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Anorak | Even the CBI doesn’t understand corporate taxation

Even the CBI doesn’t understand corporate taxation

by | 20th, April 2012

THE CBI does not understand corporate taxation:

The business group dismissed accusations that large companies enjoy a cosy relationship with HM Revenue & Customs, and said public anger over tax avoidance and evasion stems from “misunderstanding” of the complexities of the tax system.

John Cridland, the CBI’s director general, said: “Business is paying its fair share of tax – we are much misunderstood. Today is the beginning of the fightback to say we’re paying the right amount of tax and the way to get the economy moving is lower rates of tax which will lead to more tax being paid.”

The point being that business cannot be paying the “right” amount of tax because business never pays tax, not a red penny, ever.

This is one of those things that economists have known since it was first pointed out in 1899 (Edwin Seligman) but have never really managed to get the public or politicians to understand.

All taxes, any tax, requires that the wallet of some live human being gets lighter. A company is simply a legal fiction, to allow it to sue and be sued, not a real live human being. Therefore it cannot be the company that pays the tax it must be some or other human being.

The study of which human being is the study of tax incidence. And these various taxes can pop up in surprising places. Employers’ national insurance for example, something we generally think is paid by the company, is almost all really paid by the employee in the form of lower wages. VAT I think we know is

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Posted: 20th, April 2012 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink