The Institute for Fiscal Studies on Thursday gifted the rightwing tabloids a key argument against Labour’s plan to raise taxes. “Not credible …” say the headlines, as if the entire proposal had been rubbished.

Dig deeper, and the claim is actually far more specific than that. The head of the IFS, Paul Johnson, says that it is not credible for all £82bn of Labour’s planned increase in tax revenue to come from companies and people earning over £80,000 a year. So instead of the rich and big companies paying for better public services, the argument goes, “we collectively will need to pay for it” – and will pay for it, according to the IFS, through the £44bn rise in taxes on corporations being passed on to shareholders, consumers and workers, in the forms of price increases and cuts to wages.

It is a claim based on ideology, not fact. Even in an economy such as ours, the amount of tax companies are able to pass to consumers, workers and shareholders is disputed. But what the IFS seems unable to imagine is an economy that’s different from ours.

The core assumption of rightwing economics is that companies can always put up prices to consumers or depress wages. But the assumption is wrong. Since the 19th century, we’ve known that supply and demand can be “inelastic” – that is, workers resist wage cuts and consumers won’t buy expensive things if they can’t afford them. Only if all companies had an absolute monopoly could they force workers and consumers to bear all the pain of increased taxes.

Mainstream economists tend to assume that, as a rule of thumb, about 50% of corporation tax can be passed on in this way. But one evidence review put it at between 10% and 30%; another, by the US economist Kimberly Clausing, concluded that there was “no robust link between corporate taxation and wages”.

But what if we had a Labour government that systematically blocked the option of passing taxes on to workers and consumers? A government that increased the minimum wage to £10 an hour and gave workers rights to organise. Meanwhile, the central bank inflation target – augmented by credit guidance and strong competition laws – could be used to counteract attempts to raise prices.

But the IFS cannot consider this because it has no model of an economy in which the government pursues social justice via structural change. Indeed, as John Weeks, economics professor emeritus at Soas, points out, the entire IFS model of the impact of tax and spending is a “best educated guess”.

Yes, in the end it is Labour’s clear intention to make the holders of capital pay more tax, whether they be shareholders, managers or rent-seeking private equity firms and hedge funds. They will have to take their dividends after an extra £44bn in taxes is collected out of a UK gross corporate operating surplus of about £380bn a year.

According to neoliberal theory, companies faced with higher tax bills switch their investments to lower-tax jurisdictions. But in a real economy, where capital does not glide frictionlessly around the globe, the other rational response is to innovate.

The IFS assumes it is impossible to stop those with money and power from passing on the cost of higher taxes to the working class. But there’s no theoretical basis for this. If you wanted to prove it, you would do it with a model of the economy where the behaviour of consumers, workers, shareholders, managers, the finance industry, the government and the central bank are all simulated.

Let’s imagine such a model for Labour’s plans: one where the government intends to redistribute wealth; where the workforce is empowered with new rights for collective bargaining, and consumers are armed with enhanced competition laws. Let’s assume the central bank has a productivity target and will steer capital investment towards high-productivity companies.

I am fully prepared to accept that, on some outcomes, the model will show firms passing between 10% and 50% of the tax increase to workers and consumers, and on some outcomes it will not. The result depends on execution and class struggle.

But there is no class struggle built into the IFS model. For the IFS, workers are always powerless individuals, consumers are dumb price-takers, and shareholders are money-grabbing optimisers of short-term profit, incapable of investing for the long term. In the end, its argument comes down to this: because the powerful are powerful, tax rises for the rich must always be swallowed by the poor.

• Paul Mason is a writer and broadcaster on economics and social justice