Book Quote by David Cay Johnston
“The British use a system where the profits a corporation reports to shareholders is what they pay taxes on. Whereas in America we require corporations to keep two sets of books, one for shareholders and one for the IRS, and the IRS records are secret. For publicly-traded companies, the British system would tend to align the interests of the government with the interests of the company because the company wants to report the biggest possible profit. Though, all wealthy countries have high taxes as wealth requires lots of common goods, from clean water to public education to a justice system.”
About This Quote
Source Speech: Interview on tax policy, date unknown
The British tax system ties corporate profit reporting to shareholder earnings, aligning government and company interests, while the US requires separate reporting, creating secrecy and potential misalignment.
In simple terms: UK taxes corporate profits as reported to shareholders; US uses separate, secret books.
Key Takeaway
Recognize how tax structures affect corporate transparency and public goods.
Themes
tax policy
government
corporate governance
public finance
transparency
Mood
analytical
critical
informative
Type
policy analysis
educational
When to use this quote
- corporate financial reporting
- government budgeting
- public policy debates
- tax reform discussions
Key Concepts
tax alignment
reporting standards
public goods funding
Questions to Reflect On
- How do differing tax reporting rules shape corporate behavior?
- What reforms could improve transparency?
A Different Perspective
US system may obscure true profitability, hindering accountability.
