One of the more annoying things we hear from the left side of the political aisle is that "companies must pay more tax". Given that companies do not pay tax, ever, cannot pay tax, ever, this is of course the call of the ignorant. But explaining how it is that companies, while they definitely hand over the cheque, do not actually carry the burden of a tax is difficult and can be complex.

So now that I've found this excellent and simple explanation of how this all works out I'll point you to it. Here.

Do note a couple of other things that come with this argument. For example, the Financial Transactions, or Robin Hood, Tax that is so popular among the economic mouth breathers suffers from exactly the same problem. Yes, sure, it would be lovely to "make the banks pay" but it just won't be them that does, they're companies, they cannot. It will be us the consumers who pay the tax.

One little point about that paper though: I'm afraid that in proposing their alternative tax system they've forgotten something that we here in Europe learned a long time ago. They want to impose a sales tax of 17.5% (of goods value, or 15% of tax and goods value). I'm afraid that doesn't really work because, shocking as I know everyone will find this news, not everyone is entirely and openly 100% honest.

Which means that there's a limit to how high you can make a consumption tax if that tax is levied just at the final point of retail sale. And 17.5 % is, I would suggest, very much above that limit. In order to be able to have such a high rate you need to make it a VAT: so that it accumulates at each stage along the production and distribution chain, lowering the temptation not to collect it at that final point.

But, the reason I draw your attention to the paper is that the first couple of pages give a very clear and excellent description of how and why it is that it isn't the company that pays corporation tax. It's largely (and even more so in a smaller more open economy like the UK) the workers that do.