At the ASI.
Disagreeing with Cameron over \”foreign aid\”.
Monthly Archives: December 2012
So here\’s a statistical question about tax
What I want to know is the following:
What is the number for foreign corporation tax paid for \”large companies\”.
Here\’s the background.
Reuters has an analysis up arguing that large corporations (as HMRC defines them) are paying less tax than they used to while large corporation profits have risen over the past decade.
I want to test the assumption that this is about globalisation. Meaning that those large UK domiciled companies are making more of their profits abroad than they used to. Which are being taxed outside the UK as they often will be.
I would assume, but don\’t know, that there would be a figure somewhere that would let us check this. Something like, \”deductions claimed for foreign corporation tax paid\”….and we\’d like that number for large corporates. If that\’s not available, then for all would be fine.
My assumption is that this number will have risen substantially. For the past decade has indeed seen large corporates making much more of their profits outside the UK. A quick glance at the top ten FTSE for example shows only one company which I recognise as having substantial UK operations.
So, anyone know HMRC\’s stats well enough to find that number, if it exists? As a time series, back to 2000?
Crop tax paid to HMRC is down, profits are up. But what\’s the amount of foreign corporation tax that has been paid on those same profits?
In which I agree with @RichardJMurphy
Yes, I agree, I think that his Bill should indeed be passed into law:
So what would I like someone to do? I’d like a General Anti-Tax Avoidance Principle to be included in UK law. Not the nonsensical apology of a general anti-abuse rule that the government is proposing but something like the Bill Michael Meacher put to the House of Commons in September this year.
Now, I am biased: I wrote this Bill. But it would stop tax avoidance in its tracks, make using tax havens hard, let H M Revenue & Customs tackle companies like Google and rebalance the tax equation in favour of the honest and the poor.
This one, here.
Which is so badly written that it contains this clause:
(2) Arrangements are not tax arrangements if—
(a) the arrangement was specifically permitted by legislation or regulation
relating to any of the taxes referred to in section 1(3) or is clearly
consistent with principles on which the taxes referred to in section 1(3)
are based whether express or implied, or
Thus anything that the law already says may be done is not, by definition, tax avoidance.
Which means of course that none of what Google is doing is tax avoidance. For EU law specifically allows you to sell from one EU country into another and pay your corporation tax where you\’re selling from. Nor Amazon, for EU law specifically allows that VAT is payable at the rate of the company you are selling from on digital goods. Or Starbucks: EU law actually states that it is illegal for one EU state to tax royalty payments flowing to another EU state. Or Boots, EU law states that it is illegal to tax interest payments flowing to another EU state based corporation. Or Vodafone: that whole argument was over whether CFC rules apply to an EU subsidiary and they don\’t. Or the Greens: UK law specifically states that dividends paid to non-resident and non-domiciled foreigners are not taxable as income in the UK.
Absolutely none of the behaviour that Ritchie has been whining about over the years would be taxable under this Bill. And much that is currently maybe, mebbe not, would not be.
No, really, we should ensure that this Bill becomes law. For it will eviscerate the ability of HMRC to oppress us all.
I recommend it to the House.
Ritchie on France\’s 75% tax rate
Those who will be subject to this rate of taxation are rent-seekers. No one can ‘earn’ that much otherwise. Addressing that rent-seeking behaviour is vital if society is to survive. In that case progressive tax on the rewards from rent-seeking is vital. It’s as simple as that. The imbalances that rent-seeking is creating, in wealth, in income, in opportunity in hope: all those inequalities will crush society. There is no choice but address these issues, now.
Hmm. That\’s interesting, isn\’t it?
If you earn over €1 million a year you must, by definition, be rent seeking.
Gerard Depardieu is, by definition, a rent collector. In our own economy, James Dyson is. JK Rowling is.
I don\’t doubt at all that some who earn that sort of money are successful in seeking and collecting economic rents. I do rather doubt that all are: Daniel Craig for example. We might say that yes, OK, he\’s gaining a rent through controlling the world\’s supply of Daniel Craig. Even through copyright on movies.
Although that\’s not quite what we usually mean about people \”rent seeking\” really.
Imagine, say, that The Courageous State became a best seller. Sells a couple of million copies as people realise that this really is the blueprint for the desired society. Ritchie would therefore earn well over a million in the year that happened (yes, I do know what his contract looks like, I\’ve seen the standard one from the same publisher). Would we then say that Ritchie was rent seeking successfully?
And this blog\’s nomination for \”Hypocrisy Of The Year\” is
The hypocrometer pegged when Obama opined that putting armed guards in schools was not the answer to Newtowns. Barack and David send their children to Sidwell Friends School. Sidwell Friends employs 11 armed guards.
Seriously. 11 armed guards. Not counting the Secret Service people-well armed, I assure you-that protect Obama’s children.
Our kiddies, the kiddies of the politically powerful and connected, can and should have armed guards.
The kiddies of you peasantry out there should not.
Shock Horror! Companies obey law!
The Financial Services Authority has not launched a single enforcement action against any regulated business for failing to comply with its remuneration code since the rules were introduced three years ago.
Err, if everyone is obeying the law then there don\’t need to be any enforcement actions, do there?
The code was designed to cut the size and number of joining payments made to new staff by banks. However, a senior City lawyer said many had found loopholes. “Banks are doing all sorts of things to get around the code. The fact that no firm has been brought to book tells you everything you need to know about how worried they are about being caught,” said the lawyer.
Could just be that what they\’re doing is legal.
No, don\’t fall for this EU scam
A group of senior politicians in Brussels is to propose “second-class” EU status for Britain in a dramatic shift in thinking by the strongest supporters of a united Europe.
They are to suggest that the UK should become an “associate member” under plans which would result in it staying in the EU’s single market but being stripped of its commissioner in Brussels, MEPs, and its right of veto in the European Council.
Describing what associate membership status would look like, he wrote: “Participation in the EU institutions would be limited. In the case that the UK opts for associate membership based on trade and the single market, retention of a British judge at the Court of Justice would be eminently sensible, but the case for a British Commissioner would be less convincing.
Unh, unh.
This doesn\’t work: because damn near anything can be smuggled in under Single Market rules. The taxation of corporations for example. Whether or not to reduce the use of landfill (no, seriously, the actual route by which landfill use is controlled is single market rules. Holland can\’t use landfill because to do so is to rediscover the North Sea. Therefore everyone must reduce landfill use in order to preserve fair competition in the single market.). Insurance and annuity laws for men and women: sure, at the moment they\’re under equity rules. But they could as easily come under single market ones. REACH is currently about the environment. Easy enough to put it under single market.
And don\’t forget: we\’re talking about an entire continent that believes that a single market requires rules and regulations about everything. That civil, Roman or Napoleonic law thing.
It\’s actually this which is precisely the thing we want to escape. That ever growing encrustation of barnacles on the ship of state.
We desperately need to leave the Single Market. And then come back with a trade deal for it: in which we say that sure, your gaff, your rules. So anyone wanting to export to the EU will have to obey single market rules. But the other 80% of our economy shall be free of them for our gaff our rules.
The Single Market, viewed as a free trade area, is just great. The Single Market as it is, a highly regulated and bureaucratic institution, is exactly what we want to escape. Which means that we really do not want to take this offer.
After all, look who is proposing it: the Union of European Federalists. They wouldn\’t be suggesting it if it meant that we actually would be free of them now would they?
I wonder if Margaret Hodge will consider this a smear?
Margaret Hodge, who has taken on companies such as Starbucks, Google and Amazon over tax avoidance, said that she had to take on her own relatives after an attempt six years ago to take Stemcor, the steel-trading company founded by her father and run by her brother, offshore. She said: “It would be perfectly legitimate. It’s a global trading company so you could locate it anywhere. But we are not in the business of minimising our tax. So we stayed onshore.”
Ms Hodge, a shareholder in the company, said she had been upset by claims in Westminster that it had avoided corporation tax, adding that they were false. “If anybody is trying to smear me to stop me doing the work I intend to do around tax, I won’t have it,” she said.
If we could just raise the subject of that little trust for your children and grandchildren where your circa £18 million of Stemcor shares are placed.
One of the effects of this structure is that said beneficiaries will not suffer the depredations of inheritance tax at that, hopefully long delayed, moment of your death.
This is, of course, entirely and wholly legal. But that isn\’t the current question is it? That is whether this is moral?
Said structure will, from my quite possibly incorrect and very basic calculation, deprive the Revenue of some £7 million.
I personally would not describe this as tax avoidance. It is quite clearly tax compliance, obeying the law of the land in each and every particular. But it does leave us with an interesting point.
It would appear that when a corporation obeys the law of the land in each and every particular that this is immoral. When a Labour MP does so it is moral.
Which is an interesting little philosophical point, isn\’t it?
Err, Yes?
Commuters bear brunt of new year fare rises
A commuter travelling from Canterbury to London will from Wednesday have to pay £4,812 for an annual standard class season ticket, an increase of £1,332 (38 per cent) since January 2008.
The cost for thousands of season ticket holders journeying from Hove to London will be £4,184, an increase of 27.6 per cent or £904. A City worker arriving from Colchester will have to pay £4,556 a year, an increase of 21.8 per cent, or £816.
Rising costs are not restricted to routes around London. A commuter with a season ticket travelling from Gloucester to Birmingham will have to pay £3,640, a rise of 26.7 per cent or £768 more than in 2008. The journey between Morpeth and Newcastle will be 16 per cent more expensive.
If you want to live in Canterbury and work in London then who should be paying the cost of that commute? You, the commuter? Or the taxpayer in subsidies?
Quite, can\’t see why the dustman or the nurse should be scalped so you can live in Kent. Suck it up matey, your choice, your costs.
Is being recommended by Eoin libel now?
If so, which on this list will sue?
Oh well done Mr. Speaker, Well Done!
John Bercow’s attempt to call time on Westminster’s hard-drinking culture was in tatters last night after plans for a total ‘no-alcohol’ policy for Commons staff were ditched.
The Speaker has taken action to curb excessive drinking at the Commons after Labour MP Eric Joyce assaulted colleagues in a Westminster bar. Waiters are now told to top up glasses less frequently and provide more non-alcoholic drinks.
But radical plans to tackle consumption among parliamentary staff – by banning drinking at work – have now been scrapped by Commons managers.
MPs get drunk. So we\’ll stop not MPs from drinking.
What did we do to the universe to deserve this ignorant little berk as one of the paramount commoners of the nation?
If the Social Security trust fund really exists then why do they have to raise taxes to cover Social Security?
One of the most boring catfights in US political economy is over whether the Social Security trust fund really exists. Essentially, more has been taken in payroll taxes in the past than needed to be spent on social security in the past. That money was then spent by other arms of government. And a special sort of Treasury bond was issued to the trust fund for that borrowing from it.
On the one side, look, the money\’s been spent, the trust fund doesn\’t really exist. All that can pay those bonds off is the general tax raising power of the government.
On the other, look, there are bonds there, the trust fund is real.
Which leads us to this:
One point, however, cannot be disputed: Even if President Obama wins all the tax increases on the rich that he is asking for, the long-term fiscal picture will still look grim. Perhaps we can stabilize the situation for a few years just by taxing the rich, but as greater numbers of baby boomers retire and start collecting Social Security and Medicare, more will need to be done.
Quite: everyone is arguing that either benefits need to be reduced (Republicans) or taxes increased (Democrats) in order to meet the redemption of those bonds that fund Social Security.
Ergo, the trust fund doesn\’t exit: it\’s just an IOU on the future tax raising powers of the Federal Government.
In which I again venture onto Chris Snowdon\’s territory
But of course smoking was different, wasn\’t it? There\’s no slippery slope leading to the same sorts of restrictions on other things at all:
This month, the National Child Measurement Programme reported that one-third of children are overweight by the time they leave primary school. This should have the food industry\’s attention. Instead, \”big food\” continues to engage in behaviour that undermines public health. Obesity expert Professor Robert Lustig has studied the toxic, addictive and appetite-driving properties of sugar on the body, leading to high blood pressure, cardiovascular disease and cancer. It\’s causing obesity in babies, giving teenagers diabetes. \”Sugar is cheap, it tastes good and it sells. So companies have little incentive to change,\” he says. Sugar is the new tobacco.
Perhaps comparisons with the tobacco industry are instructive in other ways.
No no, no slippery slope at all.
Timmy elsewhere
We should ask Ritchie: should the French obey the spirit of the law or the letter?
France\’s constitutional council has dealt a blow to beleaguered Socialist president François Hollande by rejecting the new 75% rate of income tax due to come into effect on Tuesday.
Clearly the spirit of the law is that Parliament wants that 75% to be paid and so everyone should do so.
But the Constitutional Council says that it\’s against the letter of the law. For it is unfair.
Just what is a progressive supposed to do? Follow the spirit of the law or the letter of it?
Demand that in the name of fairness everyone must follow a law that has been declared and defined to be unfair?
A tiny remembrance of William Rees Mogg
He came to the school I was at, Downside, once to give a little talk.
Not all that surprising as a couple of his kids were there (leading to much fun in the Mail when Emma R-M was discovered to be deputy head boy. Not quite, she was female assistant to the head boy while I was male such. You\’ll not be surprised to find that in a Catholic school I did all the work.)
Always thought it a little odd that only one of the sons went to Eton but there we are.
My major memory is that it was the first time I\’d ever seen someone wearing silk socks. Perhaps not quite what he would want to have been remembered for. But maybe so: I seem to recall that he made something of a point about always wearing such that he purchased from a clerical outfitter. Not cardinal\’s red but the blue (? purple?) of a bishop or possibly a Monsignor?
Given that, other than a brief mention in a Times blog of his, that\’s the only interaction I ever had with him I\’m afraid that\’s the only story I can add.
Well, yers
Crime falls 10% despite police cuts
The government has reignited its war of words with the Police Federation by releasing new figures showing crime has fallen steeply in the past two years despite sharp reductions in police budgets.
My immediate thought is that if there are fewer coppers reporting crimes then reported crime will fall. But I doubt it\’s that simple.
Timmy elsewhere
At the ASI.
If being able to see a tree where you live makes you happier then why not grant planning permission in forests?
Excuse me, but which universe is Neal Lawson talking about here?
So the objective failure of free markets to deliver widespread wealth can only be answered by even freer markets.
For it\’s not this one, is it?
Even the most casual of looks around the world will show that markets have done exactly that, delivered widespread wealth. North Korea, without them, is impoverished. China, when it used not to have them was similarly impoverished. It has had some modicum of markets for 35 years now and is undergoing the largest and greatest production of wealth ever recorded in our species. The Soviets managed to keep economic growth down to a minimum by banning markets.
We here in the \”west\” those places that have had markets for a century or more, are as rich as any human being has ever been. We\’ve achieved what no other economic system has ever managed: three squares, a change of clothes and a roof for all.
What is the fucking \”failure of free markets to deliver widespread wealth\” that Lawson is drivelling about?
Because it works you ignorant fool!
What do I mean by magic? Forget Merlin. Forget Potter. I mean the belief that there is ever a short cut out of the constituent limitations of our humanity. That there is a way, instantly, with the flick of a wand or a credit card, of changing ourselves from one thing to something else entirely. Abracadabra. Magic is the escape fantasy of those who cannot cope with the fact that we are limited creatures, that we will grow old and die, that we can never have everything, that we will always be dependent on food and oxygen and the love of others, and that, because of this, we will often feel pain and loss. Magic is the belief that there is some other way of dealing with all of this other than simply by dealing with it.
Which is why I think the really dangerous magic – and I believe all magic is dangerous – is out there in the post-Christmas sales. The most insidious magic is disguised as something so ordinary we don\’t even notice it. In terms of magic, both Christianity and contemporary market capitalism appear under the form of their opposites.
Sigh.
So why do humans flash the cash?
Because we\’re social beings. You know, exactly that lefty thing that we\’re all in this together, not simply individuals on our own islands. Which means that how we are perceived by others makes a difference. Social status in fact. And the higher your social status, the more those other human beings around you regard you as having it, then the better your life will be.
And bling is indeed part of social status. Veblen Goods, conspicuous consumption, they all lead to increased social status. No, not because we are on our islands raping Gaia, but because those other human beings that we share society with make it so.
For men, for example, increased social status leads to more opportunities with the babes. That\’s why groupies. The social status doesn\’t have to be about bling of course: but it can be and often is.
So why do men flash the cash? Because it gets them laid.
And if you\’re going to start pontificating about morals and money and the limitations of this mortal life then you\’d really rather better understand that we are just shaved apes looking for the next jump.
In part, at least.