Thursday Morning Links

This and that for your Thursday reading.

- Ellie Mae O'Hagan and Nicholas Shaxson annihilate the claim that perpetually lowering corporate and upper-income tax rates offers any competitive advantage:

Tax "competition", it turns out, is always harmful. First, while people rarely move in response to tax changes – flighty financial capital does move. Governments "compete" for it by cutting tax rates on mobile capital (which means, in effect, cutting taxes on the rich.) And if you're not taxing the rich, you've got to make that up elsewhere. How do you do that? You tax people who can't afford to move, and can't afford to complain. The poor end up paying more.

Second, tax "competition" gives big business an unfair, unproductive advantage. Every "competitive" tax system has tax avoidance built into it – whether through low taxes, or by allowing the use of tax loopholes, and so on. Usually it's only larger multinationals that can afford the expensive tax lawyers and accountants necessary to harvest these tax subsidies. So they can use the offshore system to drive smaller, more locally based competitors to the wall – on a factor that has nothing to do with genuine business productivity or true innovation.

Tax "competition" is economic warfare, where countries fight over businesses by lowering taxes. In the United States, for example, an in-depth New York Times report provides an example of how bad the problem has become:

"A recent bidding war [between US states] for United Airlines … drew more than 90 cities. The airline had set up negotiations in a hotel, and its representatives ran floor to floor comparing bids. Jim Edgar, then the governor of Illinois, called for a truce, but many states would not sign on, he said."

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Above all, investors want good roads, a healthy and educated workforce, and the rule of law. All of which mean tax. And let's not forget what else taxes are used for: to care for the sick, to educate our children, and to look after the vulnerable. Whenever you hear a politician utter the words "competitive tax system", it's probably an indication they have no idea what they're talking about. Tax "competition" is economic warfare: a beggar-my-neighbour race to the bottom, worse than a zero-sum game. It is always harmful.

- Meanwhile, Martin Regg Cohn notes that Canadians are starting to become duly skeptical of big banks who have been among the foremost advocates and beneficiaries of corporate tax giveaways. And Clayton Ruby makes the case for being equally skeptical when oil barons claim that their short-term profits should be the sole focus of public policy.

- Marc Jaccard argues that the U.S. should reject Keystone XL - while recognizing that the effect won't be to end the use of fossil fuels in the short term, but merely to encourage a longer-term transition toward sustainable energy.

- Pat Atkinson reasonably suggests that Saskatchewan might be better off using public money to improve its education system rather than following through on the Wall government's mandatory testing scheme:

Let's take that $6 million and begin to put together an early learning and care system that includes day care, pre-kindergarten and full-day kindergarten, all with a play-based learning curriculum led by qualified early learning and care professionals. Play-based learning is not about children sitting in desks.

This approach will lead to a more successful high school completion rate in our province and ultimately get us what we all want - better results. Let's not waste our tax dollars on an approach that simply doesn't work.

- Finally, Michael Harris wonders whether there will be anybody left to make policy suggestions to a Con government whose modus operandi is to refuse to listen anyway:

(T)here are two things the Harper government hates: criticism, and sources of information other than those ministerial manure machines that go by the name of government communications. Who would have thought that spinning gold into straw could ever be so big?

So far, the Harper government has managed to rid itself of a great many obstacles to its practice of decision-based evidence to support an agenda that is rarely declared. So many evidence-based riders — experts, knowledge-lovers, rationalists — have been shot off their horses.

The long form census died, (even though its replacement cost $30 million more) because it professionally gathered nuanced information that got in the way of governing by ideology.

The Experimental Lakes Area was erased because its scientists might have come up with irrefutable reasons to reconsider the breakneck development of the tar sands at all costs.

The Law Reform Commission was put out of business because some of the brightest legal minds in the country thought too much about constitutional and legal considerations that might create inescapable restraints for political bullies.

And now the Health Council of Canada.