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Archive for 'corporate income tax'

Ten Things to Know About the Challenges of Ending Homelessness in Canada

On November 18, I gave a presentation on “ending homelessness” at the 7 Cities Leadership Summit in Edmonton. My PowerPoint slides can be downloaded here. Here are ten things to know about “ending homelessness” in Canada: 1. In 2008, Calgary became the first Canadian municipality to publicly commit to “ending homelessness.” More than a dozen […]

Small Business Taxes, Big Loopholes

by: Kaylie Tiessen & David Macdonald Small business taxes made the news last week when, during a CBC interview, federal Liberal leader Justin Trudeau suggested many business owners are using the small business tax rate as a de facto in-country tax shelter. Responding to the interview, Conservative leader Stephen Harper accused Trudeau of taking aim […]

Canada’s failed experiment with corporate income tax cuts

  After a generation of comparatively high corporate income tax (CIT) rates, in the late 1980s Canadian governments at the federal and provincial levels began a series of corporate income tax reforms. According to many mainstream (‘neoclassical’) economists, reducing CIT rates was a wise public policy. A reduced CIT rate means a reduction in the […]

Balanced Budget Myopia Breaks Both Ways

Opinions on deficit budgeting have become a short-hand litmus test in Canadian politics. Deficits are left-wing and balanced budgets are right-wing austerity.  Economists know that there is virtually no difference between a small surplus and a small deficit, but politicians and voters are a different story. I have spent the past three and half years railing […]

Is Harper right? Did corporate tax cuts really pay for themselves?

In a little noticed comment, Prime Minister Stephen Harper recently was reported to say: “Dropping our tax rate has not caused the government’s corporate income tax revenues to fall, which indicates that it does in fact attract business.” No one seems to have questioned his statement, even though it was made on the same day […]

Corporate Cash Stash Surpasses National Debt

Today’s National Balance Sheet Accounts indicate that the amount of cash held by private non-financial corporations in Canada soared from $591 billion in the third quarter of 2013 to $626 billion in the fourth quarter of 2013. Corporate Canada’s accumulated stock of cash now exceeds the federal government’s accumulated deficit, which was $612 billion at […]

Corporate Olympics: Profit Sprint vs. Investment Crawl

Statistics Canada reported today that private and public investment intentions are up by 1.4% for 2014, even weaker than Canada’s investment growth of 1.5% in 2013. Private-sector investment intentions are only 1.3% higher this year, a far cry from the growth of after-tax corporate profits. Yesterday, Statistics Canada reported that net profits were 17.3% higher […]

PEF Session at the House of Commons Finance Committee

The Progressive Economics Forum (PEF) normally hosts sessions at the Canadian Economics Association’s annual conference. But the House of Commons finance committee threw most of the PEF members testifying in its pre-budget consultations onto the same panel on November 21 and then moved it to a room without TV. MP Randy Hoback participated in the first […]

A Nuclear Error: Uranium Royalty Cuts

On Thursday’s Lang & O’Leary Exchange (at 24:45 in this CBC video), I noted that while the Government of Canada just signed a deal with Kazakhstan allowing Cameco to invest more in that country’s uranium industry, the Government of Saskatchewan recently slashed its uranium royalties to encourage Cameco to invest in the province rather than […]

Canada’s (not so incredible) shrinking federal government

Buried in the federal government’s recent Update of Economic and Fiscal Projections are figures showing the Harper government is set to squeeze federal government’s role to the smallest it has been in seventy years.   (Bill Curry at the Globe also just wrote about this, but without figures further back than 1958). Total federal government spending as a share […]

Good Time to Rethink Corporate Tax Cuts

Canada’s macroeconomy continues to be lethargic at best, and there is growing recognition that the continuing sluggishness of business capital spending since the 2008-09 crisis is a big part of the reason why.  Governments are in austerity mode; consumers are maxxed out and cautious about new spending; our exports are restrained by an overvalued dollar and uncertain […]

Do C. D. Howe’s Numbers Support its Policies?

The basic storyline of today’s C. D. Howe Institute “E-Brief”, “Canada Lagging Peers in 2013 Business Investment Growth,” is that corporate tax cuts helped boost investment per worker in Canada above the OECD average. Yet corporate Canada is slipping in 2013 and apparently needs more tax cuts. However, the C. D. Howe Institute’s own graph […]

What’s a Point of Corporate Tax Worth?

Tom Mulcair’s recently reiterated unwillingness to raise personal tax rates puts the spotlight on corporate taxes. But how much revenue is at stake? Three and a half years ago, I posted a fiscal breakdown of Harper’s corporate tax cuts and how much revenue could be retained by stopping or reversing them. These figures, based on […]

Why Is Tom Mulcair Opposed to Tax Increases?

A recent online article suggests that Federal NDP Leader Thomas Mulcair is opposed to increasing federal tax rates. I find this quite surprising. According to the August 8 article: Mulcair seemed surprised when he was asked if taxes would go up under an NDP government. “You’re the first person who’s ever asked me that,” he […]

Don’t Privatize ISC

My op-ed in today’s Saskatoon StarPhoenix (page A11): Privatizing ISC is a poor deal for Saskatchewan The provincial government estimates that selling 60 per cent of the Information Services Corporation will raise up to $120 million for infrastructure investment. Is that a good deal for the people of Saskatchewan? Last year, ISC generated $20 million […]

Provincial Corporate Taxes: A 12% Floor?

In his 2007 “Economic Statement,” Jim Flaherty threw down the gauntlet for provincial governments to cut their corporate income tax rates to 10%. Initially, it seemed like he might succeed in stampeding the provinces down to that level. Alberta and Quebec were already at 10% (although Quebec had announced an increase to 12% in exchange […]

Fairness by design: a framework for tax reform in Canada

A new CCPA (National) report by Marc Lee and myself argues that Canada’s tax system needs a “fairness” overhaul and presents a framework for progressive tax reform. Those of you who have been following our tax work so far will find this study a great complement to the BC Tax Options Paper. Tax policy is […]

Effective Corporate Tax Rate Falling

Further to my earlier post critiquing the recent  Mintz study –  which argued that cuts in corporate tax rates are not significantly denting corporate tax revenues – I looked up the effective corporate tax rate (income tax paid as a percentage of taxable corporate income.) Here is what shows up on CANSIM 180-0003.   2006 […]

Do Corporate Tax Cuts Really Pay For Themselves?

A new paper by Jack Mintz ( with Duanjie Chen) argues that “corporate tax reductions of more than 30% since 2000 have, contrary to the critics’ cries, failed to make an appreciable dent in tax revenues thanks to multinationals habit of shifting profits to Canada to take advantage of lower rates.” This is the subject […]

More Dead Money

The sector and financial-flow accounts released with today’s GDP figures indicate an expansion of the pool of dead money flagged by this blog and by Mark Carney. The National Balance Sheet Accounts have not yet been released for the second quarter, so we cannot update the accumulated total of $526 billion. However, the updated Financial […]

Dead Money

Kudos to Bank of Canada Governor Mark Carney for raising the profile of the over $500 billion Canadian corporations are holding in excess cash surpluses and not investing in the economy, which garnered front page coverage (and kudos to the CAW for inviting him to speak.) It’s not the first time he’s raised this  concern. […]

Agreeing with Hoback’s Headline

I have the following letter in today’s Prince Albert Daily Herald (page 4): Reinvest Resource Wealth in Saskatchewan To the editor: I strongly agree with the title of MP Randy Hoback’s letter: “Siphoning money out of the west is wrong” (June 9). My proposal is to keep more money in Saskatchewan by collecting more provincial […]

Canada’s Self-Imposed Crisis in Post-Secondary Education

On June 7, I gave a keynote address to the Alberta Union of Provincial Employees Education Sector Conference.  My PowerPoint presentation (with full references) can be found at this link. Points I raised in the address include the following: -Canada’s economy has been growing quite steadily over the past three decades, even when one adjusts […]

Mining in the NWT: Who Gets What?

In a recent blog post at Northern Public Affairs, Stephanie Irlbacher-Fox looks at the issue of ‘who gets what?’ when a mine is developed in the Northwest Territories (NWT). Here is an excerpt from the post: – The resource extractor: they pay royalties (the NWT has the lowest royalties in the world), and costs of […]

Quebec Tuition: Between a Rock and Hard Place?

In the context of student protests over Quebec tuition fees, my friend Luan Ngo has just written a very informative blog post on Quebec’s fiscal situation. While I encourage readers to read his full post, I do want to use the present space to make mention of three important points he makes: -On a per […]

Provincial and State Corporate Taxes

The following commentary also appears on The Globe and Mail’s Global Exchange blog: What Obama’s Corporate Tax Proposal Means for Canada Last week, there was much consternation in Canada’s business press that some modest reversals of provincial corporate tax cuts and President Obama’s proposed corporate tax changes could erode our competitiveness. Canadians should maintain a […]

McGuinty’s Business Tax Breaks

An interesting nugget in last week’s Drummond report is Table 11.1, an updated version of Table 2 from “Ontario’s Tax Plan for Jobs and Growth” (2009). It provides a sectoral breakdown of the McGuinty government’s recent business tax breaks: HST input tax credits, cutting the corporate income tax, and eliminating the corporate capital tax. The […]

Ontario’s Not Digging Deep Enough

PricewaterhouseCoopers’ biennial guide to Canadian mining taxation, Digging Deeper, features a comparative summary of royalties, mining taxes and corporate taxes for a hypothetical gold mine. This approach differs from the table I posted yesterday, which displayed royalty and mining tax revenue as a share of the minerals actually extracted from different provinces and territories in 2010. However, […]

The Race To The Trough: What Did Corporate Tax Cuts Deliver?

The CLC today celebrated Corporate Tax Freedom Day – defined as the day on which corporations have paid their share of all government taxes.  It featured a race of mechanical pigs to a trough full of cash – with the pigs wearing the colours of leading Canadian corporations with large cash reserves. Watch the video. […]

Corporate Taxes and Investment in Ontario

Last week, Ontario’s Ministry of Finance released the Ontario Economic Accounts for the third quarter of 2011. As The Globe reported, business investment was less than impressive: . . . investment in machinery and equipment fell slightly by 0.2 per cent between June and September, 2011, prompting Ontario Finance Minister Dwight Duncan to fire a […]