BC to Raise Corporate Taxes

Amazingly, BC’s government has joined its official opposition in proposing to restore the provincial corporate income tax rate from 10% to 12%. The same government that cut from 12% to 10% would now reverse itself as part of a last-ditch effort to save the HST. Revenue from a higher corporate tax rate would help finance a lower HST rate. According […]

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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 […]

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The Treasury Transfer Effect – You Read It Here First

Munir Sheikh, former head of Statistics Canada and of tax policy at Finance Canada, has an op-ed in today’s Globe: “A Canada-U.S. tax gap means a Canada-U.S. tax transfer.” As he notes, “any U.S. citizen, resident or company earning income in Canada is subject to U.S. tax, with a credit for Canadian tax paid or accrued.” So, slashing Canada’s corporate […]

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Saunders and The Value of CIT Cuts, Part I

Doug Saunders, of the Globe and Mail, has gamely launched a real and meaningful discussion about corporate tax cuts on these pages. See the comments section of this post. Since that forum was getting unwieldly, I’m starting a new post. Doug’s stated pursuit (and mine, and I wager most readers’) – how to harness growth to maximize social welfare – […]

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The Legend of Zero

No politician is talking about it, but there is a growing debate about corporate tax cuts, and it’s not about whether they should go up or down 1.5 percentage points. It’s about getting rid of them. Zero corporate income taxes. It is fast becoming the legendary goal for tax reform in some opinion-makers’ minds, and they are saying that economic […]

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Simpson Walks the Party Line on Corporate Taxes

Yesterday’s Jeffrey Simpson column was entitled, “Walking the Line on Corporate Tax Cuts.” Incredibly, he walks the narrow 1.5% line between the Liberal and NDP proposals. To his credit, Simpson takes an open-minded look at the evidence, which indicates “no discernible links” from corporate taxes to employment or investment. On this basis, he accepts the Liberal proposal to raise revenue […]

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Canada’s Caribbean Bank Tax Holiday

There’s a disturbing trend buried in this morning’s report by Statscan on Canada’s foreign direct investment (FDI) abroad.  Not only is an increasing share of Canadian direct investment abroad going through finance and insurance industries, but a growing share is also being funnelled into tax havens. The finance and insurance now accounts for over 52% of all Canadian direct investment abroad, a total of […]

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Historical Analysis of Business Investment and Taxes Going Back to 1961

Here is a link to the CCPA study we released yesterday, analyzing the determinants of business fixed non-residential capital investment spending in Canada on the basis of quarterly data from 1961 through 2010.  It formally tests for the direct significance of corporate tax variables and finds no such evidence (in either univariate or multivariate analysis). There is still an indirect impact […]

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Canadians for Tax Fairness, Stop Corporate Tax Cuts petition

A new progressive, grassroots tax fairness advocacy organization has just been established in Canada–and its first initiative is a petition and campaign to stop additional corporate tax cuts.   The text is below.   If you are in agreement, please sign on  and pass this on to your contacts. We, the undersigned, oppose additional corporate tax cuts which will give billions of dollars […]

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Why is BC’s business sector so small?

Despite all the arguments outlined on this blog, and the federal election debates, the race to the bottom in corporate taxation seems to be alive and well in the G-7. The latest move comes from the UK, whose March budget announced a new 2 percentage point reduction in their corporate tax rate. Meanwhile, Canadian provinces have their own corporate tax […]

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The Borg and Corporate Taxes

Perhaps the most compelling villain on Star Trek: The Next Generation was the Borg, which seeks to assimilate other groups into its hive. The Macdonald-Laurier Institute seems to be performing this function for Canada’s conservative pundits (although corporate-tax cutters also resemble the Ferengi). Yesterday’s Globe featured an op-ed by Brian Lee Crowley, former President of the Atlantic Institute for Market […]

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The Great Corporate Cash Stash

In response to some recent PEF commentary (now in the mainstream media thanks to today’s Globe article) on corporations in Canada hoarding cash (after-tax profits greater than new investment), PEF member Eric Pineault weighs in with some more detailed analysis: The great corporate cash stash Eric Pineault As we debate the merits and uses of a corporate tax cut, corporations […]

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Corporate Taxes: You Read it Here First

We already have several posts about today’s front-page Globe and Mail story, but that won’t stop me from piling on. Andrew and Marc have noted that today’s story makes points familiar to this blog’s readers. Indeed, posts questioning the alleged relationship between corporate tax cuts and business investment are almost too numerous to list. Jim, Armine, and I have all […]

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Untying the Gordonian knot

First of all, today’s top Globe story on corporate income tax cuts not leading to increased investment is a nice example of “you heard it here first”, so a big pat on the back to Relentlessly Progressive Economics. As we like to say: tomorrow’s conventional wisdom, today. I want to take issue with Stephen Gordon’s response, an effort to torture […]

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Corporate Tax Cuts: Big Costs but no Extra Jobs

Today the CCPA released a study that I authored which examines and debunks one of the biggest contentions of this campaign, that corporate tax cuts create jobs. The payoff of corporate tax cuts has come under increasing scrutiny from various angles, although I focus specifically on job creation. To examine this contention, I took Canada’s biggest public companies, those on […]

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Corporate Tax Cuts and Investment

It is notable that the Globe has run a major story today – on p.1, above the fold in the print edition – drawing attention to the fact that recent  corporate tax rate cuts have not produced an increase in real business investment. Reference is made to the views of labour economists. The Globe story will not be “news” to […]

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Robin Hood Economics

Canada’s economic context at the time of Election 2011 is one of “precarious recovery”, and overall demand conditions are weakened by a few major factors. Unemployment is still just under 8%, which is good compared to the double-digit unemployment of the early 1990s, but not great compared to the expansions of the late 1990s and 2000s. Too much of the […]

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Low Taxes for Whom? Flaherty’s Rhetorical Retreat

I missed last week’s federal budget, but was pleased to see the quantity and quality of same-day analysis posted on this blog. Jim wrote an excellent piece, “Corporate Taxation and Investment in the 2011 Federal Budget,” about the corporate tax debate in post-budget media panels. But what struck me was David’s point about how the budget itself did not address […]

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Potash Royalties: Lessons from Def Leppard

Advocates of low potash royalties have floated some pretty bizarre arguments. Last week, the Saskatchewan Party put out a news release emphasizing that local farmers use some 0.6% of provincial potash output, as though this tiny sliver of domestic consumption somehow complicates the province’s interest in maximizing revenue as a potash producer. Equally strange are claims that Alberta’s oil and […]

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An Alternative Budget: Making Jobs, Not War

This piece was initially posted on the Globe and Mail’s online business feature, Economy Lab. Join the comments section! For 18 years I’ve been part of a national project in participatory budgeting called the Alternative Federal Budget. Each year dozens of national and community organizations representing millions of Canadians convene over a six month period, debating and costing out measures […]

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PotashCorp’s Fuzzy Math

In a couple of recent posts, I threw down the gauntlet for PotashCorp to disclose how much corporate income tax and Crown royalties it paid to the Government of Saskatchewan. As Bruce Johnstone reports, it has finally done so: While PotashCorp paid $77 million in resource surcharges in 2010, it also paid $82 million in corporate income taxes and $70 […]

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Banking on Corporate Tax Breaks

Michael Lewis has a great article in today’s Toronto Star about the windfall that banks are reaping from corporate tax cuts. He quotes three of our favourite bloggers: Toby Sanger, Armine Yalnizyan and Jim Stanford. He also cites a BMO Capital Markets report that I shared with him. Since BMO appears to have removed this document from its website, I […]

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Mintz: Wrong Again on Corporate Taxes

Ten days ago, Jack Mintz released yet another paper claiming that international competitiveness requires continued corporate tax cuts. In addition to the usual questionable interpretations, it featured at least one straight factual error. Mintz inaccurately reports Iceland’s 2010 statutory corporate tax rate as 15% (Table 2 on page 7 and Table 3 on page 9 in the PDF). In reality, […]

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PotashCorp Responds

Today’s Saskatoon StarPhoenix and Regina Leader-Post cover my recent analysis of PotashCorp’s annual report. I suggested that the company may be paying less corporate income tax to Saskatchewan than to Trinidad. PotashCorp could clear things up anytime by simply disclosing the amount of corporate tax it paid to the Saskatchewan government. Rather than doing so, its spokesman argues that the […]

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PotashCorp’s Annual Report: The Fine Print

The Potash Corporation of Saskatchewan posted its 2010 annual report yesterday. It’s always worth taking a closer look at documents released on a Friday afternoon. Those interested in public revenues should see pages 109, 110 and 111. Note 19’s breakdown of “Provincial Mining and Other Taxes” confirms something that I had suspected. PotashCorp paid zero Potash Production Tax in 2010. […]

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“Job Creators” MIA

Statscan investment intentions data released today show thatgrowth of  real investment by the private sector is set to slow markedly in 2011 compared to 2010. (up 3.8% vs up 8.0% in 2010.)  So much for the stimulative effect of corporate tax cuts. Surprise, surprise investment is concentrated in the resource sector, especially oil, where high prices and profits guarantee high returns to […]

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OECD Corporate Tax Rates: Does Size Matter?

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 […]

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