Long standing tax avoidance advocate Roberta Maas has written the first part of what she suggests might be a two part review of my book ‘Cashing In by Murphy Richards’ (RRP £1.83 on Amazon).
Now Roberta and I are unlikely to agree. As she is a woman, she has probably been on Newsnight and the Today programme. Being a man, I have not.
But she does actually say something nice about the me:
Murphy appears to be some sort of zealot.
But then she ruins this compliment by calling me ‘facile’:
But back to Murphy’s book. I found it very facile – although it is obviously not aimed at anybody with common sense, let alone anybody who knows anything about tax. It mainly appears to be Murphy plugging his other books; he genuinely seems to be willing to say absolutely anything as long as you plug his book.
If I were actually being facile, I would probably launch into some ad hominem attack drawing erroneous conclusions of what she said and just descend into childish insults. So let’s deal with that facile point, which is completely wrong because Roberta is an immoral tax avoiding bitch who says that we should reintroduce slavery.
Roberta discusses where I should be paying tax on sales of my best-selling book ‘Cashing In by Murphy Richards’:
What is the fair share of tax to be paid in the UK on Murphy’s book? It was presumably written in the UK, published by a large US company, and sold to me by a Luxembourg website that I clicked through to from my house in the UK. Which country should fairly get the tax on my £1.83 (or rather on whatever profit has been made out of my £1.83)? Or should it be divided amongst the US, Luxembourg and the UK, and if so, how? The tax rate in the US is 35%, that in Luxembourg is 28.8% (effective) (I suspect actually that Amazon Europe are based there because it has a low VAT rate rather than a low corporate tax rate) and it is 23% in the UK. Murphy appears to think that it is fair for the UK government to get the tax. It is not clear to me why.
Well let me explain this to you Roberta, because you’re the one being facile.The book was indeed written in the UK. I will pay tax on it. But I shan’t say in which country.
It was commissioned by a UK company, from the UK. It was produced here by them. And I suspect most copies will be sold on Amazon.co.uk where they say the book is only available for download in the UK. Now if that does not prove a link with the UK, what does Roberta? So the UK government should definitely get all the tax.
Roberta thinks that because Amazon’s sales occur outside the UK, as is most of their labour and capital, we should allocate some profits outside the UK! She also appears to think that we should somehow take into account where the capital behind Random House UK is located to assign some profits there!
What a facile idea that is! Nobody in their right mind would suggest apportioning the profits by reference to where the sales, labour and capital of a business are! Only a facile idiot would suggest such a thing!
But if you ignore where Amazon and Random House are actually based, and any sensible person who isn’t being facile would do so, you would conclude that I should receive the full retail price of £1.83. Instead, I only get a few pence.Why is that exactly? Is it because they could have got a chimpanzee to write a more coherent book about taxation? Obviously not.
The main reason is that Random House and Amazon don’t actually exist outside of my head. And even if they did, they didn’t add any value to my book whatsoever. Except produce, publish, promote and sell it, of course.
I suspect few would agree with Roberta’s facile suggestion that we should apportion the profits according to where real economic factors are. Dear reader, you might think that Roberta’s reading of my book is similarly facile.
Seeking to analyse a transaction in the way Roberta does – by using a principle-based approach applied to the transaction viewed in a realistic and reasonable manner – as is done in transfer pricing – is never going to result in a basis of taxation I’m happy with. And my desired outcome is to see unitary taxation introduced.
Unitary taxation looks at economic drivers – sales, labour, capital – and where they are located. It apportions profits to the place where those things are, not according to where the economic reality of a transaction arises.
So in the case of the sale of ‘Cashing In by Murphy Richards’, as I have argued above, we would see all of the profits allocated to the UK because only a small fraction of Random House’s and Amazon’s global sales, labour and capital are actually based in the UK.
There is no argument in unitary taxation that one event suggests a profit on a transaction is in one place or another. There is instead a fudging of economic reality and then apportionment of profits on a basis that is made up of ratios that I reckon must apply to any business in any industry in any country in the world.
Unitary taxation just assumes that a group of companies exists and that legal contracts are little more than a sham.
So it ignores all the complexities of reality by using an apparently neat and comprehensive, yet superficial and simplistic, formula in its place. Now, does that sound facile to you?