WHY COMPANY’S SHOULD NOT PAY PROFITS TAXES – #1

The news of today is that  Sir. R. Branson of Virgin has spent a lifetime avoiding paying any more tax than required by law.  Any one person or company that I know, or have heard of, also subscribes to this philosophy concerning tax avoidance which, of course, is legal. In the article in October 14 edition of the DAILY MAIL, Branson offers some justification for his actions by stating that “The (Virgin) companies…have created tens of thousands of jobs and created hundreds of millions in tax….and will continue to do so…” This is, possibly, the key to understanding why the UK is slowly reducing corporate profits tax from 26% in 2011 to 21% by 2014, however, this might help a bit but my final solution is outlined below:

Corporations are not merely entities, but collectives of people investing money for profit. When the share price rises and the investors sell their shares they normally pay capital gains taxes; if the companies issue dividends, then the investors pay income taxes: taxing the vehicle (the corporation)  that produces these taxes, results in the investors either paying double taxation or in an exercise in futility: The Canadian Government allows Canadian taxpayers to take a dividend income allowance for dividend income earned from Canadian companies from their total income to offset the effect of double taxation.

CLEARLY ALL COMPANY PROFITS TAXES SHOULD BE REDUCED TO ZERO and never mind competing with countries that have lower taxation or free trade zones. IF countries are concerned that foreign investors will not be paying taxes within the country of operation, then a source tax could be implemented on dividends upon payment to the shareholders, this could result in companies re-investing profits in the counties where they operate, to avoid paying dividends, however in this case the end result should be to increase the value of such company’s shares; either way the incentive to re-invest profits with the country of operation would be

The NET result to any country that implements such a policy will be an explosion of national and foreign investment in their country, where Branson’s  claimed benefits of Virgin’s value to the UK in jobs and employee/corporate operating taxation would expand exponentially. COMPANY’S ARE A CATALYST for creating employment, and a multitude of taxes from employment taxes to property taxes.

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