Simon English: Uber-bear Edwards gets it right on corporation tax
Friday 24 February 2012
Outlook Albert Edwards at SocGen is an engaging character. Sometimes described as an uber-bear, he pokes fun at any outbreak of hope. Concessions to optimism are for fools. Hell in a handcart is the future. If you're lucky.
Just now things aren't going his way. The stock market is up getting on for 1,000 points since the summer. A blip! He insists.
Leaving that aside, Mr Edwards had a terrific note out yesterday on the folly of cutting corporation tax. He writes: "Why do I regard the idea of cutting UK company taxes as laughably stupid at this time? It is simply the fact that UK corporations, like their US counterparts, are sitting on piles of excess cash with very little evidence that they want to either spend or distribute these surpluses."
Precisely. The notion that large corporations need a cash injection is absurd. They may need to take a risk (invent a new product, hire a few folk).
What they don't need is another excuse to stockpile cash they can use to shove up earnings per share so that chief executives can claim a bonus for doing nothing.
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