I have a feeling that this weekend was the one where the world began to descend into chaos. Let me moderate that slightly: let me suggest it is just tax chaos on the horizon at the moment.
Philip Hammond made clear that the UK is happy to become a tax haven and enter into tax wars, from which only the wealthiest can win, with the EU.
I sense a growing concern about Trump's tax plans too. They're referred to by Gavyn Davies in the FT today. As he explains them (I think accurately)
Although complicated, the basic principle is that goods purchased outside the US (ie imports) would no longer count as “costs” to an American corporation, so they would not reduce taxable profits. Meanwhile, exports sales would no longer count as “revenue”, so taxable profits would be reduced dollar-for-dollar by a firm's export receipts, provided that exporting firms also have some domestic revenues. In effect, imports would be taxed by an amount equal to the import bill multiplied by the corporate tax rate of around 20 per cent, while exports would be subsidised by the same amount.
Those are mighty high tariffs.
The US would win from such a tax: it runs a trade deficit. So too would the UK. But we would be in tax ware with the EU, China and much of the developing world. And I fear tax war would be the start of wider hostilities.
I've worked for a long time for global tax harmonisation. I still will. But it feels right now that it is slipping away. And that is very worrying indeed.
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I think that you are correct.
And since tax evasion/avoidance is endemic in this country why should it not unfold as you have said?
With regard to Trump – sooner or later people might see that all that has happened is that the elite have somehow got hold of Trump and besides a few show pieces polices he is no better than those before him. Until that realisation makes itself known, the corporations will have lot’s of fun at our expense.
Can you explain (or usefully speculate), as a matter of interest, how such a regime might fit with the kind of ‘free trade’ deal that is apparently (via Gove) likely to be on offer to this country (and others individually)?
There is no fit, at all
And any such scheme cannot allow exemptions for a state or all imports come via them alone
Wow, complicated. Cant wait to see how overheads are allocated.
The accountancy/ audit profession should love this; they were masters of obfuscation before this level complexity.
Is he planning to distribute the resulting tax gains to the workforce?
How much would such measures add to his own personal wealth over the life of his presidential term?
This scheme is the creation of Oxford Professor Mike Devereux
No one has ever worked out what Mike has meant when proposing it
I guess we might now do so ‘on the job’
Am I the only person who sees the fact that Trump was happy to be interviewed by Gove of the Times = cosy relationship with Murdoch?
No
It’s not the Overton Window, it’s the ‘Underton’ one: not a shift to the right, nor to the left; but a shift downwards into corruption and chaos.
Neatly put
May I suggest that we now have the “Trumpton Window”, but with almost all the comedy removed?
Enjoy. Or don’t. https://www.youtube.com/watch?v=fudSCU1-U9g
Very interesting … I would like to understand better how the tax war might play out. And what role tax havens would play in it?
They are the launchpads for it
Tax war is the proper name for tax competition