- Ken Georgetti discusses how the corporate tax giveaways of the past 15 years have hurt most Canadians:
The Conservative government and special interest groups claim incessantly that cutting corporate income taxes is good for the economy and for individual Canadians. We have been led to believe that tax giveaways to corporations would lead companies to reinvest in research and development as well as machinery and staff training to boost productivity. This is supposed to stimulate economic growth and create better paying and more secure jobs. But that is not what has happened in Canada during the past decade.- Meanwhile, Linda Nguyen reports that while the same Con/corporate grouping tries to minimize public pensions in favour of private schemes which allow the financial sector to skim massive rents off the top, the vast majority of Canadians expect to rely on the CPP and provincial equivalents to support their retirement.
Let's look at the record since 2000, when the drive to slash corporate taxes began. The average annual economic growth between 2000 and 2012 was 1.14 per cent, one of the longest periods of low economic growth in decades. Business investment in research and development has fallen from 1.13 per cent of GDP in 2000 to 0.88 per cent of GDP in 2012. Investment in employee training and skills development is down by 40 per cent since the 1990s. The amount spent on training per employee in Canada in 2010 was $688; in the U.S it was $1,071. And now, taxpayers will get the privilege of subsidizing companies for employee training, with the federal government's proposed Canada Jobs Grant.
The years of tax giveaways have, indeed, been good for business. Their after tax profit margins rose from 6.9 per cent in 2000 to 8.1 per cent in 2012, and now we know what they have been doing with the money. Between 2000 and 2012, the total cash reserves of private, non-financial private corporations in Canada grew from $182 to $541 billion, an increase of over 300 per cent. During the same period, CEO pay went sky-high. The average CEO compensation at Canada's largest non-financial corporations averaged $7.96 million in 2012.
Corporate tax giveaways mean that the federal government has foregone billions of dollars in revenues. To pay for the tax breaks, Ottawa has borrowed billions of dollars and driven up the national debt. Now, the government has chosen to make big cuts to public services essential to Canadians in order to pay the bill for its tax giveaways.
We hold Corporate Tax Freedom Day to draw attention to the failure of business to deliver on its promises to Canadians. Clearly, slashing corporate tax rates did not produce the expected outcomes. No strings attached corporate tax cuts are a cruel and very expensive hoax and we should demand our money back.
- Trish Hennessy writes that Ontario should try to get on the right side of history by setting its minimum wage at a level which will keep full-time workers out of poverty. And the Wellesley Institute concurs while discussing the importance of also indexing it to inflation.
- Kev and Dan Tan are both rightly skeptical about the Libs' sudden Senate announcement (followed by almost immediate backtracking about what it actually means). But Paul Wells sums it up best:
The last two acts of Richard II are about sorting out the effects of Bolingbroke’s rash act, and I won’t spoil it for you but it gets a little messy. Similarly, it’s hard to know where the Liberal Party as a whole goes from here. Terry Mercer gave his life to this party. Dozens of other senators and their staffers, same deal. Percy Downe was Chrétien’s chief of staff; he got told this morning he has no further function as a Liberal. An NDP staffer this morning was gleeful, because with only 34 MPs and zero Senators, the Liberals may no longer qualify for a caucus room in the Centre Block. It’s not entirely clear how all this will work.- Finally, Matthew McKean discusses how public confidence in politics may be the most important factor in improving voter turnout (and presumably public participation in many forms as well). And the Cons' consistent attempts to weasel their way out of responsibility for their actions surely can't be helping matters.
Nor is it clear it is a permanent state of affairs. The old Reform Party was dead-set against MPs’ pensions until its members started to qualify for some. Stephen Harper did not appoint a single senator until he realized Stéphane Dion had planned to appoint plenty if the coalition crisis had gone the other way. Among a thousand other backtrack scenarios, it’s possible to imagine a future Liberal prime minister — perhaps his name would be Trudeau — watching as a coherent Conservative Senate caucus blocks Liberal legislation that has gone orphan in the Senate. In the nearer term, every time a fellow or lady who still collects a Senate paycheque shows up at a gathering of Liberals, the sincerity of this divorce will be open to question.