Talking to the taxman

Peter
Peter Jackson
Send to a friend

Send this article to a friend.

A couple of decades ago, the touchy-feelie crowd came up with a new way of asking, “How are you?” In short: “Where are you on the illness-wellness continuum?”

Health is a relative thing, you see. We are constantly moving up and down the scale, depending on our physical condition and our state of mind.

As far as I know, few employers have decided what point on that scale qualifies employees for a sick day. Personally, I’m afraid to ask. And, while it’s unclear what the upper limit of that scale might be, the lower limit is pretty obvious.

It’s a funny way of looking at personal health, but the scale would be apt for tax rates. Only in reverse. You can state what the lowest possible tax rate is, but what is the maximum upper range? The one that might put you or your business six feet under?

This discussion has been a key ingredient of the federal election debate. It has also been utterly devoid of that simple question: how much tax relief is enough?

The predominant mantra among the right-wing element in this country is that no amount is enough. Taxes have to be cut. This year and next year. Every year. Forever.

In this, Canada’s Conservatives take a cue from their more radical cousins south of the border. There, as here, there is a notion that corporations will provide the promised land for all, if only left alone. They will expand, invest and provide more jobs. They will build the economy with money they aren’t forced to hand over at tax time.

This is patently absurd, of course, but the belief seems to be gaining more ground, despite the 2008 financial meltdown caused almost exclusively by a lack of safeguards against corporate greed.

The Telegram editorial of April 7 highlighted some numbers that show this theory of corporate largesse to be bogus.

The Globe and Mail analyzed Statistics Canada figures and revealed 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.”

You can shuffle the numbers around all you like, but the bottom line is still the same. The wealthy contribute less and less, and the rest of the citizenry has to make up the difference.

Taxes not the key

On CBC Radio’s “Sunday Edition” two weeks ago, McGill University professor Henry Mintzberg explained that, contrary to popular belief, big businesses rarely base any of their strategy on tax rates. And they rarely pass corporate tax hikes on to the customer.

Such things are based on one simple principle, Mintzberg told host Michael Enright.

“In a competitive marketplace, prices are set based on supply and demand.”

The only exception, he said, is the constant threat that companies may move headquarters to another country, or not bring their business into the country. Being in the middle of the pack internationally, Canada’s tax rates should already mitigate that risk. Nonetheless, said Mintzberg, such blackmail should be tempered by stricter international standards.

“In the first (Great) Depression, we learned that unregulated domestic markets are dangerous,” Mintz said. “What we have yet to learn (since the 2008 collapse) is that unregulated international markets are dangerous.”

In the United States, President Barack Obama has bent over backwards to accommodate Republican demands for corporate tax breaks.

But faced with almost surreal, nation-shattering proposals — scenarios that would decimate education, health care and other social programs — Obama finally seems to be laying down the law.

In a pivotal speech on April 13, he explained the impasse between his and the Republican position in crystalline terms.

“They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors to each pay $6,000 more in health costs? That’s not right, and it’s not going to happen as long as I’m president.”

But his opponents continue to steadfastly defy any compromise. Corporate tax cuts must go ahead. Corporate tax cuts are sacred.

One thing is for sure. If we continue to let corporations off the hook as national debt rises, expect the country to sink further down on the illness-wellness continuum.

In America, it’s already condition critical.

Peter Jackson is The Telegram’s commentary editor. He can be contacted by email at pjackson@thetelegram.com.

Organizations: Globe and Mail, Statistics Canada, CBC Radio McGill University

Geographic location: Canada, United States

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Annette Demers
    April 20, 2011 - 11:43

    Corporate tax cuts don't work. Here's the proof: http://www.policyalternatives.ca/newsroom/updates/corporate-tax-cuts-dont-stimulate-investment

  • Ursula Dowler
    April 20, 2011 - 11:31

    Excellent article Peter . The dilema facing our neighbours to the south , is a portend of what is in store for this country . The American experiment with neo classical economic theory and practices as advocated by the Chicago School of economics may well have led them down a dangerous road and to their undoing . What is so distressing is that as a country, Canada has yet to take that step , but , the pressure is mounting . The Canadian people are being asked to support an unspoken mandate that will clearly launch this country down this path .