Tax Research UK

The reality of cuts has to be faced.

The fact that there are alternatives has to be understood.

Richard Murphy Economics, Green New Deal, TUC

How Do Business Owners Define Success? : CPA Trendlines.

US accountancy web site CPA Trendlines features a fascinating graph resulting from a survey by  the Enterprise Council on Small Business.  They asked business owners to define what satisfaction means to them. Business owners said maintaining a healthy work/life balance was the single biggest factor in their definition of success.

CPA says that:

surprisingly found that “satisfaction” was the primary way that they defined success, followed by “growth.”

The overall result was:

I don’t find this surprising at all. If people maximise it is their overall well-being that they seek to enhance. The myth of profit maximisation is just that: a myth. It’s one perpetuated by big business as an argument for unbridled growth. But no one in their right minds thinks it enhances well being.

Hat tip to Dennis Howlett.

Richard Murphy Accountancy, Economics

The bonus tax and the all-seeing neo-liberals | ToUChstone blog: A public policy blog from the TUC.

Let me accuse my TUC colleague Adam Lent of being appropriately cynical:

The FT is reporting today that the bankers’ bonus tax will generate £2.5 billion in revenue for the Treasury – nearly three times more than the Treasury itself expected.  Interestingly, those wise people around the Adam Smith Institute predicted that the tax would be avoided making the policy a meaningless gesture.  Or as ASI guru Madsen Pirie called it “political rhetoric largely empty of substance”.

Worth noting maybe that these are some of the same people making dire predictions about the impact of the Robin Hood Tax.

But let’s be honest: data has only one use for them - which if enhancing their well -being. The myth that neo-liberals are objective is amongst the biggest of the lies they’ve spun.

Richard Murphy Economics, Transaction Taxes

FT.com / Europe - Bond issue eases pressure on Greece.

Greece won a crucial vote of confidence from financial markets when investors snapped up a government bond issue on Thursday, easing fears that its debt crisis could prevent it from raising money.

Athens sold €5bn in 10-year bonds and received orders for three times that amount.

The UK easily sold a debt issue earlier this week.

The reality is plain to see: there is no debt crisis that need cause us concern. Of course there are issues to deal with, but talk of a crisis is plain nonsense.

Now, let’s get on with dealing with the issues and ignore those, like the Tories, who want to create opportunity for speculative profit on the part of bankers and hedge funds at expense to the rest of us.

Richard Murphy Economics

Department of Politics, History and International Relations,

Loughborough University

CALL FOR PAPERS

The Political Economy of Taxation:

International Conference

September 29^th 2010

This is an invitation to propose a paper at the forthcoming interdisciplinary conference on The Political Economy of Taxation, to be held at Loughborough University under the auspices of the Centre for the Study of International Governance. The conference organisers are seeking above all to attract contributions on four core themes

Core Themes

1. Tax Competition and Neoliberalism

The Politics of Tax Havens

Tax Avoidance & Tax Evasion

Transfer-Pricing and Taxation

Paradigm Shift in the International Governance of Taxation?

1. Taxation and Development

Taxation regimes in Emerging Economies

Taxation regimes in less developed economies

Taxation and mercantilism

1. Taxation in the European Union

Tax Harmonisation: VAT & Excise Duties

Taxation and Enlargement

Taxation Policy in the Framework of Macroeconomic Regimes

Environmental taxes

1. The Politics of Tax Progression

Taxation and Redistribution

Flattening the Curve of Progression

Flat Tax Debates and Regimes

Laffer Controversy?

Papers on related subsidiary themes are also warmly welcomed. These could include the following:

Potential Subsidiary Themes

1. Taxation in the arena of Party Politics: International Comparisons

1. Taxation and Gender in international comparison

1. Taxation of the Public and Parapublic Sector

Charities and the ‘Third Sector’

The State as Corporation

Public-Private Partnerships and Taxation

1. Taxation and Civic Culture

The State as ‘Other’; the State as ‘Us’

Tax Compliance in International Comparison

Tax Policing

Taxation and Corruption

If you would like to present a paper at this conference, please forward a brief abstract of your proposal by post or by email to The Centre for the Study of International Governance, Department of PHIR, LoughboroughUniversity, Loughborough, Leicestershire LE11 3TU, UK; E-mail: csig@lboro.ac.uk

Discussions have already begun with a publisher to produce an edited volume of conference proceedings, using the best of the day’s papers.

If you wish to attend the conference on September 29^th2010, you can request an application form from the Centre for the Study of International Governance at the above address or via email at: E-mail: csig@lboro.ac.uk

Further enquiries about the Conference can be obtained by contacting the

Conference Organiser: Dr Jeremy Leaman (J.Leaman@lboro.ac.uk; (44)01509-222995

Supported by: Centre for the Study of International Governance,Loughborough University (01509-222981)http://www.lboro.ac.uk/departments/eu/CSIG/ContactUs.html

Richard Murphy Economics

Tax Justice Network: Jim Hines fails to defend secrecy jurisdictions.

John Christensen’s take on Jim Hines is as unenthusiastic as mine.

And this man’s meant to be one of the best tax professors in the world?

His core assumption is a simple one;

Let’s assume I’m right

The reality is that the rest of us should read this as:

Let’s presume I’m from the right

And from then on we should note that he’s about as objective as Margaret Thatcher ever was on any issue she discussed.

Richard Murphy Economics

I mentioned the questions I proposed to ask Prof Jim Hines at his lunchtime meeting today in a blog post this morning.

I was amused to find he had read them in advance of the meeting.

He noted I’d said:

I’m not expecting adequate answers.

I’m sorry to report I did not get them. And this was despite the fact that he reported he’s read my blog and therefore had prior notification of what I might ask.

On transparency he said transparency was, of course, a good thing. It seems cl;ear he thinks we now have: he spoke warmly of recent new information exchange agreements as if he thinks the solve the problems on this issue. That’s extraordinarily naive. And when challenged on the subject of automatic information exchange he offered that standard response of the right wing economist: I couldn’t recommend it until we had data on whether it worked. What a wonderful argument that is: we can’t make change for lack of data and w won’t get data until we make change and so we can’t change the current and rather convenient status quo. Let’s be clear about this: this is not an argument for evidence bad policy, it is an argument for lack of evidence based obstruction.

On banking he was as lame. Private sector banks he says are our salvation. State owned banks – and he was categoric that state owned banks are a bad thing – hinder markets he said. So we need tax havens to promote private sector banks. He failed to note that it was privately owned banks that failed: those places that had state owned banks are doing much better than those with private sector banks right now. Evidence clearly could not get in the way of dogma

The same was true on my third question. he had created a theory, he said. The evidence supported it. Therefore it was right he said. But I had a theory, I am quite sure the evidence would support it, and yet I am wrong he said. He didn’t address the more nuanced points at all.

This was typical of his whole approach. For example, John Christensen referred him to the report of a Norwegian commission, staffed by academics, which argued the exact opposite of what Prof Hines said. He dismissed the report. He said it was not objective, he said. He is objective, he said. That’s not an argument. That’s an assertion – and quite candidly a false one as well. Of course he’s not objective. But to say that the Norwegian team did not use data rigorously or appropriately is a serious charge – and one I am sure is unfounded.

All he could really say is, time and again, that the data supports his view. Curiously a man advising the European Commission was sitting beside me. He said he came with an open mind. But, like me, he knows this data. It is just not good enough to support the claims he made.

And his examples were economically flawed too. For example, he claimed secrecy jurisdictions are essential to ensure investment takes place. Without their tax arrangements then some investments could not occur. My answer is simple: if tax abuse is needed to ensure an investment is viable it’s a misallocation of resources to do it.

And I’ll guarantee he has real problems really separating FDI and portfolio flows through tax havens.

And so it went on, and on.

Two quotes from him to conclude:

“If they [tax havens][ get in the y of free functioning markets I’m against them”

Which somewhat shoots all his other arguments down in flames.

And:

“Intuitively the message message of economics are hard to swallow even though they’re true”

Depends whether there’s any substance to your argument or not Jim, that’s what I say. Not one of the questioners was with him today.Which may say quite a lot.

Richard Murphy Economics, Secrecy jurisdictions, Tax Havens

Policy Exchange, the key Tory think tank, has a meeting at 12.30 today under the title “Offshore Financial Centres: Help or Hindrance?”. The timing is staggering. I thought they’d know the answer right now. But the wade on, none the less, saying:

Prominent US economist Professor James R. Hines Jr is the Richard A. Musgrave Collegiate Professor of Economics and the L. Hart Wright Collegiate Professor of Law at the University of Michigan. He recently published a research report commissioned by the Society of Trust and Estate Practitioners highlighting the importance of offshore financial centres, and their contribution to the investment, employment, and the efficient functioning of markets and government policies in other countries.

He has written that:

“Offshore financial centres play a key role in the international financial system, improving the availability of credit and encouraging competition in domestic banking systems. The result is a boost in investment in the major economies, which ultimately support job creation and growth.

The evidence indicates that offshore centres contribute to financial development and stability in neighbouring countries, encouraging investment, employment and other aspects of business development. They have salutary effects on tax competition, promote good government, and enhance economic growth elsewhere in the world.”

I’m attending. I hope to put at least three questions to Prof Hines. The first is:

Offshore financial centres, or secrecy jurisdictions as I prefer to call them, reduce opacity. Anyone who researches this issue knows, and the research of the Tax Justice Network has proven, that it is difficult or nigh on impossible to secure any information on an entity trading from a secrecy jurisdiction. Efficient markets apparently require free flow of information to ensure the efficient allocation of resources. In that case how can it be that creating opacity improves the efficient functioning of markets?

My second question might be:

Domestic banking is, in all major markets and for all practical purposes, closed to new market entrants. There is clear evidence that in very many ways it is oligopolistic and that monopoly pricing occurs, particularly with regard to consumers and small and medium size enterprises. If offshore financial centres enhance domestic banking profits isn’t that because that helps them disguise their monopolistic behaviour, undertaken at cost to society as a whole?

A third might be:

There is clear evidence that the most successful offshore financial centres / secrecy jurisdictions exist close to and under the protection of major states. The UK does, of course, play a major role in this activity. You argue that they contribute to financial development and stability in neighbouring countries, encouraging investment, employment and other aspects of business development but haven’t you actually got the whole causality of this relationship wrong? Isn’t it true that they actually exist to undermine the strong regulation, effective taxation systems and rule of law that create all those outcomes you observe and as such they do not promote the activities you observe but hinder them by encouraging free riding or the system, tax evasion, by undermining the rule of law, attacking the fundamental tenets of democratic government and the right of a government to deliver its electoral mandate without interference whilst diverting profit from productive to unproductive activity because it is artificially declared in tax havens and cannot therefore be remitted for productive use on the places in which it is really earned?

There are, of course, plenty of other possible questions. These will do for now.

I’m not expecting adequate answers.

Richard Murphy Conservatives, Economics, Secrecy jurisdictions, Tax Havens

Capital controls back in IMF toolkit « Real-World Economics Review Blog.

In 1942, when working to establish the International Monetary Fund, John Maynard Keynes said the “control of capital movements, both inward and outward, should be a permanent feature of the post-war system.”

In his new book Capital Ideas: The IMF and the Rise of Financial Liberalization, Jeffrey Chwieroth argues that despite the fact that the economics profession largely maintained their support of Keynes’s position, by the late 1990s the IMF motioned to change its articles of agreement in order to outlaw capital controls across the world.

The about-face in IMF thinking, according to Chwieroth, was due to a change of position among IMF staff. In yet another about-face, the IMF staff just released a position paper where they retract their rejection of Keynes ideas. Now it’s time to practise what they preach.

Yes, yes, yes!

Richard Murphy Economics

From Poverty to Power by Duncan Green » Blog Archive » The Robin Hood Tax takes off: update, arguments and counterarguments.

Duncan Green at Oxfam is a guy I respect. He’s involved in the Robin Hood Tax campaign. I am not, directly. I’ve produced a different report on the issue of Taxing banks. But I like what he has to say today in response to those from the right (and on occassion not so right) wing blogosphere who argue against the tax:

Finally, some stick is being handed out to the Robin Hood Tax campaign for the (over)simplicity of its messages (see Tim Harford’s follow up post). To which I would respond, duh, there’s a clue in the title – it’s a campaign, not a seminar. Campaigns need to have clear messages that inevitably do violence to some of the detail, but the groups that constitute the RHT are busily having detailed grown-up policy discussions with decision makers, reading the research, commissioning new work etc etc.

Quote so. The wonkers need to get out more.

But Duncan does not dismiss them. He says:

We should probably have devoted more attention to putting forward our thinking in policy wonkland, perhaps with a separate geeks website for debate, exchanges of information and research etc. That’s something we need to sort out as the campaign develops. But there should be no let up on the public campaigning – Bill Nighy. Richard Curtis et al have brought this discussion to a level of prominence that ‘undercover economists’ could only dream of. All power to them.

I also like his last word, and have strong sympathy with it:

Last word to Einstein: ‘We should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.’ I’m with Albert.

I’m aware that there are those who say that someone they describe as a retired chartered accountant should have no role in tax policy. Leave it to the xperts so they say. Like them.

Look where that got us.

Experts can be very, very wrong on occassion.

The Robin Hood tax campaign has made errors - no doubt.  It did not anticipate the capacity of the right wing blogosphere to nit-pick endlessly to no net gain to anyone. But until you’ve experienced it no one does. And when you have I know no one who can believe a) quite how rude much of their argument is and b) quite how naive their defence of their position is. The main line of argument is after all ‘let’s assume we have a perfect world in which markets solve all problems and therefore all markets have been solved’.

Which reminds me of the joke:

Q: How many economists does it take to change a light bulb?

A: None. If it had needed changing market forces would have ensured it had already been done.

Richard Murphy Economics, Transaction Taxes