to run the NHS for maybe three weeks, even if it wasn’t a fantasy figure. The debt the UK is in is astronomical
Of course there’ll be no 2nd or higher order effects …
About 12 years ago I worked on a project with a very bright and ambitious Italian who lived in Brazil. His father had a successful building company near Milan but he wasn’t interested in taking it over because there was no scope to grow it.
It turned out that at the time any building company with 50 or more employees was subject to extra taxes, social and profit, as well as other rules around employee security and benefits.
It will come as no surprise to readers here that there was a lot of Italian building companies with 49 employees.
It would also come as no surprise to learn that successful Italian building tycoons had several companies, all with the magical 49 employees: a surveying company, a groundwork company, a bricklaying company, a roofing company, a plastering company, a window fitting company, etc etc etc.
@BiND
Very similar legislation applies in France, to most (?all) businesses (not sure about extra taxes, but lots of employee protection legislation and ‘worker’ directors). And yes, very many businesses have 49 employees as a result. You can have as many contract staff as you like.
If Spud had done any research into large UK companies, he would surely have realised that most of the tax they pay is not in the UK. If you look at the FTSE100, they pay most tax to Bongo Bongo land and China and probably declare losses in the UK