This oped by Daniel Sperling in the LA Times appears to bridge, via California, my and Andrew’s positions on the impact of the Green’s proposed carbon tax: The one sector where carbon taxes will work well is electricity generation, which accounts for 20% of California emissions (and 40% of U.S. emissions). The carbon tax works because electricity producers can choose […]
Read moreMore fascinating stuff from that CIBC report follows: While many of the big names in the mining and metal processing industry have been spoken for, there are even larger capital inflows potentially still ahead in the energy sector. Thanks to the oil sands, and a still laissez-faire attitude towards ownership of those resources, Canada represents anywhere from 50-60% of the […]
Read moreThe Globe and Mail ran an editorial last Friday (now subscriber only content)Â Their summary reads:Â “We have grown used to the notion that our governments can run up budget surpluses. If only they could show some vision for putting the money to work.Statistics Canada reported yesterday that all levels of Canadian government posted a combined surplus of $29-billion […]
Read moreAn article in the Globe wonders what comes next for a Harper government that seems stuck: unable to move up in the polls despite delivering on its most populist proposals, but unable to deliver the goods for its core supporters because of, well, the polls. And interestingly, its best moves have come by doing the right thing and breaking its […]
Read moreAs Andrew Jackson points out, there are some interesting musings in the US about progressive taxation. In a recent post, Mark Thoma cites four good reasons for progressive taxation: Personally, I’m not much on redistribution simply to make outcomes more equal. But there are (at least) three reasons to depart from this. First, when there is change such that makes […]
Read morehttp://www1.hamiltonproject.org/views/papers/furman/200706summers_bordoff.htm At the Canadian Economics Association, I presented a paper (to be published by the CCPA Inequality Project this Fall) on the case for more progressive taxation of income. In a nutshell, my argument was that the tax side of the tax/transfer system must be relied on more to counter growing income inequality, since only the tax side can close […]
Read moreThe following op-ed, which is printed in today’s Vancouver Sun, picks up some key themes from this blog:   Subsidizing the transfer of jobs abroad Vancouver Sun Monday, June 4, 2007 Page: A7 Section: Editorial Byline: Erin Weir Source: Special to the Sun At a time when Kitimat and many other Canadian communities are losing manufacturing jobs, why would […]
Read moreProgressives often present corporate-tax cuts as having transferred billions of dollars from the Canadian government to big business. This characterization is largely correct, but neglects the fact that many foreign-based corporations operating in Canada are also taxed on a worldwide basis by foreign governments. To the extent that corporations in Canada are affiliates of American and Japanese multinationals, Canadian corporate-tax […]
Read moreLarry O’Brien’s train wreck of a mayoralty, which continues to play out on the Ottawa Citizen’s front pages, is an instructive microcosm of how things might look if the Canadian Taxpayers Federation (CTF) were running a government near you. O’Brien’s Chief of Staff is, of course, Walter Robinson, the CTF’s long-time Federal Director. UPDATE (May 26): Today’s National Post includes […]
Read moreEarlier today, I appeared as a witness before the House of Commons Finance Committee regarding “Tax Havens and Tax Avoidance”. The panel included a representative from Barbados who contended that it is not a tax haven. A business-school professor supported him by arguing that low-tax conduits for Canadian investment abroad benefit Canada. A couple of tax specialists from Quebec made the […]
Read moreAs foreshadowed last week and reported below, Flaherty has narrowed non-deductibility to apply only to interest already deducted abroad and delayed its implementation for five years. In other words, corporations will generally be allowed to deduct foreign-affiliate interest costs in Canada even though they generally do not pay Canadian tax on their foreign-affiliate income. Flaherty retreats on tax measure, but […]
Read moreSince I first posted about Alcan on May 1, it has certainly become more newsworthy! The Canadian Labour Congress sent the following letter to the Prime Minister yesterday. I will appear on “Goldhawk Live” to discuss the issue on Sunday at 8pm EST. Hopefully, the letter and I are more coherent than Tuesday’s Globe and Mail editorial, which decried “Ottawa’s […]
Read moreRecently, CLC President Ken Georgetti sent the following letter to Jim Flaherty: May 8, 2007 Honourable Jim Flaherty, P.C., M.P. Minister of Finance House of Commons Ottawa, ON K1A 0A6 Dear Minister: On behalf of the Canadian Labour Congress (CLC), I write to express our support for your promise, in Budget 2007, to end the corporate-tax deduction for interest on […]
Read moreTrue to form, the Liberals will put forward a motion tomorrow calling for the tax-deductibility of foreign-affiliate interest and for lower taxes on income trusts in the name of economic nationalism. UPDATE (May 10): The Canadian Labour Congress has released a letter opposing the motion.
Read moreIt looks as though Jim Flaherty’s strange journey around the tax-deductibility of interest on loans to finance foreign affiliates is about to end badly. The following story seems to confirm that, under pressure from big business and the Liberals, he is set for “a complete reversal of the budget announcement”: Flaherty retreats from tax deduction on foreign investment loans Eric […]
Read moreSo just as I was about to leave to give a lecture on taxes (and why high tax Nordic countries are not in economic ruins), my tax return for 2006 arrived in the mail. This is truly good news because I got a big refund. In all, I paid about 20% of my income in taxes last year, which seems […]
Read moreUnfortunately, it looks like the Finance Minister may be folding on foreign-affiliate interest-deductibility.
Read moreThe Globe and Mail has run three major stories about Alcan in the past few days: Act I: “Alcan says tax makes it takeover bait” (April 27) Act II: “B.C. town may fight Alcan” (April 28) Act III: “$7-billion project deepens Alcan’s Gulf ties” (May 1) Alcan is a major Canadian-based multinational that produces aluminum. Bauxite, the basic raw material, […]
Read moreCrawl Across the Ocean, which has infrequent but excellent posts, features an amusing and accurate critique of the Fraser Institute’s “Consumer Tax Index.† MORE (April 29): In particular, this critique points out that the political right defines “essential” very narrowly when measuring poverty or railing about taxes, but very broadly when limiting the right to strike.
Read moreJeffrey Simpson has a good column in today’s Globe on the new Conservative climate-change plan. He makes the same point that I did about the impossibility of meeting Kyoto’s first-round targets and the importance taking our second-round targets seriously. He also points out how thin all of these climate-change “plans” have been. To me, a “plan” is a set of […]
Read moreAl Gore has famously and correctly characterized the scientific consensus about global warming as “An Inconvenient Truth”. In today’s Financial Post, Buzz Hargrove identifies another “inconvenient truth” for Canadian progressives: “it is impossible to achieve Kyoto targets in the time frames spelled out in Kyoto.” Canada’s Kyoto commitment was relatively modest and achievable. However, after signing it, the Liberal government […]
Read moreApparently following Andrew Coyne’s advice, Dion seems to be positioning himself to the right of Harper on tax policy. This move casts further doubt on Dion’s promise of a progressive alliance with the Greens. When the Conservatives cut the GST, the Liberal response was not that this move would take money away from important public services, but that it would […]
Read moreBudget 2007 made interest on funds borrowed in Canada to finance foreign business operations nondeductible from Canadian corporate taxes. Finance Canada suggested that this arcane reform would raise relatively little revenue and, initially, business barely seemed to notice. More than a week after the budget, a Globe editorial and a Financial Post op-ed criticized the change as a huge ‘tax […]
Read moreIn Thursday’s Financial Post, the Canadian Association of Income Funds articulated the argument suggested by Elizabeth May: the devaluation of income trusts has made them vulnerable to takeovers by foreign private-equity. Certainly, many enterprises that paid little tax as income trusts will continue to pay little tax by converting to new organizational forms, such as private equity or publicly-traded corporations. […]
Read moreToday’s Financial Post reports that Ontario’s Premier “is exploring the possibility of joining the B.C.-Alberta free trade initiative.†Specifically, it quotes him as saying, “what I have done is talked to [B.C. Premier] Gord Campbell and [former Alberta premier] Ralph Klein, in the past, and said, you guys seem to have done something which sounds good. I’m not sure the […]
Read moreThis week, I am back home in Saskatchewan, where debate on TILMA is really heating up. (My location and time zone also explain why Andrew filled in for me on today’s Labour Force Survey.) Brad Wall leads the Saskatchewan Party (the renamed Conservatives) and hence the Official Opposition. While some TILMA proponents have withdrawn from the deeply flawed Conference Board […]
Read moreA rather strange – not to say bizzarre – hypothesis on the Conservative decision to restrict income trusts was put forward today (March 31) by Green Party Leader and ostensible progressive, Elizabeth May. Speaking to the Council of Canadians Integrate this! conference on the “deep integration” Security and Prosperity Partnership with the US, May said she found allegations of revenue […]
Read moreFrom the Toronto Star March 23, 2007, p. A21. Working poor get little relief from Flaherty Upon closer inspection, the Conservative finance minister’s Working Income Tax Benefit falls way short of the original proposal first floated by his Liberal predecessor Ralph Goodale, notes John Stapleton March 23, 2007 There was much anticipation that the latest federal budget would […]
Read moreIn yesterday’s Financial Post, Jack Mintz repeated the notions that the Budget featured “no broad tax relief” and big spending. He wrote, “Certainly, the idea of making the tax structure more efficient, fair and simple takes a back seat to the rash of special politically driven measures.” However, the tax measures that Mintz specifically endorses – the Child Tax Credit, […]
Read moreIn contrast to my last post, much of the business press and many conservative commentators have characterized Budget 2007 as “big spending” with “no broad-based tax cuts.” These claims reflect two (usually unstated) contentions: that spending should be measured in absolute terms rather than in relation to the economy and that tax credits are not tax cuts. Andrew Coyne is probably the […]
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