Letter to The Times: Justifications for HS2 have failed to convince

Summary

Dr Madsen Pirie and Dr Eamonn Butler, President and Director of the Adam Smith Institute, contributed to a letter to the Times, calling for "a comprehensive review of the UK’s transport priorities, and where, if at all, HS2 fits with this." The letter was co-signed with a variety government officials, think tank representatives, and prominent members of the business community.

Read the letter here.  

Or here. 

Real Business Features New ASI Report on Corporation Tax

Summary

Real Business features a new report from the Adam Smith Institute, which finds that nearly 60% of Corporation Tax comes from workers’ wages.

Read the article here.

Read Ben's full report, 'Who Pays Corporation Tax?' here.

Sam Bowman Appears on BBC News

Summary

Research Director Sam Bowman appeared on BBC News to discuss Health Secretary Jeremy Hunt's decision to veto a blanket pay rise for NHS workers.

Watch the clip here.

Sam appeared on BBC News Thursday, 13 March 2014.

Ben Southwood Writes for City AM

Summary

The Adam Smith Institute's Head of Policy, Ben Southwood, discusses his latest report on corporation tax in an op-ed for City AM.

"At best, corporation tax is a stealth tax on workers. At worst, it is a highly distortionary investment-reducing capital tax. In this week’s Budget, the chancellor is expected to cut it 1 percentage point: he should go much further. Let’s hope it doesn’t take a petition from 1D fans to convince him."

Read the article here.

Read Ben's full report on corporation tax here.

City AM Publishes MP Tim Farron's Paper from An Entrepreneurs' Manifesto

Summary

City AM published Tim Farron's paper: Why Britain's scientists are failing at business.

Read the article here.

Farron's paper forms part of An Entrepreneurs' Manifesto, which was launched by The Entrepreneurs Network, in association with the Adam Smith Institute, on March 11th in the House of Lords.

Sam Bowman Featured in City AM

Summary

Research director Sam Bowman is quoted in City AM, arguing that the NHS was designed to care for patients -- not to be a welfare scheme for NHS staff.

Read the article here.

From Harriet Green's article:

"And more crucially, as Sam Bowman of the Adam Smith Institute points out, the NHS is there to provide care for patients, "not to act as a welfare scheme for NHS staff."

Given that it's got a limited budget, increasing pay means cutting spending elsewhere: "It may well be the case that NHS patients are better served by additional staff or more investment in medical equipment than they would be by this wage increase."

Moreover, special protection means public sector workers already have "much greater job security than provate sector workers" - it's difficult to see why, says Bowman, there should be a sense of automatic entitlement for something most taxpayers are not experiencing. 

Bowman's says the political wrangling we've seen over this decision "highlights the need for devolution of pay bargaining to NHS Trusts". When you take into account the varying labour markets and patient needs across the country, it seems foolish at best having national pay bargaining. "A pay rise that makes sense for patients in Suffolk may not make sense for patients in Sunderland."

Corporation Tax cuts will increase workers' wages, finds Adam Smith Institute report

1.     Nearly 60% of Corporation Tax comes from workers’ wages, making the tax a regressive and stealthy form of income tax

2.     Most of the remaining burden of the Tax comes from capital owners, an economically inefficient way of levying revenues

3.     The government should cut Corporation Tax more quickly to increase workers’ real wages and raise the level of investment in Britain

Almost 60% of the Corporation Tax burden falls on workers’ wages, a new report by the Adam Smith Institute has found. The report, released ahead of this week's Budget, reviews existing academic studies into the incidence of the Tax and recommends that the government reduce or abolish it.

The report, ‘Who Pays Corporation Tax’, authored by the Institute’s Head of Policy Ben Southwood, proposes that the government significantly reduce, or abolish the corporation tax to reduce the burden on workers, and that it accounts for the lost revenue through either cutting spending or, if necessary, raising the money through more efficient means, such as property, income or consumption taxes.

According to the report, the Corporation Tax’s burden is split between workers— it reduces their pay without appearing on their pay slips—and capital, distorting decisions therefore reducing investment, UK growth and future living standards.

Though economists argue about the exact way in which the tax is initially and eventually split between capital and labour, all agree that the burden is shared primarily between the two.

Ahead of the Budget on Wednesday, the report’s findings should embolden the government to accelerate its corporation tax cuts to increase workers’ real wages and the level of investment.

Ben Southwood, author of the report and Head of Policy at the Adam Smith Institute, said:

"Tax avoidance scandals are often presented as if they were a struggle between the common man and the man—but economists know this is far from the truth.

“Corporation tax is partially paid by workers through lower wages, and the remaining chunk, though paid by capital owners, is likely to come out of investment, hitting growth and future living standards.

"If it can be done without introducing new distortions, we should definitely abolish corporation tax and get the revenue from a more effective tool with fewer side-costs."

Eamonn Butler, Director of the Adam Smith Institute, added: "In his Budget this week the Chancellor may announce a modest cut to Corporation Tax. He should go much further: cutting the Corporation Tax significantly will put more money in workers' pockets and boost the economy by stimulating investment. We need to grow our way back to prosperity by cutting back the state. The Corporation Tax should be the first tax to go."

The key findings of the report include:

1.     While most of the substantive details are hotly disputed, the best studies of corporation tax find that in an open economy, workers bear a significant part of the burden of the tax, along with owners of capital. In a closed economy—like the world as a whole—the burden falls mainly on capital owners.

2.     Though results have been contested, the average empirical result puts the burden on workers at 57.6%. Averaging theoretical studies is much more difficult, mainly because each study gives such a wide range of results over such varying sets of circumstances.

3.     Nearly all economists agree that taxes on capital are highly distortionary, and thus unattractive as means of raising revenue. Owners of capital do tend to be wealthier than non-owners, but capital taxes are far from the best way of redistributing wealth.

4.     Transparency is a virtue of a tax system, and many workers are unaware that their wages are lowered by corporation tax.

5.     In the presence of an extremely complex regulatory and legal regime like the UK’s, the costs of corporation taxes become even higher by distorting key decisions like choices between debt and equity.

6.     The interaction between corporate income taxes and corporate gains taxes may complicate the question, necessitating reforming both in order to properly reform one.

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07980 627940.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Comment: NHS was designed to care for patients, not to act as welfare scheme for staff

Commenting on Health Secretary Jeremy Hunt’s decision to veto a blanket pay rise for NHS workers, The Adam Smith Institute’s Research Director, Sam Bowman, said:

“The point of the NHS is to provide care for patients, not to act as a welfare scheme for NHS staff. Since the NHS's budget is limited, all increases in pay would mean foregone spending elsewhere. It may well be the case that NHS patients are better served by additional staff or more investment in medical equipment than they would be by this wage increase.

“Real private sector wages have fallen every year since 2010. Public sector workers already have much greater job security than private sector workers, so it's difficult to see why they should be regarded as being automatically entitled to pay rises that most taxpayers are not experiencing.

“The political wrangling over this decision highlights the need for devolution of pay bargaining to NHS Trusts. National pay bargaining makes little sense given differing labour markets and patient needs across the country: a pay rise that makes sense for patients in Suffolk may not make sense for patients Sunderland.”

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778 207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates liberal public policies to create a richer, freer world.

Sam Bowman Quoted in City AM

Research Director Sam Bowman was quoted in a City AM article, calling the Bank of England governor's comments "totally wrong."

Read the article here. 

From Peter Spence's article:

"Bowman says that this lack of diversification makes banks "more vulnerable" as prices shocks and restrictions on bank size exarcebate the magnitude of systemic shocks. In 2008 Basel accord requirements worsened the impact of defaults, as banks had been required to hold mortgage debts."

City AM: Entrepreneurs are held back

Michael Bird from City AM covered the launch of An Entrepreneurs' Manifesto, which was hosted in the House of Lords on Tuesday March 11th by The Entrepreneurs' Network, in association with the Adam Smith Institute.

Read the article here.

Read An Entrepreneurs' Manifesto here.