So Mike Devereux claims that it’s individuals and not companies that bear the burden of corporation tax (10 May, page 12). In particular, he says academic evidence strongly suggests that shareholders do not bear corporation tax and that workers do.

The trouble with his analysis is that he assumes anyone but the company can pay its tax bill. Companies can and do pay their tax bills. Devereux assumes that companies are the collective agents for their members, and that although companies have a legal and distinct personality and the capacity to exist entirely independently of their owners, they behave as if that is not so. That’s not true. Behavioural evidence shows that wherever a corporation exists, behaviour changes, which is hardly surprising.

The evidence on this is clear. Management acts independently of owners and contrary to their best interests. People take risks when there is limited liability, which they would not do otherwise. People manage tax differently when corporations come into play, even though most corporations do not admit to that affect, and tax accounting does not require them to do so.

That lack of transparency does not alter the fact that it’s hard to shift your personal profits out of the UK if you are an individual who wants to live here (the domicile rules apart) but it’s quite easy to do so if you’re a company that can establish subsidiaries wherever you want, provided some commercial justification can be found. Companies aren’t tax neutral or transparent in this sense. They let the place where profit is recorded and tax is paid be realigned at the whim of management. Once that happens, they are far from ‘transparent entities’ with no meaning of their own.

None of these factors contribute to the data Devereux used for his research. More than 90% of that came from four countries. Tax haven subsidiaries look likely to have been excluded from his consideration. Worse, he assumed that the countries he studied (the UK, Italy, Spain and France) are ‘small open economies’, meaning that they have no influence on the world economy, but have prices dictated to them. That’s a false assumption.

Devereux suggests all corporate tax increases can be passed on by a company onto labour. That would mean companies should be indifferent to them. That’s obviously not true. They are active in managing the tax rates they pay. And they lobby vigorously for reduced tax, which, if Devereux is right, is contrary to their best interests. In the real world, tax doesn’t work on the assumptions he uses.

Richard Murphy is a tax campaigner