Tuesday, March 21, 2006

21st March 2006

Blimey, they keep on comin'. Today's 13 (count 'em) posts are again not particularly contentious, though we have the usual embarassing spectacle of Worstall attacking Polly Toynbee for her grasp of economics. His record on this is not brilliant.

In response to Toynbee's assertion:

Ernst & Young is quoted all over the rightwing press with a spurious calculation that households now pay "the equivalent of" £9,000 extra tax under Labour. Weasel words, "the equivalent of". That would be the case only if every household earned the same and paid the same taxes, rolling in business and all other taxes. But that's nonsense in this wildly unequal society.

Worstall says :

Err, all taxes are paid by households. Just as all income flows, in the end, to households.
This is an obvious misreading of her point. I think what has happened is Worstall knows that people often make the mistake of saying that businesses pay taxes, when in fact at the end of the day only people can pay taxes (though it's more complex than this, obviously), and he hasn't bothered to see if Toynbee has made the mistake. Her point is of course that households pay different taxes, and earn different amounts of money. In other words the 'average' is not representative (as in fact is surely the case).

To her point that the corporation tax is the lowest in Europe he offers this:

Given that the amount raised in Corporation Tax has been rising, difficult to see that NuLab cut anything but the rate, isn’t it?
No, it isn't difficult. The amount raised by corporation tax could be rising for three reasons. Most obviously that the burden of it has been raised, which is what Worstall wants to argue. But also of course the amount raised will rise with a) an increase in the rate of taxable profits, and b) an increase in inflation. Worstall provides no information for us to come to any conclusions.

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