Tuesday, April 13, 2010

Two Paradoxes

Two things the Left just does not understand:

1. People reach a point when raising tax rates actually reduces the tax amount raised.

Here's a company finally goaded in into going to Switzerland as it will save almost £400m in tax by 2014. Read more.

2. Protectionism, like the proposed Cadbury law, does not work.

British jobs can just as easily be exported by British companies to their own factories in Eastern Europe and Asia. Indeed, Cadbury was doing precisely that - 80% of its business and 85% of its employees were already outside the UK, as were 78% of its shareholders.More fundamentally, changes in company control are part and parcel of the way our hugeley successful market economy works. And there is no serious evidence that Britain loses out from the process overall.The Economist recently published a survey of this evidence. They noted that over the last decade, foreigners have spent $1,000 bn on buying British companies, compared to $750 bn going in the other direction. But foreigners have tended to buy bigger operations, so in terms of numbers of takeovers, we've actually done more than they have (6000 vs 5400).

These are big scary changes. But as the Economist points out, many of the feared foreign takeovers have actually proved immensely beneficial to Britain. The workers from Austin Rover's old clapped out Cowley plant must wake up every morning and give thanks to BMW for rescuing them: they now work in the booming Mini biz, with 80% of their 200,000+ annual production exported. And throughout our economy, we have gained from the rapid importation of best practice from leading global companies - stuff we'd have taken decades to learn otherwise.Labour are now putting all that at risk, They're sending out yet another signal that profit-focused businesses are not welcome here.

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