A case of the corporate cash piles can be treated with unitary taxation

The FT has reported this morning that:

The pile of unspent corporate cash that has built up since the start of the financial crisis is being held by an increasingly concentrated pool of companies that will be crucial to hopes of a pick-up in business investment to stimulate the world economy.

About a third of the world’s biggest non-financial companies are sitting on most of a $2.8tn gross cash pile, according to a study by advisory firm Deloitte, with the polarisation between hoarders and spenders widening since the financial crisis.

The reason this is currently happening is that the tax system encourages it. It is the sign of a stupid tax system that encourages piles to grow.

So I, and the Justice for Taxes Network, have invented unitary taxation to solve this problem. This taxes multinational groups of companies as a single entity on the basis of where their assets are, amongst other factors.

Given that these MNCs’ assets, these massive piles of cash, are in tax havens, these companies will be recording a similarly large amount of their profits in these tax havens. Up to one third of their profits, according to my favoured unitary taxation formula.

I can’t imagine how unitary taxation would not deter these companies from maintaining their grotesque piles of cash in low tax jurisdictions.

Neither can I imagine how taxing investment within a country (as opposed to giving relief for it) would discourage investment in jurisdictions with higher tax rates.

Another compelling case for unitary taxation.


3 thoughts on “A case of the corporate cash piles can be treated with unitary taxation

  1. Murphy, as you say there are appropriate solutions for all piles.

    When I accrete piles, I apply Germaloids.

    When the neo-liberals who own huge corporations accrete piles, we need to apply your remedy of unitary taxation.

  2. I know you are a real life accountant, you said so in an earlier post. I see somebody over on your parody web site pointing out that because balance sheets need to ummm balance, that the massive piles of cash are probably offset by massive amounts of debt run up by the corporate sector as interest rates are quite low at the moment.

    I appreciate that this might be neo-liberal propaganda and that neo-liberals use sophistry to torture the rules of accounting to manufacture more propaganda to be used for neo-liberal sophistry. But this can’t be right can it?

    • Stop attacting Murphy !
      He ist the most intelligent tax expert of our time. How dare you speaking to him like this.
      Certainly, he has no time to talk to you as he already has countless jobs, including being adviser to the Vatican, the UK, the OECD and the Norfolk Dance Association.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s