A common belief about corporation tax rates
Many people think, as I did, that if you put the corporation tax rate up then the amount of tax collected from companies and paid to the treasury would also go up. But it may not actually be the case.
Politcal parties often make the case that higher tax would bring in more tax revenue.
But if it was truly the case then after the last decade of corporation tax rate decreases we’d expect the amount actually collected to decrease.
I wanted to find out so I pulled some of the publicly available figures.
Getting the data
I went to the most recently published HMRC Statistics and copied out the receipts data from 2005 to 2016 and graphed it against the corporation tax rates in force over the period.
The light red line shows how the Googlesheet graph plotted the trend line against the actual total corporation tax receipts.
Notice that, at least in my very rudimentary analysis here, when the tax rate goes down, the amount collected goes up.
In the graph above you’ll see just that; the rate goes down over time, and the total receipts goes up.