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Ontario could derail Ottawa’s corporate tax vision

Provincial government may forgo corporate tax cuts to fight deficit


 

Ontario may derail federal Finance Minister Jim Flaherty’s five-year plan to establish Canada as a uniform 25 per cent corporate income tax zone, The Globe and Mail reports. Liberal Premier Dalton McGuinty’s minority government faces a troubling deficit situation and may not reduce its corporate tax rate from its current 11.5 per cent to 10 per cent. Since 2007, the Conservative government in Ottawa has been incrementally cutting the federal corporate tax rate from 22.7 per cent. On Sunday, Ottawa moved to lower it to 15 per cent. The argument in favour of a lower corporate tax cut is that it would attract more foreign corporations to Canada while giving businesses more money to invest in Canadian enterprises. Opponents contend such cuts do not result in more economic investment and merely swell the coffers of successful corporations. A study released last year by the Canadian Centre for Policy Alternatives concluded business fixed capital spending has declined as a share of GDP since the early 1980s, when federal-provincial tax rates were much higher than they are today.

Globe and MailPolicy Alternatives


 
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Ontario could derail Ottawa’s corporate tax vision

  1. It takes time for business to talk over the Idea of moving to Canada.  But as they do they will produce jobs and competition which will drive prices down, reducing margins.  A quick example of that was Beaver Lumber.  Made more money than McD’s in Canada till Home depot brought real competition, then Home Depot was hit by Rona joining smaller companies into one larger one to compete, then Lowes came in, now you can shop, find deals, and Canadain tire, Home Hardware and other stores are burning the midnight oil to make a business model that works, that provides competition.

    So, if you make the pot richer, others will come, produce jobs, lower prices, provide services.

    And of course they should make money. Shouldn’t we all. And if 100 persons make huge money being CEO’s and 20 million of us make reasonable money with no one under us, big deal.

    • stick to your bible,just as many fairy tales there.

      • What Fair tales?
        What would you do, tax business 10 times as much.  What would they do? leave or if there is no competition from another country, just charge the customer.

        As for the Bible, 2012 years ago Jesus was born.  FACT.  maybe you heard about Christmas.
        As for Sunday, you might have heard about a 7 day week.  funny, why not a 10 day week.  how is it also that Jews celebrate on Sat. and Christians on sunday.  Cause Christians changed their day to meet to sunday cause Jesus rose from the dead on Sunday.  Funny how that works. 
        And where in the heck did Muslims come from.  Well, 600 years after christ, some thought that it was a stretch to say that Jesus was God.  Thought the Jews also were scamming the system so Mohamads relatives created the Koran.  Who knew.

        And what about that place called Jeruselum funny thing how the Temple that Jesus walked in was later destroyed by the romans, but the rubble is still there, funny.

        Thats not fairy tales, thats what we call History and reality.

        Merry Christ-mas.

        • No, that’s what people call nonsense.

          Now could we talk about corporate income tax in Ont on here?

      • Stick to the topic. You want to slag Christians, find an appropriate forum. That’s not the topic at hand; your comment comes across as gratuitous hate.

  2. Corporate tax cutsIt can be argued that there is little evidence that corporate tax cuts have stimulated economic activity in Canada.  The evidence suggests that the investment incentives have simply gone into corporate cash flow and really had no economic benefit. This is because agreements between Canada and the U.S. require that American companies pay federal and state governments in their home country the difference between any lower income-tax rate they are paying on their Canadian operations and what they would pay at home. When we reduce our tax rates below those of the United States, what we end up doing is transferring money to the U.S. Treasury.

    • Actually, that is not necessary correct.  The US tax rate is only applied when funds are repatriated to the US.  Therefore, a lower Canadian business tax rate actually incents US companies to reinvest money into Canada.

  3. ‘A study released last year by the Canadian Centre for Policy
    Alternatives concluded business fixed capital spending has declined as a
    share of GDP since the early 1980s, when federal-provincial tax rates
    were much higher than they are today.”

    H E L L O ! ! is there anybody out there?

    The conservative party was made for people like you Scott_G., so was the bible.

    • Forgive me if I don’t consider an obscure conclusion about a minor indicator of economic activity reached by a extreme left think tank to establish anything about the impact of low corporate taxes.

      • Unless you’ve got statistics to counter their claim, why shouldn’t they be believed? Because they happen not to agree with your personal ideology?

        • What exactly is their claim?  What is “fixed” capital spending (capital spending that’s been neutered?).  What explanations are considered, but rejected for why this form of spending has declined as a percentage of GDP, other than “because corporate tax rates have gone down”?  Is any attempt made in this study to compare what has happened to other types of spending as a percentage of GDP to “fixed capital spending”?  Is there any discussion in this study about how raising corporate tax rates will invariably lead to increasing the percentage that “fixed capital spending” is of GDP and why that would be a good thing anyway?

          The reason I dismiss studies from political organizations with an ideological axe to grind is the same reason I’m sure you dismiss studies from (for e.g.) the Fraser Institute or the Canadian Taxpayers Federation.

          • So basically what you’re saying is you don’t understand basic financial terms. Fair enough. You probably shouldn’t be writing off what people who are more experienced than you are saying then.

          • I am quite confident I have a better understanding of “basic financial terms” than you and (based on his follow up post) the OP, otherwise you and he’d know “fixed capital costs” isn’t really one.

          • (sigh)

            Once again, I note my error of assuming even a base level of cognition of a cursory point, to wit “fixed capital costs” not really being a being a “basic financial term”, if one defines “basic financial term” in the context of the story, namely the economic impact of corporate tax rate changes. Having tired of dumbing down, I’ll leave you and the OP to your smug confidence that a study authored by a Canadian Auto Workers Union economist that cherry picks both an obscure financial ratio (fixed capital spending as a percentage of GDP) and the period during which the ratio is examined is the final word on corporate tax rates.

          • Hint: Pedantry != dumbing down. I’m glad that you’ve tired of it, however. Too bad you obviously didn’t even have the wherewithal to read the linked article I provided, or you might even understand how it works in the context you attempt to define.

            Anyway. That all said, let’s get back to the original point which I note you never addressed: Got any stats that present a different story?

          • Actually there is plenty of analysis from real economists, such as Jack Mintz, head of the public policy school at the University of Calgary, and Stephen Gordon, a professor of economics at Laval University in Quebec City.
            Google them.

          • You mean Jack Mintz who can’t even get the numbers right for Iceland’s corporate tax rate when it doesn’t suit his preconceptions? (See here.) The same Jack Mintz on the board of directors of Imperial Oil and Brookfield Asset Management? A couple of the largest companies in Canada? Gee, I wonder if there’s any vested interest there (since that’s the criteria GWF seems to be using) in making sure large corporations don’t get taxed more?

            That said, Stephen Gordon is actually a good source, and quick search on him comes up with specific reasons why the Fixed Capital spending might not be a great measure to use. (See here.) So thanks.

      • So you discard factual data in favor of ??? I will be happy to see your gathered data supporting your hypothesis posted here.

        Let me get this straight, you haven’t even bothered to understand or clarify the terminology in your own mind (fixed capital spending) and yet you have refuted the study?

        You should enter politics GreatWallsofFire, the conservative government is full of people just like you.

        • “So you discard factual data in favor of ???”
          I’ve discarded nothing.  All I’ve done is question how relevant fixed capital costs as a percentage of GDP is in the context of a debate about corporate tax rates, especially when it is an extreme left wing policy advocacy organization that is trumpeting its relevance.

          “Let me get this straight, you haven’t even bothered to understand or clarify the terminology in your own mind (fixed capital spending) and yet you have refuted the study?”

          I fully understand the terminology – that is exactly why I refute that the study is of any particular relevance. 

          “You should enter politics GreatWallsofFire, the conservative government is full of people just like you. ”

          Which I suspect is one of the reasons you’ll be enjoying four (and likely many) more years of them.

        • Actually there is plenty of analysis from real economists, such as Jack Mintz, head of the public policy school at the University of Calgary, and Stephen Gordon, a professor of economics at Laval University in Quebec City.
          Google them.

      • You mean the guy who taught Steve how to be an econ-o-missed? No thanks, he just reads from the script prepared by his masters in Texas.

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