Date: 11 Jan 16
By: Frank Gue, B.Sc., MBA, P.Eng.,
Burlington, ON Canada L7R 2B5 905 634 9538
For: Editors, The Economist, London, UK
Re: Corporate social responsibility, Jan. 2 edition
Yet again, politics and populism stand squarely in the way of economics when means are sought to reconcile Corporate Social Responsibility (CSR) with tax inversion (the practice of moving corporate income to low-tax countries).
The most efficient, fairest, and transparent tax is on consumption, accompanied by a progressive income tax regime in which “a buck is a buck” regardless of its source. This has evolved into proposals such as zero tax on corporations (since corporations don’t pay taxes anyway, their consumers do), progressive taxes on consumption, and near-confiscatory taxes on “the 1%”, a la Piketty. This would eliminate the powerful incentives for inversion.
But, in this real world, many politicians hate the accountability that comes with transparency; and so don’t hold your breath until some national entity invites riots by imposing, say, a 30% consumption tax and a zero corporate tax. Some other way will have to be found to comply with the principle so famously stated by Louis XIV’s Finance Minister, Jean-Baptiste Colbert, who declared that, “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
But, I say again, don’t hold your breath.