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.