By Stephen Gordon - Friday, January 11, 2013 - 0 Comments
I’ve made the point before that the debate about income inequality is something that occurs at more than one level, and I’ve also made the following distinction:
- First-order inequality is visible in standard measures such the gini coefficient, and shows up as an increase in the gap between average and median incomes. If income growth is concentrated in the top half of the income distribution, average incomes will increase, but median incomes will remain unchanged.
- Top-end inequality refers to the share of income that goes to those whose income puts them above the 99th percentile and beyond.
In this post, I’m going to talk about what we can do about first-order inequality. I’m going to ignore the top one per cent, because their numbers are too few to make any material difference in what follows.
By Aaron Wherry - Wednesday, September 26, 2012 at 5:27 PM - 0 Comments
The Scene. The day’s prize for Inventiveness in Partisanship goes to Joyce Bateman, the Conservative MP for Winnipeg-South Centre, who, in standing to ask the Foreign Affairs Minister about the appointment of a new ambassador to China, somehow managed to accuse the NDP of proposing a “job-killing carbon tax.”
Any backbencher, having been duly awarded one of the highest honours a group of voting-age citizens can bestow on another, can stand and publicly proclaim the party line. But only the truly exceptional can do so in reference to something completely unrelated. Bravo Madame. You have established an impressive standard that will be difficult to match. Not that we should underestimate your colleagues. Especially when they might have three years to match or exceed your accomplishment.
For sure, you should probably settle in because this joke is probably going to take at least that long to tell (or, put another way, it will probably be for at least that long that the Conservatives will continue telling it). Continue…
By Aaron Wherry - Wednesday, September 26, 2012 at 11:30 AM - 0 Comments
Jim Flaherty again encourages the private sector to spend.
In his speech, the minister conceded that business investment had picked up of late, but “more needs to be done,” he told the audience.
He noted that government had done its part, slashing corporate taxes, eliminating tariffs, introducing monetary inducements to encourage the purchase of new technologies, reducing red tape and concluding some 20 free trade and investment protection agreements around the world. “The government cannot do this alone,” he said. “Private sector business investment must also help lay the foundation for a sustained, longer-run expansion of Canada’s economy and jobs growth.”
According to KPMG, Canada has the lowest corporate tax rate in the developed world.
Mr. Flaherty made similar comments last month.
By Aaron Wherry - Wednesday, January 25, 2012 at 8:30 AM - 0 Comments
Barack Obama, last night. “My message is simple. It’s time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.”
Jack Layton, last March. “As prime minister, I wouldn’t use your hard earned tax dollars to reward companies that ship jobs to the States or overseas. I’ll target investment to create jobs right here at home.”
By Aaron Wherry - Tuesday, November 29, 2011 at 9:36 AM - 17 Comments
Within a longer treatise on taxation, Brian Topp has released his proposals for tax reform.
The first step in restoring fairness to Canada’s personal income tax system is to end the free ride for Canada’s highest-income 1% by introducing a higher marginal tax rate on income in excess of $250,000. I propose a new 35% rate on income in excess of $250,000.
With two important caveats, capital gains should be taxed as ordinary income – 100% of this form of income should be recognized – and not be discounted by 50%.
Income from cashing in stock options should be taxed at full rates, abolishing a tax benefit for the wealthiest that cost the federal treasury $750 million in 2008.
Under Harper’s plan, the corporate income tax rate will drop from 16.5% to 15% on January 1, 2012. That cut should be rescinded. Thereafter, corporate income tax rates should be increased by 1.5% each year until they reach the rate of 22.12% that applied before the Harper.
The two caveats on capital gains are that they should be protected from inflation and that the changes would not apply to sale of homes, small businesses and farms.
By Aaron Wherry - Wednesday, April 6, 2011 at 4:11 PM - 44 Comments
The Globe questions the effects of corporate tax cuts.
But an analysis of Statistics Canada figures by The Globe and Mail reveals that the rate of investment in machinery and equipment has declined in lockstep with falling corporate tax rates over the past decade. At the same time, the analysis shows, businesses have added $83-billion to their cash reserves since the onset of the recession in 2008.
The Canadian Centre for Policy Alternatives has similar doubts.
By Aaron Wherry - Monday, April 4, 2011 at 9:30 AM - 58 Comments
The Liberals say the Conservative plan to reduce the corporate tax rate amounts to a $6-billion tax cut.
But economist Stephen Gordon says they’re wrong.
But the Conservatives say the Liberal plan to raise the corporate tax rate amounts to a $6-billion tax hike.
But the Liberals say the Conservatives’ own words substantiate their projections.
By Scott Feschuk - Monday, February 21, 2011 at 9:39 AM - 48 Comments
FESCHUK: Yes, he called democracy in Egypt a tube of toothpaste, but our PM has a way with words
It was a time that few will soon forget. As the Egyptian people rose up and chased their president from office, Stephen Harper took the measure of the moment, stared history in the eye and offered the following words to posterity: Those Egyptians, he said, “are not going to put the toothpaste back in the tube on this one.”
Other world leaders reached for eloquence. Our guy reached for the Colgate. None of those fancy historical allusions for Stephen Harper! He put it in plain, straightforward talk that even a hard-working Joe who also happened to have a serious brain injury could understand: Democracy—it freshens your breath AND prevents cavities! If the regime in Iran ever falls, we can look forward to Harper’s seminal “can’t put them horses back in that barn” address.
There’s the guy we used to know! The guy who never left the continent before he became leader of the Opposition. The guy who before winning power famously declared during a CBC town hall that he felt kind of worldly because his wife had travelled overseas and told him about it and stuff.
By Aaron Wherry - Wednesday, February 9, 2011 at 6:55 PM - 101 Comments
The Scene. At the risk of giving away the surprise ending, let us start with this afternoon’s profound revelation. You may wish to sit down first and are advised to put on a helmet or some other kind of cranial reinforcement to prepare for the fact that what was revealed here today may well blow your precious mind. Moments of such insight into the meaning and workings of the world that surrounds us are so rare. Indeed, it is possible that some of you may not yet be prepared to process and accept what was made clear to those of us in the House this afternoon.
But let us now say and hear what needs to be said and heard. Let us be honest with ourselves and each other. And, specifically, let us know this: according to a national organization whose stated purpose is to advocate on behalf of independent business owners, most of this country’s business owners would prefer to pay less in taxes on the revenues their businesses generate. Not more, less. Surely not since the Canadian Federation of Independent Little Girls announced in 1925 that its members would not, if offered, be adverse to accepting the gift of a pony has our understanding of human behaviour been so fundamentally altered.
And let the record show that it was Pierre Poilievre—a man they call “Skippy”—who brought this reckoning upon us. Continue…
By Aaron Wherry - Tuesday, February 1, 2011 at 10:54 AM - 32 Comments
It’s not clear to me that the Conservatives owe their 2006 victory to the GST cut, and governments in Quebec and Nova Scotia recently increased the TVQ/HST without – as far as I can tell – a great amount of fuss. Voters are adults, and can generally be counted on to make adult decisions if offered adult choices.
And even if voters do have an irrational aversion to the GST, I don’t see why I should be internalising this tendency. When politicians choose to sacrifice evidence-based policy in favour of electoral gain, they should be called on it.
In the comment thread under Gordon’s post, Ian Brodie, Stephen Harper’s former chief of staff, turns up to defend the GST cut.
By Aaron Wherry - Monday, January 31, 2011 at 5:45 PM - 82 Comments
Ah yes, in disagreement. On the left side of the House sat the opposition, themselves divided into three distinct parties. On the right side, save for a few New Democrats there at the far end and two independents in the back corner, sat the government. In general, perhaps even by definition, no one group agreed with much of anything that was said or done by any of the other groups. All were of general agreement that they wanted things to be somehow better, but all were generally inclined to believe that they, and only they, truly understood how to go about achieving that vague state of improvement.
It will no doubt surprise you little to learn that in the six weeks since all sides were last compelled to sit in reasonable proximity to each other, almost nothing—from their thoughts to their words to their general attitudes—has changed.
So let us turn instead, or at least at first, to the small matter of the democracy that may or may not be breaking out in Egypt. Continue…
By macleans.ca - Friday, January 28, 2011 at 10:44 AM - 45 Comments
By Aaron Wherry - Thursday, January 27, 2011 at 9:38 AM - 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.
By Cathy Gulli - Wednesday, November 10, 2010 at 9:20 AM - 6 Comments
Campbell has been crowned the country’s most fiscally responsible premier by the Fraser Institute
Lately, it seems like Gordon Campbell is the kind of premier only economists could love. Despite an embarrassing nine per cent approval rating among British Columbians—many of whom are annoyed about having to pay the HST, not to mention their leader’s recent $240,000 TV promo funded by taxpayers—Campbell has been crowned the country’s most fiscally responsible premier by the Fraser Institute.
In a recent report, the Canadian think tank ranked 10 premiers on how they’ve handled government spending, taxes, debt and deficits since coming into power. Campbell bested the other provincial leaders with an overall score of 89.1 out of 100. Newfoundland’s Danny Williams, who finished third, is the only premier east of Manitoba to crack the top five. Meanwhile, Ontario’s Dalton McGuinty ranked last with a paltry 29.7 points out of 100.
By Aaron Wherry - Thursday, November 4, 2010 at 1:20 PM - 0 Comments
Jasmin Guénette and Vincent Geloso from the Montreal Economic Institute, Maxime Bernier’s old haunt, lament the Liberal promise to cancel future corporate tax cuts.
The more productive a company is, the higher salaries and better overall working conditions they can offer their workers. Highly productive companies can also afford to pay higher prices to their suppliers, which in turn allows those suppliers to offer better salaries and conditions to their employees. Raising corporate taxes, though, reduces the investments that could otherwise have improved worker compensation.
By Aaron Wherry - Tuesday, June 1, 2010 at 6:17 PM - 49 Comments
The Scene. Michael Ignatieff began with an attempt to weave together various disparate strands to form a basket. A basket within which he could carry his message from one middle-class suburban door to the next.
Or something like that.
The Bank of Canada, he reported, had today hiked—the only word one can use when describing this action—interest rates. Canadian families are already more indebted than households anywhere else in the G20. The government is spending a billion to secure three days of meetings of G20 world leaders later this month. How, he wondered, could the government explain putting so much into the latter in light of the former?
Here, though, the Prime Minister stood with his own basket to weave. The interest rate hike, he said, was due to Canada’s sound economy. The G20 meetings, meanwhile, would bring as many delegates as the Olympics had athletes with even greater security risks. Ipso facto, the money simply has to be spent. Continue…
By Aaron Wherry - Thursday, May 27, 2010 at 12:50 PM - 24 Comments
Stephen Gordon has put together a valuable primer ahead of what probably should be a national discussion on taxes and the federal treasury.
Now, I’m as happy as the next person – okay, probably happier than the next person – to talk about corporate income tax policy. What worries me is that the quality of public debate on this topic is likely to be no better than that of the climate change file in the last election. For pretty much the entire 2008 campaign, reporting on climate change policy – with all-too-rare exceptions – took the form of he-said-she-said, opinions-differ-on-the-shape-of-the-earth stories that made no reference to the scholarly literature. By the time academic economists intervened with this open letter a week before the election, it was too late: the damage had already been done.
By Aaron Wherry - Wednesday, May 26, 2010 at 6:21 PM - 137 Comments
The Scene. As his second summer as Liberal leader dawns, Michael Ignatieff’s challenges are many and varied. They are myriad and they are daunting. They are traditional—common to every opposition leader who has ever been unlucky enough to hold the job—and they are unique to his particular circumstance.
It would be silly to rank them, to attempt to even prioritize such complex and interconnected problems. But if there is one question that lingers most persistently, most dangerously and most dispiritingly, it is this: Would Michael Ignatieff, if given the opportunity, destroy this country?
This is, of course, the question that is raised by the government side whenever Mr. Ignatieff so much as opens his mouth. His every proposal portends doom. His every thought indicates dark intentions. His very nature suggests a sinister agenda—most of it apparently having to do with some plan to tax every Canadian into poverty, for what monstrous purpose we can only speculate. Continue…
By Aaron Wherry - Friday, May 21, 2010 at 5:01 PM - 78 Comments
Maxime Bernier muses on government spending and taxation in a speech to the Frontier Centre for Public Policy in Winnipeg.
Let’s try a thought experiment. Let’s say that the federal government is big enough as it is and that expenses are not going to grow anymore. And I’m not saying zero growth adjusted for inflation and population or GDP increase. Just zero growth. The overall budget is frozen. From now on, any government decision has to be taken within this budgetary constraint. Every new government program, or increase in an existing program, has to be balanced by a decrease somewhere else.
We will no longer have debates about how much more generous the government can be with this or that group, as if the money belonged to the government instead of taxpayers. The focus of the debate will shift to a determination of priorities: what are the most important tasks for government to achieve with the money we have? Is this government function really important and should we have more of it? Then where should we do less or what should we stop doing and leave in the hands of the free market, voluntary organisations and individual citizens? The silent majority’s interests are always being protected.
By Aaron Wherry - Thursday, May 13, 2010 at 6:05 PM - 58 Comments
The Scene. Bob Rae opened this afternoon’s session with a vigorous display, lecturing the government on the need to reconcile environmental and economic policy and even thumping his desk with his right hand—his flare seemed to ignite a certain passion on all sides. So this last afternoon before a blessed break week was full of vim, most notably on the matter of our overdrawn national bank account.
“Mr. Speaker, it is the wrong choice to cut taxes for the largest and wealthiest corporations while the global economy remains fragile,” Bonnie Crombie cried from the back row of the Liberal side. “It is the wrong choice to cut taxes for the largest and wealthiest corporations while a debt crisis rages in Europe. It is the wrong choice to cut taxes for the largest and wealthiest corporations when markets fluctuate at the drop of a hat. Why does the government plan to borrow money and mortgage our children’s future to pay for its reckless corporate tax cuts?”
The Finance Minister did not have an answer for this one, but he did have aspersions (and in this place that’ll do). Continue…
By Aaron Wherry - Monday, May 10, 2010 at 6:16 PM - 11 Comments
The Scene. Michael Ignatieff rose and shone—which is to say smiled somewhat—then remembered the subject at hand and his face became serious.
The government side has lately been lamenting that Mr. Ignatieff hasn’t been asking its ministers enough questions about the economy. This is apparently evidence of him not being a leader or just being in it for himself or having not consumed in the past year the necessary amount of Tim Hortons coffee to be considered a Canadian citizen in good standing with this government. Apparently if Mr. Ignatieff would only ask them about a serious matter—nothing to do with Rahim Jaffer or Helena Guergis or Afghan detainees or abortion or Nancy Ruth or the firearms registry—they’d be only too happy to provide a serious answer. (And, for that matter, the public and the press gallery would finally have what both are apparently desperate to hear.)
So here stood the opposition leader to recount the Liberal party’s economic management in the 1990s, to dissuade the Prime Minister from taking any credit and to wonder if Mr. Harper might take heed of the troubles in Europe, accept some Liberal advice now and refrain from cutting corporate taxes any further.
The Prime Minister, alas, was absent, so it was John Baird who stood to take this one. And the Transport Minister, being deathly afraid of heights, steered clear of the high road. Continue…
By Aaron Wherry - Thursday, April 1, 2010 at 10:36 AM - 50 Comments
On Monday, Perrin Beatty, president of the Canadian Chamber of Commerce, wrote Michael Ignatieff to express his concern with the Liberal leader’s vow to freeze corporate tax rates at their current level.
Today, the Liberal leader has written back to Mr. Beatty.
By Aaron Wherry - Monday, March 29, 2010 at 6:16 PM - 58 Comments
The Scene. John Baird could barely contain his glee. Over the weekend, in response to the Liberal gathering in Montreal, the Transport Minister had apparently convened his own conference aimed at deciding on the absolute right joke to deliver Monday afternoon. Over two days at some undisclosed location, great minds of stand-up and clowning dealt frankly and, at times, contentiously with the concepts of sarcasm, pun, slapstick and mockery. Various one-liners were proposed, debated and amended. For awhile the conference nearly broke up over a proposal that Mr. Baird merely hand Michael Ignatieff one of those cans that, when opened, sprays a number of cloth snakes. But finally, in the wee hours of Sunday night, a consensus was achieved. And so here, just after 2:15pm today, Mr. Baird stood to reveal what had been accomplished.
“Mr. Speaker,” he said, struggling to withhold a smile, “the Liberal Party certainly had a taxing weekend.”
The very foundation of the House seemed to buckle under the weight of such wit. Continue…
By Aaron Wherry - Monday, October 5, 2009 at 1:09 PM - 28 Comments
Erin Weir goes to Tim Hortons’ regulatory filings in search of the motivating factors of corporate tax breaks.
Perhaps more importantly, Tim Hortons became an American corporation when it merged with Wendy’s. Even after separation, it was locked into a tax-sharing agreement with Wendy’s.
When that agreement recently expired, there was no longer a reason to keep Tim Hortons organized as a US corporation when some 90% of its revenue is generated in Canada. In particular, it did not make sense for the company’s entire business, which is overwhelmingly conducted in Canadian dollars, to be taxed and analyzed in US dollars.
Therefore, it seems highly probable that Tim Hortons would have reorganized as a Canadian corporation even had Canada simply kept its corporate tax rates at US levels. If so, the Canadian government might have received a similar temporary boost in tax revenue from this reorganization without the ongoing loss of future tax revenue.