On Tuesday, the Ministry of Finance released “Ontario’s Tax Plan for Jobs and Growth: Technical Paper on How the Tax Changes Affect People.†This study is an attempt to counter the Statistics Canada study released by the NDP a month ago. Until recently, proponents were claiming that the HST will simultaneously deliver huge savings to business, create loads of new […]
Read moreArthur Laffer had a boldly titled op-ed in Monday’s Wall Street Journal, “Tax Hikes and the 2011 Economic Collapse.†This piece has been invoked at least once every ten minutes on each subsequent episode of The Kudlow Report. US tax rates will rise in 2011, when the Bush tax cuts expire. Laffer argues that, to avoid these higher tax rates, Americans […]
Read moreFor years we have been asking Stephen Gordon to provide the evidence for lower corporate taxes. Like Stephen I like the Nordic model and take away from it that tax mix matters, so funding a large public sector may require more than taxes on “people we do not know†(ie corporations and the rich), so consumption taxes need to part […]
Read moreThere have been clouds and clouds of smoke generated about the impact of Ontario’s impending introduction of its Harmonized Sales Tax.  Fortunately there is finally now some substance out there in terms of a detailed analysis conducted by Statistics Canada that was recently released by the Ontario NDP. And what is shows is quite surprising. Much of the blame for all the […]
Read moreIn February, Canada experienced its slowest economic growth since October 2009. Of course, no one expected the initial rapid rebound out of recession to continue forever. Monthly growth of 0.3% corresponds to annual growth of 3.7%, which is quite strong by historical standards and stronger than the 3.2% US growth estimated this morning for the first quarter. Yesterday, Statistics Canada reported […]
Read moreWhen confronted with a document as muddled as yesterday’s Canadian Consumer Tax Index, a major challenge is figuring out where to begin in critiquing it. Indeed, this one Fraser Institute report supplied enough fodder for three separate posts today by Iglika (and she is promising a fourth!) I think that the report’s worst flaws are overstating average taxes and ignoring […]
Read moreMichael Ignatieff sent an April Fool’s Day letter to the Canadian Chamber of Commerce. It marshalled compelling evidence against more corporate tax cuts, but insisted that the Liberals still favour more corporate tax cuts: In a study that KPMG describes as “the most thorough comparison of international business locations ever undertaken by KPMG,†it was demonstrated that Canada is already […]
Read moreYesterday, I appeared on CBC’s Lang & O’Leary Exchange regarding corporate taxes in response to Ignatieff’s announcement and KPMG’s 2010 Competitive Alternatives report. (To watch the video, search for “langâ€, click “Most recentâ€, select March 31, and go 13 minutes in.) My co-panellist, John Risley, seemed more interested in talking about the “dinosauric†nature of unions and the need to […]
Read moreLast night, I went to sleep early before watching any coverage of the Liberal Policy Conference. This morning, a well-rested Erin Weir marched into the office with such purpose that I did not even look below the fold on The Globe and Mail’s front page. Imagine my pleasant surprise when I got an e-mail about Michael Ignatieff proposing to cancel […]
Read moreHere is some of what Terry Corcoran wrote in today’s Financial Post about Bank of Canada Governor Mark “Carney’s suggestion that Canadian business has so far ‘disappointed’ because it has failed to revive Canada’s lagging productivityâ€: Central bankers appear to know many things, and have big fancy computer systems and economic models to tell them what’s happening in an economy […]
Read moreToday’s provincial budget continues previously announced stimulus in the short term and projects severe, but largely unspecified, spending restraint in the long term. The most surprising new measure, a lower electricity rate for northern Ontario industry, is of little fiscal significance (costing just 0.1% of the budget). A less surprising measure of potentially greater fiscal significance is the attempt to […]
Read moreOver at Worthwhile Canadian Initiative, Stephen Gordon critiques the last federal NDP platform’s reference to “Canada’s wealthiest corporations†on the grounds that people, not corporations, own things. But as Declan points out in several pithy comments on Stephen’s post, corporations clearly can and do own things. The corporations that own the most valuable things in Canada can quite reasonably be […]
Read moreOntario Premier Dalton McGuinty has taken a shine to the Canadian Centre for Policy Alternatives (CCPA). Over the past month, he and other Liberals have repeatedly cited it. Indeed, McGuinty invoked the CCPA’s name four times in the provincial legislature on February 17. However, he first did so the day before that: Ms. Andrea Horwath: Can the Premier explain why, […]
Read moreYesterday afternoon, I caught the subway down to Queen’s Park to find out whether the throne speech would shed any light on the provincial government’s privatization plans. As it turned out, the speech included only a couple of lines on Crown corporations. But I ran into blogger extraordinaire Warren Kinsella at the legislature and note that he has reprimanded Tim […]
Read moreAs if there weren’t already enough reasons to eliminate the egregious stock option tax loophole, a column by Eric Reguly in this month’s Report on Business magazine highlights yet another. This reason helps to explain why we had such a booming stock market up to 2008, but little growth in real investment and productivity. First of all, the stock option […]
Read moreCanada’s industrial engine appeared to restart in December. Gross Domestic Product (GDP) expanded by 0.6% that month, led by particularly strong growth in resource extraction, utilities, manufacturing and wholesale trade. December propelled the fourth quarter of 2009 to 1.2% growth, the fastest quarterly growth in a decade. Canada’s Recovery in Perspective While encouraging, the Canadian recovery has been weaker than […]
Read moreWe’ve been told for years that corporate tax cuts would work like viagra to boost private sector investment and productivity, and no doubt we’ll hear much more about it in next week’s budget. But it just ain’t working. Today’s release by Statscan of private and public investment intentions shows just how limp private sector investment is expected to be in the coming […]
Read moreLast week, I argued that discussions about reversing tax cuts should not be limited to the GST. To advance this debate, I have crunched some numbers on corporate taxes using federal budget documents and tax expenditure reports. Budget 2009 (see Table A2.2 on page 255) indicates that federal corporate tax cuts since 2006 will reduce annual revenue by $14.9 billion […]
Read moreLast Monday, I testified twice to the Ontario legislature’s finance committee: as an “expert witness” and then on behalf of the United Steelworkers. I emphasized the provincial deficit’s manageability, the folly of trying to reduce it through cutbacks or privatization, the importance of maintaining tax rates to bolster future revenues, and the advantage of targeted measures to create jobs rather […]
Read morePublic debate in Ontario tends to frame sales-tax harmonization either as an unjustified “tax grab” or as a needed contribution to the deteriorating provincial budget.  Both views incorrectly assume that the HST will increase government revenues. In fact, the original proposal was more or less revenue neutral. Removing sales tax from business inputs and cutting personal income taxes would have offset […]
Read moreWhen Jim’s study of the proposed Canada-Korea “free trade†deal provoked a direct and excessive response from the federal government three years ago, he correctly concluded that his study had “hit the pig.†Since I grew up in Saskatchewan and am currently posting from Mississippi, I have at least as much credibility as Jim in invoking farmyard analogies. And it […]
Read moreA couple of weeks ago, the Canadian Centre for Policy Alternatives released a paper of mine about how Canada’s corporate tax cuts will transfer revenue to the American federal treasury. That day, I debated this issue with Don Drummond on the Business News Network (video clip). Also that day, Jack Layton raised it in Question Period. Ontario NDP leader Andrea Horwath had raised it at Queen’s […]
Read moreThis past week, Jack Mintz issued a report (PDF) praising Ontario’s last provincial budget. I like East Side Mario’s because it features both all-you-can-eat bread and all-you-can-eat salad. So, it is not surprising that a corporate tax-fighter would love a budget featuring both corporate income tax cuts and the removal of sales tax from business inputs. Queen’s Park is giving […]
Read moreAs noted before on this blog, federal and provincial corporate tax cuts will redirect revenue from Canadian governments to the U.S. treasury. Today, the Canadian Centre for Policy Alternatives released a short paper (PDF) I wrote on the treasury transfer effect. My executive summary follows: The U.S. government taxes American corporations on a worldwide basis. Profits repatriated from other countries are subject to […]
Read moreA couple of days ago, I took part in a TV Ontario panel about sales-tax harmonization. I emphasized a couple of points that will be familiar to readers of this blog. First, harmonization is unlikely to have much effect on capital investment because many capital goods are already exempt from the existing provincial sales tax. Second, if the principle is […]
Read moreI recently questioned whether Tim Hortons’ reorganization as a Canadian corporation would bring any additional jobs or tax revenue to Canada. Aaron Wherry since did something that journalists covering the Prime Minister’s photo-op on this issue should have done: he asked the company directly. Its response is now available on the Macleans blog. Of course, Tim Hortons hopes to expand […]
Read moreYesterday, the Prime Minister’s office put out a press release trumpeting Tim Hortons’ reorganization as a Canadian company as validation of deep federal corporate tax cuts. There was no real news: shareholders predictably ratified a decision that had been extensively reported back in June, when Tim Hortons management described it as “a pretty bland corporate announcement.” Nevertheless, far too many journalists […]
Read moreLast night, I saw the North American premiere of Michael Moore’s latest movie at the Toronto International Film Festival. Ironically, it was held in the Visa Screening Room, which grants preferential access to bearers of Visa Gold, Platinum or Infinite credit cards. (The unwashed masses who use MasterCard, AMEX or lower grades of Visa waited in a separate line.) While […]
Read moreShould we care that the marginal effective tax rate on capital is higher in Prince Edward Island than in Serbia? Of course, this question is a joke. But the C. D. Howe Institute actually did put out a press release (PDF) last week singling out PEI for its allegedly high business taxes compared to an average of 80 countries, among […]
Read moreA key justification for small-business tax breaks is that small enterprises are supposedly engines of job creation. The Canadian Federation of Independent Business’ (CFIB) oft-repeated claim that “small- and medium-size businesses employ more than half the workforce” (PDF) cites Statistics Canada’s Survey of Employment, Payrolls and Hours. A closer examination of that Survey casts doubt on this statement, the quantity […]
Read more