Bank Holiday bonus post on taxation


We are, as everyone knows, having a good hard look at our taxation system at the moment. Something that would be most useful is if those engaging in that debate would read through the papers in this blog post.

There is always a trade off between raising the necessary money to keep the ship of state in sail worthy condition and the distortions caused by those taxes: as well as the future growth which those taxes will prevent. There are, however, a few basic lessons we can all learn about what those trade offs are. More, that among those trade offs there are actually a few free lunches. We can have both faster growth, less distortion and the money needed for the State by changing the mix of taxes.

The theoretical literature predicts that most or all of the burden of corporate taxes is passed on to workers. Here are five recent empirical studies that demonstrate the point.......It might be argued that since all taxes generate distortions, there's no particular reason to object to corporate taxes. But it turns out that corporate taxes are among the most damaging policy instruments in a government's toolkit. The optimal tax mix is heavy on consumption taxes, light on corporate taxes, and somewhere in between on personal income taxes.

I very strongly recommend you to read this and to disseminate the information therein.

So, anyone got any ideas about how to get those inside the Treasury to take a peek?