If Fair Tax Mark is mainly about transparency, cut out the flawed analysis on tax rate

I thought I might just put a thought that occurred to me regarding the all the excitement from yesterday.

If I have missed the point and focused on some blatant errors in an unimportant part of their methodology, the Fair Tax Mark campaign should have no hesitation in removing from their methodology the assessment on the fair amount of tax element.

Richard Murphy suggests that it is obviously not the point of their evaluation. So, if there are concerns raised by an independent reviewer there should be no hesitation in removing the method.

Can anybody recommend a good person to independently review the maths?

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About Ben Saunders

I'm a Chartered Tax Adviser and a freelance writer. This is my personal blog about, well, mainly taxation. I might put other stuff in. Who knows.
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2 Responses to If Fair Tax Mark is mainly about transparency, cut out the flawed analysis on tax rate

  1. Ben

    You still entirely miss the point: the maths will, at most, alter the FTM by one mark, either way

    And we could have also used four years instead of six with at least as much impact

    But we chose six years to reduced the risk of distortion and then weight to current periods – a totally valid choice, albeit one you do not agree with

    But given you do not understand why tow thirds of the coring is on other criteria all you demonstrate is that you have a) missed the point of what we are doing b) are picking on an issue that will never distort in any material way the outcome, however weighting (including the number of years surveyed, which you have ignored) changes

    You also ignore the fact that we have published all our workings – which almost no one ever does

    Instead you wish to labour a point that will always be immaterial and which only suggests you do not understand indices

    Feel free to have the maths reviewed – and we will, of course, review the findings. But I am entirely confident they will not change the outcome in any material way – and that is why this is a non-issue

    Richard

    • Richard

      Thanks for your comments. I note that you now accept that my criticism is correct in principle.

      Publishing your method allows constructive criticism, but you need to listen to it rather than dismiss it.

      Perhaps publishing a ‘beta’ version prior to launching the Fair Tax Mark would have been a more transparent method of developing a methodology. The wrinkles could have been ironed out by interested parties before you allowed it to be tested on real-life companies. Instead, there is potentially a damage limitation issue here.

      My chief concern is that this could be a lot more significant than you suggest it is. At the very least, safeguards will be required to identify companies that your method is not suitable for assessing.

      I will see if I can get something from somebody independent to quantify how material the distortion is. However, I think that your own numbers actually provide an indication because you do initially calculate a true mean for the current tax rate but don’t use it as a comparison.

      In essence, the difference between that rate, and the weighted difference added back to the expected tax rate, should provide some indication of the level of distortion.

      In the meantime, could you suggest somebody who you would listen to, who is relatively independent and can assess the materiality of the distortion please?

      Genuine thanks for your comment.

      Ben

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