Thursday, May 29, 2014

Jeffrey Simpson fallacy: corporate tax cuts good for economy

Jeffrey Simpson attacked Andrea Horwath’s plan to cancel Liberal corporate tax cuts.

He takes the position it’s an obvious fact that corporate tax cuts are good for job creation, productivity growth, etc. But nothing could be further from the truth.

Here’s my comment on his column which debunks this fallacy and which also got the most votes.

Comment

How raising [corporate] taxes will contribute to more jobs, more research and development and more incentive to invest in Ontario is among life’s mysteries.

This is a load of hooey. The federal government cut corporate taxes by 50%. Harper’s tax cuts are pegged at $14-billion a year. McGuinty cut them by $2.4-billion a year. According to KPMG, Canada has the lowest effective corporate tax rate among ALL major economies.

And what are the results?

Corporations are sitting on $700-billion of “dead money” (Financial Post.) Productivity growth is “abysmal” (Conference Board of Canada.) Job growth isn’t keeping up with population growth (G&M). Only Hudak believes corporate tax cuts “create jobs.” (Wants to raise the tax cut to $6-billion a year.)

What do corporate tax cuts really do? They raise share value fattening the stock portfolios of the well-off. The mystery is unveiled!

It is no mystery they are a huge waste of resources which we are borrowing billions of dollars every year to pay for. It’s nothing short of insane.

P.S.

Although the Conference Board of Canada frequently implores government to deal with Canada’s poor productivity growth — which they say is necesssary to maintain high living standards — it was actually Mark Carney who used the word “abysmal” to describe our productivity growth.

2 comments:

  1. IMF says Canadian corporations are accumulating dead money faster than any other G7 country,

    Stats Canada says Canada's corporate cash horde in the last quarter of 2013 was 626 billion - more than the federal debt.

    ReplyDelete