Corporation Tax in the UK has undergone fundamental revisions since its inception in 1965-so much so that the present system bears very little resemblance to the original proposals
While distributional considerations are paramount in the design of personal taxation, they are virtually absent from discussions about company taxation.
Domestic rates have long been one of the most unpopular taxes, partly-it seems-because they are levied directly on households rather than being collected by deductions at source from employment income or indirectly in the prices of consumption goods.
The great attraction of tax-based incomes policies is that insofar as they are successful they cause the socially desirable outcome to be an equilibrium one, compatible with the self-interested behaviour of economic agents.
The Inland Revenue must derive a certain degree of satisfaction from the fact that it took the City the best part of a week to appreciate that one of the more obscure sections of the 1982 Finance Bill had overnight ended its favourite pastime of bed and breakfasting-a most skilful exercise in obfuscation.
Much was promised: little has been produced. In his 1979 budget speech the Chancellor of Exchequer, Sir Geoffrey Howe said that he had asked the Inland Revenue to prepare a green paper on the future of corporation tax.
Few, if any, of the component parts of the British tax system could be regarded as being free of serious problems, but the UK corporation tax must be the tax which is most urgently in need of reform.
The attraction of these other methods is that they require no administrative intervention. They only have to shape a market environment in which the freely taken decisions will be non-inflationary.
Recent UK economic history has been characterised by high levels of unemployment, coupled with a high nominal Public Sector Borrowing Requirement (PSBR).