Why we should raise Corporate taxes back to year 2000 level at least.
Statistics Canada figures indicate that private non-financial corporations held $471 billion of cash in the first quarter of 2011. Including short-term paper would bring this total to half a trillion dollars, enough to pay off the national debt (i.e. accumulated deficit).
Cash hoarding is a critical point in the debate about corporate taxes. If incremental after-tax profits are being deposited (rather than reinvested or paid out), lower corporate tax rates likely just produce higher piles of cash.
If corporate Canada already has half a trillion dollars more than it wishes to invest in physical or financial assets, there is no reason to expect that corporate tax cuts will boost investment. On the contrary, if the government collected more of this money and invested it directly, Canada would have more investment in total.
Not surprisingly, advocates of corporate tax cuts are trying to rationalize corporate cash hoarding as a normal and positive activity.
As Eric Pineault showed graphically and Statistics Canada shows numerically, corporate Canada’s overall approach for at least two decades has been to stockpile ever more cash through good times and bad (with only very rare and slight exceptions). Advocates of corporate tax cuts have not provided a consistent or convincing explanation of how accelerating this ongoing cash accumulation benefits the Canadian public.
More here:
http://www.progressive-economics.ca/2011/07/02/rationalizing-corporate-cash-stash/
The corporate tax rate decreased as follows:
- 28% effective 2000
- 27% effective 2001
- 25% effective 2002
- 23% effective 2003
- 21% effective 2004
Conservatives Voted into office 2006
- 21% before January 1, 2008
- 19.5% effective January 1, 2008
Economic Crash 2008
- 19% effective January 1, 2009
- 18% effective January 1, 2010
- 16.5% effective January 1, 2011
- 15% effective January 1, 2012
If you look back further back you can see the Liberals raised Corporate Tax when they got into office relieving the Mulroney Conservatives during an economic crash. As Canada started recovering and having surpluses the tax rate slowly dropped. It took 2 years from taking office to start having growth in the economy and job market.
The Harper Conservatives take the opposite approach. Instead of people and Corporations each paying more to pay debt and stem the recession, we have Corporations getting a free ride. While are recording profits, the recession continues for the people.
During the time before the crash the Harper Conservatives were busy cutting other taxes such as the Capital gains tax (Tax on sale of stocks, bonds, precious metals and property primarily)
Almost 5 year of recession/depression and economists are predicting a “double dip recession” where it collapses a second time and with far less income our government is powerless to do anything about it except hope corporations start hiring and soon.
Summing up analogy: If your significant other loses their job you shouldn’t tell your boss you’d like to make half of what you’re usually paid and the company can add the other half to it’s money heap.
