Why Tax Avoidance is among the biggest issues of our generation


11:02 am - March 29th 2011

by Sunny Hundal    


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Over my holiday last week, I read Nick Shaxson’s book – Treasure Islands. I would go as far as saying this book is the No Logo for a new century. It’s not as well written but it’s revelatory and very important for reasons I outline below.

UKuncut, who have done more to highlight tax avoidance over the last 6 months, faced a setback on Saturday. But they shouldn’t lose faith. Tax avoidance is perhaps one of the most important economic issues of our time and they are right to focus on it.

To start with, its worth emphasising that tax avoidance, which is legal in theory, exists thanks to tax havens. Havens can not only be offshore (Cayman Islands, Jersey) but also onshore (Delaware). Havens offer legislation that allows corporations or individuals to avoid tax.

This is how Nick Shaxson offers a snapshort of tax avoidance in his book:

A Mexican drug dealer mayb have $20 million, say, in Panama bank account. The account is not in his name but is instead set up under a trust set up in the Bahamas. The trustees may live in Guernsey, and the trust beneficiary could be a Wyoming (US state) corporation. Even if you can find the names of that company’s directors, and even get photocopies of their passports – that gets you no closer: these directors will be professional nominees who direct hundreds of similar companies.

They are linked to the next rung on the ladder through a company lawyer, who is prevented by an attorney-client privilege from giving out any details. Even if you break through that barrier you find that the corporation is held by a Turks and Caicos trust with a flee cause: the moment an enquiry is detected, the structure flits to another secrecy jurisdiction.

What’s legal for drug dealers is also legal for High Net-worth Individuals (HNIs) and corporations. Its a near bullet-proof system.

Last week the NYT revealed that General Electric – America’s largest corporation – not only paid zero tax on $14.2 billion in profits, but it actually received tax credits of $3.2 billion dollars. On top of that it asked union workers to make wage and benefits concessions.

You may start by pulling out that old canard: ‘everyone wants to avoid taxes surely? What’s wrong with it?’ I answered it here. In brief, if everyone really had the opportunity to avoid income taxes then society as we know it would collapse. What actually happens is that tax avoidance allows rich individuals and major corporations from avoiding tax, forcing middle-income earners to shoulder a greater share of the tax burden.

Tax avoidance contributes to stagnant living standards
They increase the tax burden on middle-income earners by allowing the richest to escape tax. Tax havens also help reduce the tax burden on the richest corporations, further reducing the income that governments get.

The richest 400 Americans booked 26% of their incomes as salaries/wages in 1992, with 36% recorded as capital gains. By 2007, only 6% was recorded as wages/salaries, while 66% was recorded as capital gains. (IRS data, 2010). The clamour for lower corporation tax will only help increases the incomes of the richest.

Tax havens lead to corruption and poverty
In March 2010, Global Financial Integrity in Washington published a study on outflow of money from African countries. They said total illicit financial outflows were approximately $854 billion over 40 years, and could be as high as $1.8 trillion.

How do you think that money was allowed to escape? Yup, through tax havens. More transparency in the global financial system would make Africa richer and reduce corruption.

Tax avoidance is bad for the economy
Tax havens make it easy for companies to hide losses and shift around money through opaque companies in secret jurisdictions. Therefore, they hinder startups who cannot employ an army of accountants to evade taxes and compete with larger companies.

This, in turn stifles competition and innovation.

Tax havens destabilise the financial sector
A court-appointed investigation into the collapse of Lehman Brothers found that the bank used an accountancy trick called Repo 105 to mask its transactions. But US law did not permit this. So what did they do? They came to London where our laws are more lax (the City is also defined as a tax haven).

Similarly, the unit that took down the US insurance giant AIG was based in London – thanks to our lax tax laws. These havens make it easy for financial institutions to evade laws (and taxes) that force them to be more secure.

The practice of continuing tax evasion destabilises our economy, since they also facilitate banking secrecy, forcing taxpayers to pick up the bill when things go bad.

Much more
There is much more to say on the topic but I have limited space. The Tax Justice Network estimated in 2005 that over $11 trillion is stashed away in havens. That is bigger than the size of the world’s largest economy: the United States.

Tax avoidance and tax havens are therefore the big issue of our generation (in addition to global warming). Its right for UKuncut to focus on it and they should continue to do so vigorously.


Some bits above taken from Treasure Islands

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


So you are advocating imperialism, in that we tell other sovereign territories, often without other industries or natural resources (or only with tourism, which is not a good base industry), what to do with their tax rates and the like? Which will presumably be backed up by threats if these other territories exercise their sovereign rights to do as they wish?

Interestingly, every one of the territories or countries you mention above is democratic. So what you are basically saying is that your will (it is not the will of the people of the UK, since that is expressed through government policy) overrides the will of the people of the Cayman Islands or Delaware, as expressed through their government’s tax policies.

I would agree there should be greater transparancy in financial systems, but do you know, I suspect this will come with lower levels of taxation (=less incentive to avoid tax, with therefore less need for complicated shells) rather than by attacking other countries and territories right to do business as they wish.

Watchman – many of them are crown dependencies surely?

But otherwise that’s the key question. Tax avoidance is wrong, but aside from the introduction of one world government how do you stop it.

A little tip for lefties – stop arguing the moral case for progressive taxes, such as the woeful Robin Hood advert, and start arguing the practical case. Most conservatives – believe it or not – think it is morally right that bankers and the super-rich pay more tax, we just dont think its possible without damaging the economy.

The whole campaign against tax avoidance is utter nonsense. Either people pay the tax due under the law, (described by you as avoidance), or, having no idea what they should pay, they should just send all earnings straight to the tax office to keep you happy.

By all means campaign to change the law but stop having a go at people for following it.

“The Tax Justice Network estimated in 2005 that over $11 trillion is stashed away in havens. That is bigger than the size of the world’s largest economy: the United States.”

Firstly, the GDP of the US is $14.6 Trillion, (according to wikipedia), and secondly that’s a yearly amount which you are comparing to a total “stashed away”. This is very misleading and I suspect deliberately so.

Tax avoidance is not morally wrong.

The state collects its revenue through taxation backed by the threat of violence.

Avoiding its demands is eminently sensible (if you can get away with it).

pagar – just because something is legal does not make it moral

I would say avoiding tax in the country to which one owes one’s freedoms is immoral. Didnt our Lord say “just give us the fucking money”?

pagar,

If you benefit from the services of the country (NHS, army, police etc) you should pay taxes within reason – your rights come with responsibilities remember. But that is why tax evasion is wrong. Tax avoidance is just playing the game I suppose – after all, the rules which allow it to happen were put in place by the same agencies (government and whatever the revenue collecting body happens to be called this century) as collect the taxes. It is only possible to avoid tax because government permits it (even indirectly) and this permission is generally because the entire system is so complex and twisted that it is easy for clever people to find ways round it. So long as you stick to the rules, you are in the right.

7. Luis Enrique

there’s a lot going on here:

1. the distribution of the burden of taxation in rich countries
2. the ability of politicians and businessmen in Africa to appropriate and stash away wealth
3. lax regulation of the financial sector in certain territories
one might add (although left-wingers don’t typically care about this sort of thing)
4. the waste of resources represented by all those highly paid lawyers and accountant

1. is an important issue – although some glibertarians will no doubt disagree, most of us don’t want the wealthy to avoid paying the taxes whilst the rest of us have to cough up. I’m not sure how far up my list of “big economic issues” I’d put this: for example, I’d place it below the problems of unemployment and stagnating wages.

2. no doubt the existence of ask-no-questions banks makes matters worse. More transparency, shutting down tax havens etc. looks like a cause worth supporting to me. But we shouldn’t kid ourselves they are at the root of this problem. For those interested there has been lots of mainstream economic research into the question of why capital flows from poor to rich countries. Even an honest African business person has reasons to keep their money outside of Africa.

3. the importance of regulating the financial sector speaks for itself.

I’m interested to read what you write about the rich in the USA increasingly recognising their income as capital – in other countries, the opposite pattern has been observed in other countries. Coincidently, corporate taxation and the taxation of capital income aren’t the same thing: you could cut corporate tax to zero and impose high taxes on capital income (dividends) and capital gains (asset sales).

if tax avoidance is going to become one of the biggest issues for our generation, I do hope people will take the time to understand some of its subtleties. A good place to start would be with the work of Joel Slemrod, author of Cheating Ourselves: The Economics of Tax Evasion (a short, readable pdf) )and several books, covering topics like corporate taxation and taxing the rich (Does Atlas Shrug?)

finally a plea that I suspect may fall upon deaf ears. It is not the case that if we somehow managed to shut down tax havens, increase corporate tax receipts etc. that all what would happen is the rich pay more tax, full stop. The impact upon prices, wages and investment needs thinking about too. Despite how they are wielded by the likes of one Worstall T, these “tax incidence” arguments aren’t things that left-wingers should leave to right-wingers, they are worth understanding rather than shouting down. I haven’t read it yet, but the IFS’s Mirrless Review is prob the place to go for that.

“Tax avoidance is not morally wrong.”

“just because something is legal does not make it moral”

Isn’t it really the case that morality and legality are separate matters? Certainly there is an overlap, but it should not be for the state to teach us morality.

If the state is concerned about tax avoidance, they can do what they always do, chase after the wind to close ‘loop holes’, or else they can simplify and reduce taxation thereby reducing the need to avoid it. All this talk about cracking down on tax havens sounds a bit like a call for gunboat diplomacy.

@ 5 Ed West

You are on a hiding to nothing trying to convince a section of the population, including people like pagar, that there is anything “wrong” with avoidance, or that rich individuals or corporations have any social responsibility to pay a fair amount of their wealth (however the state decides to collect it) towards the common good.

This discussion was had at some length previously on LC in relation specifically to corporate taxation too. For those who mistrust the state, see small government as an absolute imperative, and actually believe in the concept of the Big Society, tax avoidance is not only defensible, it is a “good thing”.

Their world view has convinced them that wealth will trickle down, and that maximising the control an individual has over their money will lead to the best result long term. The resulting inequalities are seen as a price worth paying to allow the rich to continue enjoying having their cake and eating it too.

10. Luis Enrique

oh – I meant to add that variation in tax legislation across countries isn’t quite the same thing as a “tax haven” – if multinationals route business through country X because it has more favourable tax treatment of something, that doesn’t make it a tax haven. So long as tax rules differ across countries, it’s always going to be the case that some places are more advantageous than others (The Netherlands for IP earnings, for example). If you’re not careful you can end up calling nearly everywhere a tax haven: better to reserve that term for this llot (the OECD list of uncooperative tax havens).

10 – the author of Treasure Islands defines London as a tax haven, on the grounds that ‘tax havens’ aren’t really about tax.

“Over my holiday last week, I read Nick Shaxson’s book – Treasure Islands. I would go as far as saying this book is the No Logo for a new century.”

What, you mean ignorant near libellous rubbish? Faint praise indeed.

“To start with, its worth emphasising that tax avoidance, which is legal in theory,”

No, tax avoidance is, by definition, legal. It may not be, according to your moral system, moral, but it is most certainly legal. For we have another description, tax evasion, which describes the illegal stuff.

“that tax avoidance, which is legal in theory, exists thanks to tax havens”

No. I have no doubt that tax havens enable some tax avoidance. But there are forms of such which do not need or require havens. For example, in one of Ritchie’s reports, you can see him describing income splitting as tax avoidance (even tax abuse). You see him describing the payment of dividends rather than wages as avoidance and abuse. There is no haven being used here: and Ritchie does indeed state that this is both tax avoidance and tax abuse, despite his own use of said practices.

“This is how Nick Shaxson offers a snapshort of tax avoidance in his book:”

That isn’t tax avoidance, that is tax evasion. A drug dealer of any nationality not declaring his income is evasion.

“Last week the NYT revealed that General Electric – America’s largest corporation – not only paid zero tax on $14.2 billion in profits, but it actually received tax credits of $3.2 billion dollars. ”

Note this line:

“While the financial crisis led G.E. to post a loss in the United States in 2009,”

Make a loss and you don’t pay taxes on the profits you didn’t make. And you get to carry those losses forward too. Because it is cumulative profits which are taxed. Has to be.

“The richest 400 Americans booked 26% of their incomes as salaries/wages in 1992, with 36% recorded as capital gains. By 2007, only 6% was recorded as wages/salaries, while 66% was recorded as capital gains. (IRS data, 2010).”

Could you point to that data? I’d love to see that, try to understand it.

“Similarly, the unit that took down the US insurance giant AIG was based in London – thanks to our lax tax laws. ”

Err, no. AIG Financial Products did not go down because of anything at all to do with taxes. They went down as a result of near insane business decisions. They were writing CDS’s. Without posting collateral. And then they lost their AAA rating and they had to post collateral. Sweet FA to do with taxes, everything to do with near insane business decisions.

Nick and Ritchie are bad enough but having them filtered through someone who doesn’t understand what they’re saying is worse.

@ Ed West

I would say avoiding tax in the country to which one owes one’s freedoms is immoral.

Most amusing.

I’m afraid I rather see the state as the threat to ones freedoms, rather than their protector.

@ 8 Trooper Thompson

“…..or else they can simplify and reduce taxation thereby reducing the need to avoid it.”

We hear this a lot, indeed it was trotted out during the discussion about corporate taxation, i.e. the way to avoid companies “racing to the bottom” and moving offshore to avoid higher rates of corporate tax, was to reduce or even abolish such taxes and hey presto, we would actuallt benefit because companies don’t pay taxes, people do… and without the burden of taxes, companies would reduce their prices, pay their workers more, and increase the dividends they pay shareholders.

In the long term, that might actually happen… but we all know that in the short term the companies will spend it on bigger bonuses and salaries, marble fountains for their new HQ, more speculation and buy-outs etc. In the short to medium term, the shortfall in government tax revenue is therefore made up by taxing the squeezed middle even more, because most of them are easy targets for PAYE, VAT and consumption taxes they can’t readily avoid, and they don’t have large savings and assets which can be “fiddled” by a clever accountant.

Places with relatively high taxes and good public services such as Scandinavia seem to many of us a better model than others with low taxes, poor public services and a vast underclass of helots like the USA.

“Places with relatively high taxes and good public services such as Scandinavia seem to many of us a better model than others with low taxes, poor public services and a vast underclass of helots like the USA.”

Do note that the Scandanavians have lower corporate taxes, lower capital taxes, then we do and higher VAT rates than we do.

Which is why we should indeed be more like Scandanavia!

Trooper Thompson – I agree

Places with relatively high taxes and good public services such as Scandinavia seem to many of us a better model than others with low taxes, poor public services and a vast underclass of helots like the USA.

Rates of Corporation Tax:

Denmark: 25%
Finland: 26%
Norway: 28%
Sweden: 26.3%
US: 35% (federal)

Do note that the Scandanavians have lower corporate taxes, lower capital taxes, then we do and higher VAT rates than we do.

Which is why we should indeed be more like Scandanavia!

Have you lived there?

It’s one of the dullest social environments on the planet.

The Swedes love coming to the UK for a bit of excitement!!!!

Is there a case to scrap corporation tax altogether and tax incomes and capital gains the same rate?

As far as I’m aware, No corp tax = more jobs, lower prices; no person benefits financially from it just a corporation, and at least big companies won’t have the advantage over smaller competiors… Please correct me if I’m wrong! :)

Ireland. One of the lowest rates of corporation tax in the world at 12.5% standard rate. Anyone moving there?

Norway. Oil boom.
Sweden. Crime boom from dismantling welfare.
Denmark. Still doing nicely out of Greenland’s natural assets.

21. Planeshift

“It’s one of the dullest social environments on the planet. ”

You obviously aren’t familiar with heavy metal then

Great summary and I love the excerpt from the book. I add my voice to thw UKuncut lobby group. Keep up the good work.

P

Planeshift,

You obviously aren’t familiar with heavy metal then

But is not the existence of a good heavy metal scene absolute proof that everything else is boring and not worth doing – at least according to metalheads and whatever you want to call the wierder end of the music spectrum out there…

Schmidt,

I’m sure you realise that a low corporation tax on its own does not actually work to attract companies automatically – they might also be checking other forms of taxation, wages, facilities (there is a reason why the entire business world has not relocated to taxless Somalia you know…) etc.

And in Ireland’s case, there is another thread hereabouts pointing out the elephant in the room – the looming debt mountain. Generally not a good idea to move your company to a country with no economic stability I’d suggest – hence the low tax rate, as Ireland struggles to keep companies.

Galen10,

We hear this a lot, indeed it was trotted out during the discussion about corporate taxation, i.e. the way to avoid companies “racing to the bottom” and moving offshore to avoid higher rates of corporate tax, was to reduce or even abolish such taxes and hey presto, we would actuallt benefit because companies don’t pay taxes, people do… and without the burden of taxes, companies would reduce their prices, pay their workers more, and increase the dividends they pay shareholders.

You made up some of that claim about what your opponents say, presumably for rhetorical effect.

The first part of the real claim is that corporations don’t pay corporation tax, the burden falls upon workers, prices and/or capital – there seems to be a consensus about this. The second part is about what that means and we were pointed by Left Outside in another thread to two articles listing several papers about it. One article concluded,

It might be argued that since all taxes generate distortions, there’s no particular reason to object to corporate taxes. But it turns out that corporate taxes are among the most damaging policy instruments in a government’s toolkit. The optimal tax mix is heavy on consumption taxes, light on corporate taxes, and somewhere in between on personal income taxes.

And the other,

[who bears the burden of corporation tax?] The answer is not ‘corporations’. Taxes are ultimately paid by people; the question is which people. … in a dynamic, open economy with access to highly flexible capital markets – in other words, a country such as Canada – savers can respond to higher corporate income taxes by shifting investment to other jurisdictions. If the country is small enough to not affect the world rate of return – Canada, again – then investors will always receive the world rate of return. The reduction in productive capacity reduces the demand for labour, and reduces the supply of goods. These changes have the effect of reducing wages and increasing consumer prices.

The Mirlees Review, linked to by Luis earlier, also says the burden is largely on workers.

There seems to be evidence the burden is largely on workers and I note the lack of evidence to the contrary.

Assume two tax mixes, A and B, raising equal revenue. Tax mix A wreaks great vengeance and furious anger on Teh Bankers etc, but depresses wages. Tax mix B does neither. All else being equal, which of A and B should we support?

Places with relatively high taxes and good public services such as Scandinavia seem to many of us a better model than others with low taxes, poor public services and a vast underclass of helots like the USA.

It’s about the tax mix, not whether ‘taxes’ are high or low.

26. astateofdenmark

Regardless of the rights/wrongs, this article did not suggest a single policy. For the simple reason, as the first comments note, that the only solution to the problem (nb: as outlined in the OP) is imperialism.

Look forward to that item being placed on the next ukuncut agenda.

27. astateofdenmark

All of the countries that have higher overall taxes than us, also have higher VAT rates. I’m pretty sure this is without exception, but happy to be corrected.

You obviously aren’t familiar with heavy metal then

Off topic somewhat, and a generalisation of course, but Sweden comes closest to having perfected a Fabian society. It is run by a cosy elite comprising big business leaders and politicians and has high levels of welfare provision.

The state apparatus looks after its citizens from cradle to grave and, in many ways, it would seem that there is much to admire. Prostitution is outlawed and alcohol is unaffordable. As a society, it is New Labour’s wet dream.

And yet if you pierce the surface and get to know the people, you soon realise it is in fact a Stepford society where people feel controlled and stultified by the invisible constraints under which they live.

Their passion for heavy metal is just a rebel yell.

@25 ukliberty

“You made up some of that claim about what your opponents say, presumably for rhetorical effect”

No I didn’t make it up at all: it may be paraphrased, but EXACTLY that argument was made in earlier threads on LC a few months ago relating to corporation taxes.

If I didn’t find you so tiresome I’d go and find the threads and post a link.

Avoidance of tax where that avoidance is contrary to the intention of Parliament is certainly immoral.

Not illegal, but absolutely immoral.

And those who practice such avoidance should always be called out on the moral legitmacy of their actions.

EdWest

Most conservatives – believe it or not – think it is morally right that bankers and the super-rich pay more tax, we just dont think its possible without damaging the economy.

“Most conservatives” are simply wrong.

And this woefully inaccurate economic excuse is a cover for the immoral acts just mentioned.

Galen10,

No I didn’t make it up at all: it may be paraphrased, but EXACTLY that argument was made in earlier threads on LC a few months ago relating to corporation taxes.

The claim was and is that ‘high corporation tax depresses wages’ but you and others (including Sunny and other usual suspects) usually run away with that and say things to the effect of, “oh as if reducing corporation tax would suddenly increase wages”. In one thread, for example, you said,

“You honestly think that if corporation tax was suddenly to be abolished, those wonderful chaps in charge would respond by increasing the wages of their workers?”

To which Tim Worstall replied,

“That’s not how it happens, no.” [along with a thoughtful post about what he thinks actually happens]

In another thread, you wrote,

“You, [cjcjc] and the many others who constantly use this line always baulk at answering the obvious question. In the here and now, not “over time” where is the evidence that Boots (just as one example), has used the roughly £100 million a year it has saved in corporation taxes to reduce it’s prices, increase the wages of staff, or increase dividends?”

To which Luis replied,

“why ask people who think something happens slowly for evidence it is happening instantly? why should left-wingers only be concerned about effects on wages and prices that happen instantly and not worry about things that take a few years to emerge?”

(And later a thoughtful comment about what he thinks it means.)

So, as you have explicitly been contradicted about these straw men, why not argue with the points actually being made? The silly thing is that you have agreed before that high corporation tax depresses wages. You just seem to be more interested in making corporations pay than the long-term effect on the worker. And that’s fine, but at least be honest about it rather than create straw men.

To sum up:

We all agree that high corporation tax depresses wages.

We all agree that if corporation tax were reduced, wages would not suddenly increase.

Can we move on now, after months of arguing about something on which we all agree?

@UKLiberty

We all agree that high corporation tax depresses wages.

No we don’t.

There is scant evidence for this.

Indeed, most of the evidence is the other way.

In the 30 years in which we’ve followed this nutty neo-liberal path, returns to labour have fallen while those to capital have shot up.

We all agree that if corporation tax were reduced, wages would not suddenly increase.

30 years and we’re still waiting.

BenM,

You are missing something here – which is that the only variable in the last thirty years in the economy has not been corporation tax. So, aware of this, economists at least have the decency to check contemporary societies for their material – where there are also different variables (referenced above).

And there is plenty of evidence cited above that corporation tax does get passed on to labour (I won’t say depress wages here, because that is not proven in the same way from what I’ve seen – passing a cost on can have different effects). The only evidence presented that this does not happen is your own flawed analysis.

(I won’t say depress wages here,

That’s a fair point, I’ll rephrase – the burden is on the workers.

@31 ukliberty

Try addressing what I ACTUALLY said, rather than what you THINK I said.

My concern then, and now, is that there will be a “funding gap”. None of your thoughtful commentators have ever managed to wish fulfill that gap away, so we are still left with a short to medium term situation where the state has to make up this shortfall from other sources, which is likely to mean from the taxpayer, because they don’t have the political will or the gumption to come up with a more progressive approach.

If you stopped trying to be such a smart arse, you might actually engage, rather than sit on the sidelines accusing everyone else of using straw men arguments.

It is quite clear that many people DO NOT in accept your “facts”. You are correct that I have accepted in the past that high corporation taxes may adversely impact wages, and therefor be a bad thing, that doesn’t mean I have to join in the circle jerk with you and your mates that “there is no alternative”.

If making corporations pay via corporation tax is demonstrably bad, fair enough… but it is then incumbent on people arguing against it to show how the funding shortfall can be plugged. Seems like we’re still waiting… perhaps one of your thoughtful frineds can help? I doubt anything you come out with would be of interest… but you don’t seem to do much more than try and score points and be superior anyway, so no change there eh?

“There is scant evidence for this.”

Perhaps LC contributor Chris Dillow can convince you otherwise?

Though I doubt it somehow.

As he says:

“taxes don’t necessarily fall upon the people that they are formally levied upon. An inability to grasp this point is one of the features that distinguishes economists from non-economists.”

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/04/corporate-tax-incidence-some-evidence.html

The first paper he cites is itself a survey of the literature.

37. LC Prestes

Why Britain should declare war on Jersey; If we can attack Iraq, why can’t we invade – sorry, liberate – this 21st century pirate cove?

http://www.guardian.co.uk/…/2010/…/britain-should-invade-jersey

Galen10,

If making corporations pay via corporation tax is demonstrably bad, fair enough… but it is then incumbent on people arguing against it to show how the funding shortfall can be plugged.

Agreed, but likewise I think it is incumbent on those who support higher corporation tax to show how overall it benefits us compared to other suggested tax mixes.

Seems like we’re still waiting… perhaps one of your thoughtful frineds can help? I doubt anything you come out with would be of interest… but you don’t seem to do much more than try and score points and be superior anyway, so no change there eh?

‘thoughtful friends’ have suggested, among other things, on a number of occasions such as these,

Land Value Tax
Progressive consumption tax
Higher capital gains tax
(the above three hardly indicative of being on the side of the wealthy, as some would have it)
and Page 7 of the Mirrlees Review’s conclusions and recommendations for reform may be of interest.

The pathetic thing about this topic is that it seems the people who claim to support workers in effect are calling for workers to suffer a larger burden, while decrying those who in effect would actually help workers.

36. cjcjc

Perhaps LC contributor Chris Dillow can convince you otherwise?

Nope. Pretty unconvincing in fact.

Here’s some much more compelling evidence.

http://www.taxresearch.org.uk/Blog/2010/02/28/the-evidence-does-not-support-the-theory-on-corporation-tax-incidence/

The effective rates of corporation tax in the UK fell during this period from 26.1% to 22.5%.

From a high of 55.2% labour share of GDP in 2001 it fell to 53.2% in 2008. The return to capital, however, rose from 19.9% in 2001 to 23.5% in 2008.

That’s pretty irrefutable evidence that in the real world (ie. outside neo-liberal academia) corporation tax CUTS actually depress wages.

@ 38 ukliberty

Now we’re getting somewhere. So would it have been SO hard to have posted something along these lines rather than having a go above?

The fact remains that the narrative of you, and your thoughtful mates of course (I’ll feel free to generalise about you and yours, since you seem to feel so free to generalise about me and mine, eh?), is that reducing or eliminating corporate taxes and replacing them with something else is a good thing, and that anyone who thinks otherwise is scorned as an economic illiterate.

I’m all for looking at other mixes of taxes, and having a debate about which way we divide up the cake. The thing is, in the short term, companies can evade their corporate social responsibilities by avoiding corporate taxes (quite legally I accept), and leaving us in the lurch, because even if a different mix of tax raising methods is used to plug the gap, in the meantime governments will take the easy option of collecting more using the easy options open to them.

I’m all for helping the workers, but I’m not about to put my trust in the long term action of the market to increase wages and decrease prices because they suddenly pay reduced or no corporate tax.

33. Watchman

You are missing something here – which is that the only variable in the last thirty years in the economy has not been corporation tax.

Um, this affects the “corp tax incidence on wages” argument too.

And there is plenty of evidence cited above that corporation tax does get passed on to labour

Much of which is flimsy academic theorising.

Hahaha – if Richard Murphy is the best you can do in response I’ll give up.

Hell – who cares anyway?
I own lots of shares so – please, carry on!

42. cjcjc

I own lots of shares so – please, carry on!

Well you’ve a clear interest in getting corp tax lowered then.

Dressing that interest up as a concern for the workers who deliver you the profit which pays your dividends is massively disingenuous.

Galen10,

is that reducing or eliminating corporate taxes and replacing them with something else is a good thing, and that anyone who thinks otherwise is scorned as an economic illiterate.

I would hardly class myself as economically literate. But I’m looking at the studies Left Outside linked to, and the arguments in (among others) Tim Worstall’s, Chris Dillow’s and Luis Enrique’s posts, and the Mirrlees Review, and so on, and it’s quite striking how overwhelming the evidence seems to be in support of their arguments, and how little evidence is supplied to the contrary.

This comment by Luis is +1 insightful, imv

I’m all for helping the workers, but I’m not about to put my trust in the long term action of the market to increase wages and decrease prices because they suddenly pay reduced or no corporate tax.

I think it is a bitter pill, to be sure. But it seems necessary, because in the long term “taxes changes everything (investment, employment, wages, prices etc.)”.

You rightly point out it’s politically easier to do other things – the Mirrlees Review makes this very point about it’s suggestions, recognising the political difficulty in introducing some of the changes.

44 ukliberty

So you are in effect making my point for me! Your (non) answer is that it’s a bitter pill, but we just have to hold our noses and swallow?

The ones who will suffer will be the squeezed middle, those subject to PAYE, consumption taxes, and with little in the way of assets which can be easily hidden or disguised by clever accountancy.

The companies will be laughing, because they make a sudden windfall gain by avoiding corporate taxation, and not having to pay anything else because governments are too clueless or craven (perhaps both?) to do anything about it.

The relatively well off will be fine too, because they can afford clever accountants and tax advisors, indirect taxes affect them less severely, and the companies they work for will no doubt pay them more because they suddenly have more money (interesting to see if the wages of their workers rather than fat cats go up…. I definitely have my doubts!).

Luis’ comment is insightful… but amounts to the same thing; it’ll be OK eventually, and in the short term we just have to lump it. As he says himself tho’…the short term matters!! It’s no good patting people on the head and insisting that it’ll be alright in the end when the markets magically reduce prices, increase wages and increase dividends which helps your pensions and investments.

In the menatime, what people see..and what is happening.. is that the cure is worse than the disease.

very interesting…so Galen is as clueless about tax as on history…

“The companies will be laughing, because they make a sudden windfall gain by avoiding corporate taxation, and not having to pay anything else because governments are too clueless or craven (perhaps both?) to do anything about it.”

Corporations pay wages to employees and either pay dividends to shareholders or retain profits for investment. Investment is sometimes seen as a good thing. The rate of Corp tax and the requirements of their shareholders for dividend yields versus retained profits frame their actions. If dividends are paid, then the recipients pay income tax. maybe the findings of Modigliani and Miller on optimal capital structures come into play as well.

“The relatively well off will be fine too, because they can afford clever accountants and tax advisors”

I’m glad to see that arguments for low or flat taxes have got through to you.

“indirect taxes affect them less severely”

why? even the wealthy pay VAT on theatre and opera tickets and bottles of champagne and luxury yachts. maybe they will employ extra valets and gardeners and bodyguards and chauffeurs

The ‘ illicit financial outflows ‘ are indeed massive but they do not come from Africa, which has the lowest illicit financial flows at 3% of the global total. Although, with better data the African region figure may be higher. The IFF mostly come from China, Saudi Arabia and Mexico. IFF can be estimated because global current accounts do not balance. Globally current accounts should sum to zero. An outflow of capital from one country should be offset by an inflow of capital in another country. Goods traded across borders should also offset in current accounts. Errors could not account for the huge discrepancy in current accounts. The discrepancy is caused by huge sums of dirty money looking for a clean home.

Without a doubt that money flows through tax havens and major financial centres. However, before the capital reaches London the capital will have passed through many third parties so an asset manager has no idea where the capital originated or who is ultimately behind the capital.
http://www.gfip.org/storage/gfip/executive%20-%20final%20version%201-5-09.pdf

” A court-appointed investigation into the collapse of Lehman Brothers found that the bank used an accountancy trick called Repo 105 to mask its transactions. But US law did not permit this. ”

I think this is misleading, Sunny. The impression you are given was Repo 105 under US law was illegal. That is not strictly true. The difference between the US GAAP and UK GAAP was in the US the accountants would not sign off on the financial statements to be fairly presented with Repo 105. That was because the US system takes a rules-based letter of the law approach to accountancy and legal advice. The UK system was more about principles and spirit of the law approach. Repo 105 does hide exposure but there is nothing intrinsically illegal about it per se.

There is a lot of what you say in the article true but you are mixing up regulation with tax issues.

46 diogenes

It is to laugh… it’s like being savaged by a dead sheep…

Given your grasp of history… (which seems to revolve around cheerleading for mass mudering dictators).. your take on taxes should be worth precisely nothing!

..as is evidenced by this littel gem:

“why? even the wealthy pay VAT on theatre and opera tickets and bottles of champagne and luxury yachts. maybe they will employ extra valets and gardeners and bodyguards and chauffeurs”

Of course they pay them numpty..but if your earn £150,000 the effect of such taxes will be much less.. even someone as bereft of reason as you ought to be able to work that out!

Slowly but surely the people (not the tory trolls ) are beginning to realise that they have been played as suckers. More and more it is being revealed that the global corporate elites pay no tax, and answer to no govt. GE, last week published accounts which showed $13 billion profits, yet they paid not one dime in tax. (Oh, and before all the usual idiot tory trolls tell us these firms create jobs.) They cut back 25% of their work force which they relocated over seas.

These unelected monsters buy the politicians, and have them create tax systems for their benefit. They believe in no interference with their actions, and no descent will be tolerated. The rise of corporation is now the greatest issue effecting freedom in the world. If these tyrants are not brought to heel over the next 20 years we can all look forward to slavery.

@49 Sally,

what do you think we should do about this?

Well first of all govts have got to accept that there is a problem. At the moment most govts are under corporate control. The old 1950’s catchphrase “what is good for General motors is good for America “ no longer holds true if the corporations move their factories and their head office overseas.

The politicians have encouraged free trade, and deregulation. This is pushed to make it more difficult to take any action against them. No surprise that the corporations have been behind this. The world bank, GAT are all part of this giant conspiracy. I am not sure that it has been such a good idea for western govts to encourage their corporations to move to China, which is a military dictatorship. Can Capitalism only make things in country’s where the people have no say? Bearing in mind that our own industrial revolution happened at a time when most people had no vote. Is capitalism even compatible with democracy? We keep being told that China will become more like us. I think there is a danger that we become more like them.

It is interesting that the recall of the Dem governor of California that brought Arnold to power used a system put in place by the people over 100 years ago because they were very worried about the power of corporations, and wanted a way to be able to get people out of power as fast as they could if things went wrong. The supreme court decision to give corporations the same rights as people was the stupidest mistake the court has eve made.

The public hate global institutions like the UN or The European union which they see as undemocratic. But the corporations like the idea of individual countries. They can play them off against each other for their own interests. The public would hate the idea of a global tax rate or global laws. But interestingly so would the corporations.

Scandinavia does have a higher tax burden than the UK, but they raise the tax through regressive taxes. The UK has a much more progressive tax system than any of the Scandinavian countries. The Scandinavians raise a lot of tax off people in the middle and give it back to people in the middle as well as redistributing to the poor. They do not generate as much revenue from their wealthy taxpayers as the UK.

https://lh3.googleusercontent.com/-4QJRukHrJ5c/TYhks_W3tFI/AAAAAAAABOU/tpmi4_tRNIQ/s1600/taxburden.jpg

One obvious point is because the UK has wider income inequality then that is why we generate more tax revenue from the rich. That is true, but the tax system is progressive. Moreover, it is the progressiveness of the tax system that will prevent us from raising much more revenue on the tax side of the government fiscal account.

Perfectly valid for left to argue that we should be more like Scandinavia with government services and transfers reducing income inequality. However, a progressive tax system will not be adequate to fund such a system. An increase in regressive taxes would be required because there is a limit to how much revenue the government can raise through progressive taxes.

“The public would hate the idea of a global tax rate or global laws. But interestingly so would the corporations.”

I disagree. Surely, if the global corporations are so powerful (I don’t doubt it) they wouldn’t sit idly by, as the global system is erected? I would say they are very much in favour of the moves towards one global system, because they will be round the table when the agreements are made.

Take GM food as an example. The public doesn’t want it, so what’s the plan for the corporations? In the case of the EU, they go to the unaccountable institutions of Brussels and try to stitch up a deal. The last thing they want is any democratic superintendance of the process.

Nation states, if they are democratic, are a check upon globalist corporate power, whereas if the nation state goes the way of the dodo, and decisions are taken at ‘a higher level’, I think the corps will be satisfied.

Thanks for your answer :)

@ Sally: I understand that the GE tax situation was because of losses carried over from the previous year. Now fair enough if you say you don’t want companies to be allowed to carry losses forward any more but you then have to explain how your set up would work. That’s going to be difficult because it appears to be a very bad idea.

@52 Richard

“Perfectly valid for left to argue that we should be more like Scandinavia with government services and transfers reducing income inequality. However, a progressive tax system will not be adequate to fund such a system. An increase in regressive taxes would be required because there is a limit to how much revenue the government can raise through progressive taxes.”

This.

That’s the issue isn’t it? We need to do both; we SHOULD be more like Scandinavia, and both progressive and regressive taxes where required need to be done to achieve it.

I am not saying that GE have broken any law. I am sure they have followe to the letter the law. But their are so many loopholes. GE are not the only company, I just used them as an example.

General Electric paying no taxes after making $14 billion in profits, and in fact getting $3 billion in returns from the government..

From the NYT

“The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

Minimizing taxes is so important at G.E. that Mr. Samuels has placed tax strategists in decision-making positions in many major manufacturing facilities and businesses around the globe. Mr. Samuels, a graduate of Vanderbilt University and the University of Chicago Law School, declined to be interviewed for this article. Company officials acknowledged that the tax department had expanded since he joined the company in 1988, and said it now had 975 employees.

At a tax symposium in 2007, a G.E. tax official said the department’s “mission statement” consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and “looking to exploit opportunities to reduce tax.”

Transforming the most creative strategies of the tax team into law is another extensive operation. G.E. spends heavily on lobbying: more than $200 million over the last decade, according to the Center for Responsive Politics. Records filed with election officials show a significant portion of that money was devoted to tax legislation. G.E. has even turned setbacks into successes with Congressional help. After the World Trade Organization forced the United States to halt $5 billion a year in export subsidies to G.E. and other manufacturers, the company’s lawyers and lobbyists became deeply involved in rewriting a portion of the corporate tax code, according to news reports after the 2002 decision and a Congressional staff member.

By the time the measure — the American Jobs Creation Act — was signed into law by President George W. Bush in 2004, it contained more than $13 billion a year in tax breaks for corporations, many very beneficial to G.E. One provision allowed companies to defer taxes on overseas profits from leasing planes to airlines. It was so generous — and so tailored to G.E. and a handful of other companies — that staff members on the House Ways and Means Committee publicly complained that G.E. would reap “an overwhelming percentage” of the estimated $100 million in annual tax savings.”

Sally @51

What a brilliant post.

Agree with you entirely. More like this please.

From an astonished brown shirt troll…….

Sally @56

Superb again.

I’m well confused.

According to what I can find here: http://finance.econsultant.com/general-electric-2009-revenue-profit-2010-fortune-500-rank/ GE made a loss of $11 Billion, (I can’t tell whether this is for the USA or worldwide and it’s too close to bed time to bother just now). That is presumably what they are carrying over, is that ok or not? Your NYT post/quote doesn’t mention this factor.

As for the American Jobs Creation Act, presuming it does as described, it’s horribly corrupt and an outstanding example of corporatism; more free market needed there.

60. So Much For Subtlety

32. BenM – “There is scant evidence for this. Indeed, most of the evidence is the other way. In the 30 years in which we’ve followed this nutty neo-liberal path, returns to labour have fallen while those to capital have shot up.”

Do you see what logical error you have made? You have slipped quietly from talking about wages in absolute terms to wages in relative terms. It is entirely possible for wages to have grown but for profits to have grown faster. And that is precisely what has happened.

This is usually thought of as a good thing.

Wages have gone up. A lot.

61. Strategist

I think Sunny is right. Everybody should read “Treasure Islands”. Here’s my six things you’ll find out about offshore by reading the book:

1. Central role of offshore in the financial crash
2. Central role of offshore for laundering criminal money
3. Central role of offshore in the underdevelopment process in Africa & Latin America
4. Centrality of the City of London and UK in creating the offshore system, as a replacement for the Empire
5. Importance of offshore to giving big business competitive advantage over small enterprise.
6. Centrality of the “world’s biggest tax haven” policy to Osborne’s economic policy.

There’s an overlap with Sunny’s list, but those were my notes on reading the book. I’d be interested to read others’.

This is breathtaking socialism. However tax fiddling is perfectly ok for The Guardian though.

It is the tax avoiders who create the jobs, who create the wealth generally which makes our world that bearable. They are the hard working people we really have to thank.

Considering the sheer incompetence of governments generally and profligate spending of Labour in the Uk, every penny out of the Treasury’s hand’s the more the rest of the world will benefit.

On the Mexican drug dealer why should he/she not be allowed to sell his/her product legally? 40 years of prohibition in the USA has cost $1 trillion and is even more violent and drug use just as rampant.

On the $854 billion to $1.8 trillion stashed away by African dictators is the main reason I do not give to charities in the 3rd world.

In 1985 at the time Band Aid the population of Somalia was 6 million, it has now grown to 9 million, can we expect more rattling of tins soon?

I’m glad UKUncut are still in favour over here, if they keep things fluffy I think their message will win out.

http://english.aljazeera.net/programmes/insidestory/2011/03/201132912932665337.html

This is Max Keiser setting out a clear alternative which neither of the pundits he is up against refute in any way. I always thought I was anti-capitalist. Watching Max for a little while has made me realise its actually the banking system and the bailouts which are anti-capitalist.

64. Mr S. Pill

@62

“It is the tax avoiders who create the jobs, who create the wealth generally which makes our world that bearable. They are the hard working people we really have to thank. ”

At risk of feeding the (obvious) troll…. you’d have no problem with a general strike, then. Fantastic.

@64

In a democracy striking is a basic human right. Economically rather than politically it would be counter productive.

I do not believe tax avoidance can possibly be one of the ‘biggest issues of our generation’.

In the UK tax avoidance is estimated at around £25bn – not that much compared to the total amount of tax collected. Tax evasion is estimated at £70bn per annum – surely this should be a much higher priority, especially as in this case the law has actually been broken?

In addition greater efforts should be made to collect the £28bn of tax outstanding.

There are many issues much more important than £25bn of tax which is legally avoided.

dave bones,

I always thought I was anti-capitalist. Watching Max for a little while has made me realise its actually the banking system and the bailouts which are anti-capitalist.

I fear you are confusing free markets and capitalism there – the bailouts are capitalist, in that they favour the companies which hold capital. They certainly do not favour free markets.

Free markets actually are pretty anti-capitalism (at least once state-centred socialism etc have been vanquished) because capitalism allows the growth of a limited number of large companies which control resources – if you like, capitalism is like a decentralised version of statism, whereby resources are controlled by a small number of gently competing companies who cannot really establish tyranny (at least without state help – see the banking bailout to realise the banks are currently untouchable by consumers due to government action) because they are not monopolies (monopolistic capitalism has been opposed by everyone (apart from that little guy on the front of the more modern Monopoly boxes) for 100 years or more). But through a combination of encouraging government regulation to reduce competition and applied use of existing buying power, the corporations do distort the markets in their favour and stop or distort the flow of information.

@67

…resources are controlled by a small number of gently competing companies who cannot really establish tyranny (at least without state help…

I’m’a have to stop you there. Do you really think that companies can’t become monopolies (or at least approach monopoly status) without government interference?

You’ve got Standard Oil, United States Steel Company and, more recently Microsoft to name but 3 – none of which retained any kind of government protection at all.

@67

“I fear you are confusing free markets and capitalism there – the bailouts are capitalist, in that they favour the companies which hold capital. They certainly do not favour free markets.

Free markets actually are pretty anti-capitalism…”

Hmm, I think this highlights the problem which afflicts rational debate, that of defining our terms. By your definition, free markets are indeed anti-capitalist.

It is important to recall that free trade was the antithesis of mercantilism, and what is attacked as ‘capitalism’ seems to me very much closer to the latter.

So, I think I agree with you in substance.

@70

The problem is that any attempt to foster a “free market” invariably ends with the most successful player in that market buying up the others and becoming a near- or total monopoly. The self-imposed business constraint to maximise shareholder returns above all else practically demands that be the case.

@ Watchman

I am afraid that is just a load of twaddle. There have been plenty of debates over the years about monopolies. Moreover, some of the most ideologically in favour of the unhindered market would support monopolies if that was the outcome of the unhindered market. Furthermore, they would support cartel agreements in a conspiracy against the public if that was the wish of participants in the unhindered market.

Without a doubt some government interventions and regulations create barriers to entry and actually makes things worse for consumers. However, one can’t just leap from that to assume that all government rules and regulations have that effect. The idea that if the government would just get out of the way the private sector would create perfectly free markets with no monopolies has no basis in fact. There would eventually be nothing but monopolies in a completely unhindered market. For freeish competitive markets to operate in the best interests of producers and consumers requires a framework of rules and only the state through regulations and the courts can enforce that framework. The key point is that there should be no favouritism between different participants in the same market. However, that does not mean every market needs the same level of rules and regulation for it to function well. For example, producing potatoes should require much less regulation than producing nuclear power. The natural default order is certainly not free markets. The default order without government regulations is the strong exploiting the weak.

A subsidy to the banks through the government implicitly guaranteeing them against failure does not create a barrier to entry. If anything it does the opposite and offers an incentive for others to join the guarantee. Yet, to the chagrin of the government there is no great flood of new banks. The conclusion I would draw is the implicit subsidy is not as great as people imagine and there are easier ways to make money.

This is a good paper with the arguments about the completely unhampered market and a rules oriented approach to an ordered free market.

https://www.econstor.eu/dspace/bitstream/10419/4343/1/04_11bw.pdf

72. Mr S. Pill

re:markets & capitalism… of course, Marx predicted & analysed all of this in Capital if anyone bothers to actually read him these days. the contradictions in market-based capitalism make our current economic state as ludricrous as the state-planned economies of the former USSR (for the trolls who will point to our quality of life being better I ‘umbly point them towards the two-thirds of the global population who don’t live in the US/EU/etc).

A subsidy to the banks through the government implicitly guaranteeing them against failure does not create a barrier to entry. If anything it does the opposite and offers an incentive for others to join the guarantee. Yet, to the chagrin of the government there is no great flood of new banks

Because the enormous quantity of financial regulation, coupled with capital requirements combine to form formidable barriers to entry. If you look at parts of the financial sector with much less stringent regulatory and capital requirements (notably hedge funds) you’ll notice that there is a great flood of new entrants to the market, as well as rapid turnover of existing companies.

the contradictions in market-based capitalism make our current economic state as ludricrous as the state-planned economies of the former USSR

An impressive entry to the ‘most ridiculous things said on LibCon’ competition.

@72

(for the trolls who will point to our quality of life being better I ‘umbly point them towards the two-thirds of the global population who don’t live in the US/EU/etc)

Or indeed the 80 or so per cent of people who do live in those places, but aren’t sufficiently wealthy to count in their considerations…

@ 73. Tim J

Well yes, Tim. However, hedge funds are not doing banking. The barriers to entry to banking is that you need a lot of capital to set up a bank and set aside a lot of capital not earning a great deal to comply with capital requirements. The barriers to entry are similar for someone who wants to open a greengrocers shop but does not have any capital. I don’t think barriers to entry is the right concept to think about in relation to banking. Capital intensive and there are easier ways to make money from that capital is the correct concept. It is significant to me that it is only Tesco, Virgin and a few others who are making any attempt to get a foothold in banking. Tesco and Virgin already have the capital and the customer base.

“World poverty is falling. Between 1970 and 2006, the global poverty rate has been cut by nearly three quarters. The percentage of the world population living on less than $1 a day (in PPP-adjusted 2000 dollars) went from 26.8% in 1970 to 5.4% in 2006 (Figure 1).”

http://www.voxeu.org/index.php?q=node/4508

And will certainly have continued to fall further, even through the crisis, given the continued growth in the emerging markets.

Wonderful thing this globalisation/free trade/free(ish) markets, innit?

Galen10,

The companies will be laughing, because they make a sudden windfall gain by avoiding corporate taxation, and not having to pay anything else because governments are too clueless or craven (perhaps both?) to do anything about it.

Companies are already ‘laughing’ – that’s why we want change, isn’t it? If you’re still stuck on the idea that companies bear the burden of corporation tax I don’t see any value in continuing the discussion.

@70 Bluepillnation,

“The problem is that any attempt to foster a “free market” invariably ends with the most successful player in that market buying up the others and becoming a near- or total monopoly. The self-imposed business constraint to maximise shareholder returns above all else practically demands that be the case.”

Invariably? What examples can you proffer? (It shouldn’t be hard, if it is an invariable process).

Besides, the problem is not monopoly per se. There are many ‘natural’ monopolies, such as the only pub in a village, but this doesn’t mean they are free to charge whatever they want.

@78

Well, we can start with the public transport sell-off, which ended up with the market largely carved up between Arriva, FirstGroup and Stagecoach – now a de facto cartel. You have Microsoft’s position in the ’90s. You have bank consolidation over the last two decades… barely even the tip of the iceberg.

@79

in the case of ‘privatisations’ I certainly see a tendency towards monopoly, or rather oligopoly, as the ex-head of the energy watchdog called it, but this is an example of where the government has relinquished its control and created a new system, rather than where the market has been allowed to get on with things more or less unmolested. In other areas, such as your example of banking, there are currents that move towards consolidation, but there are also currents pulling in the opposite direction, and if the barriers to market entry are low, then there will always be new-comers to challenge the big corps.

There’s nothing inherently wrong with monopolies per se. We all have a monopoly in ourselves, for instance, and there are many ‘natural monopolies’, such as the one pub in a small village. I know these examples are not what are usually discussed in relation to monopolies, but it is the ability to exploit a monopoly position that is the problem, not the monopoly itself. If the pub in my example put the prices through the roof, someone else can always open a pub.

It’s difficult to talk of free markets in relation to a lot of areas where large corporations predominate, as there are usually many protectionist and mercantilist fixes in place, and these corporations rarely favour true freedom, but would rather do what the can to pull the ladder up behind them. The issue of intellectual property, especially with regard to patents, is one area which seems to block innovation and economic freedom.

@81

IMO it doesn’t matter whether they came from privatisations of a state-owned monopoly (as in the case of the public transport services and utilities) or whether they had no state involvement whatsoever (like Microsoft) – the result is always the same.

It gets better and better for GE boss.

From the Washington post….

“It’s everything that’s wrong with corporate power today: News broke last week that General Electric, America’s largest corporation, made $14,200,000,000 in profits last year and paid $0 in taxes — that’s right, zero dollars in taxes. At the same time, C.E.O. Jeffrey Immelt saw his compensation double. Now I hear that GE is expected to ask 15,000 of their unionized workers to make major concessions in wages and benefits.

But what really adds insult to injury is the prestigious and influential position Jeffrey Immelt holds as chair of President Obama’s Council on Jobs and Competitiveness. That’s wrong. Someone like Immelt, who has helped his company evade taxes on its huge profits — and is now looking to workers to take major pay cuts after his compensation was doubled — should not lead the administration’s effort to create jobs…

I repeat again they own the politicians. Just look at Blair , and now Obama is going the same way. We are so fucked.

Is that the Ed West who works for the Barclay Brothers? No doubt he makes the point about tax avoidance to them all the time.

@82 Sally: I see you’ve ignored the point about carrying forward losses. For some facts about this I suggest you take a look at this: http://www.gereports.com/setting-the-record-straight-ge-and-taxes/

I have ignored your straw man clap trap. That is all.

Isn’t everyone who has an ISA avoiding tax

@67. Watchman

right but keisers “alternatives” are much clearer than the march for the alternative. next time the banks fail, nationise them as utilities which lend at 2% End speculative practices in favour of savers and people who use banks in a normal way.

This is something left and right can get behind. Notice noone refutes Max Keiser.


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    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  17. Caspar Henderson

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  18. Ebony Dawn Marsh

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  19. Mark Clapham

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  20. Diane

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  21. Tenzin™

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  22. Nicky

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  23. dan hancox

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  24. Rhiannon

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  25. Andy Bean

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  26. Farid

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  27. For Fox Sake

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  28. Danny Lewis

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  29. Pauline Wooding

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  30. Jill Hayward

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  31. EcoLabs

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  32. Mabel Horrocks

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  33. Chris

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  34. SonOfDave

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  35. WestMonster

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  36. Olivia Short

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  37. Edward Clarke

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  38. Emily Davis

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  39. Simon

    Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/heElCg

  40. lindsay alden

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  41. Jorge Manuel Lopes

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  42. Nicholas Shaxson

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  43. Dave McDave

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  44. UNISON - the union

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  45. UNISON MillionVoices

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  46. Deb

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  47. Sana A. Malik

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  48. gillalexander

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  49. Raf Noboa y Rivera

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  50. Raf Noboa y Rivera

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  51. Nick H.

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  52. phillip anderson

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  53. Mr_Spock

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  54. Paul Wood

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  55. michelle mcculloch

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  56. Two more endorsements | Treasure Islands: Tax Havens and the men who stole the world | A book by Nicholas Shaxson

    [...] like this from Liberal Conspiracy: Over my holiday last week, I read Nick Shaxson’s book – Treasure Islands. I would go as far as [...]

  57. rich

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  58. Peter Johnson

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  59. Owen Millard

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  60. Kevin Davidson

    RT @andrewducker: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/fqVkrT

  61. Ben Little

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  62. Richard

    RT @sunny_hundal Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  63. Debbie Jolly

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  64. Meg Howarth

    RT @sunny_hundal: Why Tax Avoidance is among the biggest issues of our generation and @UKuncut is right to raise it http://bit.ly/hgouS4

  65. James Field

    Why Tax Avoidance is among the biggest issues of our generation http://t.co/F1luIhP

  66. doreen

    RT @magneticboy: Why Tax Avoidance is among the biggest issues of our generation http://t.co/F1luIhP

  67. Nick Watts

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  68. Gail Bradbrook

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  69. Richard Murphy

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  70. Nathon Raine

    Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/rcwLst9 via @libcon

  71. Double.Karma

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  72. Tom Davies

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  73. Pucci Dellanno

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  74. Daniel Rees

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  75. Nicholas Wilson

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  76. adrienne campbell

    RT @PeterPannier: Why #TaxAvoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/GC7Qtz2 #TaxJustice # …

  77. Russ Noble

    Why Tax Avoidance is among the biggest issues of our generation … http://bit.ly/f8JT5c

  78. Carol Hriczov

    RT @NobleAccounting: Why Tax Avoidance is among the biggest issues of our generation … http://bit.ly/f8JT5c

  79. Daniel Pitt

    RT @libcon: Why Tax Avoidance is among the biggest issues of our generation http://bit.ly/hgouS4

  80. Stuart White

    Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  81. Liam Shields

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  82. Liberal Conspiracy

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  83. Paul Sandars

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  84. Mancunian Candidate

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  85. Mancunian Candidate

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  86. John Kampfner

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  87. paurina

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  88. toz

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  89. Pucci Dellanno

    RT @StuartGWhite: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/HPZsUOk via @libcon

  90. Lauren Edwards

    Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/zUb0GRZ via @libcon

  91. Patrick Sawer

    RT @LaurenREdwards: Why Tax Avoidance is among the biggest issues of our generation | Liberal Conspiracy http://t.co/zUb0GRZ via @libcon

  92. What I would focus on if I were the Shadow Chancellor | Liberal Conspiracy

    [...] Another would be a Mansion Tax on property wealth. Another: closing loopholes that allow tax avoidance, which not only helps fund terrorism and organised crime, but also allows large corporations to [...]

  93. Links Apr 1 | Credit Card Payment Site - Citicards, Discover Cards, American Express Cards

    [...] tax avoidance is among the bigger issues of our generation Liberal Conspiracy Mar 29 – Yet another reader who chooses Treasure Islands as a vacation book, and finds it [...]

  94. sunny hundal

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  95. Julian Rowley

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  96. Lotusflower

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  97. Omolade

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  98. Paul Krishnamurty

    Brilliant piece on #taxhavens by @sunny_hundal Indeed, one of the biggest issues of our generation. #ukuncut #oligarchs http://t.co/H6Jt8NAj

  99. Jimmy Wavamunno

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  100. Indra Persaud

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  101. Naomi Fowler

    On Africa and corruption – here's how tax havens help feed corruption in the continent. We could stop this but don't http://t.co/jwytB8qk

  102. David Leloup

    Why Tax Avoidance is among the biggest issues of our generation http://t.co/R9HP4GiB

  103. Sharron Ward

    Why Tax Avoidance is among the biggest issues of our generation Liberal Conspiracy http://t.co/JnnaGwj6 via @libcon #tax





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