Head of Research at the ASI, Ben Southwood, discusses the £130 million in corporation tax that Google has agreed to pay, and what the potential benefits are of scrapping the tax altogether:
Investment – into tools, infrastructure, skills, and better organisation – is what makes us more productive. Higher productivity means more goods to go around and higher living standards. Most economists, across the ideological spectrum, agree that capital should ideally not be taxed at all; in fact the result most convincingly showing this is the “Atkinson-Stiglitz theorem”, after famously progressive Anthony Atkinson and Joseph Stiglitz. Corporation tax flies in the face of this, reducing returns and hence disincentivising investment.