
Brexit: George Osborne pledges to cut corporation tax - bontoJR
http://www.bbc.com/news/business-36699642
======
peteretep
Maybe better to link to the free:
[http://www.bbc.com/news/business-36699642](http://www.bbc.com/news/business-36699642)

~~~
dang
Ok, we changed to that from
[http://www.ft.com/cms/s/0/d5aedda0-412e-11e6-9b66-0712b3873a...](http://www.ft.com/cms/s/0/d5aedda0-412e-11e6-9b66-0712b3873ae1.html).
But it's still too purely political an article for HN.

------
wrong_variable
This is going to be similar to the Kansas Experiment but a scaled up version.

Can Britain really afford to cut taxes ? It has already cut services to the
bone, while running a large twin deficit.

Ireland can afford lower tax rates because its such a small country - Dublin
is nothing like London and can survive on low investment, and Ireland does not
have complex public health service like the NHS.

Also lower rates really doesn't mean anything if you are unable to access
customers. What Brexit represents is a demand shock to British business, a
kind of deflation that has caused the collapse of society in the past.

A market of 55 million people is too small for doing any serious 21st Century
type globalized business.

~~~
UK-AL
If it gets more companies here and more people employed, it can actually
increase the amount of tax.

~~~
Noseshine
"Lower the taxes of businesses so that they can invest" \- That's been the
theory behind decades of such experiments in many countries. Worked out great,
we all can see how the money keep s"trickling down".

That theory is actually very un-capitalistic: It assumes that only a few
people know what is best for the majority. Because it's built into the system
(and with a certain perverse logic, not at all irrational of course) that
those who've had success are more likely to know how to have more of it.

So the system is actually incredibly anti-risk with money - in an age when
"money" surely is not a limiting factor. Not overall - it is because a few
have so much they don't find good investment opportunities (when you have
billions, only hundreds of millions of opportunity at once make sense to even
look at), but for the vast rest of us it is.

So it becomes a tautology: The system is set up to make it far more likely
that the successful succeed more, and that is then used as justification for
itself, "see, it's too risky to give resources to the inexperienced, data
prove it". So we get ever more concentration of control ("money", "power" are
indirect terms, "control" is what it comes down to. Th eproblem of the 0.01%
isn't their jets, their yachts, their mansions, it is their control of too
much of economic life at the expense of most everyone else.):
[https://www.youtube.com/watch?v=QPKKQnijnsM](https://www.youtube.com/watch?v=QPKKQnijnsM)

~~~
nagrom
> That's been the theory behind decades of such experiments in many countries.
> Worked out great, we all can see how the money keep s"trickling down".

Do you have an example? I don't know of any serious economist that backs
trickle-down theory except as a strawman, but many point to lower and flatter
taxes that can be used to support market-based economics as enabling high
productivity. The obvious country that backs this - the US - has done pretty
well from it, as have a multitude of smaller nations (Hong Kong, Switzerland,
Singapore, the UK, Canada, Australia).

Some countries with higher taxes but also based around a free market economy
have done well - Germany is the prominent example and Sweden and Finland. Some
have succumbed to corruption and are failing, or on the brink of failure
(Italy, Spain, Greece).

The opposite - high taxes, lack of a market and extreme governmental
intervention - has certainly been tried in many, many countries. Most (all?)
have failed badly in a way that has destroyed generations of productivity
(North Korea, Cuba, The Soviet Union, Venezuela, etc.) and really fucked-up
their societies that way - usually accompanied by secret police squads, the
crushing of liberties and very low quality-of-life.

> That theory is actually very un-capitalistic: It assumes that only a few
> people know what is best for the majority.

That's actually very 'capitalistic' \- the man with the capital makes the
ultimate decisions as to where it gets invested. Perhaps you meant democratic?

I'm not convinced by the rest of your argument either. The capital owner
usually employs many people to invest portions of the capital into smaller
investment opportunities - it's not like Bill Gates has to invest all of his
fortune into just one opportunity is it? If anything, this site is based
around the idea of giving capital to the unexperienced to start businesses
with promising ideas - that's pretty much the exact theoretical definition of
angel investors, incubators and VCs.

One might argue that these institutions suffer from cronyism and don't do
their job as well as they should, but their job is after all to re-allocate
accrued capital to value-producers in a risk-balanced way across a broad
portfolio which, I think, is what you seem to want to advocate.

~~~
Noseshine

        > Do you have an example? 
    

A not too large and not too small and recent example - using the whole of the
US is more muddled also because of larger timescales which include the ability
to blame other developments - see Kansas.

------
jamiethompson
The kind of businesses that they're worried might flee are the large
corporations that evade almost all taxation anyway. To announce something like
this right now is as foolish as Theresa May refusing to guarantee the status
of non-British EU nationals currently living in the UK.

I am ashamed of this country and am applying for Polish citizenship as soon as
possible.

~~~
tonyedgecombe
It's just a very loose signal to business that they shouldn't rush out the
door, the UK might be anti-EU but it isn't anti-business. Note there was no
mention of a date.

Theresa May isn't the prime minister yet, nor head of her party. Article 50
hasn't been called, negotiations haven't started.

I think it's a bit early to start feeling ashamed.

~~~
jamiethompson
A vote to leave the EU secured by means of misinformation that caused areas
like Wales to literally vote against their best interests? Misinformation,
lies, which were almost immediately revoked by the perpetrators? I think there
is much to be ashamed by and worried about. Personally I intend to secure a
future for my children as EU citizens, and that appears to mean that we must
now leave the UK.

~~~
tonyedgecombe
I was strongly in favour of remaining, I just think we have to be pragmatic
about where we are now.

~~~
DanBC
[https://twitter.com/TimHarford/status/749874385490771968](https://twitter.com/TimHarford/status/749874385490771968)

> So if we all hold hands and say "I believe in Brexit, I do I do!" it will
> become a brilliant idea? Tinkerbell economics.

~~~
tonyedgecombe
No, it was a terrible idea, I just feel quite strongly we have to get on with
life rather than wallow around.

------
peteretep

        > would be seen as in effect the start of Brexit
        > negotiations
    

No, as much as I was pro-Remain, and as much as I have sympathy for their
perspective, the start of Brexit negotiations was this:

    
    
        > "No informal EU talks before Britain invokes Article
        > 50, says Germany"[0]
    

[0] [http://www.reuters.com/article/us-britain-eu-germany-
idUSKCN...](http://www.reuters.com/article/us-britain-eu-germany-
idUSKCN0ZD132)

~~~
lagadu
You're saying they shouldn't? Seems a fairly straightforward strategy: by
calling them out on it, they either force the UK to step up and invoke article
50 or to have their bluff called out. Both outcomes weaken the UK's ability to
negotiate and remove the threat of leaving from the table as a weapon the UK
could use.

Seems like a decent plan, why would they possibly want to negotiate something
with the UK, only for them to potentially make a heel-face turn and not leave?

In other words, they have very little, if anything, to gain by negotiating
anything before the UK makes a move.

~~~
crdoconnor
>You're saying they shouldn't? Seems a fairly straightforward strategy: by
calling them out on it, they either force the UK to step up and invoke article
50 or to have their bluff called out. Both outcomes weaken the UK's ability to
negotiate and remove the threat of leaving from the table as a weapon the UK
could use.

Which would make sense if it was the EU's primary intention is to punish the
UK for having the audacity to leave.

>In other words, they have very little, if anything, to gain by negotiating
anything before the UK makes a move.

By being up front about precisely what an exit will entail it will reduce
uncertainty about the outcome for everybody. That's a strong benefit.

If EU wants to be vindictive it can try but it probably will be economically
damaging (both to the UK and the EU). That will only serve to give Farage-
equivalent politicians in the EU enough ammunition to call for their own
referendums and before you know it the EU is no more.

Edit: disagree by all means but please disagree with something I actually said
rather than some crazy thing the leave campaign came up with or some rubbish
you "implied" from what I said that I clearly didn't.

~~~
pluma
I'm German so I may be biased, but I don't think this is punitive at all.

The UK has been using the threat of leaving as a trump card in negotiations
for decades. They've basically opted out of all major agreements yet demanded
having a say in every decision. They've basically been given special treatment
like no other EU member and still complained about the "fascist EU" taking
away their "sovereignty".

UKIP was the logical consequence to decades of telling your own people
everything that goes wrong in the UK is the fault of those evil bureaucrats in
the EU. Cameron tried to bluff in order to renegotiate the UK's special
privileges but he made the mistake of promising a referendum he didn't foresee
he would lose. He severely underestimated how much those decades of FUD had
paved the road for the Leave campaign.

In the wake of the referendum the entire UK government has committed to
following through. The result has been communicated as "a democratic
decision", not as a tentative opinion poll to aide in decision making. Nobody
has invoked Article 50 yet but everything in how the UK has handled this says
"we're going to leave".

What the UK apparently didn't expect is that the EU's reaction can be
summarised as "Good riddance; don't let the door hit you on the way out".

The UK has two options now:

1\. Follow through and renegotiate everything.

2\. Admit they were bluffing and try to handle the fallout.

Either way the brexit trump card is no longer on the table. Staying in the EU
would mean effectively giving up on all the advantages gained in previous
negotiations because nobody is going to take future threats serious anymore.
Leaving means renegotiating everything from scratch.

The UK isn't being punished. It's just having the privileges revoked that it
previously bargained for by continuously threatening to leave.

There's nothing vindictive about this. There's just no reason for the EU to be
nice to the UK anymore. How the UK is being treated now is simply a reflection
of how the UK has treated the EU until now. It's certainly not nice, but it's
not unfair. There's simply no reason the EU should negotiate anything in
advance to Article 50 being invoked.

BTW, in Germany the general appearance of the Brexit seems to be that the UK
made a huge mistake and their country is disintegrating as a result. Scottish
independence is perceived as a given and nobody sees any long-term point of
having EU companies stay in the UK unless the UK can reach an agreement (e.g.
staying in the EEA, which would mean upholding a ton of regulations the
Leavers complained about with no way of affecting them). Nobody is worried
about this setting any favourable precedent in the slightest.

And for the record: despite Leave campaigners' propaganda, Germany has its own
nationalist anti-EU movement which had previously gained a considerable
following as a result of the refugee crisis, which has hit Germany much more
than the UK). Germans don't see the EU as some Fourth Reich tool of
controlling Europe. Most Germans don't even seem to be aware of the amount of
political power Germany has within Europe. During the Greek financial crisis
the general reaction to the prospect of a Grexit was actually positive (again
with some worries about how badly Greek would do on its own). The mindset is
simply different: Germans seem to genuinely think of themselves as European
whereas Brits seem to think of Europe as "the continent" (i.e. not them).

~~~
peteretep
I think your comment assumes a cohesive government policy that simply doesn't
exist.

    
    
        > They've ... still complained about the
        > "fascist EU" taking away their
        > "sovereignty".
    

There is no "they". There are leaders of political parties beholden to
factions in their parties, only. For every nutcase UK politician and voter who
calls the EU facist, there's a French one, a Dutch one, and a German one
saying the same thing. Voter skepticism in the UK is probably higher than in
the other major EU countries but only by a fraction. Don't assume the margin
in the Netherlands or France would be massively that different, and those are
countries which already have the Euro.

    
    
        > UKIP was the logical consequence
    

UKIP is the logical consequence to the UK lacking a real far-right party. The
right-wing parties on the continent are far scarier, and generally have higher
support.

    
    
        > In the wake of the referendum the entire
        > UK government has committed to following
        > through. The result has been communicated
        > as "a democratic decision", not as a
        > tentative opinion poll to aide in decision
        > making. Nobody has invoked Article 50 yet
        > but everything in how the UK has handled
        > this says "we're going to leave".
    

You are reading different papers to me.

    
    
        > What the UK apparently didn't expect is
        > that the EU's reaction can be summarised
        > as "Good riddance; don't let the door hit
        > you on the way out".
    

No, that's exactly what Cameron said would happen - that we'd have to trigger
Article 50 the next day.

~~~
pluma
The reason I pointed out the "fascist EU" bit is because I only recently found
out the reason I kept running into Leavers who think the EU is uniquely
controlled by Germany: a quote from a prominent pro-Brexit politician (I
forgot who it was but I want to say Boris Johnson).

> The right-wing parties on the continent are far scarier, and generally have
> higher support.

Don't conflate nationalism with right-wing. The BNP already was a thing. UKIP
is just less ostensibly racist. A similar thing happened in Germany actually:
the NPD is blatantly racist (though always just constitutional enough to avoid
being banned) and the AfD is almost a carbon copy of UKIP (just with more
anti-muslim rhetoric as it seems).

> You are reading different papers to me.

Probably. I'm not even in the UK. However Cameron's speech after the
referendum sounded pretty much like "okay, we're leaving but I'm not the PM to
do that" and pretty much everything else I saw on BBC World within the days
following the referendum sounded like the Brexit has been decided -- plus the
various statements by "the remaining 27" EU members certainly are phrased in
ways that no longer count the UK as an EU member.

> No, that's exactly what Cameron said would happen - that we'd have to
> trigger Article 50 the next day.

I guess I should have avoided saying "the UK" because politics are too complex
to put everything in terms like that. The Leave campaign certainly seems
dumbstruck they won't get to negotiate prior to triggering Article 50,
however.

And there are an awful lot of people who seem to think the UK isn't already
leaving or that there's still a way -- though I guess that's mostly wishful
thinking (or the "bargaining" step on the grief progression).

~~~
peteretep
Pretty sure the idea that the EU is run by Germany is stronger outside the UK
than inside it.

I absolutely understand a desire to say "fuck 'em" to us Brits, but the margin
was tiny, and EU-scepticism is rampant throughout the EU. Please don't pin the
sins of our ex-PM on holding a referendum on the whole country - EU history is
chock-a-block with countries rejecting various parts of the EU via referendum.

~~~
pluma
I really don't have anything to add to what you said, just wanted to say
thanks for a civilised discussion.

I personally hope the UK will stay because I would hate to see them leave but
I'm not sure what would be better for the EU from a pragmatic point of view
(rather than my idealistic one). OTOH if the UK leaves I'm excited to see what
will happen with Scotland. Not like I personally can do anything but watch,
either way.

~~~
peteretep
I personally hope they stay too :-)

Came across this figure earlier:

    
    
        > according to News channel N24, 62% of Germans now
        > want decision-making powers transferred from Brussels
        > back to Berlin"
    

[http://www.bbc.co.uk/news/uk-politics-eu-
referendum-36710399](http://www.bbc.co.uk/news/uk-politics-eu-
referendum-36710399)

------
bertil
Announcing that prior to negotiation is on par to Farage insulting his peers
or having the Leave team back-stab each other, or lying furiously throughout
the campaign: UK’s main commercial and HR assets are tied to its relationship
with the Europe Union. Sabotaging that ahead of negotiation sounds incredibly
misinformed.

The key player in those talks, Germany, openly wants the crown jewels: the
banking sector; Chancellor Merkel has already started playing hardball to get
it. How is looking less prepared going to help?

~~~
hjrnunes
How/when did Farage insult his peers (I presume you're talking of MEPs?)

~~~
lucozade
Last week when he said that most of them had never had proper jobs [0].

[0]
[http://www.theguardian.com/politics/video/2016/jun/28/nigel-...](http://www.theguardian.com/politics/video/2016/jun/28/nigel-
farages-full-speech-to-meps-most-of-you-have-never-done-a-proper-job-video)

------
return0
15% is quite low. it brings them to tax-haven territory. That will show the
corporate elites running the EU! /s

But don't forget there are countries with lower taxation in the EU (10% in
bulgaria). UK can do better!

------
arviewer
So the fight has started! Interesting to see how Ireland is going to react.
And then what effect will this have on the negotiations?

On second thought - this is probably not a fight. This is probably not even a
plan. This is the result of not having any plans, no vision, except for
letting the market dictate what to do. Do they want a healthy relation with
the EU? I guess not!

~~~
danieltillett
Yep I can't see Ireland being too keen on this "plan". It is not like the UK
has to get unanimity on every point from every country in the EU.

At this point I think the UK would be better off just pulling the
thermonuclear option and withdrawing without negotiating at all. Get the
economic shock (depression) over quickly and then negotiate new trade
agreements over time. Why waste two years in dithering dragging out the
uncertainty to end up with nothing.

------
oneloop
I'd like to remind everyone that in the USA corporate tax is a humongous 35%
rederal, plus state.

The point being that there's other ways to attract business that are more
effective at growing revenue than cutting tax.

------
ionised
I would prefer they raised it to 90%.

~~~
harel
Any why is that?

~~~
Singletoned
He probably lives in Europe and wants all the UK companies to flee there.

~~~
harel
Most likely, but still, I find seeking the misfortune of others is a sad state
of mind, usually reserved to those on the lower end of the self esteem scale.

~~~
ionised
Your armchair psychology is cute but I'm just pissed at what I view as half a
century or more of deregulation and tax cuts geared towards big businesses and
the wealthy and privileged, always at the expense of the poorest in society.

~~~
harel
90% of tax on corporations? What reason would there be to run a company then?
What would drive people to take this road? What result other than the total
collapse of an economy would a 90% tax bring? I would leave Britain, and so
will many others. Lower the bar on corp tax and you create more companies
creating more jobs for people, increasing tax revenue and the wellfare of
those in work (and by that the wellfare of those not in work).

~~~
harel
Also, what if I'm a medium sized company, employing 85 happy people, but
registered as a corporation? In the UK i'd probably be a limited company but
for the sake of argument, lets pretend I'm a registered corporation. I also
have offices in the states employing 85 people. At that point when 90% corp
tax hit me, 85 people in the UK would be unemployed. And I would be sad.

I'm all for worker rights. I don't think running companies and worker rights
are mutually exclusive things.

~~~
harel
I can't reply to your comment as its too deep :)

It comes down to people. Some people are good people and will run a company
well. Regardless of its tax status. Some are bastards and will act
accordingly. This kind of thing, as cliche' as it sounds, starts at home.
Bastards are cultivated, not born. The thing is by saying to someone you can
run your company but I'll take 90% of your profit comrade, you are basically
telling them not to bother. And to those that already bothered you're saying -
stay as you were. Do not attempt growth. Besides, why stop at 90%? Why not
just take it all?

------
amai
They should lower the tax rate for corporations to 0%. Because if corporations
don't pay taxes politics doesn't need to care about them so much.

"He who doesn't pay the piper doesn't call the tune."

~~~
_Understated_
Agreed.

Corporations don't pay corporation tax anyway: People do.

As an example, if suddenly corp tax jumped by 20%, prices would jump by 20% to
cover it so customers must pay an additional 20% for the product.

