Attention dunderheads: Taxpayers are NOT giving businesses £93bn

Re: The Truth of the Matter is this...

If you read any of Worstall's stuff and any economics stuff you would find that the burden of taxation always falls on individuals, never on corporations. Corporations are paper entities run by humans for the benefit of humans. They are just a contractual method of organising people. It is the people in the corporation and those who use its output (profit -> shareholders, product -> customers) who pay for the tax that the corp collects. The proportions are what economics people argue over, that employess, shareholders and customers pay the tax is not under dispute.

Re: The Truth of the Matter is this...

This is why our children no longer have free University Education

No it isn't. There's two reasons why our kids no longer have fully funded higher education. The first is that a certain grinning war criminal decided that 50% of school leavers should go into further education. Unfortunately, instead of useful subjects and apprenticeships, this meant a vast increase in the number of people studying, and unfortunately most of these additional places were for Medicated Izal degrees - sociology, journalism, hair dressing, sports science, media studies and the rest. It was this same Labour government that introduced tuition fees, because this massive increase in tertiary education couldn't be funded despite Blind Gordo's enthusiasm for shovelling billions of pounds of debt onto future generations (like the PFI that you mention).

The second reason why we don't have free further education is because that puffy faced lightweight we've endured as prime minister for the past five+ years decided that handing £12bn a year out as foreign aid was a better way of spending what limited resources we do have, and that despite a range of tax increases to try and reduce an unsustainable budget deficit, it was better to further increase tuition fees. I select foreign aid because it was a decision taken at the same time as increasing tuition fees, and because it has a similar quantum as a fully funded tertiary education system would have.

This has nothing to do with corporations, and everything to do with a political elite who for fifty years have been busy drawing up the ladder they themselves climbed, whilst pissing money away on crap. So the grammar schools were largely abolished by Labour party tossers who'd benefited from them. Maggie (IIRC) started the abolition of student grants (having enjoyed a scholarship at Oxford). Labour came back with tuition fees, with Blunkett loading debt onto graduates, unlike his own fully funded degree at Sheffield Uni. The current shower of piss have made things worse still (with the support of the now-extinct Liberal Democrats), despite all enjoying state support for their education.

So, make no difference which party you thing represents you, they all think the same, and they've all shat upon our higher education system, and in particular on the poor buggers going through it. Bastards the lot of them.

Re: The Truth of the Matter is this...

It would seem that the Greek problem is that they never managed to reach a primary surplus or put forward a remotely plausible plan to do so,. That would lead naturally to the conclusion that they could not repay any amount of debt in a finite number of years, something that quite understandably concerned their debtors. The reason for failure, whether government giveaways, tax fraud, or other corruption, appears to a first approximation quite immaterial.

Re: The Truth of the Matter is this...

@AC (the first poster)

The irony being there is simply not one ounce of truth or accuracy contained within your post. Not one.

This is why our children no longer have free University Education

When university was free it was for the best and the brightest. Roughly 10%. You can't extend that system to literally half the country without financing it. Since all the tax money was lashed up the wall on public sector wages, and a shed load more borrowed money to boot, the only people left to pay for this were the students themselves.

have to fund Off-Sheet balance items such as PFI for generations to come

Much as Ed Balls and Gordon Browns grasp economics were as disastrous as they were comical, their PFI hangover will only take about 30 years to clear, rather than several generations. You're too harsh on them, which is not something I'd ever expected to write.

Tax credits is a difficult subject really.Paper of mine discusses it here:

http://www.adamsmith.org/research/reports/abolish-the-poor/

Benefits that are paid only conditional upon being in work *could* be subsidies to employers. Benefits that are not subject to a work requirement *cannot* be, in fact they operate to raise wages, not reduce them.

As it happens the general view is that some 25 to 30% of working tax credits does end up as a subsidy to employers. but the influence of the benefits system as a whole is very definitely to raise wages.

Re: Interesting writeup

Business rates are really paid by the landlord, not the renter.

The shop is "worth" x to the person renting it. That's what they're willing to pay, in total, for the use of it. Whether 1% of x or 50% of x goes in tax or rent doesn't make any difference to that perceived worth.

The landlord cares a great deal about what that percentage is.

Re: When I read the article

Yeah, even the raging left-wing loon I am understood how that part of the article fell down and Tim was right to point out the absurdity of it.

And to the point of tax breaks, it is hard to discuss them in a forum such as this. I would define a tax break as a subsidy in a like-to-like scenario: If Widget Producer A and Widget Producer B were headquartered in the same tax jurisdiction and the same sector manufacturing the same widgets and they both had comparable financials, but one had a reduced tax bill, that is a subsidy. A real-world (though United States-based) is when looking how a state or even city works to lure a company to expand or relocate. This is often done by providing a refund for or an exemption from state taxes on profits, the same to property taxes, or special credits for certain types of purchases, wage levels, or things like that. Things that a competitor would not be able to get, even if they were located next door because they didn't bother to pit various states or cities against each other for an expansion.

In some situations, like the enticements to a company to invest in a distressed area, might in fact be more beneficial to the economy, a tax jurisdiction's general fund, or both. But others, like the sales, property, or profit taxes, are often done with little consideration to what it will look like it 10, 15, or 20 years when that exemption or agreement runs out.

In the US at least, those can be very expensive and have arguable benefits (a company will expand when there is demand for it, regardless of enticements by the government; it just might have picked a different jurisdiction). Texas is notorious for this and in 2012 alone refunded or exempted $14.9 billion in state taxes. That's just madness, as in most cases, the companies reaping those rewards still would have done what businesses do.

Re: So how didn't he get it?

There was a bit of back and forth on Tim's personal blog.

http://www.timworstall.com/2015/07/08/bwahahahaha-15/

Don't think it's all there, but the start is. You want to ignore almost everyone except Tim himself and the chap going by 'Pellinor'. The rest is sheer blather.

As far as I can tell, this Farnsworth bloke is entirely ignorant of how the tax system actually works - he thinks capital allowances are paid in that amount to companies, rather than being deductible from profits before tax is paid on those profits, for example. He has no intention of listening when anyone tries to explain it to him. He's either malign, or enjoying the money/attention he's currently getting, or someone's useful idiot. I'd go with a combo of the last two: he's believed a bunch of myths because they fit his prejudices, and now he's getting fame for regurgitating them.

Re: So how didn't he get it?

Depreciation is easy to understand once you get the idea of assets on a balance sheet.

Suppose you start with £1m in cash. You then buy a £100K lorry. Your business now owns:

* £900K in cash

* a lorry worth £100K

In total, the situation hasn't changed: you haven't made a "loss" of £100K, you have simply swapped one type of asset for another. In principle at least, you could sell on the brand new lorry for £100K to someone else.

The lorry is going to reduce in value as it gets older (and used), and that's what the depreciation reflects. If you were to sell the lorry in a year's time or two year's time, you would get back less.

That's the only sort of "loss" or "profit" which matters: the decrease or increase in your total assets. And that's what the government taxes. As the article explained, a "capital allowance" just lets you offset the entire cost of the item against this year's profits, instead of spread over several years.

If a supposed tax expert doesn't understand this, then heaven help us all.

Re: The point where I concluded this guys an idiot.

Road tax collects 25 billion. The government spends 5 on roads. This is just another way of forcing Joe Public to pay a greater burden of tax than billion dollar companies should be doing.

Re: The point where I concluded this guys an idiot.

If they did tax aircraft fuel the same a filling station fuel. Then you would probably end up driving to Paris or Amsterdam to catch a flight to New York.

Already works like with air passenger duty, although people don't drive, they just fly short haul to somewhere civilised (like Schipol), and take the long haul flight onward from there.

Re: The point where I concluded this guys an idiot.

Fuel used to propel a boat on inland waterways is taxed at the full rate, and liable to vat.

Fuel used to HEAT the boat is rebated. In fact the tax is applied based on a formula that allocates a percentage of fuel purchased to propulsion and heating.

@James Anderton

"Incidentally if you are plowghing a field, pottering about on a canal, digging a hole, fishing for herring, consuming gin on your floating palace then you will also be receiving this "gift" from the taxman."

Actually, if you are pottering about on a canal, you now have to pay duty on the diesel you use. If you also use diesel for heating, then you get that without the diesel - you have to allocate a percentage of your fuel that you use for heating.

Thus, liveaboards pay little duty, but cruisers pay much more.