Phligm Phlagm 2

[philmophlegm]

Cutting Corporation Tax to 10% wouldn't just be a good idea because it pisses off the French.

There are ten times more galaxies in our universe than we previously thought. That seems a pretty big error. Did some cosmologist put a decimal point in the wrong place?

What if the EU tried to stop us trading with them completely? Well, it's been tried

Comments

[allaboutweather]

Baroness Scotland sounds like the British Michelle Obama.

[wildeabandon]

Re: the Corporation Tax link, I'm probably about to demonstrate my economic illiteracy, but why is tax on labour output to be preferred to tax on capital output?

It seems to me that tax on labour would be a stronger disincentive, because you can very easily convert not outputting labour to leisure, whereas there seems no comparable benefit to not producing output from capital.

[philmophlegm]

Not really my area of economics, but the general argument against taxing corporate profits uses any or all of the following:

1. 'Profit' is a somewhat artificial, somewhat malleable concept.
2. The incidence of the taxation falls on individuals anyway - some combination of employees, shareholders, customers etc.
3. It's easy to find ways to avoid it.
4. Collecting it tends to be inefficient.

[wildeabandon]

Oh, yes, that's all familiar and makes sense, and I accept that taxing corporate profits isn't necessarily an effective way of taxing capital income (although I think the problem of finding a system of taxation which makes it clear where the burden falls, can't be easily avoided, and is efficient to collect is a hard problem, and becomes harder when you add the constraints of wanting a certain level of progressiveness* and wanting to minimise disincentives to production).

I was specifically querying the final line of the first paragraph - "Similarly, given that we are all economically literate, we know that capital income should be taxed rather more lightly than labour income, if it should be taxed at all." - which is a more general assertion, and not one that I've seen made before.

*Our assessment of the optimal level here may differ, but I'm sure we can agree that there is an optimum

[wildeabandon]

I'm not entirely convinced by the "productivity has fallen - that's a good thing" article. The argument seems to be saying that GDP falling will cause a drop in either employment or productivity, and that of the two, a temporary reduction in productivity is better because it shares the pain.

But is the causality really that way around? Doesn't a reduction in employment or productivity cause a decrease in GDP? Does the actual cause of those reductions have the same relationship that more of one will mean less of the other?

[eledonecirrhosa]

An economics 101 question for you: Doesn't "UK companies must increase productivity?" mean "UK companies' employees must do more work for the same pay"?

I'm mainly asking because my workload has doubled over the past couple of years, to the extent that it made me ill. So I'm now very twitchy about implications that the whole country ought to follow my example! :-)

[philmophlegm]

It could mean that the same number of employees produce more because they work harder or simply because they have better tools or work smarter. So not necessarily "more work for the same pay".

I'm generally sceptical about using "productivity" as a useful measure in economics. It's too vague a term and too easily affected by other factors. Is a supermarket that has got rid of serviced tills and replaced them with self-service really more "productive"?