{"id":18374,"date":"2012-11-28T08:41:52","date_gmt":"2012-11-28T08:41:52","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=18374"},"modified":"2012-11-28T08:41:52","modified_gmt":"2012-11-28T08:41:52","slug":"john-kay-supports-unitary-taxation-in-the-ft-this-is-the-solution-to-the-current-corporate-tax-crisis","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/11\/28\/john-kay-supports-unitary-taxation-in-the-ft-this-is-the-solution-to-the-current-corporate-tax-crisis\/","title":{"rendered":"John Kay supports unitary taxation in the FT: this is the solution to the current corporate tax crisis"},"content":{"rendered":"

As John Kay notes in the FT this morning<\/a>:<\/p>\n

Many multinational companies that appear to be operating successfully in\u00a0Britain pay little or no corporation tax\u00a0in this country. It is not difficult to understand why ordinary people on wages and salaries, and small British companies that pay tax at the normal rate on their profits, are angry.<\/p><\/blockquote>\n

As he\u00a0correctly\u00a0concludes, little can be done to mend the existing international\u00a0corporate\u00a0tax system: it is fundamentally\u00a0intellectually\u00a0flawed.<\/p>\n

The consequence is, as he notes, that an alternative system is now needed. Despite\u00a0George\u00a0Osborne's hopes, and the OECD's claims, tinkering with a failed mechanism cannot ever now make it work. As Kay notes:<\/p>\n

The states of America quickly experienced the problems encountered in a highly integrated economy with many different tax collectors. Many states dealt with the issue through profit apportionment. Instead of attempting to estimate what fraction of a company\u2019s total profit was earned in California and what amount in Wyoming, apportionment states taxed corporations on a share of their aggregate US profits corresponding to the share of their total US activity that took place in the state. The most common basis of apportionment is the \u201cMassachusetts formula<\/a>\u201d, which gives equal weight to sales, payroll and assets.<\/p><\/blockquote>\n

This is, of course, unitary\u00a0formula\u00a0apportionment\u00a0taxation that I and the\u00a0Tax Justice Network have been promoting for some time<\/a>. As Kay also notes:<\/p>\n

Some states, notoriously California, attempted to apply this principle on a global basis. Through more than a decade of aggressive lobbying by British multinationals, this arcane issue became a major cause of friction in Anglo-American relations. In the mid 1980s, the British claimed victory and the US agreed to limit apportionment to its own frontiers.<\/p>\n

However, the battle that Queen Elizabeth\u2019s Conservative government won had little more legitimacy than the battle that King George\u2019s forces lost to America two centuries earlier. Well conceived apportionment is the best \u2014 perhaps only \u2014 answer to the problem presented by multiple company tax jurisdictions.<\/p><\/blockquote>\n

Quite so.<\/p>\n","protected":false},"excerpt":{"rendered":"

As John Kay notes in the FT this morning: Many multinational companies that appear to be operating successfully in\u00a0Britain pay little or no corporation tax\u00a0in
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[64,78,102],"tags":[],"class_list":["post-18374","post","type-post","status-publish","format-standard","hentry","category-corporation-tax","category-oecd","category-unitary-taxation"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/18374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=18374"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/18374\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=18374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=18374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=18374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}