One of my main undertakings on this blog has been to debunk Jack Mintz’s relentless advocacy of tax cuts for large corporations. However, I also give him credit when he proposes good policy, such as raising potash royalties and the small-business corporate tax rate. This past week, he was out with a paper on the latter subject. The small-business deduction […]
Read moreAmazingly, BC’s government has joined its official opposition in proposing to restore the provincial corporate income tax rate from 10% to 12%. The same government that cut from 12% to 10% would now reverse itself as part of a last-ditch effort to save the HST. Revenue from a higher corporate tax rate would help finance a lower HST rate. According […]
Read moreI do not know if the Conference Board intended its latest release on sluggish investment in machinery and equipment to be taken up during the election campaign. However, as Canadian Press reports: The Conference Board report comes at a time when the issue of corporate taxes is a key demarcation point among the parties in the election campaign, with the […]
Read moreMunir Sheikh, former head of Statistics Canada and of tax policy at Finance Canada, has an op-ed in today’s Globe: “A Canada-U.S. tax gap means a Canada-U.S. tax transfer.†As he notes, “any U.S. citizen, resident or company earning income in Canada is subject to U.S. tax, with a credit for Canadian tax paid or accrued.†So, slashing Canada’s corporate […]
Read moreCutting corporate income taxes doesn’t create jobs. They may raise wages, but probably not for you and me. And they mean Canadian taxpayers are paying more….to help the Americans pay down their debt Here’s how I know these things to be true: Yesterday SUN TV rolled out its first full day of programming. The prime 8 p.m. slot features radio […]
Read moreDoug Saunders, of the Globe and Mail, has gamely launched a real and meaningful discussion about corporate tax cuts on these pages. See the comments section of this post. Since that forum was getting unwieldly, I’m starting a new post. Doug’s stated pursuit (and mine, and I wager most readers’) – how to harness growth to maximize social welfare – […]
Read moreNo politician is talking about it, but there is a growing debate about corporate tax cuts, and it’s not about whether they should go up or down 1.5 percentage points. It’s about getting rid of them. Zero corporate income taxes. It is fast becoming the legendary goal for tax reform in some opinion-makers’ minds, and they are saying that economic […]
Read moreYesterday’s Jeffrey Simpson column was entitled, “Walking the Line on Corporate Tax Cuts.†Incredibly, he walks the narrow 1.5% line between the Liberal and NDP proposals. To his credit, Simpson takes an open-minded look at the evidence, which indicates “no discernible links†from corporate taxes to employment or investment. On this basis, he accepts the Liberal proposal to raise revenue […]
Read moreThere’s a disturbing trend buried in this morning’s report by Statscan on Canada’s foreign direct investment (FDI) abroad. Not only is an increasing share of Canadian direct investment abroad going through finance and insurance industries, but a growing share is also being funnelled into tax havens. The finance and insurance now accounts for over 52% of all Canadian direct investment abroad, a total of […]
Read moreHere is a link to the CCPA study we released yesterday, analyzing the determinants of business fixed non-residential capital investment spending in Canada on the basis of quarterly data from 1961 through 2010. It formally tests for the direct significance of corporate tax variables and finds no such evidence (in either univariate or multivariate analysis). There is still an indirect impact […]
Read moreA new progressive, grassroots tax fairness advocacy organization has just been established in Canada–and its first initiative is a petition and campaign to stop additional corporate tax cuts.  The text is below.  If you are in agreement, please sign on and pass this on to your contacts. We, the undersigned, oppose additional corporate tax cuts which will give billions of dollars […]
Read moreDespite all the arguments outlined on this blog, and the federal election debates, the race to the bottom in corporate taxation seems to be alive and well in the G-7. The latest move comes from the UK, whose March budget announced a new 2 percentage point reduction in their corporate tax rate. Meanwhile, Canadian provinces have their own corporate tax […]
Read morePerhaps the most compelling villain on Star Trek: The Next Generation was the Borg, which seeks to assimilate other groups into its hive. The Macdonald-Laurier Institute seems to be performing this function for Canada’s conservative pundits (although corporate-tax cutters also resemble the Ferengi). Yesterday’s Globe featured an op-ed by Brian Lee Crowley, former President of the Atlantic Institute for Market […]
Read moreIn response to some recent PEF commentary (now in the mainstream media thanks to today’s Globe article) on corporations in Canada hoarding cash (after-tax profits greater than new investment), PEF member Eric Pineault weighs in with some more detailed analysis: The great corporate cash stash Eric Pineault As we debate the merits and uses of a corporate tax cut, corporations […]
Read moreWe already have several posts about today’s front-page Globe and Mail story, but that won’t stop me from piling on. Andrew and Marc have noted that today’s story makes points familiar to this blog’s readers. Indeed, posts questioning the alleged relationship between corporate tax cuts and business investment are almost too numerous to list. Jim, Armine, and I have all […]
Read moreFirst of all, today’s top Globe story on corporate income tax cuts not leading to increased investment is a nice example of “you heard it here first”, so a big pat on the back to Relentlessly Progressive Economics. As we like to say: tomorrow’s conventional wisdom, today. I want to take issue with Stephen Gordon’s response, an effort to torture […]
Read moreCorporate tax cuts have become a defining feature of the election campaign thus far. The Globe and Mail covered the topic today with an article entitled “Corporate tax cuts don’t spur growth“. Stephen Gordon fired off a critique of the piece in his latest blog at the Globe and Mail’s Economy Lab, to which I am also a regular contributor. […]
Read moreToday the CCPA released a study that I authored which examines and debunks one of the biggest contentions of this campaign, that corporate tax cuts create jobs. The payoff of corporate tax cuts has come under increasing scrutiny from various angles, although I focus specifically on job creation. To examine this contention, I took Canada’s biggest public companies, those on […]
Read moreIt is notable that the Globe has run a major story today – on p.1, above the fold in the print edition – drawing attention to the fact that recent corporate tax rate cuts have not produced an increase in real business investment. Reference is made to the views of labour economists. The Globe story will not be “news” to […]
Read moreCanada’s economic context at the time of Election 2011 is one of “precarious recovery”, and overall demand conditions are weakened by a few major factors. Unemployment is still just under 8%, which is good compared to the double-digit unemployment of the early 1990s, but not great compared to the expansions of the late 1990s and 2000s. Too much of the […]
Read moreI missed last week’s federal budget, but was pleased to see the quantity and quality of same-day analysis posted on this blog. Jim wrote an excellent piece, “Corporate Taxation and Investment in the 2011 Federal Budget,†about the corporate tax debate in post-budget media panels. But what struck me was David’s point about how the budget itself did not address […]
Read moreAmidst all the frenetic disarray of budget day, I had an interesting and informative exchange on CBC’s Power & Politics with John Manley, former Liberal Finance and Industry Minister, and now chief lobbyist for Canada’s corporate elite (as President and Chief Executive of the Canadian Council of Chief Executives).
Read moreAdvocates of low potash royalties have floated some pretty bizarre arguments. Last week, the Saskatchewan Party put out a news release emphasizing that local farmers use some 0.6% of provincial potash output, as though this tiny sliver of domestic consumption somehow complicates the province’s interest in maximizing revenue as a potash producer. Equally strange are claims that Alberta’s oil and […]
Read moreThis piece was initially posted on the Globe and Mail’s online business feature, Economy Lab. Join the comments section! For 18 years I’ve been part of a national project in participatory budgeting called the Alternative Federal Budget. Each year dozens of national and community organizations representing millions of Canadians convene over a six month period, debating and costing out measures […]
Read moreIn a couple of recent posts, I threw down the gauntlet for PotashCorp to disclose how much corporate income tax and Crown royalties it paid to the Government of Saskatchewan. As Bruce Johnstone reports, it has finally done so: While PotashCorp paid $77 million in resource surcharges in 2010, it also paid $82 million in corporate income taxes and $70 […]
Read moreMichael Lewis has a great article in today’s Toronto Star about the windfall that banks are reaping from corporate tax cuts. He quotes three of our favourite bloggers: Toby Sanger, Armine Yalnizyan and Jim Stanford. He also cites a BMO Capital Markets report that I shared with him. Since BMO appears to have removed this document from its website, I […]
Read moreTen days ago, Jack Mintz released yet another paper claiming that international competitiveness requires continued corporate tax cuts. In addition to the usual questionable interpretations, it featured at least one straight factual error. Mintz inaccurately reports Iceland’s 2010 statutory corporate tax rate as 15% (Table 2 on page 7 and Table 3 on page 9 in the PDF). In reality, […]
Read moreToday’s Saskatoon StarPhoenix and Regina Leader-Post cover my recent analysis of PotashCorp’s annual report. I suggested that the company may be paying less corporate income tax to Saskatchewan than to Trinidad. PotashCorp could clear things up anytime by simply disclosing the amount of corporate tax it paid to the Saskatchewan government. Rather than doing so, its spokesman argues that the […]
Read moreThe Potash Corporation of Saskatchewan posted its 2010 annual report yesterday. It’s always worth taking a closer look at documents released on a Friday afternoon. Those interested in public revenues should see pages 109, 110 and 111. Note 19’s breakdown of “Provincial Mining and Other Taxes†confirms something that I had suspected. PotashCorp paid zero Potash Production Tax in 2010. […]
Read moreStatscan investment intentions data released today show thatgrowth of  real investment by the private sector is set to slow markedly in 2011 compared to 2010. (up 3.8% vs up 8.0% in 2010.) So much for the stimulative effect of corporate tax cuts. Surprise, surprise investment is concentrated in the resource sector, especially oil, where high prices and profits guarantee high returns to […]
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