Responding to Shaxson on his ten reasons for the corporation tax
Posted by Christie Malry on March 15, 2011 at 1:07 pm
Nick Shaxson, he of Treasure Islands fame, has written a piece for CiF giving ten reasons why companies should have to pay tax.
Now, because I'm on my phone today. I can't respond to his points one by one, but only in aggregate. Sorry.
The problem with these sorts of list are that it's very rare for all ten to be as good as each other. This list is no exception. The arguments boil down to a few reductio ad absurdum points and a few that try to pluck the ethical heartstrings. The rest quibble with the academic literature. He makes some howlers too. While a company may be more than the sum of its parts, it can no more bear taxation than a table or a computer games console. Only people pay tax, so our tax policy should aim to tax the people who conduct economic activity in our country.
In his haste to think up ten reasons, he's missed the most obvious reason of all (spotted by the first CiF commentator): it's where the money is. But there are many economic reasons why taxing companies might not be such a great idea. You know, tax incidence, double taxation, international competition, etc. But there is an alternative. If we're worried about offshore structures and international investors, we could always have a low corporation tax but levy a withholding tax on flows out of the country, with exemptions for our European friends or other countries we like. Ideally, we want people to base their companies here, because it brings jobs and prosperity. That's a far greater prize than the pathetically small amounts we raise in corporation tax.
And finally, you can ponder for yourself whether Britain should accept any lectures on tax avoidance policy from a man who, according to Wikipedia at least, lives with his family in Switzerland.
One of the things that I like most about a lot of the hostile comments on today's article and my book more generally is that they avoid engaging with the actual issues. This is a classic example. "You can ponder for yourself whether Britain should accept any lectures on tax avoidance policy from a man who, according to Wikipedia at least, lives with his family in Switzerland." If you can't handle the message, smear the messenger! And perhaps the most enjoyable part of the hostile comments comes when the commenter clearly hasn't actually read the item in question. Tax incidence, double taxation, and so on. If this is your riposte, then I would urge you to read the article! Come on, you are clever people. You can surely do better than this. Do try again.
[...] my book more generally is that they avoid engaging with the actual issues. Here, at the hyena-like FCA blog, is a classic example. “You can ponder for yourself whether Britain should accept any [...]
[...] 2011 at 11:32 pm OK, back in front of a real computer, so I can spend a bit of time doling out a proper beating to Nick Shaxson's article 10 reasons we should tax [...]
Ah yes, the "smear the messenger" method of dodging awkward questions. Notably Shaxson has not responded to those questions, which are perfectly legitimate given that he is part of a growing industry which profits handsomely out of whining about tax fairness. So he should be absolutely transparent about his own tax affairs. Where are the profits from his book taxed? Do they accrue to him personally or are they held in some type of company, spv or trust? In which jurisdiction is tax levied on those profits? What is the marginal rate of tax that he pays on his entire income, and how does it compare against the proper rates in the UK? Does he have any avoidance measures in place? Does he provide HMRC with full details of his assets & income in Switzerland?
Tony, if you head over to Mr. Shaxsons blog you could read an interesting exchange between him and another commenter ( http://treasureislands.org/ten-reasons-why-we-sho... ).
in case you don't want to bother heading there I've pasted the relevant quote below (note: he mentioned that he hasn't setup a corporation to receive the income from the book):
"I am resident in Switzerland, so I’m a Swiss taxpayer, not a UK one. And to answer your question, I pay my taxes in full. "