Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers


Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

The Conference Board on Weak Business Investment

I 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 Conservatives favouring lower taxes to boost investment and the opposition parties calling for the rate to be hiked.

Labour economists such as Jim Stanford and Erin Weir, as well as the Canadian Centre for Policy Alternatives, have published charts showing investments did not increase as combined federal-provincial corporate tax rates slid from about 42 per cent at the turn of the century to the current 28 per cent. . . .

The perceived lack of payoff for the many carrots thrown at firms has frustrated policy makers. Finance Minister Jim Flaherty has on several occasions urged firms to play their part. . . .

[The Conference Board’s Glen] Hodgson says the issue of why Canadian firms have lagged behind for such a long time is complex, but he believes most business decisions are rational. “It’s not a question of blame.”

I agree with Hodgson that it is not a matter of blaming or jawboning corporate Canada. Businesses do try to make rational investment decisions and corporate tax rates have little effect on those decisions.

Enjoy and share:


Comment from Denise Freedman
Time: April 30, 2011, 6:52 am

It is rational for corporations not to invest when they have made the ‘rational’ decision they will not make money, an appropriate rate of return on their ‘investment.’

They why is it ‘rational’ for us to create a political economic environment since 1980, as Stanford has shown us, to create the conditions for corporations, many foreign, to do exactly this? When they do not do so?

Is it not ‘rational’ for those of us who are actually living persons, not corporate entities, to create an environment of public goods–education, health care, social assistance, etc.–for OUR good and not THEIRS?

And it is just this stark.

Comment from Travis Fast
Time: April 30, 2011, 9:56 am

And the Zombie replies: “But, But without the tax cuts investment would have been even lower!”

Comment from jdean
Time: May 3, 2011, 12:50 pm

If corporate tax cuts have not lead to increased investment or jobs, what is the theoretical explanation for this? It’s possible to use standard economic analysis to give an answer: much of corporate profits are economic rent, also known as monopoly profits. Taxing them or untaxing them has very little effect on the behaviour of corporations – on their decisions about whether to invest in productivity or hire new workers.

Mainstream (aka neoclassical) economists de-emphasize the concept of monopoly power and economic rent simply by assuming that markets tend towards perfect competition and in the long run, surplus profits get competed away. But what if this isn’t the case? What if companies are able to consistently earn economic rents through their sheer market power or through controlling the laws of the land? In short, through rent seeking.

The says this about economic rent: “Reducing rent does not change production decisions, so economic rent can be taxed without any adverse impact on the real economy, assuming that it really is rent.”

Write a comment

Related articles