Wednesday, May 09, 2018
I Heard "Canada Is No Longer Competitive" and I Thought, Define "Competitive."
The Bloomberg business network posted this video of Sun Life CEO warning that Ottawa will need to rethink Canada's competitiveness. That got me wondering what this guy must be on about. My guess was taxes, corporate taxes, and he was agitating for Trump-grade corporate tax cuts, the race to the very bottom in this the era of "everyday low taxes."
Bingo.
That's one of the biggest and most insidious distinctions between progressivism and neoliberalism.
In neoliberal practice, government works for the corporate sector and that much comes across in the velvet-gloved demands of guys like this Sun Life CEO's.
Under a progressive system, government works with the corporate sector but it works for the public, the people, the voters who elect that government. They understand that the corporate sector's value is the measure of the benefit that results for the public. Government's priority must remain with the corporate sector's service to the country, not the corporate benefit to shareholders and directors.
Donald Trump has America in a race to the bottom. The United States is at near full employment but the terminal-stage capitalist model that Trump and others like him have crafted is broken. How do you know? That's easy.
When a nation approaches full employment that results in a reduction in the labour pool. That should shift economic power somewhat more to labour than capital. A scarcity of available labour should result in higher wages. It's a seller's market. Only this time that's not happening in the States. Wages remain unduly flat. Labour is not buoyant. It's merely treading water. Which suggests that the next economic turndown will be pretty tough on working class Americans.
I think what we're seeing in the States and what we're hearing from guys like this Sun Life CEO should remind us that it's time we revisited how we want our governments to deal with the private sector. These shakedowns have to stop.
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7 comments:
America has been in this "race to the bottom" since Reagan, and both parties have been equally enthusiastic participants--as Hillary also would have been had she been elected. She just wouldn't have been as brazen about it, which is all that really separates Republicans and Democrats these days when it comes to economic issues.
I believe the correct response to cries for "more" is as follows:
The interviewer aimed a blow at Dean Conner's head with the microphone; pinioned him in his arms; and shrieked aloud for security.
At least, something like that happened when Oliver Twist tried it.
Cap
Charles Koch is rumored to have said " I want my fair share, and that's all of it." Mega wealth is a sickness for most i think it's like too much of anything. Most people just want a little taste and good times with family and friends. Some people just want money even if it's to the detriment of everyone else and even themselves in the way they treat the only home we all have. I heard an old first nations saying from the US or here i don't know ,it's "We don't inherit this world from our parents , we are borrowing it from our children."
"Trump-grade corporate taxes"? Really?
Canada has the lowest effective corporate tax rate in the universe. This after decades of corporate tax cutting.
Mulroney cut the official federal rate from 36% to 28%. Paul Martin cut it from 28% to 22%. Harper cut it from 22% to 15%. All the provinces followed suit in slashing corporate taxes. (Mulcair's "right-wing" NDP ran on restoring taxes to 22% in 2016.)
Add in big corporate subsidies and the effective rate is even lower.
In 2012, KPMG said Canada's effective rate was 7.3% while America's was 28.1%. (China's was 14.8%!)
The US had a big problem with its official 40% rate. Corporations were offloading their corporate tax burden to other countries to lower their tax bill or eliminate it altogether.
With all the Fake News hysteria, it's hard to get a beat on the competency of Trump's corporate tax restructuring and repatriating of corporate tax revenues. (Time will tell after the dust settles.)
But after all the corporate tax cutting/restructuring, Canada's official rate is now 26.5% and America's 27%.
Doug Ford – who is certainly no Donald Trump – plans to cut Ontario's ultra-low corporate tax rate from 11.5% to 10.5%.
KPMG: Corporate tax rates 2012
http://www.competitivealternatives.com/reports/2012_compalt_report_tax_en.pdf#page=24
KPMG: Corporate tax rates 2018
https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html
HuffPo: Corporate Tax Cuts Have Made Canada a Poorer Country
https://www.huffingtonpost.ca/gabriel-yiu/corporate-tax-cuts_b_8140696.html
Corporate taxes in Ontario election. Current rate 11.5%.
Promised rate change:
Lib: none
NDP: 13%
PC: 10.5%
Green: 12.5% - 13.%
https://globalnews.ca/news/4185151/ontario-corporate-tax-rate/
The data shows that slashing corporate taxes does absolutely nothing to attract investment and boost the economy.
Investing in people however has shown to produce outstanding dividends during the New Deal era.
Given the federal government has unloaded most of the cost-sharing onto the provinces, the provinces must have higher-than-federal corporate taxes.
Their target rate should be 22% to recoup the losses from the Harper-Trudeau era. Then onto reversing the failed tax cuts of the failed Mulroney-Chretien era.
The top 20% own over 90% of corporations. Plus there is big foreign investment. Cutting taxes for plutocrats at home and abroad is pure corruption.
Re,
Canada has the lowest effective corporate tax rate in the universe!!
Just what does 'effective rate' mean?
I conclude that it is the rate required not the rate paid.
Big business moves it's profits around the world seamlessly as the average voter see's his or her's local taxes increase to the point where it affects their ability to sustain a decent lifestyle.
TB
Do we really believe that mimicing Trump's policies is wise? Lemmings!
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