Why you should not care about corporate tax dodging!

Around the world, and especially in the UK, there is a growing resentment towards large corporations and the huge profits they make. It is widely known that many corporations try to minimise their tax bills by using various organisational and legal structures. This tax planning conducted by multinational corporations has led individuals to believe that these companies do not pay their fair share of taxes. This leaves many individuals angry at ‘the system’ and feeling helpless. But I’m here to tell you that you should not waste your time of effort thinking how little corporation tax multinationals pay. This is because the money saved by a corporation on a reduced tax bill will end up in your pocket anyway through dividends. Yes, you have an ownership share in these large multinational corporations whether you know it or not.

There is this common misconception that only the rich and wealthy own stocks. But in truth, the biggest owners of shares are the general public through their pension funds. Go and have a look at any major companies top shareholders list. You will always see that the biggest share owners are pension funds, insurers and passive index tracking companies like Vanguard and Blackrock. These organisations hold shares on behalf of the common man like you and I. So in essence, its the everyday person that owns the majority of wealth on the stock market, not some rich man or women living in Monaco.

Once you get to this level of thinking and see that the money made by large public corporations  are distributed back to the people, you’ll stop worrying that these companies pay a lower rate of tax then you.

Now I’m not saying that companies should avoid tax, far from it. I believe that taxes are the price to pay for living in a civilised society. What I am saying is the following:

If you live in the developed world, where share ownership is at a disproportionate level to where the companies actually make their money, a multinationals lower tax bill is not a bad thing as the money saved on the taxes will end up in your pocket one way or another.

When it comes to corporate tax dodging, its the privately owned companies that you should be worried about. With  private companies, ownership is held by a small number of people. The general public does not benefit from the profits private companies make. Thus, if these companies artificially reduce their tax bills, its only a small number of people who benefit. In this case, society loses out.