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 more you know

by Aaron Wherry on Thursday, January 27, 2011 9:38am - 125 Comments

Abacus asks Canadians how they feel about the corporate tax rate.

Once respondents were made aware of Canada’s tax position relative to the United States, Germany, Japan, and Britain, two statements were presented – the federal government’s argument and the opposition parties’ argument. “This finding suggests that as Canadians become aware of how low Canada’s tax rates are compared to other countries, it becomes more difficult to convince them to support them.”

“Right now, public opinion is firmly aligned with the opposition parties,” said Coletto.  “Only 21% of respondents buy the job creation argument when given the alternative to spend more on health care or to reduce the deficit.” The survey then asked Canadians if they support or oppose the government’s plan to continue with the corporate tax cuts.  In total, 52% strongly or somewhat oppose the government’s plan, while 26% support or strongly support it.

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  • chet

    and I suspect while they tell them how low Canada's rates are to say… the UK and the USA, they probably don't also tell them how much healthier our economies are.

    lest they draw the incorrect inference or something,

    best to let them "figure out" only so much.

  • Mike T.

    If the tax cuts are there to create jobs, make the tax cuts contingent on creating jobs, right?

  • Stewart_Smith

    I think overall the efforts to directly link job creation to a company's economic treatment by government have proven clumsy, short sighted and ultimately ineffective.

  • LdKitchenersOwn

    If the tax cuts are there to create jobs, make the tax cuts contingent on creating jobs, right?

    If you think that cutting corporate taxes is the means, and creating jobs is the end, then sure. If you think the "creating jobs" rhetoric is the means and cutting corporate taxes is the end, maybe not.

    Besides, expecting companies to create jobs with their job-creating tax cuts wouldn't be fair. That'd be like putting in requirements to ensure that daycare space creating tax credits actually create daycare spaces. What's important is that the politicians are able to SAY that these tax changes will have effect X. Putting in measures to ensure that effect X actually happens would be entirely beside the point.

  • Mike T.

    A lot like straight tax cuts to create jobs then, right?

  • LdKitchenersOwn

    I think overall the efforts to directly link job creation to a company's economic treatment by government have proven clumsy, short sighted and ultimately ineffective.

    So, are you agreeing with Mike then that companies should only get this favorable treatment from the government if they can show that they've actually accomplished the job creation that is supposedly the point of the favorable treatment?

  • s_c_f

    Of course tax cuts create jobs, I think this has been proven extensively, I don't think there is any debate about this. That doesn't mean that every single company that receives a tax cut will create jobs, that's ridiculous. But frankly, a report was just released the other day that estimated about 100,000 additional jobs should the tax cuts take place.

    And of course, we are all entitled to equal protection under the law, and we're also supposed to be a free country, so forcing all companies to hire would be preposterous. You let companies keep more of their own money, and they will use it in many ways, all of it good. Either it will be returned to investors as dividends and your RRSP goes up. Or it will be used to invest in machinery or other capital to improve their products and their competitiveness. Or they will improve their competitiveness because they'll be able to hire more people.

  • burlivespipe

    I bet there's a pretty good correlation to lowered taxes for corporations and bigger bonuses for CEOs! Although i'm certain CEOs will find a way to get that bonus bigger one way or another…

  • Todd

    Lets just cut the corporate tax rate to 1% then. According to the government, it will produce more revenue.

  • Stewart_Smith

    yes, Companies are presumably always interested in making more money. I suspect like all of us, they are more likely to do something dynamic if they have ready cash at hand. If hiring a new person with that money leads to substantial new income for the company, then they will hire. If buying sophisticated, automated equipment with that money (and laying off some workers) leads to more income they will do that. In my view, governments should set a fair, predictable playing field and resist the urge to meddle. My large proviso is that in industries that are very highly regulated (say power generation) then government is already fully entangled and needs to be much more sophisticated in how it treats them. In particular, I find the argument that the private sector will always outperform the public sector to be specious wrt cases where both price and methodology is regulated.

  • LdKitchenersOwn

    I'm not sure I totally understand this reply (Nor Stewart's above). Mike T.'s comment seems to suggest that he's skeptical that corporate tax cuts will create jobs, so he only wants corporations to be eligible for these corporate tax cuts if they actually create jobs. Your reply and Stewart's seem to me to have a critical tone, as though you're trying to make a counterpoint, but you both seem to ALSO be skeptical that the tax cuts will create jobs.

    Maybe it's a matter of online nuance, but you both seem to be agreeing with Mike's point, but in a way that makes it seem like you're criticizing it.

  • jonatwitan
  • Mike T.

    Oh, how I long for the day when the Dapper Dolt is ensconed as leader for life of her majesty's loyal opposition!

  • s_c_f

    Putting in measures to ensure that effect X actually happens would be entirely beside the point.

    Well, we are supposed to be living in a free country. But if you like communism better, that's your prerogative. The fact is, governments are in the position to allow us to keep more of our money. They are not in the position to tell us how to spend our own money. That's what freedom is all about. Many corporations will create more jobs, especially the weaker ones, the ones that did not have the money to hire the people they need in the first place.

  • burlivespipe

    I'm guessing there'd be a good percentage of corporations and businesses who would take their tax savings and pay down their own debt… at the expense of the Canadian gov't (and general populace) going further into debt. So instead of telling business to get their houses in order on their own dime, we'll clean it for them, and kick the servants when its done for them!

  • Mike T.

    There are many many words here you do not seem to know the meaning of.

  • LdKitchenersOwn

    Fair enough, but is that not an argument that this is about tax cuts not job creation?

  • tedbetts

    Deficits are more of a pet peeve to me than high taxes, and I do not think that now is a good time for cutting taxes. I certainly don't think the economy is going to come down by getting rid of them or by keeping them. In the grand scheme of things, this is not the biggest most consequential issue.

    It is not, for example, nearly as consequential to businesses and employees and employment as increasing payroll taxes. That has a direct impact on people's take home pay and employers decisions to hire or not. Corporate taxes have a more long term planning impact.

    I would say in addition though that the longer the tax cuts are in place, the more reluctant I would be to rescind. As I think I've mentioned to you before, predictability and stability is so critical to business planning, especially when the market has been so volatile, that the added instability of public policy volatility is more damaging than rescinding tax cuts (if you've implemented them) or cutting taxes (if you have not implemented them yet).

  • LdKitchenersOwn

    I'm trying to get my head around this. If tax cuts are what creates the jobs, then how are there cases where tax cuts don't create jobs?

    There's some truth to your argument I think, but I'm struggling with the notion that "Of course X causes Y, this has been proven extensively. That doesn't mean that X always causes Y". If some companies that get tax cuts create jobs, and some don't, doesn't that call in to question the causal link between tax cuts and job creation?

    I don't disagree that dictating to companies what they should do with their money would be wrong, I just ALSO think that claiming that cutting taxes creates jobs is wrong too.

  • criselis

    Or they will address pollution issues such as mine tailings or polluted water systems. Then taxpayers wouldn't need to fund such clean ups.

  • McC_

    "This is a fundamental tenet of teaching in public policy research."
    and that is why you fail.

  • Blue

    Why would Bernier want to be leader of the Liberals ?

  • s_c_f

    Many fewer than you, however.

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