Corporation Tax Unfit For Purpose

[Ignitionnet]

Just a thought for those lovely people in UKUncut who seem to think that taxing corporations more will make everything better, along with some correction of the nonsense the Guardian and other publications peddle over supposed tax evasion.

See attached.

[Ignitionnet]

There's an even stronger perception that the money to pay for corporation taxes just magically appears out of the ether.

Companies do not pay their own taxes with their own money, they pay them with the money they generate through charging more for their goods and services, with money they save through employing less people and paying those they employ less, and providing investors, be they private, pension funds, whatever a lower return on their investments.

Like every other tax individuals pay corporation tax.

[Chrysalis]

you are correct but its not a cut and dry situation, in a situation with corp tax removed it is almost certian the savings would at least partially be diverted to profits rather than reinvested. In addition the loss of income would be replaced with a new tax. Which like most recent new taxes would probably hit the poor worst.

[Ignitionnet]

Originally Posted by Chrysalis

you are correct but its not a cut and dry situation, in a situation with corp tax removed it is almost certian the savings would at least partially be diverted to profits rather than reinvested. In addition the loss of income would be replaced with a new tax. Which like most recent new taxes would probably hit the poor worst.

Interesting, last I checked my income tax went up, I pay more VAT on the things I buy with my disposable income, I buy more VAT rated items due to higher disposable income, NI also up. My income tax went up to fund an income tax cut for those who pay basic rate.

I've no doubt that the savings would be partially diverted to profit although I'm not entirely sure how this works given profits would be taxed (Corporation Tax taxes profits), along with this money would go to investors (to be taxed as capital gains) and staff (taxed as income) as well as general economic activity pushing money to other companies.

This particular game is zero sum. What hits the poor is them paying more and earning less in order to maintain a particular rate of return for investors. The companies aren't going to be pumped into increasing profits else a competitor will take market share by accepting the previous level of profits and cutting prices or increasing staff salary and attracting higher quality, more productive staff.

EDIT: A quick bit of maths shows me paying 43.841% on my income before it even reaches me. Clearly a sign of a not very progressive tax system. We actually have one of the more progressive tax systems in the world, most make people, regardless of income, pay a certain premium for their healthcare while ours is funded mostly from progressive general taxation.

Of course the public health insurance premiums are conveniently ignored by 'progressives' when trying to complain about Britain's tax system.

[Chrysalis]

if I was a government even considering something like this I would do it on an agreement.

The condition would be prices deflated 27% to match this claimed real cost of corp tax (so living costs go down).

I would then probably recover the revenue from the income tax middle rate by adding whatever is needed to it.

[Ignitionnet]

You wouldn't need to recover it from there the increased economic activity along with increased income taxes would do the trick. Prices wouldn't deflate that much part of it would go in increased salary and some in increased capital gains.

Corporation Tax reductions worldwide have been revenue neutral or better in the majority of cases.

[Chrysalis]

I doubt it would be close to neutral whilst we still in a depression.

I would like to see some data or links to data on it been prudent because history of the tory party shows whenever they have claimed reduced taxes will yield a profit they have failed.

In addition when clinton lost power in the states and bush started wielding tax cuts the states went from a positive budget back to negative and growing debts again.

[Ignitionnet]

With Bush it was spending that was the problem, that and unproductive tax cuts for ideological reasons rather than economic ones.

Clinton didn't lose power, he had reached the end of his terms.

See the PDF I attached to the first post. It has a list of citations and references.