Seriously, no need to measure up to the U.S. on corporate tax rates - Macleans.ca
 

Seriously, no need to measure up to the U.S. on corporate tax rates

Uncle Sam is in a different league, writes Stephen Gordon


 

(Jeff McIntosh/CP)

As Mike Moffatt has already noted, NDP leader Thomas Mulcair is responsible for what is probably the most ill-advised policy proposal of the year coming from a major federal party:

We will get back to something resembling the American combined rate in Canada which would indeed constitute an increase in corporate taxes.

Different taxes have different effects on economic growth, and the empirical consensus (example here; reading list here) is that corporate taxes are particularly harmful to it. Moreover, the increase in revenue they produce is small, so hiking up corporate taxes is a remarkably costly way of raising money.

You hear a lot about U.S. corporate tax rates from people who advocate increasing the Canadian rate — it’s implicitly suggested that there’s little harm in increasing Canadian corporate tax rates so long as they stay below U.S. rates. The problem is that there really isn’t any theoretical or empirical basis for thinking that this conjecture is plausible, much less solid enough to use as a fulcrum for policy.

Firstly, a promise to keep rates below those of the U.S. should be put in context: U.S. corporate tax rates are the highest in the OECD. (Data source is Table II.1 from this page, click on the graph to open a larger version in a new window):

Promising to keep Canadian rates below those in the U.S. amounts to a promise to set them at the second-highest level in the OECD. Promising to keep them where they are, on the other hand, would place us comfortably among the Northern European welfare states.

Also, I’m not aware of any theory of corporate tax rates in which an increase only bites once it crosses some threshold. An increase in corporate tax rates reduces the after-tax rate of return on all investment projects, and the problem is that projects that were viable at low rates will no longer be viable at higher rates. This doesn’t depend on what the level of U.S. tax rates is — although changes in U.S. rates can affect Canada (for example, some investors would react to an increase in U.S. rates by sending some of their savings up north).

But most importantly, the notion that Canadian policymakers can make the same choices as their U.S. counterparts when it comes to corporate tax policy is simply wrong: Even though the two economies are closely integrated, they operate in very different worlds when it comes to corporate income taxes.

The sheer size of the U.S. economy means that  it plays a singular role in world markets. For one thing, even though the flows of goods and capital in and out out of the U.S. are huge, they are dwarfed by the size of its domestic markets. For many policy purposes, it’s not a bad assumption to assume that the U.S. economy is closed to trade. Arguments about the U.S. losing noticeable quantities of investment to other countries can ring hollow: Where, exactly, is all that capital supposed to go? It’s probably not a coincidence that the second-highest corporate tax rate is in the second-largest economy: Japan. Canada is a long way from playing in that league.

Moreover, the U.S.’ position at the centre of global financial markets means that many foreign investors see U.S. assets as very safe and are willing to hold such assets as a way of insuring themselves against risk and not necessarily as a way of generating returns. Even though the U.S. is a net debtor country (U.S. holdings of foreign assets are less than foreign holdings of U.S. assets), its investment balance is still positive: The rate of return on foreigners’ assets in the U.S. is significantly lower than the rate of return U.S. investors earn on foreign assets. The U.S. is the only country in the world that is able to pull off the trick of running a positive net international investment income balance on a negative net international investment position. If anything, the U.S.’ problem is that it currently attracts too much foreign investment. Again, this situation is far removed from the one facing Canada.

It is sometimes a good idea to refer to the U.S. as a benchmark, but not for corporate tax policy. The U.S. can indulge in practices we cannot afford.


 

Seriously, no need to measure up to the U.S. on corporate tax rates

  1. This hurt my head. I signed up to disquis just to say that. So there is still significant foreign investment in the US despite the high corporate taxes? I’m not going to pretend that’s possible in Canada but I’d like to know more as to why this happens.

    • People are willing to buy US assets because the US is considered a safe haven during crises. They don’t mind getting low returns.

      It’s like fire insurance. Almost everyone loses money buying fire insurance. But they do it anyway, because if your house *does* burn down, you’ll be very glad you did.

      • I am doing Panama. Get 5.65% for interest on Canal debt backed by the government. Sure blows the doors off of Ottawa or provincial debt that BoC ends up buying as no one else will. Many provinces re-issue bonds regularly, as they don’t sell.

        It is insanely stupid to invest for total rates of return below real inflation+taxes as it is in essence, negative value investing. Fiat fraud money, CAD loses spending power over time, so returns must be higher than the losses to maintain value.

        Not much left in Canada that returns above real inflation+taxes any more, and why I am in the US and offshore and slowly divesting out of Canada. When Canada can show it isn’t a negative value depreciating economy I will change, as savvy investors do the math, its all about returns over inflation+taxes.

    • Simple. People are not robots, as economists like to pretend. Rational decision-making usually occurs, but “mob mentality” exists as a phrase for a reason.

      • But if you can anticipate it like 2008, its money in the bank. I could see 2006 Bernanke as bad news, and in his fiat money for zero rate debt causing the 2007 crisis I got out of the markets by May 2008 waiting for a crash. I was rewarded well for waiting out the 2008 Nov crash and cheap stocks in early 2009.

        But I only listen to liberal economist for what they say I should not do. Flaherty, liberal economists said buy when I was selling.

        Markets are about millions of investors valuing business on futures, nothing more or less. And investors know better than government or government liberal so called “experts”. Most are just paid puppets in debt, like 6 digit in debt Mulcair. Lots of stupid talk, as they love ignoring reality.

        • LOL.. really? In a post where you talk about how you avoided the market crash, you also suggest that investors know better than government?

          Tell me.. who, exactly, do you think got caught in the crash?

          I’ll tell you right now, government wasn’t in it until afterward.. when all of the “investors” you laud started crying about how they were getting hurt by their investments.

  2. In the Mike Moffatt piece linked to above, I posed the question:

    In your link to the OECD data on pct CIT of GDP [“every single year from 2004 to 2011”] Norway stands out as tops with 9.8% – 12.8%, while neighbour Sweden is at 3% – 3.7%.

    Does this mean anything? Can you explain?

    So, I am now returning to the topic after some rudimentary research of my own. This State of Alaska report sums it up nicely:

    Oil and gas tax system

    Norway’s income tax on oil and gas profits has two components: A 28 percent tax on profits (the same income tax charged on all businesses in Norway), and a special 50 percent tax on profits from offshore oil and gas production, for a total tax of 78 percent. (All of Norway’s oil and gas production comes from offshore federal leases.) For example, the owners of gasoline stations and the two refineries in Norway pay just the 28 percent tax rate, even if they are owned by an offshore oil and gas producer – the profits are counted separately.

    “It’s stable, and still they earn money,” said an official with the Ministry of Petroleum and Energy, explaining that companies continue bidding on Norwegian oil and gas leases, despite the substantial tax bite. The profits tax is assessed on earnings in Norway, unlike Alaska which assesses its corporate income tax on a proportional share of producers’ worldwide earnings.

    http://www.arcticgas.gov/norway%E2%80%99s-different-approach-to-oil-and-gas-development

    Different system in Canada with the provinces owning the onshore resources, and provincial taxes paid on profits, and provincial royalties.

    • If we compare Norway to Canada, and I have lived in Norway lets do the whole picture.

      Norway has 2 less layers of government to support. They don’t ahve debt-tax bloated provincial governments to support. Pretty much city or county, then federal. We have city+prov+fre+FN. Sami (FN types in Norway) are required to work and pay taxes as equals, like everyone else. Sami run fishing, deer meet and other businesses just like any other group.

      No welfare, just workfare. Unions can’t jsut strike, they must do mediation and get government permission. Unions will have to answer for productivity, the profitability of a company, and if government he wages are not negotiable as they are fixed by law. Workers are limited to an average of 40 hours a week unless emergency personnel related. Worker participate rates too are much higher.

      Norway socialism is not comparable to NDP or Canadian socialism. Be like comparing USA to China. Norway is really closer to true socialism and not just the greed of tax em more for NDP union bailouts and excessive wages. Norway isn’t bailout anyone.

      • In essence, you are arguing the point I was indirectly and subtly making on the original MM blog.

        Straight one to one comparisons between Canada and the US on such a high level basis is not really definitive. Depends upon type of economy.

        What the Norway example does demonstrate, however, is that resource extraction could be treated differently, as it is difficult to pick up the resource and move to a lower tax jurisdiction, unlike say financial services.

  3. If we are to match the higher corporate US tax rates, then we should also have to match higher US productivity, no? If corporate tax rates are equal, a rational corporation would locate to the country with the higher productivity, wouldn’t it?

    • Productivity is not an immediate consequence of location, while corporate tax rates are. However, some aspects of productivity are related to location, like shipping costs, proximity to resources, local wages, and so on. But for the most part, all other things bein equal, the same corporation may be more or less equally productive in either country.

      • True, but “all other things being equal” is a theoretical construct.. one that almost never exists in reality.

        • “A theoretical concept.” Next you’re going to tell us that the sky isn’t really blue, it just looks that way from down here. When someone says “All things being equal”, what they are saying is: “I acknowledge that in reality all things will not remain equal, but since we are discussing a single variable among many, we must, for the purposes of this discussion, assume that all things remain equal.” To recap: The statement “all things being equal” is in fact an acknowledgement that all things are not equal.Yet invariably, when one states the ceteris paribus assumption, someone will chime in with the reminder, “Yah but all things are not equal,” as though they were making an important point. Just a suggestion, but you might want to stop doing that.

          • All things being equal, I would find living on Mars boring.

          • Perhaps you should re-read what s_c_f wrote. He specifically acknowledged there are a host of variables, and then hand-waved them all away to make his point.

            It’s like saying that if ghosts exist they’d be proof of an afterlife. If the precedent is crap, the conclusion is worthless.

          • Then you’re still not grasping why the ceteris paribus assumption was used. I’ll get the puppets.

          • No, I grasp exactly why it was used. To hide the fact that the theory is useless because the situation never actually exists.

      • That is a perfectly lucid response and that should be acknowledged.

    • Can never match U.S. productivity rates because we are a nation of raw goods and this lowers our productivity figures. Research has shown that the extraction of oil sands alone draws down half our our productivity figures. The implementation of manufacturing and transformation technologies pulls our productivity figures up but alas our government has put its eggs all in one basket: the extraction and delivery of raw materials. Our car assembly plants have been rated as some of the most efficient and productive in the world but not enough of manufacturing goes on.

  4. I have worked at a lot of investment projects and not one of them made decisions based upon corporate profit tax rates. After all coporate income tax are based upon profits.
    There are a lot more important things to consider such as interest rates, net contribution, inflation, and uncertainty which have a much bigger impact on the bottom line than profit taxes.
    But the minute you talk about tax increases you get these doomseday articles that talk about the end of our economy.
    Lets put things into perspective and decide for ourselves how and how much we want to be taxed both personally and corporately.
    After all this is not the US. We are not closet libertarians.

    • I guess then you didn’t work in accounting and fiscal studies much. While you might be right for some short term lower level decisions, it very much does go on in head offices with good management. All costs will be evaluated at some point. And that includes taxes.

      Part of why so many companies are leaving Ontario, they don’t see the economics working for them with NDP, union and government greed.

      • Ontario is a poor excuse for a government that spends money on useless things. You agreed in the post below that high taxes such as in Norways oil and gas sector do not scare away investors, and that is a large rate of taxation.

    • Like you, I have worked with investment projects. But, I’d like to make a slightly different point that I believe most economists overlook when making the claim that small cuts in corporate taxes lead directly to investments in productivity enhancing equipment.

      Say I have an operating company that uses a high level of labour, and is therefore not very productive, relative to its foreign peers. I have an opportunity to invest in a labour reducing whatchamacallit when, after all is said and done will give me a 13.5% atax return on my investment. My hurdle rate is 15%. So, the policy sol’n is to cut taxes by 1.5% and I will invest, right?

      Nope. Because what is often overlooked, as far as I can tell, is that my base case (the “do nothing” or not investing in a whatchamacallit) has also received a 1.5% tax cut. Relatively, nothing has changed (I may be oversimplifying). Both base case and investment scenario are more profitable.

      This may explain why the anticipated or predicted investment/jobs have not materialized. It is less risky to seek tax cuts and show more on the bottom line by doing nothing. Why I believe tax cuts are counterproductive to improving productivity for existing Canadian company mgnt.

      • Cutting corporate taxes does not necessarily mean companies invest more, it just means that they can invest more, should they choose. You can’t spend money you don’t have. Of course, a company could borrow, but then the interest rate of said borrowing diminishes any possible returns.

        Yes, any investment has risks.

        But if you had x + y dollars in profit, but y is taken in tax, it’s certainly less risky than having x + y dollars, 0 is taken in tax, and y is invested.

        In one case you have x dollars and 0 investments.
        In the other you have x dollars and y investments.

        Obviously less taxes means more incentive to invest.

        • Cutting corporate taxes does not necessarily mean companies invest more,

          Not how it was sold in Canada. See Jack Mintz article cited elsewhere.

          I understand the argument you are making, but that is separate to the productivity argument through investment of new equipment. More related to new investment. By domestic and foreign owned companies.

          • Well, I’d say over the long term, you can expect that eventually some of that extra money left in the pockets or corporations will eventually go towards new equipment thus increasing productivity, and some will go towards new hires thus reducing unemployment.

            They may also use some of it to buy advertisements to obliterate their competitors in other countries.

            They may also put some towards dividends and their shareholders then use it to inflate the housing bubble.

            Regardless, money is generally invested better by the people who earn it, rather than hoarded by government and put towards bridges to nowhere, slush funds and other boondoggles intended to buy votes and curry favour.

            I think that when you leave money in the private sector it will mostly be put towards what people believe is the most productive use, and that can vary from one corporation to the next, and in the end that will produce the most benefits for all.

          • “what people believe” is the kicker.. and is what makes the private sector absolutely no different from the public sector when it comes to deciding on investments.

            The only difference is that the private investor who decides wrong can go to the government to get bailed out, but won’t bail out the government if they decide wrong.

          • No, the real difference is that the private sector is millions of individual actors, all with different circumstances, all of whom have individual and unique ways in which money is best spent. Where it is best spent for me is different from my neighbour, which is different from his neighbour, and so on. The public sector is a monolothic entity that cannot possibly know or even attempt to fathom where investments produce the best returns for millions of individuals. Not only that, money spent by the government is money that was forcibly taken and not earned, whereas money spent by private individuals is money that was voluntarily handed over in a free marketplace. Money not earned is carelessly spent. As far as bailing out the government, that happens all the time everywhere around the world. It’s called devaluation and/or taxation. Government blows a ton of money and they either devalue the currency or raise taxes to make up for the money they’ve lost.
            I can assure you that I can better spend money to improve my future, better than being forced to send the money to some faceless bureaucrat to spend it for me and millions of others. The same is true for all actors in an economy. The only exception might be you… I can’t imagine you’ve ever spent a cent wisely in your life.

          • Exactly, and the interplay between those millions of private actors simply cannot be replicated by the state.

  5. Actually according to KPMG’s international guide for businesses — Competitive Alternatives 2012 — Canada has the lowest effective corporate tax rate among all major economies:

    “Corporate income taxes are lowest in Canada (7.3 per cent effective corporate income tax rate), France (14.7 per cent), and China (14.8 per cent). At the other end of the scale, effective corporate income taxes exceed 30 per cent in Japan (31.5 per cent), Brazil (36.1 per cent), and Italy (37.6 per cent). These effective income tax rates are significantly lower than the nominal tax rates in most countries due to the inclusion of various tax incentives, including R&D tax incentives, in these calculations.”

    First neo-cons said corporate tax cuts would “create jobs.” After that flopped, they now say reversing these failed tax cuts will not raise revenues. They have zero credibility.

    KPMG Competive Alternatives 2012 — Focus on Tax (Chp 3, pg 7)
    http://www.competitivealternatives.com/reports/2012_compalt_report_tax_en.pdf#page=9

    • Do you even bother to read the posts before commenting? You keep saying the same dumb thing over and over again, regardless of what the OP is about.

      • I am stating the facts about corporate tax rates in Canada. Something obviously missing from your agenda-driven ideology.

    • Do you honestly think that the economy would create more jobs with a HIGHER CIT?

      • Corporate tax policy isn’t about job creation. It never was.

        • Your peer Jack Mintz has suggested otherwise in the past:

          OTTAWA — Fully implementing the Conservative government’s corporate tax cut scheme will have “little” impact on budget revenue, and in the medium-term generate an estimated $30-billion in additional business investment and 100,000 new jobs, says one of the country’s leading tax and fiscal policy experts in an analysis released Tuesday.

          On its own, the final cut to corporate income tax rates, from 16.5% to 15%, would result in $30-billion in additional business investment and 102,500 new jobs over a seven-year period, the paper estimates.

          The Canadian Manufacturers and Exporters, in its own separate analysts released a few weeks ago, said that fully implementing the federal business tax cuts would create 98,800 net new jobs over the next two years as companies invest the additional after-tax income generated.

          http://www.financialpost.com/news/Corporate+cuts+create+jobs+study/4163689/story.html

        • Yes, trickle-down economics was never meant to achieve any economic benefits like job creation or GDP and productivity growth. It’s entire purpose is to cut taxes for the wealthy and bankrupt the centrist post-war social safety net (aka, “starve the beast.”)

          Canadians must fight this corrupt, misanthropic agenda. The well being of their children depends on it.

          • What parts of the post-war safety net were cut. Serious question. What services were available 1946 to 1960 that are no longer available? Cuz from what I understand, universal Medicare did not even come into being until the late 1960s. When I was born in the very late 1960s in a hospital in Winnipeg, my parents still paid several hundred in hospital fees – back when several hundred was a lot of money. That would be unthinkable now. So it can’t be healthcare you’re talking about. So what has been cut since the post-war era?

          • EI benefits have been significantly scaled back. Most people who pay into are not qualified to receive benefits. Funding for job training has been slashed. Transfers to social spending have been cut (Canada now ranks #23 of 31 OECD developed countries in social spending; Paul Martin bragged of reducing social spending to 1953 levels.) Harper recently cut the Canada Health Transfer in half. He also raised the age for OAS to 67.

            No doubt I could dig deeper, but I obviously don’t need to…

            This neo-con war against centrist government has only just begun. It’s a never ending process as Gordon himself pointed out. It’s a four-step program: 1) make reckless tax cuts; 2) create a budget crisis; 3) justify spending cuts; 4) go to 1.

            The goal of libertarian economists and businessmen is to eliminate all the gains society made in the post-war era. The Conservatives want to turn Canada into America. The Republicans want to turn America in Chile.

          • Well, yes you do need to dig a little deeper. Harper did not cut the Canada Health Transfer in half. He cut the rate of growth from 6% to nominal GDP, and this only as of 2016. Depending on nominal GDP, it might well be cutting the rate of growth in half. That’s not the same thing as cutting health transfers in half. That’s not cutting them at all in fact. EI benefits have been cut in recent years, but they weren’t all that generous back in the 1950s either. They became more generous in the late 1960s and 70s, when universal healthcare also came into being. And yes, OAS was bumped up by two years. That’s become a necessity due to demographics.

            But you’ve completely avoided my question. Never mind percentages and comparisons with other countries. What services did we have in the post war era that we do not have today? I can think of one – door to door mail delivery. Anything to add to that list?

      • An ultra-low CIT is a huge waste of economic resources. We are now borrowing $14B/yr to pay for Harper’s pointless corporate tax cuts (the amount he said corporations would save according to his 2009 budget.) Canada already had one of the lowest effective CIT rates before them.

        But yes, better allocation of economic resources would certainly lead to job creation: namely, investment in social and physical infrastructure.

        We presently have a skilled-labor job shortage and a $125B infrastructure deficit. Making working training and post-secondary education more accessible will create good paying jobs and prevent the hollowing out of the middle class. Investing in physical infrastructure is a proven way to create jobs and GDP growth.

      • I am sure that no company would ever want to pay one cent of taxes. But we get value for our taxes including roads,infrastructure and security and the list goes on and on.
        If you did not pay any taxes and you had no infrastructure, then do you think that would create a lot of jobs?
        Furthermore if we are running deficits then more of the portion that we receive in tax money goes to servicing the debt and there would be less money spent productively which also will not create too many jobs in the private sector.

  6. would place us comfortably among the Northern European welfare states

    Uh, your right wing slip is showing. Comparing corporate tax rates, especially with the US, is a strawman because corporate tax is so riddled with exemptions that it becomes meaningless. Just like the graph you provided.

    What is more important is how much tax is collected relative to how much a government spends; and how that tax is collected.

    The Value Added Tax (VAT) in Europe is typically 400% the GST rate in Canada, and there are far fewer exemptions.

    Not long ago you could buy a euro for $1.24 CDN. Now the price is $1.39. Canada is sliding back into 3rd world status as the entire world is getting more expensive for Canadians (and Americans too) to visit.

    And don’t get me started on Norway’s sovereign wealth fund when compared to Alberta’s Heritage Trust Fund Sustainability fund massive deficit. Alberta has been producing oil far longer than Norway and it has almost nothing to show for it, excepting for the most millionaires per capita and the best food bank system in the world.

    • Norway is not a province in some larger Scandinavian federation (though they used to be). As an independent country, they are therefore able to keep 100% of their oil revenue to do as they like. I am not suggesting Alberta should be able to do the same, far from it. They are a part of Canada, and therefore must pay federal taxes, and presumably enjoy the benefits of Canadian citizenship. All I’m saying is a comparison of Norway and Alberta is not instructive at all, it’s completely useless.
      Also, you should know that while Norway’s government is flush with cash, their personal debt levels are the highest in the developed world; an average of more than 200% of annual income. So in that sense you are correct – AB has a long way to go to catch up to the Norwegians.
      Finally, if you’re in favour of massively increasing our GST, and applying it to groceries, as they do in Sweden (not sure about Norway) please feel free to promote that idea, and see how far it gets. We couldn’t even take the sensible step of harmonizing two serparate sales taxes in BC, so I doubt Canadians are amenable to Euro-style VAT levels.

      • Yeah, but AB sets royalty rates, determines what/when O&G leases are sold, to whom, and when approved/developed. And largely dictates environmental policies related to this industry.

        It’s not as incomparable as you suggest.

        • The main difference is that Albertans and Alberta corporations must pay income and corporate and sales taxes to another level of government.

          • I believe the 28% CIT numbers quoted for both Norway and Canada include all levels of gov’t.

            But, for the O&G industry, AB collects royalties, which is not included in Canada’s 28%. I believe AB rates are in the order of 10% (from memory), compared to 50% for Norway.

          • When Alberta raised the royalty rates back in 2007-08, there was a massive exodus of exploration and drilling activity into Saskatchewan and the Baakan region of North Dakota. Alberta was forced to quickly rescind the increases. All of them. They simply are not in a position to extract more royalties.

          • The same thing happened when Lougheed increased royalties in the early 70s. Big photo ops of the rigs leaving, and according to him, they quietly and quickly returned in the dead of the night, unnoticed after he was steadfast.

            True, lots of posturing, and difficult to put the genie back in the bottle. Especially when costs have escalated due to unfettered development. Not for the faint of heart, or short term focused politicians.

            Bakken would have happened irrespective.

          • They weren’t faking it. And Alberta was alarmed enough that they back-tracked. It’s not like the government didn’t want the revenue. The backtracked because they believed the changes were costing them revenue.

          • Well co-ordinated Industry opposition and emergence of a well funded Wildrose Party had something to do with it also. As it turned out, Eddy was not so Steady.

          • Not to mention it was freakin’ 2008. Gee, what else happened in 2008 that might have affected the profitability of oil exploration? Rather more than the minor royalty increases?

          • Good point.

            Lots of companies like Suncor used the opportunity to take a pause and try to get inflated costs under control.

          • It is true the royalty increases came at the worst possible time. But oil companies were still expanding in Baakan and Saskatchewan. There’s no doubt the royalties had an effect on decisions to relocate there.

          • I’m sure you’re right. I can’t claim to know the details of every evaluation that went into the various decisions to explore or not, but I think it’s unquestionable that the global downturn had more effect on those decisions than did the small royalty change. I’ll go out on a limb and claim that, with or without royalty changes, almost all of those decisions would have gone the same way… the effect of the downturn on return on investment dwarfed the effect of royalties.
            Indeed, eliminating royalties entirely would still have had less impact than the global slowdown – they just aren’t that large a part of the equation. They matter a great deal at the margins, but suddenly much exploration wasn’t close to the margin.

          • The government of Norway also kicks in as much as 80% on promising exploratory wells. Offshore exploration is very expensive. And Norway is a world beater in serving this market.

    • Alberta’s “massive deficit” is funded entirely by Alberta. So yes, they’re borrowing money from themselves to pay for things now, while waiting for the economy to recover. You don’t see credit rating agencies threatening to downgrade Alberta, like say, Ontario.

      And please, explain to me how Norway taking more money out of the economy than they intend to spend is a good thing? So they put the money in a sovereign wealth fund to sit there and do nothing. That money would be far better used if the private sector were allowed to reinvest it in the economy.

      It’s amazing how you people will accuse corporations of “hoarding cash”, while at the same time demanding that our governments do the same.

      • Alberta’s “massive deficit” is funded entirely by Alberta.

        That is such an unbelievably stupid reply. You have no shame, do you?

        I read somewhere (maybe even in Macleans), that Alberta was rated as one of the highest risks to default over the long term. A One-trick-pony kind of risk. But never mind.

        I lived in Alberta for a long enough, through the Lougheed years, and the Klein years, to know how it works there. When the kids were in elementary school, parents were fundraising by running casinos to buy books for the library and computers for the classroom.

        The Heritage Trust Fund created by Lougheed, at one point, had the astonishing amount of $10 BILLION in the account. But it just kind of disappeared into WTF land.

        Hey! Remember Ralph bucks? $400 for everyone. The Alberta dividend.

        • http://www.finance.alberta.ca/business/ahstf/
          As of June 30, 2013, the AB Heritage Trust Fund had a balance of $16.6 billion. Are you saying it disappared in the past 3 months? That is astonishing. :)

          • It appears he has ducked out of this thread to avoid further humiliation. I would too after a gaff like that one. 20 seconds on the Google (that’s all it took me to find the latest figures on the AB Heritage Fund) would have saved him the embarrassment of a $16.6 billion misquote.

          • To me he’s an extreme example of lots of people. Lots of people have no real interest in facts. They twist facts, or choose facts selectively, or ignore contrary evidence, in order for them to promote their ideology.
            His case is just extreme, so extreme that he cannot even be bothered to check the most elementary things with 20 seconds on google. Rarely do you see such an extreme and continuous sequence of blatant falsehoods.

          • DELETED.

          • Hey, you read it on an Alberta Government web site! It must be true!

            Fact – The Alberta Heritage Trust fund was $10 billion back in 1982. Here is a Fraser Institute report. Read it and weep.

            Fact – Alberta’s deficit was $2.8 billion for the last fiscal year. That could easily double for the next year.

            And it was Moody’s who ranked Alberta as the most likely to default in the next 30 years.

            Remember the $54 Billion Employment Insurance surplus during the Chretien years? It turns out it was just a notional surplus, just on the books, because the money had already been spent reducing the deficit?

            So how much of Alberta’s fund equity is in hospitals and highways?

          • True, the EI surplus was never anything more than a fictional accounting surplus. The media presented it as a pile of cash sitting somewhere collecting dust, but the media always misinterprets such things. It could well be the heritage fund is already spent on highways, hospitals, etc. and therefore is not available for anything else. You do have a point there, and I’m going to have to look into it more. I do know they’ve drawn on it during the lean years (the oil glut in the early-to-late 1980s for sure). That’s precisely what the fund is for. So it makes sense that it hasn’t grown in real terms since Lougheed.

          • The media presented it as a pile of cash sitting somewhere collecting dust, but the media always misinterprets such things.

            Uh, right (slowly backs away). I have some emails to answer.

          • Apparently I was too quick to give you credit for having a point. I just examined the latest fiscal report for the Heritage Fund. It appears that $16.6 billion is all invested in investment-type assets (everything from timberland to fixed income to equities), and is producing enough income, over and above inflation, to have added $320 million to the general treasury last year. So this ain’t anything like the EI fund. You’re back where you started, trying to defend an indefensible whopper.

      • “So they put the money in a sovereign wealth fund to sit there and do
        nothing. That money would be far better used if the private sector were
        allowed to reinvest it in the economy. ”

        Umm, the money’s not under a mattress. It’s invested, mostly in equities… much as it would be if it hadn’t been collected.

        • Yes, and the government playing the stock market on a massive scale with public money is just such a comforting thought.

          • That’s a different discussion, of course. I’m merely taking exception to Rick Omen’s odd belief that money in government hands “does nothing”. It’s a convenient argument for making a point dishonestly, but it’s absurd. It’s quite possible to argue against government “overtaxation” without resorting to such silliness.

    • Your comment is complete BS and here’s the proof:
      http://www.xe.com/currencycharts/?from=EUR&to=CAD&view=10Y

      Any sane person would admit that the Canadian dollar has been appreciating against the Euro for a long time.

      When you you could buy a euro for $1.24 CDN just a year ago, that was the highest value of the CDN dollar against the Euro in history, and according to you this short and temporary 1 year slide is tatamount to 3rd world status, when in reality it’s just a blip with no effect on the long-term picture.

      • True, and the Euro’s plunge last year was brought on by the very real fear of a depression in Euroland. They’ve only just started – barely – to recover from that, and naturally, they’re currency has recovered somewhat.

        Next he’ll be sounding the alarm over the C$ is “plunging” against the Greenback, given that it’s down from a high of $1.09 USD in 2007 to $0.97 USD today. A catastrophe!!! It’s like we’re…. Zimbabwe or something.

      • Any sane person would admit that the Canadian dollar has been appreciating against the Euro for a long time.

        Nice link. I had a look at the chart.

        Now maybe you could explain what you consider a “sane person”. Someone who sees something that isn’t there?

        • I consider the meaning of sane to be what most other people do. But since you are insane, you might have invented your own meaning for the word. I wouldn’t put it past you, you appear to have difficult with the truth, you appear to want to live in an alternate reality.

          • He has his own definition of sane, and many other words apparently. It’s why his posts make so little sense to the rest of us.

  7. I don’t expect NDP to understand this but investors look at the entire picture not just one point a unscrupulous, deceptive and myopic politician chooses for his rant and tax greed.

    Given your average Canadian company is less productive, they need lower taxes to get the same equivalent yield at the investors bank account after taxes. As it is, Canada isn’t a great place to invest (on average). It is also a lot more expensive to operate in a tax inflated economy like Canada. As companies pay taxes in many forms, income tax is just one point, but not the big picture. Companies pay property taxes, utility taxes, employment taxes like CPP/EI, import and duty taxes that are in the top 5% of the world for the rates charge. Lots of non-value added bureaucracy in dealing with CBSA too.

    And company taxes come in two parts, add them up and investors get taxed more than workers. There are the taxes company pay, then there are taxes the investor pays. Add in double taxes with low returns, you can see why Canada doesn’t get job creating manufacturing investments as much as they used to.

    That is the reality. But hey, NDP love to prey on peoples ignorance, desperation, envy and greed for a vote. A screw the rich mentality the NDP don’t realize their own pensions are the owners of much of business…..yep…so dumb they will screw themselves then tax us for union company and pension bailouts.

  8. Northern Europe isn’t a welfare state at all . Lets consider that all wealth starts with natural resources , The occupants own the resources and the deserve a fair market price . They allow private industry to buy the resource . As anyone can see Northern Europe is a smart and sells it’s resource and shares the proceeds with the owners of the wealth of resource . Unlike Canada’s conservative that give away our resources at fire sale price and when we the true owner want a fair share , The spin doctors come out and call us names for wanting what is ours . It is theft by government . Don’t we all wish for a government that worked for the true owners of the wealth