tag:blogger.com,1999:blog-1141932539860553199.post803942033553140043..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Economic Myths: Corporation tax is a tax on capitalMark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-1141932539860553199.post-18152383558153372822014-03-17T21:25:23.411+00:002014-03-17T21:25:23.411+00:00SM, perhaps I misunderstood you, I thought you mea...SM, perhaps I misunderstood you, I thought you meant zero % corp tax and then tax on dividends.<br /><br />I don't like marginal rates, as I am a flat taxer. Everything taxed at the same rate (however high or low), and we sort out progressivity or redistribution through the welfare system.<br /><br />And what does 'cash received' mean? Whether the money is in the company's bank account (on trust for shareholders) or in the shareholders' bank accounts, makes little difference.<br /><br />And ultimately, corporation tax is inherently just a tax on that surplus cash (by its very nature and not because the UK's system is particularly good).<br /><br />So the least-bad system is like HK, one flat rate for all corporates and individuals, no special dividend tax (as dividends have already been taxed).<br /><br />Whether that flat rate is 16% like in HK, or 10% or 20% is a secondary issue. The lower the better, but 20% is sort of the cliff edge, below which stage the deadweight costs are barely measurable.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-29464891034878890472014-03-17T21:12:58.529+00:002014-03-17T21:12:58.529+00:00Mark
Sorry - you misunderstand me.... I wasn'...Mark<br /><br />Sorry - you misunderstand me.... I wasn't advocating a distinct 'dividend tax'. That would be mad.<br /><br />Just tax the cash received at the recipient's marginal rate - which as you say should be flat and low.<br /><br />Anyway, under full-on LVT it all goes away... which would be better.Shineyhttps://www.blogger.com/profile/13281261419328886986noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-48620946021078098822014-03-17T18:31:15.828+00:002014-03-17T18:31:15.828+00:00D, yes, if you start dismantling the LToV it crumb...D, yes, if you start dismantling the LToV it crumbles apart to nothing, it has no predictive value whatsoever. <br /><br />SM, nope, CT could well do with being radically simplified, fewer silly disallowances and fewer silly tax breaks. In civilised countries you just take your accounts profit and times it by the tax rate, job done.<br /><br />The idea of just taxing dividends is more Faux Lib nonsense, I'm afraid, it's administratively unworkable and would lead to so much evasion that the fiscally neutral tax rate on dividends would have to be very, very high.<br /><br />With taxes like income tax or corporation tax, the least-bad thing to do is have the broadest base with the lowest rate.<br /><br />AFAIC, there is no CT on reinvested profits because you get a deduction for investment/spending, so what's left is surplus cash. <br /><br />Whether that cash sits in the company bank account gathering dust or is paid to shareholders makes little difference, and broadly speaking, it is better for companies to pay out surplus profits than to hoard them, seeing as that money belongs to the shareholders anyway.<br /><br />So HK does the decent thing and has one flat income tax applying to corporate and individual income, there's no tax on dividends at all and that seems to work just fine. Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-21913338065678942014-03-17T17:13:13.310+00:002014-03-17T17:13:13.310+00:00Yes but....
Surely its better to do away with the...Yes but....<br /><br />Surely its better to do away with the crap around CT (cap allowances, reliefs for certain favoured activities, R&D credits yada yada yada) and just tax dividends that accrue to UK tax payers.<br /><br />Would take out a load of compliance issues - (like wtf is deferred corp tax? - try explaining that to a non-accountant).Shineyhttps://www.blogger.com/profile/13281261419328886986noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-58721333682451768012014-03-17T16:48:59.847+00:002014-03-17T16:48:59.847+00:00I think that the Labour Theory of Value is misname...I think that the Labour Theory of Value is misnamed. It should be called the Labour Theory of Cost, since it really explains how much it costs to supply an item. But Value is related to Demand, not to Supply, so a Theory of Value should be based on the need/desire for an item, not on how much it costs to produce. <br /><br />So for instance a Theory of Value should tell us why water is of more value to most people when it comes in bottles, even when a product of equal quality is available from the tap, particularly those of us living in Perth or Aberdeen.Derekhttps://www.blogger.com/profile/06296053477905542366noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-60180215297502934812014-03-17T15:53:36.016+00:002014-03-17T15:53:36.016+00:00L, yes, but does the LToV help us explain or under...L, yes, but does the LToV help us explain or understand the world better than simply assuming things come into and go out of fashion?<br /><br />a) Taxes aside, the price you can charge the customer is dicated by supply and demand; and<br /><br />b) how the total revenue from the customer is split between rent, today's labour and yesterday's labour is simply down to relative bargaining power.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-45539941422226489322014-03-17T15:44:40.993+00:002014-03-17T15:44:40.993+00:00So, what you could say is the factors of productio...So, what you could say is the factors of production are not land, labour and capital, but land, todays labour and yesterdays accummulated labour. In which case the factors of production are labour and 'rent', or rather, since rent isn't production, production is labour. Doesn't that push us rather towards the 'labour theory of value' or rather again why the LToV got adopted in the first place?Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.com