Drop Corporate Income Tax, Says IEA

September 5, 2016 Taxation in UK

Tax Freedom DayLONDON – Corporate income taxes should be replaced with a new tax on distributions to shareholders, according to new research.

Late last week the UK think-tank Institute of Economic Affairs (IEA) released the results of new research suggesting that the UK should drop corporate income taxes entirely.

The researchers of the IEA claimed that a disproportionately large portion of the cost of corporate income tax is actually borne by employees, ultimately hurting employees more than businesses.

Further, development in modern international business and the global movement to close off opportunities for corporate tax evasion mean that governments will need to look at new methods of ensuring that adequate taxes are paid without compromising business growth.

The researchers proposed that in order to simultaneously modernize the tax system for the current business environment while not negatively effecting business, corporate income taxes should be dropped entirely and replaced with a tax on distributions made to shareholders.

The proposed system is claimed to be able to overcome shortcomings in the current tax system, while helping reduce the instance of avoidance, without compromising business activity.

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