This election suffers hugely from a lack of economic innovation in terms of the direction of policy within the two main parties. For example, Labour is suggesting to raise the corporation tax level to 26%. Although, the treasury has received a 21% boost in revenue from the lower corporation tax rate. Whereas, the Conservative are proposing economically illiterate policies such as the immigration skills charge which could take vital cash away from much could need investment which fell by 2% in 2016. However, all the current proposals are not radical enough to address the current problems, therefore, within this article it will be proposed that corporation tax should be abolished.
To establish the case for abolition, the relevant political scenery must be explained. Currently, within both the US and UK, there are proposals to decrease the rates in their perspective countries. Within the US, the move would be radical, as under the current settlement business have 35% of their profits deducted. Whereas the proposed plans would reduce the rate to 15% with the aim of encouraging investment and preventing the offshoring of profits. However, within the UK, Theresa May has promised to reduce the rate to make it the lowest in the G7 which much like Trump’s promise is with the aim of providing investment.
Yet, with all the benefits of the current settlement within the UK, big business is continually scapegoated for tax avoidance. This is, to some extent correct, as six out of the country's 10 biggest multinationals, including Lloyds, British American Tobacco and Shell, didn't pay any corporate tax at all in 2014. Furthermore, as Margrethe Vestager, a European commissioner found out when dealing with Apple and Ireland, the tax is a deliberate walk way to attempt to achieve exemptions, accidental loopholes and, in some cases, special sweetheart deals.
Therefore, instead of merely lowering the rate it must abolished to prevent the pro-business, anti-market mentality of politicians but also anti-capitalist mentality of the masses and a new method must be found.
There are, in fact, many ways in which governments can keep business in check. The first, could be, although not favored by many- myself included- environmental and labour regulations. This would be least appealing to governments as it does not provide revenue but it would a feel-good agreement for the anti-capitalists.
The second option could be a flat tax on income, land value tax and higher rates of VAT. The second settlement would be the most beneficial, as the IEA found with regards to the flat rate of income tax as the 3% in society would be better off, yet, the incomes of those at bottom would rise 26%. Therefore, producing vast amounts of taxable income as well as providing the grounds for consumer activity and investment as well as an incentive for business to increase wages.
Thus, although the decreased rates are welcomed, they are not radical enough to address some of the ill of society through the market.