I normally ignore Tim Worstall. So does almost everyone on the left, and for good reason: he's a troll cheerleader saying little of worth, offering abuse by the bucket load and encouraging all the worst traits of internet rage and hatred that now so disfigure the right's contribution to political debate.
That said, Tim does not ignore me. Since he was given a Telegraph column a few weeks ago more than half his columns have featured commentary on my work. I wouldn't like to suggest he's a man obsessed; the evidence does it for me.
His latest offering is an example of his genre. It's riddled with abuse, intellectual inconsistency (at one moment praising HMRC for disagreeing with me on the tax gap; on others roundly condemning them for trying to collect tax to close that gap and next excusing the criminality of tax evaders and even suggesting society has a duty to tolerate their crimes in the name of so-called freedom) and straightforward misquotation and incorrect fact (he has et tax debt seriously wrong). It's easy to see why he's so easy to ignore.
But on this occasion he has tried to put forward an argument on the tax gap. First, he says I'm wrong to include gross tax debt in it. But that's obviously wrong for two reasons.The first as I explain in my new report for PCS is that HMRC have also done so in their time. The second is so glaringly obvious it shouldn't really need saying, but as Tim doesn't get it I will, which is that if you're trying to recover gross debt then you have to include gross debt before recovery and not net debt after recoveries in your performance target. I can only conclude Tim's never actually ever managed any real business of any substance if he knows so little about such things.
Second, he argues the corporate tax gap I calculate is simply companies claiming routine tax reliefs. Even serious tax journalists now dispute that, and rightly too. Read this The claim is just nonsense.
Third, he moves on to what he thinks is economics. He makes three claims. The first is that I assume that if the tax gap were closed there would be no impact on economic activity undertaken in the economy. I've never said such thing, firstly because I hope there will be such an impact; secondly because I have never claimed we could close the whole tax gap, and thirdly because far from having the negative impact he suggests I believe the result would be almost wholly beneficial, the reasons for which I explain below. As usual, Worstall's claim about my work is just wrong.
His second economic claim is that the costs of tackling the tax gap aren't worth incurring. This is extraordinary. Whatever the right number for the gap - and it's always in reality going to be a range not a precise figure - we're taking about many tens of billions of pounds. And all Worstall can say in response is that the massive abuse is a price worth paying for his concept of freedom - which is unsurprising when his definition of freedom is the right to abuse. That's not just warped logic, it's fundamentally unethical.
So let me come to the third argument that he makes, which is that closing the tax gap won't in any case end austerity. His logic is that all tax paid increases austerity and therefore closing the tax gap would reduce growth.
This is deliberate misinformation by Worstall for a number of reasons. First, we're not talking about extra taxes here. We're talking about collecting taxes owing. That's something very different.
Second, I've never suggested we collect these taxes to pay down debt. I've suggested we collect them to spend - as a stimulus for growth. Worstall's claim is only right if the money is withdrawn from the economy, but I don't suggest that. I suggest it be used to invest in the economy - and that stimulates growth by more than is spent. In that case Worstall's either not telling the truth (which is likely) or does not understand economics (certain).
Third, failure to collect these taxes is incredibly harmful to business. I explain this logic in full here. Suffice to say if you undermine trust because cheating is prevalent then you destroy effective markets. And if you create competition on the basis of the ability to cheat you misallocate resources from production to speculation, and that reduces growth. And third, if you use asymmetric information to deliver this through tax havens you encourage big business over small and deliver market inefficiency via monopoly.
Worstall ignores all this because unlike me he learned economics, but has clearly never thought about it. And the conventional economics to which he subscribes simply does not address these issues. So he comes to the wrong answer, as ever.
Which is, I guess, a long way round of saying we should continue to ignore him.
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Worstall has no evidence, no logic, no nothing to support his steam of conciousness. Like all bullies, he resorts only to shouting incoherently and bullying, a sure sign of of his awareness that his arguments, such as they are, have been found out.
And he’s buggered off to France!
Nick
100% right – except it’s Portugal I think
Odd for a UKIP member!
Richard
“he argues the corporate tax gap I calculate is simply companies claiming routine tax reliefs. Even serious tax journalists now dispute that”
The link does not show Goodall disputing the claim that you include routine tax reliefs in your calculation of the tax gap.
The truth is you have never attempted to quantify the effect of R&D, capital allowances, double tax relief in your work – and it would clearly amount to a significant sum. Or if I am mistaken and you have attempted to quantify then accept my apologies and direct me to the work.
Until you do quantify these reliefs, allowances and exemptions your work should continue to be regarded with the utmost scepticism.
I deal with that issue in my discussions on deferred tax
But neither you or Worstall understand that
have you got a link to your deferred tax stuff?
deferred tax is a purely accounting concept and has nothing to do with actual tax paid – it is an accounting myth to smooth the tax payable line in accounts over time – im curious as to how this interplays with the tax gap?
Deferred tax is an indication of the success companies enjoy in avoiding tax using legal tax loopholes that defer their tax liabilities
See my TUC work on the corporate tax gap in 2010 and the Missing Billions i9n 2008
Avoiding tax or mitigating tax? If the tax laws provide, for example, wear & tear allowances that differ from accounting depreciation charges and this leads to deferred taxation is this really a success in “avoiding tax”?
As you call this tax avoidance, I wonder if your proposed GAAR would catch it?
Some of it is not tax avoidance – I have always accepted that
But some – and there’s not doubt much leasing falls into this category – is
And as I’ve always accepted – it’s hard from accounts to tell the diference. I’ve never denied that – only my opponents on this issue make that claim. I’ve always accepte that the reality is that the tax gap is of course in a range
But given that the scale of the claims has undoubtedly risen the chance they’ve been used to defer tax and reduce tax rates by artificial abuse seems to me to be highly likely
And if that were not true – just suppose – it would still mean tax was not being paid as expected – which is my definition of the tax gap – meaning reform is needed
Either way, I’m right
It seems the Telegraph’s not having a good time of things:Jeremy Warner has a really slapdash attempt at criticising Krugman (Krugman’s delighting in the further publicity).
And I still want to know what the Adam Smith Insitute has to do with Adam Smith – Denham and Garnett in their book on British think-tanks found nothing but the Scottish origin of its founders.
Interesting given that the key figures at the ASI seem to be Irish….
I’ve been attacked by Tim Worstall a couple of times at Angry Bear (which reprints some of my blog posts) and I can say with certainty that Adam Smith’s work holds up a whole lot better than the stuff Worstall writes.
Richard
You and others have hit raw nerves exposing the hyper-rich muggers and vandals. We can expect more from the likes of Worstall and for it to be coordinated.
Academic fronts, pressure groups, “bought” politicians, and captured regulators, working in concert to deceive and frighten the ordinary citizen.
There will be “Laffershite” (pardon my Anglo-Saxon) reports from the academics, paid for by hyper-rich muggers and vandals using mules like TPA. These reports will be used by corrupt politicians to do nothing while hapless regulators take the heat.
Keep it up.
Dave
“Deferred tax is an indication of the success companies enjoy in avoiding tax using legal tax loopholes that defer their tax liabilities”
Deferred tax is a complete red herring – it is irrelevant to the tax gap. And you’re wrong on its effects too – it is nothing to do with deferral of tax liabilities in the sense commonly understood (which you obviously play on: “deferral – ooh, something fishy”). It relates to timing differences between accounting and tax treatment. It does not relate to dodgy tax treatment.
If,as is the case in the UK, you have a 100% write off of the first capex of £100,000 then you are going to get deferred tax as the depreciation in the books is over a substantially longer period.
And having looked at the reports you cite in your reply, I still cannot find you quantifying the effects of CA, R&D, DTR etc.
See my reply to JayPee just now
And then stop wasting my time with pedantic nonsense – you’re concentrating on a tiny number where the answer is bound to be in a range as I’ve never denied so you can deny the much bigger issues – including the crassness of much of HMRC’s estimating process – which they admit is bound to produce unreliable estimates
Now why would you want to do that?
Are you in favour of tax abuse? Could that be it?
As I have commented before, my belief is that your estimates, needing to be shown to be careful in data and analysis, are in fact relatively conservative and limited. Given the scale of money movement we do not know about and its velocity it is likely to be very much worse.
I accept your point
Worstall has written no fewer than six blogs about you in one day. To me this points to an unhealthy obsession.
Why would one man want to spend his days responding to every utterance of another man?
Maybe he knows I’m right
And he’s very, very worried