tag:blogger.com,1999:blog-1859345528889981553.post4904892806331411090..comments2023-10-19T01:44:50.017+01:00Comments on Liberal Polemic: Corporation Tax and Payroll Tax: the stealthiest taxes of them allLiberal Polemichttp://www.blogger.com/profile/05002372579024659424noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-1859345528889981553.post-33760745607284269652007-04-18T10:39:00.000+01:002007-04-18T10:39:00.000+01:00A useful link, Joe. Thanks. Moving on a page to ht...A useful link, Joe. Thanks. Moving on a page to http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4016453 I was impressed to find how byzantine it really was. <BR/><BR/>Nonetheless, if Corporation Tax is levied at 30%, then the capital of an investor whose income is less than £39,825 is already being taxed at a higher rate than income from labour. To then withold a further 10% seems punative.<BR/><BR/>Similarly, if one has an income over £39,825, one's investment having already paid 30%, it may make sense to tax the income by a further 10% (on the original sum) so that all marginal income is taxed at 40%. But to slap on an extra 32.5% leaves one with less than half the procedes of one's investment (i.e. paying a marginal rate of tax of 52.5% through a combination of Corporation and Income Tax).<BR/><BR/>Thus, capital is taxed at a higher rate than labour, which is both arbitrary (why pick on one factor of production and not another) and distortionary (discouraging investment).<BR/><BR/>I may not (yet!) be arguing for flat taxes across incomes, but flat taxes across sources of income seems perfectly fair and sensible.Liberal Polemichttps://www.blogger.com/profile/05002372579024659424noreply@blogger.comtag:blogger.com,1999:blog-1859345528889981553.post-2659756735997038152007-04-18T08:47:00.000+01:002007-04-18T08:47:00.000+01:00Tom,Income tax on dividends is at a lower rate. Se...Tom,<BR/><BR/>Income tax on dividends is at a lower rate. See<BR/><BR/>http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015566<BR/><BR/>Presumably this lower rate exists in recognition of the double taxation.<BR/><BR/>This is also a good explanation:<BR/><BR/>http://www.bbc.co.uk/blogs/thereporters/evandavis/2007/04/that_pensions_raid.htmlJoe Ottenhttps://www.blogger.com/profile/18380362092159905533noreply@blogger.comtag:blogger.com,1999:blog-1859345528889981553.post-5029717949254500042007-04-18T02:03:00.000+01:002007-04-18T02:03:00.000+01:00The idea of businesses voting isn't quite as outla...The idea of businesses voting isn't quite as outlandish as you might think - I think that there was a business vote in local elections in the C19th. But to be honest I'm not suggest that they should be given representation; I'm suggesting that they should not pay taxation.<BR/><BR/>So in answer to Joe's points:<BR/><BR/>1) Because all dividends are taxed as income in the same way as wages, ANY additional tax taken at the point that a company declares a profit is going to result in capital being taxed at a higher rate. So basically, Joe, I AM arguing for lower business taxes, but my suggestion is that they should be zero.<BR/><BR/>2) I agree, despite my point above. <BR/><BR/>3) I totally agree, but the point remains that Corporation Tax is passed onto the consumer, so in the end it is just another tax on us, which is why...<BR/><BR/>4) I have lost count of the number of times I have heard people say that we should tax poor people less and rich companies more. It totally misses the point, but it is a convenient misunderstanding that politicians are happy to play to as they continue to tax us through the prices we pay to businesses saddled with heavy tax burdens.<BR/><BR/><BR/>Andy, <BR/><BR/>I totally agree that businesses are not people; as I said above, I don't want businesses to have a vote.<BR/><BR/>However, companies DO know how much of their payroll goes in taxes (including the employees Income Tax) and this undoubtedly pushes up the price of labour, resulting in higher unemployment. <BR/><BR/>As for the corporation as a legal entity, it is an anomoly, but it is one that has worked very well, creating a lot of wealth and employment in society. I would be loath to mess with something so successful.Liberal Polemichttps://www.blogger.com/profile/05002372579024659424noreply@blogger.comtag:blogger.com,1999:blog-1859345528889981553.post-78552673819333684812007-04-17T22:03:00.000+01:002007-04-17T22:03:00.000+01:00If we should be told how much of our payments to c...If we should be told how much of our payments to corporations go in corporation tax, then should we also be told how much of the money we pay *real* people in exchange for goods or services goes on their income tax (if indeed they are declaring it!)? I don't think so. We should never lose sight of the fact that corporations are *not* people. Arguing that there is something inconsistent about treating them as people and taxing them but not giving them a vote is fine (although I think it's more than possible to argue that, representing as they sometimes do large concentrations of wealth and power, they exert quite enough influence over the political process in their own way). <BR/><BR/>But the solution is not to give corporations a vote - and I don't believe you seriously think it is. Surely the solution lies in dismantling what makes the concept of the corporate person so bizarre in the first place? The creation of legal entities, entitled to buy, sell, employ people, own land etc. whilst being both potentially immortal and more importantly immune from any form of punishment for damage to the environment, etc. other than a financial one is bizarre in the extreme, and allows the people who actually run them to take decisions which, in a free society where no such legal construct existed, they would not otherwise take. The corporate person needs, in my view, to be seriously diminished as a legal entity.<BR/><BR/>Besides, if we allowed corporations a vote, how many people do you think would all of a sudden discover the wonders of incorporating pretty damn quickly?Andyhttps://www.blogger.com/profile/15432543456476489561noreply@blogger.comtag:blogger.com,1999:blog-1859345528889981553.post-39830941627153513362007-04-17T19:27:00.000+01:002007-04-17T19:27:00.000+01:00Sorry Tom, but:1. The whole double taxation argume...Sorry Tom, but:<BR/><BR/>1. The whole double taxation argument is a crock. What I care about, as a worker, investor, and consumer, is not the number of times taxation is applied, but the total amount. By all means make a case for lower business taxes.<BR/><BR/>2. I don't see why the principle of no taxation without representation should apply to companies any more than to tracts of land. Should sods of earth get the vote? No. Companies are not granted human rights, but rather whatever legal rights are thought to facilitate general prosperity.<BR/><BR/>3. While higher taxes on Tesco would drive up prices, it would not work in the simple way you suggest. It is not as if Tesco is currently forgoing some margins, that they would suddenly start to take should taxes rise. As an investor I would be most annoyed if they were. No, such taxes put up prices by increasing the cost of capital.<BR/><BR/>4. Who, exactly, has led you to believe that corporation tax is free money?Joe Ottenhttps://www.blogger.com/profile/18380362092159905533noreply@blogger.com