Oh dear, he's really lost it now. I've also included a brief discussion with @tomthewaters, in which Ritchie digs an even greater hole for himself.

Where do you begin with this nonsense? The substance of a tax cut is this: before the cut the government wants X% of taxable profits and after the cut it wants Y% of taxable profits. And Y is less than X.

What the government might decide to spend its tax revenues on is neither here nor there. That's because we don't hypothecate taxes, nor do we insist that our government operates a balanced budget every year. So there's simply no link between "the tax that we think we would have received in corporation tax had we not cut taxes" and "the money we spend on the poor".

So there's simply no truth at all to the idea that accountants would view a tax cut as a subsidy to the company. The European Union doesn't require it, accounting standards don't require it, good practice doesn't require it and nobody, as far as I know, other than Ritchie has ever thought it to be a good idea. It's a stupid idea. It doesn't reflect reality and it doesn't describe the underlying substance. It's equivalent to saying that, because robbers decided not to burgle your house last night, the substance is that they gifted you all the things you own.

It's a really stupid idea. Only Ritchie would disagree.

People who read this post also read:

• Dual standards at Tax Research UK
• A very strange idea indeed
• Ritchie on the teaching of accountancy
• Sometimes Ritchie shoots himself in the foot
• No, Ritchie, you don’t get to do this

Filed under: Accounting, Taxation with tags idiots, richard murphy, substance over form, tomthewaters