And the quote of the day is this one, via The Guardian newspaper and Professor Rowland Atkinson of Sheffield University, author of a two-year study of the super-rich in London.
“You can argue that the rich are a tax on everybody [else] in London”
Tax treaties are an arcane but important part of the international trade and investment system. When a business from one jurisdiction invests in another, the question then arises as to which jurisdiction gets to tax which bits of the income that the investment generates. So countries have for years signed Double Tax Treaties or Double Tax Agreements (DTAs) with each other, to sort out these and other questions. Since the global treaty system began to emerge (after Austria-Hungary signed one with Prussia in 1899), the core aim of the system’s designers has been to make sure that multinationals don’t get taxed twice on the same income: so-called ‘double taxation’. Countries sign them because they think they will attract (and smooth the flow of) inward investment.
This will make their country more ‘competitive,’ the thinking goes.
All of which may sound like perfectly reasonable ideas. But of course, beneath these reasonable ideas there’s a world of possible mischief.
We’ve been using a term, the Competitiveness Agenda, to describe a pernicious ideology that’s emerged almost under our noses. As it’s been described:
“The Competitiveness Agenda involves special pleading to bestow perks (such as tax cuts) on Capital and its owners, on the basis that if they aren’t pampered they will flee to other more hospitable jurisdictions. (Whether they would actually do this is another matter: the point here is that the scaremongering is often effective in extracting subsidies for Capital.)”
In a profound way, this agenda is one of the most powerful engines that has been driving the Washington Consensus, and even neoliberalism itself. Soundbites such as “we wouldn’t want to become uncompetitive” are used as trump cards to destroy opposition to policies that shower goodies on capital – and few people raise voices are ever raised against such arguments — even though the whole concept is, as we and many others have demonstrated, populist, economically illiterate nonsense.
We haven’t yet focused very hard on the question of who is pushing this agenda. So here is a starter pack with some preliminary answers.
Recently we posted an article entitled New studies: do ‘competitive’ corporate tax cuts boost growth? – to which the answer was a qualified ‘no.’ Well, now we are delighted to host a guest blog by Prof. Nikolay Anguelov of the Department of Public Policy, University of Massachusetts, Dartmouth, who has produced an important new working paper looking at this question. Entitled “Lowering the Marginal Corporate Tax Rate: Why the Debate?” it provides a range of further evidence and insights. (This article will be permanently stored on a section of our site called The Harms.)