Maya Forstater

New paper from @gabriel_zucman cited by @Ed_Miliband showing that the idea that companies are mobile is wrong. They shift profits, but it’s much harder to shift jobs/factories - so govts shouldn’t be so focused on cutting corporate tax rates. http://gabriel-zucman.eu/files/TWZ2018.pdf … @alexcobham

@MForstater There are those @delaFeriaR who say that customers are even more immobile, whereas we have seen millions of jobs lost from G20 countries, to places where mobile capital has invested into new factories, sometimes with inducements to relocate there...

You have a point, but as @alexcobham reframed the issue - Tax rates are often a 2nd, 3rd etc order issue for companies compared to day labour costs or market access

I'm not so sure of that. If factories/jobs are so hard to move then how is it so many jobs have gone, not just accounting profits? And would we then not be trying to raise minimum wages in such countries as much, if not more, than reducing avoidance?

I think it's more that the argument that companies move jobs/factories primarily on the basis of the tax rate doesn't stack up. They might profit shift for that reason. If they are going to move jobs, it's for other reasons e.g. cheaper labour.

Not aware of serious academic work defending that to be the case - not on those broad terms. Issue always one of marginal effect.

But politicians often cite it as a reason, even when business isn't calling for rate drops - e.g. in the UK. Sadly politicians don't back up all their assertions with properly peer-tested research!

Alas, we agree. A very unfortunate mixture of political economy, availability bias, confirmation bias, and the Dunning-Kruger effect.