Corporate Tax Cuts.

[Insidious Von]

Do they actually work?

Both the Canadian and Ontario government are bringing in corporate tax cuts in the upcoming budgets. At the same time they are both implementing spending and service cuts, is this the best way to stimulate the economy. For most of the 20th Century, Canada invested heavily in research and development and had one of the world's strongest economies. Innovation should always take precedent over austerity, right?

 

[train]

Do they actually work?

Both the Canadian and Ontario government are bringing in corporate tax cuts in the upcoming budgets. At the same time they are both implementing spending and service cuts, is this the best way to stimulate the economy. For most of the 20th Century, Canada invested heavily in research and development and had one of the world's strongest economies. Innovation should always take precedent over austerity, right?

Who was it that invested in research and development ? The Ontario Government? The Feds? So other than the space arm ( not a hot item these days) and Candu reactors what actually have these governments developed directly?

Truth is most development these days is done by the private sector and that's the people you are giving the money to ( or taking away less from). So if this was your only consideration you must be in favour of the tax cuts then . Correct?

 

[buckwheat1]

Tax cuts only put more money into the companies bank accounts they DO NOT create jobs.

 

[Buick Mackane]

They seem to be calling the shots, it's no longer a democracy.

 

[buckwheat1]

I could'n agree more it seems like the attacks today is on the employee

 

[Insidious Von]

I don't agree with you.

Would the Manhattan Project ever have gotten off the ground if the US government had not overseen it. Canada's Avro Arrow would not have been possible without financing from the King/St Laurent administrations. And the Irvings and Stronachs owe their business empires to initial investments from the government. train your view of the private sector is myopic.

 

[buckwheat1]

Stronachs = Magna internation now the chair makes close to a million his name is Mike harris what a joke

 

[realthing69]

About 10 years ago our company (in hi-tech) applied for a tax break in R&D. We had to show the Federal government (some auditors came to our office) and document our R&D and yes our company did hire quite a few people to develop our project. In the end the project didn't work out but that's a risk in R&D.

I think giving tax breaks to corporations, without them demonstrating some sort of new innovation is wrong. It just puts money in their pockets as someone above mentioned.

 

[ogibowt]

oh LaRue, where are you?

 

[39ajaxmale]

http://www.dlittle.ca/articles/tax-cuts-for-the-rich-ten-men-in-a-restaurant.html

I love this little anecdote every time I hear about corporate tax cuts, and how the rich get all the breaks.

Then I'll give you this little tidbit from the financial pages of Yahoo's website.

http://ca.finance.yahoo.com/q/is?s=THI&annual

This is Tim Horton's 2011 Income Statement. It shows that Tim's had gross profits of just over $1b in 2011. They paid $155M in taxes. In 2010 gross profits were just over $1B, they paid $200M in taxes.

Yes, Corporations get tax cuts, yes it improves their bottom line. And yes, they stay in Canada. We are competitive. If we weren't.. we'd be seeing a lot of multinational companies fleeing. I remember before the 2011 tax cuts hearing ads on the radio about how Brittan was offering tax breaks to companies willing to relocate there. I don't hear those anymore.

 

[Possum Trot]

Tax cuts only put more money into the companies bank accounts they DO NOT create jobs.

So your Phd in economics tells you this or is it your shop steward ?

 

[oldjones]

So your Phd in economics tells you this or is it your shop steward ?

You seem to have a different opinion, can you back it up and show us when and where corporate tax cuts and increased employment tracked together?

I spent years in a highly mobile industry, whose corporations could and did relocate around the planet at the merest drop of a percentage point in corporate taxes. Ontario climbed out of that race to the bottom, but there are Rust Belt States that are beating each other into the ground each promising a lower rate than the next. And what we don't price cheap enough is done in Bulgaria, Rumania or Prague. Mind you, their need is likely greater.

And the jobs? Unlike many places, Ontario tied the break to labour expenditures, hoping to increase hiring rather than bottom lines. So you now have to prove permanent residence here with multiple documents, in order to get hired. In places like Michigan, where they did not, all but the most basic gruntwork goes to 'from aways' who have the desired skills that the locals lack. Nevertheless, when Carolina and Texas and Michigan lowered their rates, the work dried up here.

One other wrinkle: Ontario, (Mike Harris Presiding) decided Toronto was fat and prosperous and didn't need the tax incentive, so it only applied if the company did the big chunk of its manufacturing AnywhereButTO. Even though the 'Michigan Effect' predictably applied for labour and facilities which all had to be imported. From Toronto. And guess where those paycheques and equipment cheques got cashed.

Of course tax breaks change the employment landscape. Briefly. But lowering production costs has never created jobs. It is after all, one of the reasons China manufactures more goods sold here than we do.

 

[FAST]

Not needed

I think we should get rid of EVERY last one of these big corporations, obviously way more trouble that their worth.
Their costing us so much, OH wait at minute...........

FAST

 

[39ajaxmale]

You seem to have a different opinion, can you back it up and show us when and where corporate tax cuts and increased employment tracked together?

I spent years in a highly mobile industry, whose corporations could and did relocate around the planet at the merest drop of a percentage point in corporate taxes. Ontario climbed out of that race to the bottom,

Tax cuts aren't always about new jobs. Sometimes they're about existing jobs. As you said RIGHT there, your highly mobile industry decided that it was more costly to move than stay. That's not always the case. Telus recently pulled over 1200 call centre jobs to India. A Bell call centre recently moved 1400 jobs to Nashville.

In customer serice there's a saying, it goes 'It costs less to keep an existing customer, than get a new one." That doesn't end at a storefront experience. It costs less to KEEP a corporation who is paying hundreds of millions if not billions in taxes to the provincial and federal coffers, than to recruit a new one.

As our minimum wage goes up (Thanks Dalton) down goes corporate profits. Tax cuts are a way to pass on a BIT of savings to our LOYAL corporations who have stayed in Canada, and Ontario.

 

[blackrock13]

So your Phd in economics tells you this or is it your shop steward ?

BW1 many not have a PHd in economics but these guys, Krugman, Rogoff, Reinhart, on opposite ends of the spectrum, have a few and they say tax cuts don't work to create jobs, with caveats.

 

[oldjones]

Tax cuts aren't always about new jobs. Sometimes they're about existing jobs. As you said RIGHT there, your highly mobile industry decided that it was more costly to move than stay. That's not always the case. Telus recently pulled over 1200 call centre jobs to India. A Bell call centre recently moved 1400 jobs to Nashville.

No. What I said was that they DID leave, at the drop of a single percentage point. It's a global economy, and there isn't a thing made here except maple syrup that a corporation couldn't buy elsewhere. An extra percent of millions offered by some other country is incentive enough; if it wasn't there would be nothing to discuss.

In customer serice there's a saying, it goes 'It costs less to keep an existing customer, than get a new one." That doesn't end at a storefront experience. It costs less to KEEP a corporation who is paying hundreds of millions if not billions in taxes to the provincial and federal coffers, than to recruit a new one.

As our minimum wage goes up (Thanks Dalton) down goes corporate profits. Tax cuts are a way to pass on a BIT of savings to our LOYAL corporations who have stayed in Canada, and Ontario.

So if they aren't making jobs—for people whose taxes aren't cu—and we're cutting the taxes we collect from the corporation, how are we better off? I read that as poorer.

Show me the loyal corporation you have in mind. Electro-Motive? Or any of the folks I worked for who happily did their next deal in Hungary or Slovakia?

Where tax-cuts do make sense —MAYBE— is when they're offered to people who aren't in your jurisdiction already paying taxes, or employing people at all. Short term, that'll get something happening, as long as your reduced rate's the lowest among your competitors, and hey! the peanuts we tax them is way better than zero, and the workers of course get no breaks and pay all the usual freight. Which was more than they paid when they had no jobs.

But as any sort of long term plan? Racing to the bottom does not make this a good place to live, work or do business. The focus needs to be on striving the be the best, not the cheapest.

 

[JohnLarue]

Corp tax cuts are necessary to attract new investment.

A tax cut will not likely save a situation like Eleto-motive where the labor costs were twice that of Indiana
Call Caterpillar evil, nasty, heartless or whatever you want, labor costs are what closed that plant

Canada can no longer compete on the basis of a weak dollar
We also have higher labor costs , lower productivity and significant payroll taxes that other countries do not have

The OP implies that the corp tax cuts offset cuts to R&D credits.
Not a dollar for dollar switch
The R&D tax credits were being abused , not generating the intended innovation, rather supporting an army of consultants who guided corps through the loopholes.
That program needed to be changed

The trend world-wide is to wards lower corp taxes & smaller govt
CEOs indicate that crop taxes weigh heavily when considering where to invest
The Canadian Gov ts should do everything possible to new investment & jobs
To get a smaller Govt, the public sector employees will just need to give up ridiculous perks like 200 banked sick days & indexed pensions

 

[ogibowt]

i have the hump on ignore...but i knew it was only a matter of time......no other of the dozens of other threads interest you?

 

[CapitalGuy]

i have the hump on ignore...but i knew it was only a matter of time......no other of the dozens of other threads interest you?

Common sense scares you doesn't it? Keep hiding from the real world then, and you'll be fine. Peace.

 

[39ajaxmale]

No. What I said was that they DID leave, at the drop of a single percentage point. It's a global economy, and there isn't a thing made here except maple syrup that a corporation couldn't buy elsewhere. An extra percent of millions offered by some other country is incentive enough; if it wasn't there would be nothing to discuss.

Are you arguing my point, or yours? Your comment seems to argue mine. IF this company received a better tax incentive to stay here... Maybe they would have. A single percentage point? Wow... how many people were unemployed by the reluctance of government to reduce the taxes by 1%. If we had lowered your companies taxation rate, we wouldn't have had HOW MANY people on unemployment? TAKING from the system instead of paying into it. How long did most of these people stay on EI? I wonder how much income tax was LOST due to the inability of government to reduce that 1%.. or find a way to subsidize this company. Was this move right after there was a raise in minimum wage? Do any of the employees of the company MAKE minimum wage? What other factors went into this company leaving.

Our dollar for the most part over the last 5 years has been at Par with the US. Here's what we're competing with:

http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages

So if they aren't making jobs—for people whose taxes aren't cu—and we're cutting the taxes we collect from the corporation, how are we better off? I read that as poorer.

Show me the loyal corporation you have in mind. Electro-Motive? Or any of the folks I worked for who happily did their next deal in Hungary or Slovakia?

You're right. As a government cutting the taxes of a corporation, and not increasing workforce as a country, we are poorer. Sometimes you have to take a loss to come out ahead in the long run. We cut the corporate taxes, we keep people employed. You know what I compare this to? Sometimes stores put items on sale and take less profit, to generate loyalty and goodwill with their clients. Companies are the governments clients. Sometimes you have to throw them a bone to keep them happy. US Unemployment rate currently is roughly 8.2%. Canadian is 7.4%. Seems our Global Economy isn't doing too badly. Let's keep the companies that call us 'home' here, and not have them lured to the US - our workforce will thank us.

A loyal company in Canada. How about Molson's. Tim Horton's - who flirted with the idea of moving their corporate offices south of the border, but eventually decided to stay. CARA restaurants, who recently bought out a portion of Prime Restaurants America. They could go south, for now they're here. Let's see, how about TD Bank or ScotiaBank who have large corporate presences in the US and South America. Sure they'd lose some recognition here as a Schedule 1 bank, and they could take their billion dollar annual profits somewhere else.

Where tax-cuts do make sense —MAYBE— is when they're offered to people who aren't in your jurisdiction already paying taxes, or employing people at all. Short term, that'll get something happening, as long as your reduced rate's the lowest among your competitors, and hey! the peanuts we tax them is way better than zero, and the workers of course get no breaks and pay all the usual freight. Which was more than they paid when they had no jobs.

This reminds me of a bait and switch "introductory rate" mortgage or even better one of those Ally bank commercials. "Yeah, but he's NEWER" - even the kids know it's a load of crap. The guy who's been here forever feels like he deserved the break, and you gave it to someone to lure them in. Well guess what, Corporations aren't that stupid. Cuz pretty soon he ain't the new guy, and you're gonna screw him just like you're screwing the old guy.

The focus needs to be on striving the be the best, not the cheapest.

Being the best? Ok, let's offer free health care. Let's be the second cheapest country with regards to the cost of energy in the world. Let's provide 52 weeks paid to the women in our country who give birth (In the US you get 12 weeks - potentially unpaid - PROTECTED parental leave - all that means is your employer can't fire you for taking time off). Let's provide MANY social programs for our citizens.