Advocates of corporate tax cuts like comparing Canada to an unweighted average of Organisation for Economic Co-operation and Development members. Since the OECD keeps admitting more microscopic economies with very low corporate tax rates, this average keeps falling regardless of whether any country actually lowers its rate. Last year’s admission of Estonia, Israel and Slovenia dragged the OECD average just […]
Read moreThe Canadian Press summary of the Prime Minister’s comments raised my eyebrows, but it was not a direct quote. So, I checked the Parliament of Canada website: Right Hon. Stephen Harper (Prime Minister, CPC): There is not a single business organization, not a single credible voice in this country, that supports the tax hikes proposed by the Liberal Party. It […]
Read moreThe main objection to my argument about the treasury transfer effect is that American companies do not actually repatriate their Canadian profits and pay US corporate tax on them. As The Globe reported: Jack Mintz, director of the School of Public Policy at the University of Calgary, said the unique tax status of U.S. companies is a moot point because […]
Read moreOver at Worthwhile Canadian Initiative (WCI), Stephen Gordon reasonably argues that economic models can be useful for policy analysis even if they lack the predictive power needed for forecasting. He writes: A well-designed model will be able to reproduce the main features of interest of the real world. More importantly, it will also be able to reproduce the main features […]
Read moreDavid Dodge is as close to an authoritative mainstream voice as we have on economic issues (not that that means he is always right, but he sure counts in the mainstream media.) Here is what David Dodge had to say on postponing corporate income tax cuts in a lecture at Queen’s a year ago. “In addition the final scheduled cut […]
Read moreStatscan economist Philip Cross weighs in on how trivial is the impact of cuts in the overall scheme of things, as reported in a fine story by Heather Scoffield of CP. I agree, but fear his career will be in serious jeopardy. Or perhaps he is on the eve of joining Munir in retirement. Minister Clement will not like this […]
Read moreA few months ago, I tore a strip off Barrie McKenna’s column on internal trade. But today I write to praise his column on corporate taxes: U.S.-based companies . . . are taxed by the Internal Revenue Service on their global income. So any profits they don’t reinvest and try to repatriate are hit with the higher U.S. rate, not […]
Read moreThe fiscal implications of corporate income tax (CIT) cuts are a key issue in the current debate. Federal cabinet ministers and Neil Reynolds have boldly asserted that lower CIT rates will increase CIT revenues. As Andrew and I have pointed out, this claim is implausible and not supported by the government’s own Department of Finance. The following table provides a closer […]
Read moreThis was posted on the Globe and Mail’s online feature Economy Lab today. My sincere thanks to all the people who have posted on the topic on this site. The Harper government ’s commitment to further reduce the general corporate income tax rate while the nation struggles with budgetary deficits has been championed by – surprise! – the corporate sector. […]
Read moreHere’s a short description of the methodology I used yesterday in explaining why allocating $3 billion of federal revenue to further corporate tax cuts (instead of other more effective stimulusmeasures) would actually destroy jobs (up to 46,000) on a net basis. It’s also available on the CAW site.
Read moreJack Mintz is out today with yet another paper applauding the federal corporate tax cut from 18% in 2010 to 15% in 2012. Revenue Fudge He claims that the revenue loss will be “relatively small†or “relatively insignificant†without actually suggesting a dollar amount (pages 3 and 20). By comparison, the Department of Finance (see Table 3.5), the opposition parties, […]
Read moreI have to assume that this week’s Conservative road show will be called People for Corporate Tax Cuts.
Read moreAndrew Jackson has engaged perhaps the strongest theoretical argument for corporate tax cuts: that they make more new investments viable by lowering the pre-tax return needed to get over an after-tax hurdle rate of return. (Indeed, I remember the C. D. Howe Institute’s Finn Poschmann lionizing Andrew Coyne for making this argument halfway through TV Ontario’s last post-budget panel.) Imagine […]
Read moreI have been reflecting a bit on the CME study of corporate taxes which Erin has previously covered quite comprehensively. This subject is clearly very much in political play at the moment. With the Liberals and the NDPÂ opposing cuts to the federal corporate income tax rate championed by the Conservatives, it merits further debate. The key argument made by […]
Read moreIt is one thing to argue (as the CME did last week) that corporate income tax cuts boost GDP via higher investment and thus generate some offsetting increase in revenues. (See Erin’s post for a good critique.) It is quite another thing for Finance Minister Flaherty to argue that CIT rate cuts generate fully offsetting CIT revenues. Here is what […]
Read moreI have reviewed Jayson Myers’ recent Canadian Manufacturers and Exporters report on corporate tax cuts, which I made public yesterday. Proponents of lower corporate taxes usually argue that these will help Canada compete with other countries in attracting internationally-mobile investment. However, as Myers admits, “over the past decade, reductions in Canada’s effective and average combined statutory corporate tax rates have […]
Read moreJayson Myers from the Canadian Manufacturers & Exporters (CME) is touting a report supposedly showing that corporate tax cuts will create 99,000 jobs. News stories indicate that it is “set for release†or “being released Wednesday morning.†I could not find the report online, so I phoned the CME. I was initially told that it would be posted around 10am […]
Read moreLast weekend, I pointed out that Neil Reynolds had misleadingly presented figures on capital-gains realizations as being capital-gains tax revenues. Tuesday’s Report on Business included the following item: Correction – January 4, 2011 U.S. capital gains tax realizations fell to 3 per cent of gross domestic product in 1987, when the rate was hiked. Incorrect information appeared in a Dec. […]
Read moreThe December 2010 issue of the quarterly Economic Climate for Bargaining publication that I produce is now on CUPE’s website in both English and French. In each issue I summarize developments and trends for the economy, labour markets, inflation and wages, and also include short pieces of 1-2 pages on related topical issues. In this issue, the focus is very much on pre-budget […]
Read moreDoing Business enjoys the highest circulation of any World Bank publication. It ranks countries based on the favourability of their regulations to business. It is like the Heritage Foundation’s Index of Economic Freedom and the Cato/Fraser Institute’s Economic Freedom of the World Report, but supported by the World Bank’s credibility and clout. (Notwithstanding corporate Canada’s incessant complaints about regulation, Canada […]
Read moreEarlier this month, I attended a very interesting conference on the taxation of multinational corporations. It included a case study of how SABMiller avoids paying tax in Africa. While many of the points presented are undoubtedly familiar to this blog’s readers, the conference put it all together with a clarity that I attempt to reproduce below. The Trouble with Transfer […]
Read moreA week ago, the Government of Saskatchewan released the Conference Board of Canada’s report on the possible Potash Corporation of Saskatchewan (PCS) takeover. It provides 77 pages of useful information, but is disappointingly thin on policy recommendations. The Conference Board downplays concerns about BHP leaving Canpotex after acquiring PCS. It argues that, with or without Canpotex, profit maximization would motivate […]
Read moreThis morning, the Canadian Foundation for Economic Education hosted a Bay Street breakfast meeting with Stockwell Day, President of the Treasury Board of Canada. Jim serves on the Foundation’s Board of Directors, but could not make today’s session. So, Armine and I ended up having breakfast with Tories at Torys. (Some other participants may not have been Tories, but I […]
Read moreBC’s carbon tax was supposed to be “revenue neutral”, meaning all carbon tax revenue would be “recycled” to British Columbians through personal income tax cuts, corporate income tax cuts and a low-income credit. When the 2008 budget launched the carbon tax, we were provided with a forecast that had revenues precisely match recycling through tax cuts and credits, with about […]
Read moreThis summer, the Ontario government has been attempting to implement its proposed public-sector compensation freeze. The provincial Finance Minister has essentially promised that he can convince organized labour to comply. But as recent news reports confirm, unions have not been volunteering for a pay freeze, especially since the government apparently has enough spare cash to implement multi-billion-dollar corporate tax cuts. […]
Read moreI have the following op-ed in today’s Regina Leader-Post. Below it is a table supporting my statement that “the mines that PCS owned in 1989 still account for 80 per cent of its potash production and capacity.†Privatizing Potash was a Costly Mistake The greatest tragedy in BHP Billiton’s $38.6-billion (U.S.) bid for the Potash Corporation of Saskatchewan (PCS) is […]
Read moreThere has been a persistent drumbeat in the American business press about corporations accumulating cash. The argument is that, while corporations are making solid profits now, they are not investing in the US for fear of anti-business policies in the future. Obama has allegedly spooked corporate America into hoarding cash rather than investing. To test that story, I looked at […]
Read moreToday’s Toronto Star features an op-ed by John Cartwright, President of the Toronto and York Region Labour Council. (I once had the chance to hear John speak at a press conference in Toronto and found him to be an oustanding public speaker. But I digress…) In the piece, he argues that “we” (I think he means both the Harper government and the […]
Read moreWith all of the attention focused on the HST implementation on July 1, most people seemed to miss the next increment of that other much-hated tax, BC’s carbon tax. As of July 1, the carbon tax is now $20 per tonne of CO2, or about 4.6 cents on a litre of gasoline. And like any two-year old, this toddling tax […]
Read moreI recently had the pleasure of making a couple of presentations on public finances in Alberta. In February, I spoke at the “Remaking Alberta†conference in Edmonton. This past week, I served on an Alberta Federation of Labour (AFL) panel in Calgary with Todd Hirsch from ATB Financial and Roger Gibbins from the Canada West Foundation. Like other provinces, Alberta […]
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