One of the arguments that we economically literate keep having with the varied tax campaigners out there is that who really bears the burden of a tax is not necessarily the same as who hands over the cheque. This is particularly important when we come to corporation tax for the standard analysis is that it’s some split between the shareholders of the company and all the workers in the economy doing the taxing that carry the burden. The argument is logical enough, tax returns to investment and sure, the shareholders carry some of that cost. Which dissuades some from investing, which reduces investment, and given that capital plus labour is what raises wages then and therefore the workers get lower wages over time.
Within actual economics rather than wishful thinking circle jerks the only argument is over how much on each side, capitalist pigdogs and noble workers with chins lifted toward the rising dawn of equity. The causes are known. The smaller an economy and also the more mobile capital then the more it’s the workers. This being important as the developing countries are, by definition, small economies and they’re also hoping like hell for more of that highly mobile foreign capital that the circle jerkers are so insistent upon taxing.
But, they say let’s have more taxes anyway!
A new minimum corporation tax would raise substantial revenues, almost entirely at cost to the shareholders of multinational corporations.
Note that, shareholders, the capitalists. We’ll take – say – 25% off them then.
This would mean the creation of an investment income surcharge in many countries to compensate for the fact that wealth is not subject to Social Security charges.
And we’ll take another 15% off those same capitalists – that’s his usual demand for the surcharge.
It would also require the elimination of the preferential rates provided to many sources of investment income right across the world.
And income tax rates should be the same for incomes derived from capital as from labour – 45% at the top end for the UK then.
And, it would require that rents are taxed at appropriate rates, with little or no deduction for interest charges,
And folks can’t deduct a major cost of doing business either.
And after that consideration of a wealth tax may be appropriate.
Oh, and we’ll have a slice of the wealth itself as well thankyouverymuch.
At which point we might try, as this tax campaigner has not, the employment of a little addition. So, this is all to be carried by shareholders of major corporations. Who will be taxed 25% within the company. And 45% on what they get out. Plus 15%. Without deducting a major cost of being in business.
So, on £100 of profit there’s £25 of tax, leaving £75, which is taxed at 60 or £45. Which is an overall rate of 70% upon capital incomes. Without being able to deduct that major cost of doing business, interest.
Just how bloody damn poor are they trying to make the workers?
I, of course, have no objection to anybody working on the ideas around such a tax now so long as the interim steps that I suggest are also implemented.
How kind of you. It’s idiocy. Now go away.