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Corporation Tax starves business of investment; hurts workers. Discuss.

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    Corporation Tax starves business of investment; hurts workers. Discuss.

    I've long thought that CT is a silly tax. Taking money from business just deprives it of the money it needs to invest in plant and machinery (which would increase productivity) and needs to invest in staff (which would lead to more, better paid staff).

    Ah ha! But don't businesses just take their fat profits and pay Fat Cats huge salaries? Yes, some money goes here, but there aren't that many 'fat cats'.

    Ah ha! But don't business just distribute profits to shareholders? Yes, but many (most?) shareholders are investment companies looking after things like pensions, ISAs and other investment vehicles, which benefit people like your family.

    Raising CT would prompt companies to raise prices, taking money from the pockets of the very people that governments say they want to help. Raising CT would reduce business investment, increase unemployment, depress wages and raise prices.

    The converse is true: Lowering CT increases business investment, decreases employment, raises wages and reduces prices, putting more money in to the pockets of those who need it most.

    So panel, what do you think? Am I right? If so, yay! Am I wrong, if so, why? I'm keen to understand this topic more fully.

    #2
    CT taxes profit. So staff costs are before CT, so is training, and investment.

    There is an argument that lower CT increases the total tax take, but I'm not an economist. Gideon wanted to reduce CT as that should increase investment, and therefore jobs, and therefore PAYE tax.
    Certainly less tax taken by CT will increase dividends, and they are taxed anyway (and increasing). So I support some of the suggestion but not for the reasons outlined.
    Last edited by Lance; 12 September 2017, 09:54. Reason: grammar was tulip
    See You Next Tuesday

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      #3
      https://www.tutor2u.net/economics/bl...orporation-tax
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        #4
        Maybe if it was lowered but enforced for all businesses, then it might work.
        …Maybe we ain’t that young anymore

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          #5
          Originally posted by WTFH View Post
          Maybe if it was lowered but enforced for all businesses, then it might work.
          that is the answer to a different question. Google, Apple et al are US companies so they pay their dividends in the US. There aren't any easy answers to that. And as point of note the US CT is 39% and that's why they (Apple/Google) are so rich as the $$$$ are all stored offshore. They cannot repatriate without paying that 39%.

          The beauty of CT is it does have to be paid before dividends, and therefore difficult to avoid if you want to reward the shareholder. Which means London listed company values are based on them actually paying CT.
          See You Next Tuesday

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            #6
            Pre 1965, CT didn't exist.

            https://en.wikipedia.org/wiki/United...orporation_tax

            Ah, dear dead days beyond recall.

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              #7
              Employers NIC is what bugs me. Abolish it, roll it into Employees NIC, increase everyone's salary accordingly. It would be much more honest.

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                #8
                Originally posted by northernladyuk View Post
                Employers NIC is what bugs me. Abolish it, roll it into Employees NIC, increase everyone's salary accordingly. It would be much more honest.
                hear hear.
                It's a political tax. Allows a chancellor to increase income tax (i.e. a tulipload of ££££) without losing votes.
                See You Next Tuesday

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                  #9
                  Originally posted by Lance View Post
                  hear hear.
                  It's a political tax. Allows a chancellor to increase income tax (i.e. a tulipload of ££££) without losing votes.
                  I am not against high taxation but it should be transparent.

                  Comment


                    #10
                    Originally posted by northernladyuk View Post
                    Employers NIC is what bugs me. Abolish it, roll it into Employees NIC, increase everyone's salary accordingly. It would be much more honest.
                    I think the problem is that because of all the levels and limits, there would be losers whatever you did = political minefield

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