Sven Giegold, yes, everyone’s favourite Green, German, MEP, tells us something that shows he’s not thinking. This being true of everyone who tries to make the same point in fact. It’s about this level playing field stuff. Hmm, well, OK, I don’t agree there anyway. I worry about the consumer and if they benefit then who gives a shit? There are those that don’t agree and fine, it’s differences of pinion that make a market.
However, when we move to demanding a level playing field about corporation tax then the argument becomes wrong. Yet that is what is being demanded here(from PR email):
The inclusion of effective provisions to guarantee a level playing field on financial services rules between the EU and the UK after Brexit will be of high importance as we consider our agreement to the compromise found on Christmas Eve.
Currently, the text contains only weak provisions on corporate tax rates…
This being something that Our Sven thinks is a very bad idea. But corporate tax rates cannot be an example of a differently leveled playing field. Well, not if we’re going to be consistent overall that is.
Why are we so worried? In a nutshell, our most serious concern is due to the fact that taxation is excluded from the rebalancing provisions in the Brexit Deal
This is worrying as a whole number of tax rules which were proposed by the European Commission and supported by the European Parliament are currently waiting for approval by the Council of the EU. As soon as these new European tax laws will come into force, they will by no means be covered by the deal. The same applies to the still outstanding common rules on minimum taxation of corporate profits
So, as we can see, there’s a definite attempt there to say that a lower corporate taxation rate is an unfair unlevelling of the playing field. But this rather bumps up against other things that are said about the taxation of business.
Firstly, the claim that no one ever didn’t invest because of the taxation of the profits from that investment. That’s something Warren Buffett has said and it’s still damn stupid. Of course people look at the post-tax return – we’d not have tax-free municipal bonds trading at about the same yields as Treasuries if this were not true.
Then there’s this idea that the taxation of profits isn’t a burden to the companies. Because, you know, it’s of the profits. But if not paying tax on profits is a benefit to the company – that unlevel playing field – then clearly the tax is a burden. And why are we trying to burden businesses then?
Finally, it runs smack into this idea that it is only the company, or perhaps capital – ie the shareholders – who carry the burden of corporate taxation. If a business as a whole gains from paying lower corporate taxes, gains some competitive advantage, then this means the business is going to be bigger. That’s the very meaning of that unlevel bit. If that’s so then more people get employed then, don;t they? Which means – because the tax reduces that biggerness – that some part of the burden of corporate taxation falls upon the workers.
This very insistence that no one be able to gain an advantage through lower corporate taxation is the proof we need to show that most of the rest of what we’re told about corporate taxation is untrue.
But then Germans, Green MEPs and all that, eh?