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Excellent Richard!
It’s quite possible to have neither, and where would that leave you?
With a different problem
But one we have never faced as yet
Which makes your argument irrelevant in any currently known context
Where can I get the T-Shirt?
Feel free to print it
I seams to me that people are upset with Tax havens, because the likes of Starbucks, Apple, Google, etc ‘are not paying their fair share’… etc
BUT… this only makes sense if tax is used to fund spending (MMT says its not!)… If its not used to fund spending, then the only reason people can become upset is simply because the amount of money those companies have…ie jealousy! Should all the people protesting outside of Starbucks really be as upset if they thought Tax was not used for public funding?
Why should there be corporation tax anyway?
A company can save money, or it can use it to pay employees, shareholders, or buy more stock/pay bills. Buying stock / paying bills means the money will end up in a suppliers account, who then have the same choice of saving, paying employees/shareholders, or buying more stock/paying bills. Sooner or later the money ends up in someones pocket, at which point its taxed according to personal tax limits.
But, if a company Saves it, then isn’t economically speaking, having the same affect as it being taxed…ie, draining money out of the economy?
Having 0% corporation tax will surely make the UK far more desirable for companies to setup business here…..
I think the Government actually knows perfectly well about MMT.
Why did they let Google off so much money? Why did they allow Starkbucks to pay just £20m tax over 2 years. Why are they reducing Corporation tax year after year, if the deficit is still high….
They know…. and I believe They understand exactly your ideas about the economy, and believe them…. They just dont want it publically known, that they know otherwise they’d have NO excuse not to fund the NHS more, etc.
Sorry
But no they don’t
This is exactly the sort of comment that completely discredits MMT and is based on three false premises that are also fairly described as stupidity wjen portrayed as offered from a position of apparent knowledge, as you do
First it assumes that money creation and taxation are entirely unrelated which is completely and utterly untrue. Money creation can only take place if there is a means to also cancel it i.e. through taxation. It is entirely true that the relationship between money creation and the funding of government spending is indirect but to pretend that they are not linked is just wrong
Second, you pretend that there is no relationship between when which taxation is imposed on social consequence that again is completely and utterly untrue. Of tax is not charged to pay for government spending but is instead charged to prevent inflation then when which taxes charge can be decided upon solely by social objectives. What is readily apparent from your comment is that you think that the accumulation of savings in companies is totally and utterly acceptable without consideration of the potential social consequence of inequality in society, whilst you also utterly failed consider the fact that charging companies to tax is also one of the most effective ways in which to collect money when to charge it upon individuals and companies do, for example, distribute profit, is a highly inefficient mechanism for taxation, but I guess you know that.
Third, let’s just invert your comment to see how stupid it is. You say why charge a company when if it saves it cancels money. Why not instead only tax companies because when they say they also cancel money? And, if we didn’t charge individuals the tax, would not make the UK far more desirable as a place in which to spend? The logic is absurd: so is yours
If you believe in MMT stop mixing it with pure undiluted right wing drivel.
That was a patiently thorough answer. He can’t believe in MMT if he doesn’t know what it is.
Hi Richard, Thankyou for your thorough reply.
I’m more left wing than you think!
I am not in any position of authority, i’m just another internet user who’ve come across MMT from articles by Warren Mosler, Bill Mitchell, etc, and which seems to me far more sense than the neoliberal economics what is pushed by the government. If I have misunderstood parts then I apologise, but am grateful for any errors you may point out in my understanding.
I know that current left-wing thinking is that vast company profits should be taxed….that it is immoral that a company can have billions in the bank when hospitals are cutting beds.
But, isn’t this thinking a direct consequence of TINA/neoliberal thinking…and a TINA mindset that has been adopted even by most Left wing people…. If we did not have this almost daily TINA/Neoliberal speak rammed into our heads by the media…. but instead accepted that all poverty was caused totally by government policies and needless austerity. Would we still have this repulsion to highly profitable companies?
You said:
“What is readily apparent from your comment is that you think that the accumulation of savings in companies is totally and utterly acceptable without consideration of the potential social consequence of inequality in society”
I really think that it should be the governments responsibility to ensure that social needs of its population are met. This by having a sufficiently well funded health service, good education for everyone even through adult life. Full employment with wages that are high enough for a good standard of living. This is the governments job to do this. We do not have such a government…so, the idea that highly profitable companies should instead fill the gap seems morally right…especially when we are told time and again “the government cant afford it”.
But, lets say in a parallel universe we did have such a government that actually invests fully in healthcare, education, etc…and provided enough public sector work to make sure everyone had a job, enough money, security, then there would be no poverty, foodbanks would be no more… crime would be cut. In this universe, Would successful companies still have a moral obligation to ‘pay their way’…. or would their high profits be more accepted by the general population, in the same way Chelsea might be praised for ended up at top of the football league? In this universe there would be way more competition in the market, as government would be supporting smaller companies more, giving them a foot-up the ‘company league tables’. more competition = cheaper prices = less profits for the big boys anyhow.
Thanks again for replying.
Tony.
So you think governments should meet all needs and corporations need make no contribution to tax
And how do you think that works?
I know some MMTers (and you name two) are very naive on tax but there’s no need to repeat their mistakes hat discredit their broader thesis
We have to tax to prevent inflation
If we taxed as you suggested we would have massive social inequality
Or serious inflation
Are those what you want?
What is the difference between a company making and keeping a million in the bank, or a company making a million, being taxed £200k, and then keeping the rest in the bank? If a company keeps its profits in the bank, then (please correct me if i’m wrong), this money is not in the economy?
I cant see how taxing 20% of it will make any difference whatsoever to inflation, when the money is locked up in a corporate bank account or government bonds.
Yes, public debt is now 20% more and corporate bank accounts are now 20% more. But, with MMT thinking, is this really an issue?
Thanks,
Tony.
Are you really saying we can ignore the £200k of revenue and its social implications?
Please don’t say yes
….This is why earlier up I suggested the Government does actually, secretly know about MMT. The evidence being in that they just don’t seem care how much tax they want from these companies, when they can create as much money on demand as needed. That they voted against plans to crack down on corporate tax dodging.
Why would they do this? They are not like the french for example who, (without the ability to create their own currency), needed to go raid Googles offices earlier this year.
A bigger budget deficit means they can give stronger economic reasons why they need to cut budgets, and the huge hole in accounts left by labour. Economic manipulation for political means…
Ok, going to take tin foil hat off now!
I assure you they have no awareness of MMT from any discussion I have had
And by getting tax so wrong MMT does not help[ its cause
Which is a massive shame
You said:
“Are you really saying we can ignore the £200k of revenue and its social implications?”
Yes! (sorry!)
The government just doesn’t need £200k, when it can just sell a few more bonds, and get the BOE to buy them back as part of QE!
Should the government decide to to invest £200k in social funding, or not, has no bearing on money collected through taxation. The £200k tax is simply there to drain money from the system, and prevent inflation. From what I understand from “The 7 Deadly Innocent Frauds of Economic Policy” – the government would have just shredded it anyway….(but I am no economist).
Tony.
Sorry – in that case you’re all about accumulating private wealth in ways that guarantee that w will have inequality for good
In that case to claim you are left wing is a lie
Open your eyes and realise the stupidity of your argument – because that’s the politest version of it
MMT’s explanation for taxation can be complex for non-economists (like me!).
As I understand it taxation is necessary for 4 principal reasons. 1) to regulate the money supply (inflation); 2) to help level out the wealth gap; 3) to influence consumer behaviour; 4) to mitigate against corporate excess.
I believe Bill Mitchell has stated that the level of taxation required to regulate the money supply is not set in stone and should be determined by good political management according to circumstances.
Maybe this might help: https://alittleecon.wordpress.com/2013/06/16/on-tax-avoidance-and-the-purpose-of-taxation.
Googling MMT and taxation will throw up lots of worthy articles & blogs. Plus quite a few YouTube presentations. I can recall an interview with Warren Mosler & Stephanie Kelton who both confirmed what you have said Richard – that bizarrely government either doesn’t understand or doesn’t want to.
MMT is as much a political philosophy as an economic theory.
I understand MMT and know many of the participants
My big problem with it is not MMT, but their lax attitude to the social principles of taxation
@John D – thanks for the link. At least it means someone else has thought in the same lines.
@Richard Murphy.
There is a fair bit of inequality in corporate tax:
If you are a small limited company… one or two man business… Then you will have to pay 20% corporation tax.
If you are a medium to large sized company, you can afford to pay for better accountancy….or maybe you can afford to setup a office in Ireland where they have 12.5%
If you are a huge company like amazon, Facebook, Google. You can afford to make up your own tax avoidance scheme… and get away with getting taxed less than 5%.
How can this be fair? That the more money you have, the less you pay, and even if you get caught, you pay peanuts compared to what you should have paid. If anything is totally right wing, it is the current setup. Poor = 20% corporate tax. Rich = well, pay what you want, the government isn’t going to mind too much!
Yes, I know that ideally everyone should pay the same amount….. BUT, the higher the tax rate, the more pressure there is to setup tax avoidance schemes. 0% levels the playing field, and allows the small company to compete easier with the big…. This is not a right wing argument, this is far more fair to small companies than the current situation!
And, really…. 20% tax rate is not at all going to prevent large companies accumulating wealth anyhow. If given a corp tax rate of 0%, a company was able to fill its bank account with a million in profit over 5 years, then, if the corp tax rate was 20%, it would only take the same company just over 6 years to accumulate a million…
So, let’s increase the rate then
Solved
And all your comments show no sign of awareness of the behavioural literature: abuse goes on to the point that negative rates are sought
And that is unacceptable
This abuse can be stopped: the one thing you ignore us that possibility? Now why would that be?
Please don’t bother to respond: I am beginning to assume you are a paid astroturfer
Sorry – I posted in the wrong place. It was intended as a reply to Tony’s comments. Just striving for simplicity and clarification. You’re a lot more au fait with MMT than me!