Taxation explained by Mattick Jnr

"Government-financed production does not produce profit. This is hard to grasp, not only because it violates a basic presupposition of the past seventy-five years of economic policy, but because a company that sells goods to the state, as when Boeing provides bombers for the Air Force, does receive a profit, and usually a good one, on its investment. But the money paid to Boeing represents a deduction from the profit produced by the economy as a whole. For the government has no money of its own; it pays with tax money or with borrowed funds that will eventually have to be repaid out of taxes.

Tax money appears to be paid by everyone. But despite the appearance that business is undertaxed, only business actually pays taxes. To understand this, think of the total income produced in a year as the money available for all social purposes. Some of this money must go to replace producers’ goods used up in the previous year; some must go as wages to buy consumer goods so that the labor force can reproduce itself; the rest appears as profit, interest, rent—and taxes. The money workers actually get is their “after tax” income; from this perspective, tax increases on employee income are just a way of lowering wages. The money deducted from paychecks, as well as from dividends, capital gains, and other forms of business income, could appear as business profits—which, let us remember, is basically the money generated by workers’ activity that they do not receive as wages—if it didn’t flow through paychecks (or other income) into government coffers. So when the government buys goods or services from a corporation (or simpler yet, hands agribusiness a subsidy or a bank a bailout) it is just giving a portion of its cut of profits back to business, collecting it from all and giving it to some. The money paid to Boeing has simply been redistributed by the state from other businesses to the aircraft producer.

This is why government spending cannot solve the problem of depression, though it can alleviate the suffering it causes, at least in the short run, by providing jobs or money to those out of work, or create infrastructure useful for future profitable production. The problem of depression—insufficient profits for business expansion—can only be solved by the depression itself (aided, perhaps, by a large-scale war), which increases profitability by lowering capital and labor costs, increasing productivity through technological advances, and concentrating capital ownership in larger, more efficient units...

...if the whole financial system fell away, and money ceased to be the power source turning the wheels of production, the whole productive apparatus of society — machines, raw materials, and above all working people — would still be there, along with the human needs it can be made to serve. The fewer years of suffering and confusion it takes for people to figure this out, the better."

http://www.brooklynrail.org/2009/04/express/what-is-to-be-done

Equity

A 25-year veteran of private equity and chairman of SVG Capital, the biggest investor in Permira’s record €11billion ($14.8billion) fund with a commitment of €3.8billion, Mr Nicholas Ferguson, one of the most prominent figures in Europe’s private equity industry , said

“Any common sense person would say that a highly-paid private equity executive paying less tax than a cleaning lady or other low-paid workers, that can’t be right,”

Nicholas Ferguson, one of the most important figures in UK private equity business, has criticized rules on capital gains tax that allow executives at private equity firms and some hedge funds to enjoy tax rates as low as 10 percent. "I have not heard anyone give a clear explanation of why it is justified," said Mr. Ferguson

Private equity general partners are paid a base salary but earn most of their money from “carried interest” – typically a 20 per cent share of any profit from selling portfolio companies after a certain threshold. So-called “taper relief” rules allow the tax paid on this income to be reduced from the top capital gains rate of 40 per cent down to 10 per cent as long as the private equity firm holds the company for two years before selling it.

Dictionary meanings of equity :
1. The difference between the market value of a property and the claims held against it
2. The ownership interest of shareholders in a corporation
3. Conformity with rules or standards
4. Fairness

Fair ? Capitalism is never fair . And for the standard it conforms to , it is greed and accumulation .

That's rich

Comedian and political commentator and columnist Mark Steel writes in the Independent that last year the richest 54 people in Britain had an estimated income of £126billion and the amount of this paid in tax was 0.14 per cent.

Philip Green, whose group owns Burtons, Topshop and Dorothy Perkins. In 2005 it declared a dividend of £1.299billion. But £1.2bn of this he kindly gave to his wife who was resident in Monaco and therefore didn't have to pay the UK rate of tax. It's estimated this saves the Greens £300million, but that would still have left a billion . Obviously , not enough .

The Government admits that tax avoidance last year was somewhere between £97billion and £150billion , whereas benefit fraud amounted to less than one billion pounds.

So who are the real robbers and cheats ??