Sunday, July 11, 2010

Well said

The Star's editorial on the need to put other priorities ahead of constant corporate tax cuts deserves a read in full. But the part about the type of public policy which actually matters to business is particularly worth highlighting:
(I)t is useful to look at what business experts really say about competitiveness. The same KPMG report states that corporate taxes are a minor element in deciding locations for investment. Issues such at transportation, facilities (buildings), utilities and labour rates are the key cost factors that are considered. But overwhelmingly in business reports, the availability of a well educated, skilled workforce and the quality of life for executives and their families loom large in investment decisions. There is no good reason to make business taxes lower when we are already the lowest. All it does is provide room for more executive bonuses — like the $8 billion in bonuses given to the elite of the Canadian banks in 2009.

In a bizarre twist of fate, some of the money saved by American companies operating in Canada simply gets transferred to the U.S. Treasury. Their rules require that foreign operations pay taxes at no less than the U.S. rate, or make up the difference to Uncle Sam. Studies by economist Erin Weir show that money not collected by Ottawa is instead taxed by Washington for the benefit of Americans. Instead of helping to solve the massive infrastructure backlog in communities across the country, Flaherty is giving away billions to his U.S. counterpart.

You will forgive us then, when working people object to politicians telling us that we have to sacrifice our wages or pensions for some “greater good.” The rules keep changing, but always to the benefit of global corporations instead of working families. We have watched unemployment insurance being gutted, good jobs shipped offshore, and bad trade deals undermine our standard of living. More and more, young people are finding work only through temp agencies or short-term contracts. There is something wrong with this picture — the priorities need to change.

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