The New Economics Foundation / Tax Justice Network mythbusters series has continued with the next one being featured in an article on tax competition in The Guardian, co-authored by Ellie Mae O'Hagan and Nicholas Shaxson. It's subtitled "Tax 'competition' — in which countries fight to lower taxes — not only hits the poor, it doesn't even help the economy grow." Which is exactly right.
It starts like this:
"A myth we're repeatedly told is that a country must be "tax competitive" in order to support a successful economy. It sounds so reasonable. We're taught that competition between companies keeps them on their toes and pressures them to produce better products and services, at better prices.
But here's the problem: competition between companies in a market bears no economic resemblance whatsoever to "competition" between countries on tax. They are utterly different economic beasts."
Now read on. This is one of the most important myths out there on international tax.
The published article is somewhat shorter than the original. Here's one bit that was cut out, but that we'd like to highlight:
"Let's tackle the economic illiteracy behind those calls for a ‘competitive' tax system. If you write about it, always put ‘competitive' in quote marks, to signal that you understand. And when a politician wheels out the ‘C' word - get them to explain exactly what they mean. Or run for the hills."
Because when it comes to tax competition can only spell one thing - and that's trouble for ordinary people. Only the rich win in this game, and that's precisely why they promote it.
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I think the tax Justice website maintains that social outcomes are better with higher taxes:
. We do not argue generally for high or low taxes (that is for voters to decide) but we note the often better human development outcomes in higher-tax countries and oppose the demonisation of tax that is fashionable in some circles.
I’m happy to say we do think that – yes
Who pays the higher levels of tax? The individuals as well as the corporations? Where would the cut of point be for the lower / higher rate band be if we’re all expected to pay more tax.
Nioe for those funded by taxpayer if there is more money coming into the paws of central govt….not so nice for those who may have to pay more. I wonder if a research body in recepit of taxpayer funds e.g. from the EC & th Department for Business, Innovation and Skills has ever said, “….no don’t give us this taxpayers cash. Simply don’t take it from the workers….”
Have you ever wondered why pariah states apart it is the more highly taxed states that are wealthiest?