Friday, February 04, 2011

On open questions

Carol Goar raises a few of the types of questions that seem to have been ignored far too long in the race to slash corporate taxes. But let's highlight the last couple in particular:
• What proof can (Jim Flaherty) provide that corporate tax cuts make Canadian companies more competitive? They could well have the opposite effect. Instead of hustling for business, investing in research, or capitalizing on Canadian innovations, firms can sit back and wait for the next instalment of tax relief to undercut their international rivals.

• Why is it good economic policy to shift an ever-growing portion of the tax burden from businesses (many of which are highly profitable) to individuals (many of whom are struggling to get back on their feet after the recession)?

For most citizens, corporate tax cuts are not a top-of-the mind issue.

But as a litmus test of their government’s values, its candour and its willingness to balance the needs of all Canadians, they work remarkably well.

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