An NDP plan to slash corporate tax rates?

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1948
An NDP plan to slash corporate tax rates?

 

1948

If I could be so bold, unionist proposes the following...

quote:

Originally posted by unionist:
[b]

I know little about taxation (as the rest of this post will amply demonstrate!), but maybe you have a point. I've never understood why we "tax" the means of creation of wealth - seems counterproductive.

What would you think of this modest proposal - just talking federal for a moment:

1. [i]Abolish all corporate income tax[/i] (which I think is about 17% of total federal tax revenue);

2. Make up the shortfall by increasing personal tax income (on a heavily progressive basis, of course) - which currently accounts for about 55% of federal tax revenue;

3. Eliminate current tax exemptions and/or credits on dividend and capital gains income;

4. Apply strict controls on any capital outflows abroad, including earnings on foreign capital invested in Canada.

There may be more elements, and none of this may make sense, but surely business will have much more resources available to grow and create jobs. Every penny reinvested in the business would be tax free.

What do you think?

If you like the idea (subject to some fine-tuning), I will personally commit to getting the NDP on board. It's tiresome to hear them talk, decade after decade, about wealthy corporations - when the real problem is wealthy individuals on one side and poor and struggling individuals on the other.[/b]


Discuss.

1948

I'll try and bump this up by repeating my earlier post:

I know less about taxes then unionist pretends to. But the politics of this are interesting.
Unionist is going where a lot of the advanced social democrat countries have gone. Not surprisingly - Quebec is further down this path than any other province. I assume he knows this.

New Democrats haven't gone as far as the PQ. Generally, I think, they have been reluctant to talk about taxes in campaigns and, as a populist measure, have hidden behind taxes that aren't on "people".

There's good political reasons for this. Running on even mild tax increases for the extremely rich (ie. the federal NDP's 2004 inheritance tax for people with estates worth more than $1 million; the Ontario NDP's 2003 plan to create a new tax bracket on incomes over $150,000) caused a Liberal/Conservative-led backlash against "raising taxes". Even the Ontario NDP's attempt to scrap the extremely regressive health tax and repace it with progressive taxes on high income earners died on the runway. People got lost in the details, didn't buy it, or didn't care.

All that noted, NDP attempts to score political points by taking on corporate taxes have had mixed results. In the most recent campaign the NDP ran on an utterly unremarkable commitment - to keep tax rates the same and cancel scheduled cuts. And even here, in a nominally "progressive" space, people howled that this was "raising taxes" and "attacking business".

Globally, and in Canada, the move has been to replace business taxes with consumer and other regressive taxes. Hence the GST, the health tax and (I'd argue) the carbon tax.

Could an NDP leader argue that cutting business taxes and replacing them with income taxes was sound policy? Maybe. But would people like it? It's politically risky. The track record of politicians arguing for "tax shifts" isn't great(yikes!). However, the political climate is changing so rapidly. Last week's "political suicide" is this week's obvious answer.

ADDING: "Orange shift" is funny...

1948

And one last attempt to move conversation...

quote:

Originally posted by Mojoroad1:
[b]

Ken, I hardly think it's a matter convenience....it's just that there is a disagreement on the various merits of taxation/wealth redistribution. Halting corporate taxes at the levels of that great socialist Paul Martin is hardly "attacking corporate taxes" as you define it. If you seriously believe that there should be no corporate taxation then you are essentially agreeing with the Neo-Con paradigm of "trickle down" IMO. It is not a matter of "closed mindedness" within the NDP to point out the hypocrisy of corporate welfare (tax cuts) which affect the ability to help main street which, (to torture a metaphor) more and more people are living on the "wrong side of the tracks". [img]smile.gif" border="0[/img] [/b]


Sweden, Norway and Denmark all have lower corporate tax rates than Canada. They just tax the shit out of real human beings. Socially progressive Quebec has the lowest tax rates in Canada - and the highest income taxes.

I have no sources for this so if I'm wrong fact check away.

Adam T

I believe that is correct. Nordic countries (and I think New Zealand, which has a Labor government for the next few days at least) have low corporate taxes and high personal taxes, especially high consumption taxes.

I disagree with the notion that consumption taxes are inherently regressive. That problem can be easily corrected with tax credits or negative income taxes.

I'll add what I posted in the other thread:
The reason the NDP ran as an 'anti corporation' party in the last election is due to, I think this:
The NDP used to be very different from the Liberals. They proposed nationalizing a number of corporations and they proposed much higher spending than Liberal governments (probably not much higher spending than Liberals in opposition proposed though). Since the 1960s however:

1.The NDP has moved away from proposing nationalizing industries.

2.Since the Liberals balanced the budget in the 1990s (yes on the backs of all sorts of groups), the NDP has also come around to favoring balanced budgets. So, they can no longer propose spending that just piles up the debt.

So, while the NDP and the Liberals certainly differ in other areas, most notably foreign policy, on the issue people are most concerned about, economics, there isn't a lot of difference.

So, to create a wedge between the Liberals and the NDP and to find a way to pay for more spending, Layton et al support higher taxes on corporations than the Liberals support (not saying Layton doesn't also sincerely believe in his policies).

So, where does this analysis lead? To me it suggests that the NDP moving to a position of eliminating taxes on corporations is, to them, a political non starter. How could they be seen as different from the Liberals?

Even if they argued "we proposed this, not the Liberals." The Liberals would most likely point out what I've pointed out above: this proposal is where Liberal taxation on income trusts was likely headed, higher taxation on dividends (and maybe capital gains) and elimination of taxes on corporate income.

I suspect you'll get a lot of this in replies to this thread: "if we didn't suggest taxing corporations, (on economics) how would we be any different from the Liberals?"

M. Spector M. Spector's picture

Unionist doesn't think wealthy corporations are a problem. Only wealthy people.

Unionist thinks the vast pools of cash and other wealth held by corporations, from which they derive their enormous power and influence over the economy and society, should go untaxed.

One of the main ways governments can influence corporate behaviour is through taxation policies. If they aren't taxed, corprations will not be amenable to spending their money in ways that the government deems socially beneficial.

Corporations pay salaries to employees, and deduct that expense from their income for tax purposes. Do you think your corporate boss would be as willing to give you a $1,000 raise if the money were not tax deductible?

Moreover, abolishing corporate tax would in effect make corporations into tax shelters for the rich, like a giant RRSP, where they could park their capital and accumulate surplus value without having to share with the government, until they take their dividends out.

Corporate entities would pop up everywhere; people would create corporations just to hold their money and keep it from the taxperson. Every home, automobile, and yacht would be owned by a corporation, and purchased with before-tax money. Instead of paying for your kids' university tuition, you could have the family corporation award them scholarships.

Why would we even contemplate this?

Mojoroad1

erm... there were 2 threads and I lost the coin toss so I'll repost here:

quote:

I said (in essence), "tax the wealthy instead of taxing businesses", and you reply (in essence), "that's exactly what the right would LOVE you to do except for the part about taxing the wealthy"!?

Sure, if you cut out 1/2 of my proposal, it doesn't sound all that great...


No, I'm not counting it out at all unionist. What I said was

quote:

This would equate to nothing more than to accelerate the (already happening) "race to the bottom". Over the past 20 years we have consistently shifted the tax base from corporate to individual...result: erosion of the middle class, huge gains for the very rich and a massive increase in working poor.[b] Furthermore, for that model to work, you are assuming a larger than real number of uberweathly individuals in Canada... They could not cover the costs of government alone.[/b]

quote:

And then you say that it's the shift to personal income tax which has eroded the "middle class" (whatever that is) and led to a "massive increase in working poor"!?
I guess the answer to that would be to lower personal income taxes, and wow do I disagree with that one.

I guess I should have added "+ plus additional tax cuts that favour the rich.". As for erosion of the middle class in Canada....

[QB] TORONTO – Canadian families are putting in more work time, yet most -- 80% of them -- are getting a smaller share of Canada’s growing economy, says a study by the Canadian Centre for Policy Alternatives (CCPA).

The study finds Canada’s income gap between the rich and poor is growing, largely because the lion’s share of Canada’s economic growth is going to the richest 10% of families. It’s not going to the majority, the 80% of families earning under a $100,000.

“Canada’s gap is growing at a time when Canadian families are playing by all the rules – working harder, contributing to a growing economy – but most aren’t getting payback,” says study author Armine Yalnizyan, research fellow with the CCPA.

The study, The Rich and the Rest of Us: The Changing Face of Canada’s Growing Gap, looks at the earnings and after-tax incomes of Canadian families raising children under 18, comparing families in the late 1970s and those in the early 2000s. The study finds:

* Canada’s income gap is growing: In 2004, the richest 10% of families earned 82 times more than the poorest 10% -- almost triple the ratio of 1976, when they earned 31 times more. In after-tax terms the gap is at a 30-year high.
* Bottom half shut out: Between 1976-79 the bottom half earned 27% of total earnings. Between 2001-04 that dropped to 20.5%, though they worked more. Up to 80% of families lost ground or stayed put compared to the previous generation, in both earnings and after-tax terms. The poorest saw real incomes drop.
* Work is not enough: All but the richest 10% of families are working more weeks and hours in the paid workforce (200 hours more on average since 1996) yet only the richest 10% saw a significant increase in their earnings – 30%.[\QB]

. That's a summary of a report from last year.

for more info:

[url=http://www.growinggap.ca]growinggap.ca[/url]

[ 28 October 2008: Message edited by: Mojoroad1 ]

farnival

quote:


3. Eliminate current tax exemptions and/or credits on dividend and capital gains income;

i think this idea, that of eliminating business taxes, and shifting them to personal, has merit, in that it could end up being a better way to accurately tax the citizen at levels they can afford and still recieve robust public services, without skipping anyone, but it should go further than point 3 above.

i would add that if you were to do as per point 3, the tradeoff business would have to accept would be no government help at all and serious regulation. period. no tax breaks, deferrals, subsidies, marketing help, bailouts, whatever they get now...gone. sink or swim. let "the market" decide if your idea for a business or enterprise is viable or not. and governments would need to enact very robust oversight legslation and rules as suggested in the other points above, which would include labour and environmental protections of course.

but, given that there is no real "free market" and even alan greenspan has now had to admit that they can collapse without proper oversight, the business sector might want to be careful about getting what they asked for...no taxes...as they quite like the current level of government intervention in their beloved market and the tradeoff might not be as lucrative for them.

the other option would be to accept that with no taxation, they get heavy regulation and oversight, but help with things like r&d, marketing, employment services, training, but with an evaluation system to show the govt. was investing public money wisely, unlike when the Libs in Ontario gave GM millions who then promptly laid off hundreds and the govt. has gone soft on the "job guarantees" required, as i'm sure GM knew they would.

it would be an interesting way to keep private risk private. as long as there was a robust unemployment system that [i]everyone[/i] paid into and was accessable to all that paid, then they would have nothing to worry about when they inevitably realise they can't do it without a bit of help. [img]wink.gif" border="0[/img]

[ 28 October 2008: Message edited by: farnival ]

Mojoroad1

quote:


Originally posted by 1948:
[b]And one last attempt to move conversation... Sweden, Norway and Denmark all have lower corporate tax rates than Canada. They just tax the shit out of real human beings. Socially progressive Quebec has the lowest tax rates in Canada - and the highest income taxes.

I have no sources for this so if I'm wrong fact check away.[/b]


1948 you're wrong. From the OECD Tax Database:
(it was an excel file so bear with me)

Country: Adjusted central government
corporate income tax rate:

Canada 19.5

Sweden 28.0

Denmark 25.0

Norway 28.0

1948

quote:


Originally posted by Adam T:
[b]The reason the NDP ran as an 'anti corporation' party in the last election is due to, I think this:
The NDP used to be very different from the Liberals. They proposed nationalizing a number of corporations and they proposed much higher spending than Liberal governments (probably not much higher spending than Liberals in opposition proposed though). Since the 1960s however:

1.The NDP has moved away from proposing nationalizing industries.

2.Since the Liberals balanced the budget in the 1990s (yes on the backs of all sorts of groups), the NDP has also come around to favoring balanced budgets. So, they can no longer propose spending that just piles up the debt.

So, while the NDP and the Liberals certainly differ in other areas, most notably foreign policy, on the issue people are most concerned about, economics, there isn't a lot of difference.

So, to create a wedge between the Liberals and the NDP and to find a way to pay for more spending, Layton et al support higher taxes on corporations than the Liberals support (not saying Layton doesn't also sincerely believe in his policies).

So, where does this analysis lead? To me it suggests that the NDP moving to a position of eliminating taxes on corporations is, to them, a political non starter. How could they be seen as different from the Liberals?

Even if they argued "we proposed this, not the Liberals." The Liberals would most likely point out what I've pointed out above: this proposal is where Liberal taxation on income trusts was likely headed, higher taxation on dividends (and maybe capital gains) and elimination of taxes on corporate income.

I suspect you'll get a lot of this in replies to this thread: "if we didn't suggest taxing corporations, (on economics) how would we be any different from the Liberals?"[/b]


A few points:

- I think the Liberals would balk at any proposed hike on income taxes. The difference between what (I think) unionist is proposing and what the Liberals/Conservatives are doing is that the former is shifting the tax burden (and hopefully the political discussion) while the latter are simply shrinking government.

- The income trust taxation policy was pure politics of the crassest sort. There was a certain organized demographic that liked trusts and the Conservatives and Liberals - at different times - pandered to them. But that was never a serious aspect of tax policy - as was made clear when the Liberals promised to 'reverse' the Harper broken promise but maintain a moratorium on new trusts.

- I don't think the NDP of old proposed nationalization as much as you think they did and I don't think the current NDP opposes nationalization as much as you think they do. It's hard to propose nationalizing the oil sector when it's booming, creating thousands and thousands of jobs and driving the economy. It might get easier in the year to come when the bottom falls out, thousands lose jobs, and all Alberta's left with are massive holes filled with poision where tar sands used to be. We'll see.

- I'm not sure the NDP was ever as in favor of deficit financing as you think they were and I'm not sure they're as opposed to it now as you think they are. With Harper saying he'll run a deficit and McGuinty already running one I don't think the NDP will stick too hard to the mantra.

- I don't think this proposal would work as a key plank of the NDP platform but as an interesting idea, a defensive measure, a way of shifting debate, it might work.

Unionist

quote:


Originally posted by M. Spector:
[b]Unionist doesn't think wealthy corporations are a problem. Only wealthy people.[/b]

Never said that. I said this (in the previous thread):

quote:

Originally posted by unionist
[b]I'm anti-capitalist, but I'm not anti-corporation. I just don't think corporations that control the main levers of the economy should be owned and controlled by individual investors.[/b]

quote:

[b]Unionist thinks the vast pools of cash and other wealth held by corporations, from which they derive their enormous power and influence over the economy and society, should go untaxed.[/b]

I don't believe "corporations" have power and influence over the economy and society. I believe a small class of owners of those corporations do. And I believe (in the longer term) they should not own those corporations at all. But in the short term (like tomorrow), I'd rather tax [i]them[/i] than their corporations.

quote:

[b]One of the main ways governments can influence corporate behaviour is through taxation policies. If they aren't taxed, corprations will not be amenable to spending their money in ways that the government deems socially beneficial.[/b]

Government can force corporations to do whatever governments want - such as stop closures, stop monopolistic practices, stop anti-labour activity, stop regional discrimination, etc. etc. [b]That has nothing to do with taxation.[/b] Presenting a corporation with an annual tax bill does nothing to modify its behaviour. And by orange-shifting the entire 17% of corporate tax onto the shoulders of the wealthiest taxpayers, the same funds are available for government to spend in socially useful fashion.

quote:

[b]Corporations pay salaries to employees, and deduct that expense from their income for tax purposes. Do you think your corporate boss would be as willing to give you a $1,000 raise if the money were not tax deductible?[/b]

I'm suggested making not only corporate expenses - but corporate income - "tax deductible"! Anyway, my corporate boss pays me on the basis of supply and demand plus whatever additional small pressure my union can exert. Are you suggesting that by increasing corporate taxes, we can achieve better wage increases, because wages will look like a bargain to them compared to other expenses???

quote:

[b]Moreover, abolishing corporate tax would in effect make corporations into tax shelters for the rich, like a giant RRSP, where they could park their capital and accumulate surplus value without having to share with the government, until they take their dividends out.[/b]

And when they take their dividends out, they would be taxed to kingdom come. This would of course be an ongoing cycle, so that from the government's viewpoint, it would be tax neutral. From the economy's viewpoint, it would be a huge benefit.

If you want to amend my proposal by legislating that corporations cannot just "park" capital (I'm sure our economists could come up with some definition), I'll happily adopt it. The Orange Shift is very accommodating.

quote:

[b]Corporate entities would pop up everywhere; people would create corporations just to hold their money and keep it from the taxperson. [/b]

Good. I never understood why governments tax savings. Why not apply the RRSP principle to all savings? Pay income taxes when you spend it. And, of course, we need to add steep progressive estate taxes, etc.

quote:

[b]Every home, automobile, and yacht would be owned by a corporation, and purchased with before-tax money.[/b]

Uh-uh, only if the home, auto, and yacht are legitimately used in the business and form an integral part of wealth creation. Personal use would be taxed through the ying yang. Fraud is always a possibility, but the same possibilities exist now and we have laws to deal harshly with that.

quote:

[b]Instead of paying for your kids' university tuition, you could have the family corporation award them scholarships.[/b]

Better yet, abolish university tuition.


quote:

[b]Why would we even contemplate this?[/b]

To stop the bullshit debate about "are deficits good or bad", "corporate welfare bums", "kitchen table vs. boardroom table", etc. The NDP has suffered for decades by being stigmatized as big spenders who will hurt the economy. Its response has too often been to prove that they are more Liberal than the Liberals, more Conservative than the Conservatives. Why not make a radical break?

Tax the wealthy, not the economy!

[ 28 October 2008: Message edited by: unionist ]

1948

quote:


Originally posted by Mojoroad1:
[b]

1948 you're wrong. From the OECD Tax Database:
(it was an excel file so bear with me)

Country: Adjusted central government
corporate income tax rate:

Canada 19.5

Sweden 28.0

Denmark 25.0

Norway 28.0[/b]


Canada's provincial taxes should be added on to that. Economists I argue with usually point me to 'effective tax rates' which the good socialists at the Cato Inistitute list [url=http://www.cato.org/pubs/tbb/tbb_1008-50.pdf]here[/url]:
Argentina46.0%
Australia29.3%
Austria26.4%
Bangladesh17.8%
Belgium-3.4%
Bolivia21.9%
Botswana23.3%
Brazil39.1%
Britain28.7%
Bulgaria4.1%
Canada29.1%
Chad40.1%
Chile13.8%
China 45.3%
Costa Rica27.9%
Croatia9.6%
Czech Rep.14.7%
Denmark18.6%
Ecuador13.7%
Egypt10.4%
Ethiopia21.9%
Fiji19.2%
Finland20.1%
France35.9%
Georgia 20.5%
Germany27.3%
Ghana14.8%
Greece11.9%
Hong Kong 4.4%
Hungary13.5%
Iceland10.5%
India37.6%
Indonesia26.9%
Iran26.5%
Ireland13.2%
Italy28.1%
Jamaica16.2%
Japan35.0%
Jordan20.0%
Kazakhstan20.4%
Kenya1.8%
Korea37.1%
Latvia 4.2%
Lesotho26.5%
Madagascar17.4%
Malaysia18.5%
Mauritius7.4%
Mexico15.4%
Morocco14.5%
Netherlands16.6%
New Zealand20.1%
Nigeria3.1%
Norway24.5%
Pakistan28.9%
Peru24.7%
Poland14.0%
Romania9.4%
Russia37.0%
Rwanda13.8%
Sierra Leone21.9%
Singapore8.0%
Slovak Rep.12.6%
South Africa15.1%
Spain26.4%
Sweden21.1%
Switzerland15.5%
Tanzania22.2%
Trinidad14.8%
Tunisia23.1%
Turkey9.2%
Uganda16.4%
Ukraine8.7%
United States*36.0%
Uzbekistan20.1%
Vietnam16.3%
Zambia20.6%

Mojoroad1

quote:


I don't believe "corporations" have power and influence over the economy and society. I believe a small class of owners of those corporations do. And I believe (in the longer term) they should not own those corporations at all. But in the short term (like tomorrow), I'd rather tax them than their corporations.

I know I'm cherry picking your post but this is out right silly. I could bring up a million documentaries, books, and google pages but I'll answer this one (in Canada) with 3 words: NAFTA CHAPTER 11.

Mojoroad1

quote:


Originally posted by 1948:
Canada's provincial taxes should be added on to that. Economists I argue with usually point me to 'effective tax rates' which the good socialists at the Cato Inistitute list

Ok. Fair enough. Now subtract the tax credits/energy rebates/corporate handouts, endless loopholes etc. That aren't factored in with those numbers. [img]wink.gif" border="0[/img]

Unionist

quote:


Originally posted by Mojoroad1:
[b]

I know I'm cherry picking your post but this is out right silly. I could bring up a million documentaries, books, and google pages but I'll answer this one (in Canada) with 3 words: NAFTA CHAPTER 11.[/b]


I say big capitalists influence the economy, you say corporations do. Why don't we agree to continue debating that point. But for the present purposes, do you agree with me (as I replied to M. Spector) that corporate taxation doesn't affect their influence? That if the same funds are achieved by government from the wealthy instead of from businesses, then government's fiscal ability to influence society and the economy is the same?

1948

Someone else may be able to help but I think that is considered:

quote:

Effective tax rates take into account statutory corporate rates, capital cost recovery, and taxes on capital purchases such as retail sales taxes and nonrefundable value-added taxes. Other capital-related taxes are also included, such as taxes on assets, gross receipts taxes, stamp duties, and financial transaction taxes.

Unionist

quote:


Originally posted by 1948:
[b]- I think the Liberals would balk at any proposed hike on income taxes.[/b]

Excellent. That leaves them arguing, "Don't tax the wealthy", while we argue, "Don't tax the economy!" We can live with that. Of course, we could use some committed publicists who don't see the electorate as inferior and dumb ("kitchen table", ATM fees, blah blah blah).

quote:

[b]It's hard to propose nationalizing the oil sector when it's booming, creating thousands and thousands of jobs and driving the economy. It might get easier in the year to come when the bottom falls out, thousands lose jobs, and all Alberta's left with are massive holes filled with poision where tar sands used to be. [/b]

Actually, this is [b][i]precisely[/i][/b] the time when government should nationalize the oil sector. Why should government be saddled only with socially essential and inherently unprofitable enterprises (like mass transit)? Why not make [b]profit[/b] directly from its ownership of profitable industry, and then appropriate a portion of that profit for traditional forms of government spending? That would be corporate self-taxation. Government could then alleviate the personal tax burden on the super-rich!

Explain to me again why government's only role is to bail out incompetent money-grubbing coupon clippers' investments gone sour. I say: Buy out the best businesses! Let the losers go (except for essential services, of course).

quote:

[b]I don't think this proposal would work as a key plank of the NDP platform but as an interesting idea, a defensive measure, a way of shifting debate, it might work.[/b]

You may be right. I threw it out here to show that there are other ways to fight the magnetic charm of Liberals etc. than by coming to resemble them.

George Victor

quote:


I don't believe "corporations" have power and influence over the economy and society. I believe a small class of owners of those corporations do. And I believe (in the longer term) they should not own those corporations at all. But in the short term (like tomorrow), I'd rather tax them than their corporations.


And you don't believe the fact that the average "Joe" and "Jane" out there who have lost more than 30 per cent of their pension's value in the last month does not suggest a tiddly bit of co-optation in the ownership of those corporations?

Otherworldly, u. Just otherworldly.

Mojoroad1

quote:


Originally posted by unionist:
[b]

I say big capitalists influence the economy, you say corporations do. Why don't we agree to continue debating that point. But for the present purposes, do you agree with me (as I replied to M. Spector) that corporate taxation doesn't affect their influence? That if the same funds are achieved by government from the wealthy instead of from businesses, then government's fiscal ability to influence society and the economy is the same?[/b]


I would argue the "Big Capitalists" that you mention essentially have the vast majority of their wealth in the "big corporations" I mention. Effectively one in the same. And you hit the nail on the head with "IF the same funds..." As I mentioned before, whatever (paper) wealth that isn't kept in the system via corporate investment (and more and more of said profit is funneled out of the country as the govmt allows our companies to be bought up willy-nilly by foreign interests), or not taken out of country to off shore tax havens, is not enough to support a progressive safety net alone.

as for loopholes etc I mentioned earlier this is off some generic corporate accounting company's front page of their website...


quote:

Canadian Corporate Tax

Companies operating primarily in Canada need the benefit of every available tax break to compete successfully with multinationals, who in turn need to optimize their global effective tax rate. Advice from tax professionals who are part of an accomplished cross-country network—and have the industry experience necessary for recognizing and implementing real savings—can help Canadian corporations to minimize their income and capital tax liabilities.

Our specialists in federal and provincial income and capital tax can recognize a wide range of potential tax planning opportunities, and have seamless access to the best tax practitioners from across the country and around the world. Whether your company needs advice on federal or provincial tax planning, deferral strategies, financing structures, employee compensation, shareholder remuneration, or a range of other complex tax issues, we have both the foundation and the building blocks to optimize your effective tax rate in Canada.


Unionist

quote:


Originally posted by George Victor:
[b]And you don't believe the fact that the average "Joe" and "Jane" out there who have lost more than 30 per cent of their pension's value in the last month does not suggest a tiddly bit of co-optation in the ownership of those corporations?

Otherworldly, u. Just otherworldly.[/b]


Not sure what you're talking about. I (and most other unionized workers) are proud to have spent almost 100 years negotiating defined benefit pension plans. I have lost not one penny. That's why we need to unionize all workers, so that they stand a chance in this cruel world.

As for the small (very small) savings for kids' education etc., I personally have never got sucked into the "mutual fund" chimera. It's always been Canada Savings Bonds and/or GICs.

So who are you talking about that lost 30% of their pension?

Anyway, I'm sorry I made that parenthetical comment about corporations' influence on the economy.

What do you think of my Orange Shift (tm) proposal, George?

KenS

I was hoping you'd start a thread on this unionist.

Too bad "Orange Shift" has to drop out of sight.

Or, Orange Shake.

George Victor

quote:


What do you think of my Orange Shift (tm) proposal, George?


Been hoping to see a post with something positive in mind for months now, u.

Will review your points with interest. But a bit dismayed by your non-acceptance of the degree of "worker" involvement in the market these days.
Even the macjob workers with their tiny contributions to the CPP for their old age.The corporate flight from guaranteed benefits in pension plans these days is just another sign of the terrible forces at work in a globalized economy these days. Would really like to see you put forward more protection for the corporation-as-employer.


quote:

If you like the idea (subject to some fine-tuning), I will personally commit to getting the NDP on board. It's tiresome to hear them talk, decade after decade, about wealthy corporations - when the real problem is wealthy individuals on one side and poor and struggling individuals on the other.


Right on. The old left-populist target crutch.

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From a previous post of mine some days ago:


quote:

posted 19 October 2008 12:01 PM
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quote:
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In a word, we need countering economist voices to provide deconstruction.

--------------------------------------------------------------------------------

Right on. But try to winkle out anything more than quotes from Harvard professors attached to politics on the ground around here.

(Just be careful about those "Scandinavian" references, however. Norway has its sovereign oil fund. Sweden has very low corporate tax rates but very high income tax rates, and then there's the world's best educated folks in little Finland...all small countries and doing nicely. The difficulty would be in turning around the great unwashed in this dinosaur of a resource-extractor that's just depended on bellying up to the U.S. for a half-century now.)


[ 28 October 2008: Message edited by: George Victor ]

Mojoroad1

quote:


OTTAWA—The federal government's planned corporate tax cuts will only exacerbate the existing inequalities in Canada's economy—both between regions and across industries, says a study released today by the Canadian Centre for Policy Alternatives (CCPA).

The study, by economist Jim Stanford, analyzes the distribution of corporate profits across Canada’s provinces and across 16 major industries. It finds that the big winners from Conservative corporate tax cuts will be Canada’s oil-producing provinces, and the oil and finance sectors. In contrast, industries and regions which are struggling will receive very little benefit.

"Despite what Finance Minister Flaherty says, corporate tax cuts are an especially uneven policy tool,” Stanford says. “These corporate tax cuts constitute a significant net fiscal shift in favour of Alberta, and away from Ontario and every other non-oil-producing province.”

According to the study, Canada’s three oil-producing provinces, which account for 15% of the population, generate 36% of corporate profits—and can be expected to reap a similarly large share of the benefits of corporate tax reductions. On a per capita basis, companies operating in the oil-producing provinces can be expected to receive three times as much benefit from the tax cuts as companies in the rest of the country.

“Finance Minister Flaherty is 'picking winners’ as surely as any other Finance Minister—including Ontario’s,” says Stanford. “Surprisingly, the ‘winners’ he’s picking are the provinces and industries that are already doing very well indeed.”

[b]The study also questions the economic impact of corporate tax cuts. Despite the dramatic decline in corporate tax rates this decade, business spending on capital equipment and R&D has been remarkably sluggish—even as Canadian companies are enjoying all-time record profits.

“Corporate tax cuts, as expensive as they have been and will continue to be, have had no visible impact on the broad pattern of business investment at all,” Stanford says.

“In addition to asking whether the regional and sectoral impacts of the Harper government’s $15 billion annual corporate tax cuts are fair and acceptable to the majority of Canadians, we should also ask whether they will have any beneficial impact on Canada’s economy at all,” concludes Stanford.[/b]


[url=http://www.policyalternatives.ca/News/2008/05/PressRelease1890/]Source[/...

[ 28 October 2008: Message edited by: Mojoroad1 ]

It's Me D

The Orange Shift seems to have grown into a whole platform:

quote:

From unionist so far this thread:

"tax the wealthy"

"abolish university tuition"

"nationalize the oil sector"

"unionize all workers"


Sounds downright communist of you unionist, and like a platform I could get behind [img]biggrin.gif" border="0[/img]

1948

Only Nixon could go to China.

Only a corporate tax slashing NDP could nationalize the means of production.

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

This was always Stephen Gordon's hobby-horse. And the question that he never failed to ignore was: How do you collect taxes from the foreign owners that control a huge percentage of the profitable corporations operating in Canada, if not through direct corporate taxation?

Indeed, do you not accelerate the hollowing-out of corporate Canada (through sell-outs to multinationals) if you further advantage foreign ownership by heavily taxing Canadian owners while subsidizing foreigners (through lowered corporate taxation)?

janfromthebruce

quote:


Originally posted by Lard Tunderin' Jeezus:
[b]This was always Stephen Gordon's hobby-horse. And the question that he never failed to ignore was: How do you collect taxes from the foreign owners that control a huge percentage of the profitable corporations operating in Canada, if not through direct corporate taxation?

Indeed, do you not accelerate the hollowing-out of corporate Canada (through sell-outs to multinationals) if you further advantage foreign ownership by heavily taxing Canadian owners while subsidizing foreigners (through lowered corporate taxation)?[/b]


And LTJ, that was exactly where I was going. Essentially, that's what Martin did with his Canadian Shipping Lines is fly is under a foreign flag, but in this regard, he would move his corp to fly under a Canadian flag (cheap - no corp taxes) and fly his wealthy butt in another company.
That actually would be easier for the corp owners. It's easier to move the household.

Fidel

Nobel laureate Paul Krugman said people who claim tax rates affect growth are not serious economists, and that the mystery of growth is "deep and poorly understood." Canadian William Krehm points to evidence from Chicago School of Economics economists of the 1950's and 60's, Nobel prize winners themselves in the post-war era, who concluded that investments in people and infrastructure provide the most significant returns in a mixed market economy.

I think Nordic countries economies do have some similarities to our own but are not scaled-down versions for the most part. Norway's is an energy exporting economy, and I think Canada would do well to copy that country's energy nationalism. We have a number of key sectors of economy which are majority foreign-owned and controlled since FTAA-NAFTA, especially manufacturing and energy. Transfer pricing and misdirected tax cuts allow companies in those sectors to shovel money(and jobs) out of the country at a frenzied pace without fail.

[ 28 October 2008: Message edited by: Fidel ]

1948

I'm more interested in the politics. If the NDP has said, for instance, that they were going to introduce a new tax bracket for high income earners and use that revenue to cut corporate taxes what would be the reaction?

Or, for that matter, in the next election (after the Libservatives corporate tax rate cuts are a reality) should the NDP propose raising them back up again? If not, does the NDP simply accept the fact that the govvernment has shrunk forever? Pledge to run massive deficits? Bring in regressive consumption taxes and maybe pretend it has something to do with the environment? Or, maybe... tax income? If so, whose income?

[ 28 October 2008: Message edited by: 1948 ]

Unionist

quote:


Originally posted by Lard Tunderin' Jeezus:
[b]How do you collect taxes from the foreign owners that control a huge percentage of the profitable corporations operating in Canada, if not through direct corporate taxation?[/b]

That's why I had my item #4:

quote:

4. Apply strict controls on any capital outflows abroad, including earnings on foreign capital invested in Canada.

No?

quote:

[b]Indeed, do you not accelerate the hollowing-out of corporate Canada (through sell-outs to multinationals) if you further advantage foreign ownership by heavily taxing Canadian owners while subsidizing foreigners (through lowered corporate taxation)?[/b]

If item #4 isn't clear enough, then we should make it clear. Taxes on any income earned in Canada (earnings from employment, capital gains, dividends) are payable regardless of where you reside. No $$$$$ leaves this country without oversight to ensure the Orange Shift™ Code has been respected.

Unionist

quote:


Originally posted by janfromthebruce:
[b]Essentially, that's what Martin did with his Canadian Shipping Lines is fly is under a foreign flag, but in this regard, he would move his corp to fly under a Canadian flag (cheap - no corp taxes) and fly his wealthy butt in another company. [/b]

And yet, here's what Adam T said in the previous thread:

quote:

Point 4 is not practical, however. First, it's probably not allowed under free trade rules and secondly [b]it would greatly discourage investment[/b].

If my Orange Shift™ is accused simultaneously of warmly welcoming, and scaring off, foreign investment - there must be something to it!

George Victor

I'm informed that Putin is suggesting Russia and China free themselves from the US dollar. With a Bretton Woods #2 coming up as well, it may be an opportunity to free ourselves from the globalist vice and return to some kind of sovereignty.

But let's continue this intersting (not to say, exciting) discussion, please.

Lost in Bruce County

[Reprint from other thread]
Originally posted by unionist:

but surely business will have much more resources available to grow and create jobs. Every penny reinvested in the business would be tax free.

[ 28 October 2008: Message edited by: unionist ]

Uggg.... you bought straight into Wall Street's propaganda. Corporations - they're not like you and me because they're corporations. That means they don't give a monkey's bum about the betterment of communities or the progress of society because they only care about profit. So what do corporations do - convince people like you and me that not only should they not pay taxes, but get this... we should give them money and free resources. And how do they do this? They promise us job creation which they say magically produces better communities and a progressive society. And we get so giddy from all the helium in the corporate dream bubble that we forget to ask questions. Like, has trickle down theory (developed by corporate sponsored research institutes) ever worked? NO - and when it has the returns have been very marginal compared to the investment. Does corporate tax breaks act as incentives to create jobs? NO. We end up setting a lower industry standard so that other provinces and countries have to lower their taxes just to keep the jobs they have. So really it's not creating jobs but stealing them from others - but at a lower rate. In some situations these people get called scabs.

So should we get NDP on board with corporate tax cuts that don't work and steal other people's jobs? I say no. Coodos to the NDP for not kissing corporate ass for no good reason. And coodos to the NDP for being a strong leader and realizing that the best way to create jobs and to build solid communities is to directly invest in communities. Believe it or not, investing in social services and infrastructure actually creates good paying jobs enabling Canadians to go out and purchase meaningless crap so that big corporations can prevail. Corporations don't need tax breaks - they need us to invest in the public sector so that we can afford their crap - that's the only way they can grow and actually create more jobs.

Unionist you did prove one thing. If lefties like you can buy into corporate b.s. then we're all vulnerable. Linking back to the initial discussion - why do lefties vote liberal - because they have brought into corporate propaganda just like unionist. I would like to see NDP produce better ad campaigns not only to counter right-wing messaging, but to educate and offer up our alternative and effective solutions. I would like to see NDP reinforce its community allies so they can deliver this messaging. For starters, unions and NDP should be working together to offer education campaigns so that membership doesn't have the wool pulled over their eyes anymore.

Unionist

Hey Lost! Listen up! I agree that corporations are evil! I agree that cutting their taxes doesn't create jobs or anything like that!

In exchange, will you please agree to read [b]my full proposal[/b]. It's only four points long. There was something in there about gigantic tax increases for the rich - you may have missed it.

Then I'd like to hear your comments again.

Cueball Cueball's picture

My question would be, what precisely is the point of this proposal, if it does not really change the grand totals of the financial equation? Are you not just shifting the point at which the taxes are taken?

[ 28 October 2008: Message edited by: Cueball ]

George Victor

And while you may have your savings in a Canada Savings Bond sock and GICs, u, do you really think that is the average situation out there?

If 30 per cent are unionized and all have defined benefit pensions and no company is going to go belly up and reneg etc. etc. etc.....how ab out the majority? And I don't mean just mutual funds, the real money pits. There are all sorts of invetment vehicles DEPENDING ON THE HEALTH OF THOSE BLESSED CORPORATIONS.

eh?

[ 28 October 2008: Message edited by: George Victor ]

quote:

Not sure what you're talking about. I (and most other unionized workers) are proud to have spent almost 100 years negotiating defined benefit pension plans. I have lost not one penny. That's why we need to unionize all workers, so that they stand a chance in this cruel world.


[ 28 October 2008: Message edited by: George Victor ]

Unionist

quote:


Originally posted by Cueball:
[b]My question would be, what precisely is the point of this proposal, if it does not really change the grand totals of the financial equation? Are you not just shifting the point at which the taxes are taken?[/b]

No, because corporate taxes don't come out of executive salaries and bonuses and dividends. My taxes do.

Furthermore, taxing the rich more and the poor less doesn't "change the grand totals of the financial equation" either - but don't you think it's a good idea nonetheless?

[i]The Orange Shift™ [/i]

[ 28 October 2008: Message edited by: unionist ]

Cueball Cueball's picture

That right. That is why I am asking. The plan does not change the grand totals, prima facie. I haven't decided if it is a good idea or not. I am just trying to get a fix on the purpose. The purpose is transparency?

[ 28 October 2008: Message edited by: Cueball ]

Fidel

quote:


Originally posted by George Victor:
[b]I'm informed that Putin is suggesting Russia and China free themselves from the US dollar. With a Bretton Woods #2 coming up as well, it may be an opportunity to free ourselves from the globalist vice and return to some kind of sovereignty.[/b]

It could be an interesting outcome. It looks like Wall Street appointed Trojans were installed in central banks of two BRIC nations, India and Brazil, years ago. They will kow-tow to Wall Street banksters unless something remarkable happens.

The neoliberal voodoo is coming home to roost for our two old line party politicians who have followed these economic prescriptions in some sectors while abandoning it in others. The result here in Canada has been mediocre energy export-driven economy and a return to hewer and drawer status as of 2005.

[url=http://www.rabble.ca/babble/ultimatebb.cgi?ubb=get_topic&f=13&t=004201&p... has plenty of room on taxation[/url]. The feds are anywhere from $35 billion below the OECD average tax revenue(as a % of GDP) to about $75 billion below the EU-15 average. Nobel economists have said that there is no real correlation between wanton corporate tax cuts and economic growth. Social Democrats in Scandinavia and Nordic countries know what the Caramilk secret is, and so do Canada's Social Democrats understand as well.

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

quote:


Originally posted by unionist:
[b]
Taxes on any income earned in Canada (earnings from employment, capital gains, dividends) are payable regardless of where you reside. No $$$$$ leaves this country without oversight to ensure the Orange Shift™ Code has been respected.[/b]

Unless there is a clear advantage to declaring their profits in Canada, multinationals will (as they always have) sell their products at high margins into Canada for resale; and sell Canadian production to themselves at low rates to earn their declared profits elsewhere.

Your solution only works with the foreign shareholders of those Canadian public companies which operate exclusively in Canada.

Unionist

quote:


Originally posted by Cueball:
[b]That right. That is why I am asking. The plan does not change the grand totals, prima facie. I haven't decided if it is a good idea or not. I am just trying to get a fix on the purpose. The purpose is transparency?[/b]

I'll be back to your question later, Cueball.

Meanwhile, I'm kind of hoping that some economist will get online here and pound the crap out of my proposal.

It's grown too big for me to handle...

LTJ, I'll have to read your post a few more times. I really do know next to nothing about such matters.

[i]The Orange Shift™ - Tax the Wealthy, Not the Economy![/i]

[ 28 October 2008: Message edited by: unionist ]

Left J.A.B.

Just wondering where you think those corporations get their money from? Maybe people's spending power eh? So taxing them more would in fact curtail spending power, which would then lead to a decline in profits and so on.

Much better to have a balanced approach that asks corporations to pay for some of the things they benefit from like roads, an educated workforce, communication lines, health care for workers and so on.

Not only that corporations are legally individuals under the law. If you are propsoing to change that too, then it might work. Right now that is the basis for taxation (not the different rate) and a lot of other things that corporations benefit from.

The short answer, you don't know nearly as much about the tax system as you think you do.

Parkdale High Park

Capital controls!? That is a bad idea.

1. It violates national treatment treaties that Canada has with a number of countries (bilateral investment treaties). If we restrict our firms from investing in them, they will restrict theirs from investing in us. One of the advantages of slashing corporate taxes should, presumably be attracting investment.

2. Capital controls are distortionary, and have negative effects in the long run, even if they are sometimes necessary responses to economic crises (eg. their use Malaysia).

3. Capital controls arguably no longer work - you might consider reading this paper by a former prof of mine:

Pauly and Goodman. "The Obsolescence of Capital Controls" in World Politics 1993

If you are more empirically inclined, Sebastian Edwards has a piece: "How effective are capital controls" in NBER, written in November 1999. He concludes that capital controls seldom work as expected.

The abstract:
"In the aftermath of the East Asian crisis a number of authors have argued that capital mobility is highly destabilizing, and that emerging countries would benefit from restricting capital flows. In this paper I investigate, from a historical perspective, the effectiveness of capital controls. I deal with Tobin taxes, controls on outflows and controls on inflows. I argue that controls on outflows have seldom worked as expected. They introduce major distortions and breed corruption. Market-based controls on inflows - similar to those implemented by Chile - have the potential for lengthening the maturity of foreign debt. They are not very effective, however, in achieving other objectives, including a higher degree of monetary policy independence. "

(you can google scholar both)

Cueball Cueball's picture

quote:


Originally posted by Parkdale High Park:
[b]Capital controls!? That is a bad idea.

1. It violates national treatment treaties that Canada has with a number of countries (bilateral investment treaties). If we restrict our firms from investing in them, they will restrict theirs from investing in us. One of the advantages of slashing corporate taxes should, presumably be attracting investment.
[/b]


Exactly, so why vote for a body that does not have control over economic system which, more than anything else, defines people lives? Moreover, how does one even propose the possibility that a Social Democratic party can exist and effectively legislate control over the economy, when such is essentially outside of the mandate of that body?

Fidel

quote:


Originally posted by Parkdale High Park:
[b]
Pauly and Goodman. "The Obsolescence of Capital Controls" in World Politics 1994[/b]

And those were good times for rich people and banksters with neoliberal voodoo well underway.

Free market ideology ebbs and flows according to special interests of a tiny minority of superrich and powerful people. It was good to preach laissez-faire at times when speculative bubbles grew. They will now hide those sermons away for a while as governments everywhere deliver taxpayer-funded bailouts to protect them from their own ideology.

KenS

Like unionist, I don't know anywhere near enough to know how capital and profits leakage is dealt with, or even how big an issue it is.

But its a safe bet there aew ways to deal with it.

I would actually have to be convinced that scrapping corporate taxes in favour of more direct taxes on wealth is a good thing.

But I'm open to the debate. I have yet to see an argument against the idea in this discussion that definitely has more to it than dedication to a sacred cow.

Bringing in Stephen Gordon is a sure sign that people are relying heavily on ad hominem arguments. "If Gordon's in favour of it, it must suck."

TCD

quote:


Originally posted by 1948:
[b]Or, for that matter, in the next election (after the Libservatives corporate tax rate cuts are a reality) should the NDP propose raising them back up again? If not, does the NDP simply accept the fact that the govvernment has shrunk forever? Pledge to run massive deficits? Bring in regressive consumption taxes and maybe pretend it has something to do with the environment? Or, maybe... tax income? If so, whose income?[/b]

1948 raises a good point.

If we assume the next election is two years away (and given the blank cheque the Liberals have given Harper we should assume at least that) the corporate tax rate will be cut another 1.5 points. If they make it it to 2011 another 3 points.

So the issue might not even be a "shift" (though unionist's propsal (tm) is for a complete eradication of corporate taxes) but how to make up the lost revenue.

Of course, in the current climate, corporate tax cuts seem even kookier than they used to. I wonder if the Harperites will flip-flop on those too.

As for the Liberals, I'm not too worried about wedges with this collection of nitwits. One day, I hear them demanding a deficit. The next they insist they never would run one. When asked how they would avoid it they have no answer. They supported every single Harper tax cut in the last election (and opposed his cost-saving moves on income trusts). The only tax hike they endorse is a carbon tax which they're now running away from.

The Liberals are a lost and directionless herd of rats who will be devouring each other for years to come. They'll lose more seats in the next election. Just wait.

Fidel

Jack Layton did a doctoral thesis on international capital flows.

In her book, the Cult of Impotence, Linda McQuaig talks about her conversation with Canadian economist Pierre Fortin. It was an interesting conversation about capital flows and how Bay Street bond salesmen prefer policies favourable to international capital versus those of ordinary Canadians. It doesn't have to be that way, Fortin, a rather conservative economist himself revealed. The feds have the tools at their disposal to pursue sovereign policies more favourable to working class Canadians. They simply choose not to use them. In this way, the impotence of Tory and Liberal governments past hasn't been real laissez-faire but rather the self-imposed variety.

KenS

Just to clarify, there is nothing in common between the current reality of simply cutting corporate taxes as a preferred form of general tax cutting, and what is proposed here: eliminating corporate taxes to be replace by what is argued to more direct and more effective tax on wealth.

Tommy_Paine

I'm probably a cult of one, when I think taxes should have nothing to do with anything but running the government.

I think corporations should pay taxes as long as they receieve government services. Like fire, police, etc, etc, etc.

The idea that low or no coroporate tax rates lead to more investment, is in these current times, evidentially wrong.

Listen. Everyone has his or her reason why they should be exempt from taxes, or why we should be earning more. We typically over value our contributions to the whole, and undervalue the contributions of others. So we'll always argue about it.

Taxes, like I said, should be about collecting enough money from persons for the government to run what the government runs. The fairness of a graduated tax is self evident. The unfairness of flat taxes like GST, PST, user fees etc, are also self evident.

Social engineering using Revenue Canada is attractive to some on the left. I find it unatractive. The idea of loop holes, deductions, etc, only serves to allow people not to contribute their fair share.

If we want to encourage certain behaviors and penalize others, pick another branch of government other than Revenue Canada.

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

quote:


Bringing in Stephen Gordon is a sure sign that people are relying heavily on ad hominem arguments. "If Gordon's in favour of it, it must suck."

[img]confused.gif" border="0[/img]

I mentioned Mr. Gordon, perhaps I shouldn't have. He came to mind because he started a half dozen threads on this subject, and I thought those interested might want to see the previous arguments made therein.

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