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A morally suspect view of corporate taxation

Summary:
We’re told that organisations - the statement is companies but organisations is meant - that add value to lives in Britain should be taxed for doing so. This strikes us as a morally suspect justification of taxation:“Any business that takes money from British customers should contribute to the schools, hospitals, roads and services those customers need, by paying their share of taxes. Far too many are not,” he said.A business makes a profit by adding value - that’s what profit is, the value added. It is also true that what we all consume is value added - that’s the definition of consumption in the GDP calculation, the total value added in the economy. It is also true that people only purchase something if they believe that the value on offer is greater than the price they must pay - the

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We’re told that organisations - the statement is companies but organisations is meant - that add value to lives in Britain should be taxed for doing so. This strikes us as a morally suspect justification of taxation:

“Any business that takes money from British customers should contribute to the schools, hospitals, roads and services those customers need, by paying their share of taxes. Far too many are not,” he said.

A business makes a profit by adding value - that’s what profit is, the value added. It is also true that what we all consume is value added - that’s the definition of consumption in the GDP calculation, the total value added in the economy. It is also true that people only purchase something if they believe that the value on offer is greater than the price they must pay - the consumer surplus.

So, a profit making business is, by definition, adding value. Any consumer is also gaining further value they don’t have to pay for. For this temerity all such companies must pay more tax? This makes neither moral nor logical sense.

That those who then draw incomes be taxed, why not? The broader shoulders pay more than in proportion perhaps. Vast dividend or interest streams, CEO salaries, pay a higher rate of tax, this could be fair even as we might argue that current rates are more than what might be fair.

But why would we insist upon taxing the organisations that make us rich for being the organisations that make us rich?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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