On unequal distributions

There doesn't seem to be much dispute that the attempts to point to job or investment projections as somehow justifying corporate tax slashing (in the face of a decade's worth of evidence that they don't much help) are off base. But what about the argument that corporate taxes should be accepted because their main effect is on workers in the form of wages?

Let's assume for a moment that it's true that all corporate tax reductions will be returned to workers in the form of increased wages, and ask whether the result is one that we'd see as fair or desirable with a focus on how the benefits would figure to be distributed.

To test who figures to benefit most, the first obvious question is that of which industries have the most profits which would be subject to reduced taxation. There, two obvious answers appear: the financial and resource sectors, each of which (on a quick look) takes in roughly a quarter of all Canadian corporate profits.

How many workers will then be in line to benefit when half of a corporate tax cut goes to those sectors? According to StatsCan's chart of employment by industry, just under 2% of all Canadian workers are in the resource sector, and approximately 6.3% in the financial sector. So assuming that a corporate tax cut doesn't somehow alter the expected distribution of profits by industry, the result of a corporate tax cut is to deliver 50% of the expected wage benefits to just over 8% of all workers (and in sectors which are already far from hurting).

Meanwhile, there would be something close to zero anticipated benefit for large segments of the population such as the 21% of all workers who work in the public sector, the 15.5% who are self-employed, and anybody in a sector with a high ratio of workers to profits.

Now, the above division is undoubtedly oversimplified, as there would figure to be spillover effects based on mobility between industries. But the basic point is that an attempt to argue for corporate tax cuts on the basis that they'd be expected to raise wages looks to leave out an important part of the picture. And for those of us who don't count trader bonuses as evidence that the working class is getting ahead, there's ample reason for suspicion that the real effect of corporate tax cuts is only to make inequality worse - even if it does result in something that can theoretically be defined as wage gains.