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McGuinty's graph misleads on corporate taxes

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Further to Jim's excellent critique of the Ontario Conservative platform's graphs, I am similarly struck by the Liberal platform's lone graph.

"Cutting Ontario's Taxes on New Business Investment in Half" (page 25) purports to show that corporate tax cuts are required to get the province's "Marginal Effective Tax Rate" below the U.S. and OECD averages.

It compares projections of those averages for 2012 with Ontario rates for four other years. It cites no sources for any of these figures.

The Liberals have often invoked Jack Mintz in support of corporate tax cuts. However, his figures confirm that Ontario has been below the U.S. Marginal Effective Tax Rate of 35 per cent all along (table 2, page 7). The Liberal graph incorrectly displays a U.S. average of 31 per cent to imply that Ontario needed corporate tax breaks to compete.

The comparison to a raw average of OECD countries is also disingenuous. This average is dragged down by ultra-low taxes in very small OECD members like Ireland, Chile, Iceland, the Czech and Slovak Republics, Hungary, Slovenia and Estonia. All of those economies combined are smaller than the Canadian economy.

This article was first posted on The Progressive Economics Forum.

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