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

[ladymuck]

Didn't I see something recently about HMG considering taxation based on revenue, not profit? Targeted at those companies which offshore but raise revenue in this country but you can see it hitting UK based companies too once they realise how much could be fleeced. A retrograde step, I think.

The problem with no CT is that the funds need to be raised from somewhere. So, the question really ought to be: "if CT were to be abolished, what would you replace it with?" HMG still needs to bring money in. I don't know the answer to that but I do wholeheartedly believe a root and branch overahaul of the entire tax system (including all the little duties and other stealth taxes) needs to happen.

[chopper]

Reducing CT and increasing dividend tax, to me, is the way forwards. The Estonia model. You need, however, to ensure that any dividends from UK companies, whether paid to UK or non-UK entities, have the dividend tax imposed.

And perhaps UK tax rules could be adjusted so that any payments from the UK arm of a global company to a non-UK arm should not be deductible from profits for CT purposes.

[Platypus]

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

[northernladyuk]

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.

[Lance]

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.

[northernladyuk]

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

[zeitghost]

Pre 1965, CT didn't exist.

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

Ah, dear dead days beyond recall.

[Lance]

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.

[WTFH]

Maybe if it was lowered but enforced for all businesses, then it might work.

[TheFaQQer]

https://www.tutor2u.net/economics/bl...orporation-tax

[Lance]

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.

[Platypus]

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.