Tuesday, October 30, 2018

Tuesday Morning Links

This and that for your Tuesday reading.

- Andrew Jackson argues that Canada has nothing to gain in trying to race Donald Trump to the bottom when it comes to corporate taxes:
While marginal effective corporate-tax rates are clearly a factor in business investment decisions, they are by no means the only or most decisive factor.

Non-tax factors such as access to natural resources, skills, energy costs, house prices, urban amenities and other locational advantages play a major role in investment decisions, especially in the knowledge-intensive sectors. And investment will be limited if demand is sluggish, even if the after-tax cost of capital is relatively low.

Further, cuts to the corporate-tax rate are costly since most of the benefit goes to existing firms making profits from past investments, rather than to new firms or those thinking about expansion. A cut in the tax rate is also irrelevant to companies earning so-called rents or above-average profits compared to the international norm. For example, during the resource-boom companies would have invested in the oil sands even if the corporate-tax rate had been much higher, since expected profits were very high.

Canadian banks, utilities, airlines, railways, retailers and cultural industries among others all have to operate mainly in Canada to serve the Canadian market, so they are not very responsive to changes in tax rates compared to other countries.

It is striking that the level of business investment in Canada as a share of GDP remained almost unchanged in recent years as the Harper government cut the federal corporate-income-tax rate to 15 per cent today from 22.1 per cent in 2006, at a cost of about $12-billion in annual tax revenue.

Deep corporate-tax cuts came at the price of foregone public investments in areas such as infrastructure, research, education and skills that could have contributed more to productivity growth. Introduced at a time of deficits, these tax cuts also increased the public debt.
- Stuart Trew points out how the USCMA is designed to prevent regulators from fulfilling their mission of protecting the public interest. And Jeremias Prassl offers some suggestions as to how to bring collective bargaining into the gig economy.

- Cory Doctorow writes that the researchers whose first outlier study was initially used to criticize Seattle's minimum wage increase have clarified that all kinds of lower-earning workers were better off for the boost.

- Matt Ford discusses the growing gap in civil rights under the Trump administration. And Tyson Brown explains how discrimination and associated social factors lead to long-term disparities in health outcomes.  

- Emily Chung reports on the findings of the Living Planet Report of a 60% decline in vertebrate populations since 1970 due to overdevelopment and climate change.

- Finally, Andrew Coyne writes that the most important question on British Columbia's referendum ballot is the first one - and that there's no justification for clinging to the unrepresentative status quo based on process complaints.

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