Reverse the Liberal and Conservative giveaways. The New Democrats will not implement Mr. Harper's profligate, wasteful and unproductive corporate tax breaks. We'll restore a uniform 22.12% tax rate – what it was before the Martin and Harper governments began these giveaways.
Simplify the tax code by reviewing and eliminating outdated tax incentives and loopholes. Tighten-up tax administration so everyone pays their fair share of taxes, and the billions of dollars in taxes currently owed, but not paid, are collected.
Of course, some people disagree: A tax professor at the University of Calgary (oh, ho-ho-ho!), the OECD, and the C. D. Howe Institute among others. The usual suspects. According to KPMG, Canada's corporate taxes (when compounded with provincial tax rates) are the third-highest in the OECD.
No surprise, the Canadian Labour Congress disputes KPMG's numbers:
However, Canadian Labour Congress economistErin Weir counters the claim that corporate tax rates in Canada are relatively high, arguing it is no longer accurate."Canada's marginal effective tax rate dropped from 37 per cent to 31 per cent, mainly due to accelerated depreciation for manufacturers and other targeted measures," Weir said.
Not only is Canada's marginal effective tax rate lower than the 32-per-cent average of industrial countries, the rate on Canada's struggling manufacturing sector is an even lower 23 per cent, well below the 31-per-cent average in industrial countries, Weir added.
What I don't think can possibly be disputed is that Canadians have received very little for previous tax cuts [pdf link]:
As noted, the federal corporate income tax rate has been cut from 28% in 2000 to 21% today. But there is,to date, no evidence of a significant impact on investment.On the contrary, corporate pre-tax profits have soared to a record-high as a percentage of national income, while real business investment in structures and in machinery and equipment has languished.
Now, my good friend Stephen Gordon argues that corporate taxes aren't even progressive, since countries like Sweden have low corporate taxes and higher income and consumption taxes. I'm prepared to move towards Sweden's low corporate taxes to increase investment and productivity as long as we're agreed to pursue the whole gamut of Swedish socio-economic policies, including industry-wide bargaining and significant codetermination powers for local unions within their firm, ... oh yeah, and 80% unionization levels.
Until such a time, I prefer that the state maintain its power to tax our generally underperforming business sector, using targetted tax breaks to ensure genuine investment in our country's future, rather than simply banking it.
4 comments:
Stephen Gordon argues that corporate taxes aren't even progressive, since countries like Sweden have low corporate taxes and higher income and consumption taxes.
Not quite. I argue that rich countries with well-developed social programs such as Sweden have low corporate taxes and higher income taxes because that's pretty much the only available way of financing those programs without tanking the economy.
I know of no theory that explains how generous social programs can be financed by high corporate taxes without tanking the economy, and I know of no rich country with generous social programs that do so using high corporate taxes.
I can't see the difference between what I said and what you say, but whatever. If there's something missing maybe re-reading your description of your position again will make it come to me.
And I still stand by what I said; that countries with good social programs and lower corporate taxes like Sweden, Germany, etc. also have a lot more worker and government direction of business. Here in Canada, low corporate taxes would most likely be distributed as dividends.
Of course - that's rather the point. High dividends means more investors, more investment and more employment opportunities.
And I don't see why this should be contingent on higher unionisation rates. Even though countries like Sweden and Germany have stronger unions, they have pretty much the same levels of inequality in market income as do Canada and the US. The heavy lifting of reducing inequality is done by transfer payments to low-income households.
Well, I'll need some references for your claims about social inequality in Sweden being the same as in Canada and the US, but that has nothing to do with the productivity of Canadian industry.
We're a branch plant economy still, and a timid one at that. Sweden processes far more of its raw materials than Canada does.
My point has been that if you simply give North American capitalists a tax break, they won't do anything with it.
Post a Comment