“Corporate Tax Freedom Day,” by the Canadian Labour Congress’s calculation, arrived February 1. On that day, Corporate Canada had paid the equivalent of all the taxes that would be imposed on it this year by all levels of government.
You can argue with the CLC’s methodology and its larger agenda of income equality for Canadians. But the calculation is long overdue. As we prepare this month for individual tax time, it’s helpful, finally, to have a comparison with the “Tax Freedom Day” that right-wing groups have been using for generations to accuse government of dipping too deeply into our pockets.
For Canadians, this year’s supposed Tax Freedom Day will arrive in June. That’s when, according to this 64-year-old conceit of right-wing anti-government types, we will have earned enough income to cover our total annual government tax bite.
The TFD concept is nonsensical, of course. And that’s putting aside the dubious methodology employed by the Fraser Institute, the nest of right-wing vipers who are the TFD’s local branch plant. The concept originated with a Florida businessman, Dallas Hosteler, who sold the U.S. rights to his concept to the Koch brothers- and ExxonMobil-funded Tax Foundation in Washington, D.C.
The TFD is unquestionably a valuable franchise, putting the once obscure Fraser Institute on the map, and ditto the Adam Smith Institute in Britain. They each garner headlines with their annual TFD calculations from a credulous news media that invest them an intellectual integrity that isn’t there.
Implicit in the TFD notion is that Big Government’s money grab is funds you’ll never see again.
That certainly was the case in feudal times, with crops you were made to surrender to the gentry. And it applies today in Burma, Zimbabwe, Syria and other nations run by thugs.
But in Canada, your tax dollars enable you to focus on family and work while a portion of your income, employed by government (“diverted,” as the anti-taxers have it) finances the provision of essential services we can’t make available on our own.
These include the obvious: national and civil defense; the criminal-justice system; natural-disaster relief; and a civic infrastructure of public works in disease control, fresh-water provision, state-funded education and training, and first-class roads and airways without which Walmart stores, FedEx Corp. and Amazon.com would perish. That these outfits seldom credit the public for its largesse on their behalf is a matter to be settled in the afterlife.
“Corporate Tax Freedom Day” for the $142-billion (sales) General Electric Co. in fiscal 2011 arrived on Jan. 1 of that year. GE paid zero taxes on its U.S. profits. If only you, dear reader, had GE’s phalanx of tax lawyers to make such miracles possible.
“Corporate Tax Freedom Day” arises from a non-partisan belief in the panacea of corporate tax breaks. The governments of Jean Chrétien, Paul Martin and Stephen Harper steadily lowered the corporate tax rate from 28 per cent in 2000 to 15 per cent as of Jan. 1, 2012. The stated goal has been to free up corporate profits for greater economic vitality and job creation.
Misplaced enthrallment with tax breaks as a come-on to foreign investment first appealed to governing Liberals mesmerized by Ireland’s “economic miracle” of the early 2000s, arising from Dublin’s experiment with the lowest corporate tax rates in Europe. But by the end of that decade, an insolvent Ireland was among the first of the European Union members requiring a bailout from its EU partners.
This particular form of corporate welfare has come at a high cost to everyday Canadians. Corporate tax receipts reached $30 billion in fiscal 2010-11, a mere 20 per cent increase over the average of 2002-05.
The Canadian economy grew by more than 88 per cent during that period. If corporate tax revenues had increased in tandem, we’d have $17 billion in additional funds Ottawa has chosen to forsake with which to close our deficit, social justice and infrastructure gaps.
So what does Canada gain from leaving that $17 billion on the table, and for the lowest corporate tax rate among the G-7 nations? (The U.S. rate is 35 per cent.)
Our business leaders themselves continue to bemoan the laggard productivity of Canada’s private sector, which stubbornly refuses to invest in the best-trained workers and most efficient machinery. Corporate R&D spending in Canada is embarrassingly meagre. And the $17-billion windfall is not being spent on job creation.
More than 1.4 million Canadians are jobless amid a supposed Canadian economic recovery, 400,000 more than pre-recession 2008. Instead, the massive tax break is being spent on CEO pay hikes, stock buybacks, higher dividend payouts, and cash hoarding.
Since Harper accelerated the corporate tax giveaways, Hershey Co. has closed its three Canadian manufacturing plants. Siemens Canada Ltd. shuttered its century-old gas-turbine plant in Hamilton. Ford Motor shut down its auto-assembly plant in St. Thomas, Ont. And last month Caterpillar Inc. ended more than a half century of locomotive manufacturing in London, Ont.
If deep-discount taxes are a magnet for foreign investment, why are Siemens and Caterpillar relocating their former Canadian operations to the comparatively high-tax regime of the U.S.? (In Charlotte, N.C. and Muncie, Ind., respectively.)
It doesn’t take a tree-full of owls to figure out why defectors are leaving. They’re engaged in a race to the bottom on wage costs, not tax levels. America is becoming the world’s newest sweatshop economy, where the likes of Caterpillar and Ikea are building plants in low-wage, non-union states and paying less than half the labour costs that apply in Canada.
A sensible industrial policy would reserve the lowest tax rates for companies that create high-skill jobs in Canada. That invest in R&D and made-in-Canada innovations. And that reduce our export reliance on the U.S. by cracking global markets elsewhere.
Instead, a $17-billion gift that has to be made up by everyday Canadians is showered indiscriminately, much of it on the likes of “Canadian” firms in our branch-plant economy that are glorified warehouse operations for their offshore parents.
As economic stimulus ideas go, it would be more effective for Ottawa to place skids of $20,000 in cash on street corners in distressed neighbourhoods. People struggling to make ends meet don’t hoard cash but promptly spend it on necessities like rent, food and children’s clothing. And not having private jets and executive dining rooms to write off as a business expense, such folks among us actually pose less of a financial burden on society than a great many CEOs.
Original Article
Source: Star
Author: David Olive
You can argue with the CLC’s methodology and its larger agenda of income equality for Canadians. But the calculation is long overdue. As we prepare this month for individual tax time, it’s helpful, finally, to have a comparison with the “Tax Freedom Day” that right-wing groups have been using for generations to accuse government of dipping too deeply into our pockets.
For Canadians, this year’s supposed Tax Freedom Day will arrive in June. That’s when, according to this 64-year-old conceit of right-wing anti-government types, we will have earned enough income to cover our total annual government tax bite.
The TFD concept is nonsensical, of course. And that’s putting aside the dubious methodology employed by the Fraser Institute, the nest of right-wing vipers who are the TFD’s local branch plant. The concept originated with a Florida businessman, Dallas Hosteler, who sold the U.S. rights to his concept to the Koch brothers- and ExxonMobil-funded Tax Foundation in Washington, D.C.
The TFD is unquestionably a valuable franchise, putting the once obscure Fraser Institute on the map, and ditto the Adam Smith Institute in Britain. They each garner headlines with their annual TFD calculations from a credulous news media that invest them an intellectual integrity that isn’t there.
Implicit in the TFD notion is that Big Government’s money grab is funds you’ll never see again.
That certainly was the case in feudal times, with crops you were made to surrender to the gentry. And it applies today in Burma, Zimbabwe, Syria and other nations run by thugs.
But in Canada, your tax dollars enable you to focus on family and work while a portion of your income, employed by government (“diverted,” as the anti-taxers have it) finances the provision of essential services we can’t make available on our own.
These include the obvious: national and civil defense; the criminal-justice system; natural-disaster relief; and a civic infrastructure of public works in disease control, fresh-water provision, state-funded education and training, and first-class roads and airways without which Walmart stores, FedEx Corp. and Amazon.com would perish. That these outfits seldom credit the public for its largesse on their behalf is a matter to be settled in the afterlife.
“Corporate Tax Freedom Day” for the $142-billion (sales) General Electric Co. in fiscal 2011 arrived on Jan. 1 of that year. GE paid zero taxes on its U.S. profits. If only you, dear reader, had GE’s phalanx of tax lawyers to make such miracles possible.
“Corporate Tax Freedom Day” arises from a non-partisan belief in the panacea of corporate tax breaks. The governments of Jean Chrétien, Paul Martin and Stephen Harper steadily lowered the corporate tax rate from 28 per cent in 2000 to 15 per cent as of Jan. 1, 2012. The stated goal has been to free up corporate profits for greater economic vitality and job creation.
Misplaced enthrallment with tax breaks as a come-on to foreign investment first appealed to governing Liberals mesmerized by Ireland’s “economic miracle” of the early 2000s, arising from Dublin’s experiment with the lowest corporate tax rates in Europe. But by the end of that decade, an insolvent Ireland was among the first of the European Union members requiring a bailout from its EU partners.
This particular form of corporate welfare has come at a high cost to everyday Canadians. Corporate tax receipts reached $30 billion in fiscal 2010-11, a mere 20 per cent increase over the average of 2002-05.
The Canadian economy grew by more than 88 per cent during that period. If corporate tax revenues had increased in tandem, we’d have $17 billion in additional funds Ottawa has chosen to forsake with which to close our deficit, social justice and infrastructure gaps.
So what does Canada gain from leaving that $17 billion on the table, and for the lowest corporate tax rate among the G-7 nations? (The U.S. rate is 35 per cent.)
Our business leaders themselves continue to bemoan the laggard productivity of Canada’s private sector, which stubbornly refuses to invest in the best-trained workers and most efficient machinery. Corporate R&D spending in Canada is embarrassingly meagre. And the $17-billion windfall is not being spent on job creation.
More than 1.4 million Canadians are jobless amid a supposed Canadian economic recovery, 400,000 more than pre-recession 2008. Instead, the massive tax break is being spent on CEO pay hikes, stock buybacks, higher dividend payouts, and cash hoarding.
Since Harper accelerated the corporate tax giveaways, Hershey Co. has closed its three Canadian manufacturing plants. Siemens Canada Ltd. shuttered its century-old gas-turbine plant in Hamilton. Ford Motor shut down its auto-assembly plant in St. Thomas, Ont. And last month Caterpillar Inc. ended more than a half century of locomotive manufacturing in London, Ont.
If deep-discount taxes are a magnet for foreign investment, why are Siemens and Caterpillar relocating their former Canadian operations to the comparatively high-tax regime of the U.S.? (In Charlotte, N.C. and Muncie, Ind., respectively.)
It doesn’t take a tree-full of owls to figure out why defectors are leaving. They’re engaged in a race to the bottom on wage costs, not tax levels. America is becoming the world’s newest sweatshop economy, where the likes of Caterpillar and Ikea are building plants in low-wage, non-union states and paying less than half the labour costs that apply in Canada.
A sensible industrial policy would reserve the lowest tax rates for companies that create high-skill jobs in Canada. That invest in R&D and made-in-Canada innovations. And that reduce our export reliance on the U.S. by cracking global markets elsewhere.
Instead, a $17-billion gift that has to be made up by everyday Canadians is showered indiscriminately, much of it on the likes of “Canadian” firms in our branch-plant economy that are glorified warehouse operations for their offshore parents.
As economic stimulus ideas go, it would be more effective for Ottawa to place skids of $20,000 in cash on street corners in distressed neighbourhoods. People struggling to make ends meet don’t hoard cash but promptly spend it on necessities like rent, food and children’s clothing. And not having private jets and executive dining rooms to write off as a business expense, such folks among us actually pose less of a financial burden on society than a great many CEOs.
Original Article
Source: Star
Author: David Olive
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