The Fair Tax Mark fails the maths test

The maths at the heart of the Fair Tax Mark is broken.

Richard Murphy has stated with regards to the mathematical errors made in the Fair Tax Mark:

the maximum likely distortion either way is one mark, at most

This is wrong, as the following example illustrates. Over a six year period, the company pays tax well above that regarded as “fair” by the Fair Tax Mark campaign. Despite the payment above “expectation” the company would receive a zero on the tax rate score because the weighted difference is above 7%.

FTMRNG simpleThe weighted difference makes a basic mathematical error and does not use a correct calculation of an average rate. It also introduces an arbitrary annual weighting. This is not a minor technical issue. This is a fundamental flaw that the developers of the methodology refuse to acknowledge.

Other detailed workings related to this example appeared in a previous blog.

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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