Beyond The Commons

 Beyond The Commons

Aaron Wherry covers all the goings-on in and around Parliament Hill. Follow Aaron on Twitter: @aaronwherry

Categories: Beyond The Commons, Capital Read

The donut speech, fact checked

by Aaron Wherry on Friday, September 25, 2009 1:29pm - 38 Comments

Erin Weir, an economist with the United Steelworkers, writes in to the Toronto Star to quibble slightly with the apparent joy expended on Tim Hortons’ return to Canada.

By reorganizing itself as a Canadian corporation for tax purposes, Tim Hortons will no longer pay American tax on its global profits. But it will pay no additional Canadian tax on its Canadian profits. There is no indication of Tim Hortons relocating any facilities or jobs to Canada.

This corporate reclassification appears to be the Prime Minister’s best or only example of what deep corporate tax cuts have achieved. If so, it suggests that these cuts provide essentially no public benefit.

Tags: , , ,
Bookmark and Share
  • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

    Yes, we were anxiously awaiting news of what the union spin would be on the move, thanks.

  • oppo guy

    How about that? One of the brightest economists in the country doesn't work for a bank or a right-wing think tank.

    The pendulum towards low-as-you-can-go corporate tax cuts has begun to swing back.

    • http://intensedebate.com/people/avr avr

      What's your basis for either of those statements?

      • Michael

        Basis? As in, something that points to the truth?

        "It doesn't have to be true. It just has to be plausible"

        heh.

  • http://intensedebate.com/people/SeanStok SeanStok

    I'll bite: what's the objective judgement here?

    • http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

      the objective judgment is that the objective judgment isn't being provided here.

      • http://intensedebate.com/people/sea_n_mountains sea_n_mountains

        so please, fill the void. what is the benefit to canadians here?

        • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

          The benefit is that business leaders will look at this decision and consider concentrating more operations in Canada. Its been a very long time since Canada had a better corporate tax than the US.

        • http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

          The benefit is that business leaders will look at this decision and consider concentrating more operations in Canada. Its been a very long time since Canada had a better corporate tax structure compared to the US.

          • http://intensedebate.com/people/sea_n_mountains sea_n_mountains

            tim hortons….the beacon guiding international business…. thanks for the laughs.

          • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

            Tim Hortons is not good enough for you? Well, I'd wager they are performing better financially than you.

          • http://intensedebate.com/people/sea_n_mountains sea_n_mountains

            right, the point here is the state of my personal finances relative to Tim Hortons.

          • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

            the point is that you presume other businessmen don't pay attention to what is going on, and that you know better than the lowly TH, which is unlikely.

          • http://intensedebate.com/people/sea_n_mountains sea_n_mountains

            I assume nothing of the like. other business people do pay attn and i don't know much about these kinds of decisions, to a point.

            I do know enough to know that TH paper only move is not likely going to inspire a pile of international businesses to move their operations to Canada as you suggest whether Harper is there to highlight it or not.

  • http://intensedebate.com/people/YYZ YYZ

    The amount of doublespeak in that little blurb alone is ridiculous:

    " There is no indication of Tim Hortons relocating any facilities or jobs to Canada." That's a pretty vague statement.

    "This corporate reclassification appears to be the Prime Minister’s best or only example of what deep corporate tax cuts have achieved." "appears." "Best or only".

    Well done Erin! Myth de-bunked! Facks appear to be possibly checked!

  • http://www.intensedebate.com/people/YYZ YYZ

    The amount of doublespeak in that little blurb alone is ridiculous:

    " There is no indication of Tim Hortons relocating any facilities or jobs to Canada." That's a pretty vague statement.

    "This corporate reclassification appears to be the Prime Minister’s best or only example of what deep corporate tax cuts have achieved."

    "appears." "Best or only". Ha.

    Well done Erin! Myth de-bunked! Facks appear to be possibly checked!

    • John.K

      Well, there is in fact no indication of TH relocating any facilities or jobs to Canada. That makes it a factual statement, not a "pretty vague" one.

      And I haven't heard any other example from the PM of what his deep corporate tax cuts have achieved, so that sounds pretty factual as well.

      • http://intensedebate.com/people/YYZ YYZ

        A more useful statement would be "Tim Hortons has indictaed they have (no plans / might have plans / do have plans)"

        And on corporate taxes: do you think most companies run it by the PMO before they move to Canada or increase their presence here?

        Feel free to disagree with reducing corporate taxes, but to argue that reducing corporate taxes does not create jobs is absurd.

        • Dave

          I don't think that's the argument in as much as that in this specific case being rolled out there's no evidence that tax cuts are going to create more jobs because all that's happening is a paper move. Afterall, I find it hard to believe a company currently employing X people to do a job is suddenly going to go in a hiring spree in absence of need simply because they're now paying less in taxes. Any sane corporation pockets that money and pads the bottom line.

          The new job opportunities from lower corporate taxes happen when companies physically shift locations entirely to take advantage of them or establish new presences in favourable locations. Why aren't those moves being highlighted? Who's being attracted to Canada lately?

        • http://www.progressive-economics.ca/2009/09/24/taxing-tim-hortons/ Erin Weir

          If Harper is touting Tim Hortons’ reorganization, the burden of proof should be on him to demonstrate tangible benefits for Canada.

    • http://www.progressive-economics.ca/2009/09/24/taxing-tim-hortons/ Erin Weir

      If Harper is touting Tim Hortons’ reorganization, the burden of proof should be on him to demonstrate that it will produce tangible benefits for Canada.

  • Anon

    All they did was move the Canadian entity one box up on the corporate chart and pushed the US Delaware entity below it. New shares will be issued, of equal value.

    A cynical observation might be that perhaps, just perhaps, Tim Horton's is doing this reorg to avoid the coming healthcare and other tax-related changes in the US, because this is not a physical move. This is only a paper transaction.

    I would say that Tim's probably spent less on this reorg than Harper did flying back-and-forth and arranging his photo-op.

  • http://intensedebate.com/people/SisyphusThis SisyphusThis

    Ain't that l'il ol' corporate registration a truly magical thing.

    Hey ! Look over there !

  • AT1

    So what would the media reaction be if Tim Horton's was going the other way as a result of changes to corporate taxes? Fast and furious I would imagine, directed at the government for allowing the loss of yet another heritage corporation.

    • http://intensedebate.com/people/PhilCP PhilCP

      You're probably right. But that misinformation wouldn't last for long; a plethora of Macleans commenters are on hand to point out that type of misinformation.

  • http://intensedebate.com/people/OntarioTown OntarioTown

    I think I'd rather hear from other economists before listing to a union "we hate corporations" person.

    • http://intensedebate.com/people/Be_rad Be_rad

      Because you can detect obvious distortions, inaccuracies or misleading statements in what you see here or because it would just feel more comfortable to hear from someone who shares your perspective already rather than soemone who challenges it?

      I like reading people who disagree with me in order to see if what I believe stands up to alternative perspectives.

    • http://intensedebate.com/people/SisyphusThis SisyphusThis

      Live with it. Or go to the back of the line of the "we hate unions" crowd. It's a long
      and rabid one.

      • kcm

        Yeesh! Unions hiring their own economists. That's not kosher. They're supposed to bat for the good guys – aren't they?

        • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

          I think the problem is not that the unions have spin doctors, it is that certain media rely on them as their 'fact checkers". It's like asking Jack Layton to check the facts on a Steven Harper statement. I don't think Jack is going to say 'oh yeah, all those facts check out'.

          • John.K

            Even if Jesus checked the facts on a Steven Harper statement, I don't think he'd say 'oh yeah, all those facts check out'.

          • http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

            And if you find a journalist that has an accurate feed from Jesus, please pass along the link.

  • http://intensedebate.com/people/OntarioTown OntarioTown

    No, I'd rather hear from other first, thank you very much.

    Personally, bringing Timmies back does what – create more "minimum" wage jobs – wow.

    I understand the need for unions – but their greed is just as bad – my taxes prove it.

  • Greg

    So basically if you took the total value of a USW union economists opinion on the effectiveness of corporate tax cuts, added the value of Aaron's opinion on anything, then added $1.50, you could afford a double double at Timmy's in either country

    • http://intensedebate.com/people/SisyphusThis SisyphusThis

      I'm sure if you tossed in estimates from the many bank and think tank economists as
      competition you could negotiate the price upward.

  • Foreigner

    Sorry cranks, but capitalism can only be saved by having robust labour rights to challenge its natural tendency towards greed, corruption, megalomania and the destructive of public wealth. The jury's in on that one.

    Of course, unions are not the only way of achieving that; just the only one we know of.

  • http://intensedebate.com/people/TwainShallMeet TwainShallMeet

    I have no idea why this is generating negative comments. I watch politics on a daily basis and i have long since stopped believing anything the CRAP says about anything. Why and how exactly people are taken in by theses Cons is baffling to me.____This donut story should have Harper announcing his retirement, but that sort of applies to all he touches. But his support rolls in, mindless and inexhaustable. Disgusting!__

  • http://www.progressive-economics.ca/ Erin Weir

    Thanks, Aaron, for posting a Timbit of my analysis. The full-meal deal on this issue is available at my blog:

    http://www.progressive-economics.ca/2009/09/24/ta…

Previous

Next

From Macleans