Dion Proposes Major Corporate Tax Cuts

[jdobbin]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

Liberal Leader Stephane Dion pledged to reduce the federal corporate tax rate on Friday to further bolster economic growth and fuel competition with foreign markets.

During a speech at the Economic Club of Toronto, Dion said the previous Liberal government lowered the rate from 28 per cent to 19 per cent.

He went on to slam the Conservative government for its pledge to reduce the rate to 18.5 per cent by 2011.

"What I have said for our economic prosperity, what will be especially important is to have a competitive tax system and to have a way to decrease our corporate tax, deeper than what was planned," Dion said after his speech at a downtown hotel.

The Liberal leader said that reducing the tax will lower the cost of capital for Canadian corporations, allowing for future investments in capital equipment and its workforce.

Canadian companies invest $1,600 per worker less than U.S. firms and $700 per worker less than the Organization for Economic Co-operation and Development average, Dion said during his speech.

The OECD is an international resource for global economic and social data statistics and serves to monitor, analyze and forecast economic developments.

Dion said the tax cut would also protect Canadian corporations from foreign takeovers and will facilitate foreign investment in the country, diverting dollars away from the U.S. market with a "big hook."

"A key competitive advantage for Canada used to be our weak currency. Now that our dollar is at par, and we have lost this weak currency advantage, a key advantage must be a competitive corporate tax rate," Dion said.

"A lower corporate tax rate is a powerful weapon in the federal government's arsenal to generate more investment, higher living standards and better jobs."

I think this is the type of policy proposals we need to see.

Now, let's see the 10% cut in personal income taxes.

Edited October 12, 2007 by jdobbin

[msj]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

I think this is the type of policy proposals we need to see.

Now, let's see the 10% cut in personal income taxes.

The Liberals proposed to reduce corporate tax rates from 28% to 19% by, iirc, 2010.

The Conservatives went along with this proposal and then decided to lower them further to 18.5% due to their October 31, 2006 Income Trust reversal.

Neither party deserves any credit for proposing corporate tax cuts which are just now starting to be implemented.

[jdobbin]

The Liberals proposed to reduce corporate tax rates from 28% to 19% by, iirc, 2010.

The Conservatives went along with this proposal and then decided to lower them further to 18.5% due to their October 31, 2006 Income Trust reversal.

Neither party deserves any credit for proposing corporate tax cuts which are just now starting to be implemented.

As far as I remember, the budget of 2005 said the tax decrease would start in 2008. The Tories went along with that proposal. The reason the number was set for 2008 was because the Liberals left in place the income trusts which represented a huge tax break for business already.

As you know, the Tories flip flopped on the income trusts.

[msj]

As far as I remember, the budget of 2005 said the tax decrease would start in 2008. The Tories went along with that proposal. The reason the number was set for 2008 was because the Liberals left in place the income trusts which represented a huge tax break for business already.

As you know, the Tories flip flopped on the income trusts.

Yes, they did flip flop on trusts and agreed to lower the promised rate to 18.5% (from the already promised rate of 19%) not to mention allowing seniors to split certain types of income on their personal tax returns.

The point is that neither party has been all that impressive when it comes to corporate taxes.

The corporate surtax, for example, was promised to be reduced in the 2004 budget. It will finally be eliminated for companies with fiscal years that end in 2008 (iirc, but it may be for fiscal years that begin in 2008).

[jdobbin]

Yes, they did flip flop on trusts and agreed to lower the promised rate to 18.5% (from the already promised rate of 19%) not to mention allowing seniors to split certain types of income on their personal tax returns.

The point is that neither party has been all that impressive when it comes to corporate taxes.

The corporate surtax, for example, was promised to be reduced in the 2004 budget. It will finally be eliminated for companies with fiscal years that end in 2008 (iirc, but it may be for fiscal years that begin in 2008).

The Canadian Taxpayers Federation was impressed with the last Liberal budget and they don't give praise lightly.

I don't doubt that both the Liberals and Tories are going to be putting up tax cuts in the next days. We'll see which ones business thinks are best for them.

[msj]

The Canadian Taxpayers Federation was impressed with the last Liberal budget and they don't give praise lightly.

I don't doubt that both the Liberals and Tories are going to be putting up tax cuts in the next days. We'll see which ones business thinks are best for them.

The Liberals did give us pretty good budgets - but mostly on the personal side. The Conservatives have been terrible, though.

[jdobbin]

The Liberals did give us pretty good budgets - but mostly on the personal side. The Conservatives have been terrible, though.

I wonder how much tax cuts will be as an issue in the election. Voters sometimes react a lot differently in terms on priorities.

One thing is certain: when you run $14 billion surpluses, you are collecting too much tax.

[jdobbin]

http://ctv2.theglobeandmail.com/servlet/st...BN/ctv-business

Ottawa's revised plan to crack down on tax deductions for financing foreign ventures will still cost Canadian corporations up to $2-billion a year, according to business groups that warn the proposed changes will hurt their efforts to expand globally at a time when foreign rivals are gaining ground.

In May, Finance Minister Jim Flaherty backtracked on a proposal in the 2007 federal budget to drastically limit the deductibility of all expenses incurred to fund Canadian companies' foreign operations.

Responding to business outcry, Mr. Flaherty refocused his crackdown on what's called double-dipping, where firms deduct interest incurred for foreign expansion against both Canadian and foreign taxes.

Finance Canada this month released the legislative fine print to implement Mr. Flaherty's May plan but business groups say that killing double-dipping – a practice that has existed for decades – will damage their foreign competitiveness.

The Canadian Chamber of Commerce, the country's oldest and biggest business lobby, estimates the refocused measure will cost firms between $1-billion and $2-billion annually, mostly in higher taxes to be paid to foreign governments.

Another indication of some of the anger about business taxes.

In addition, the government after a year of thinking about takeovers is going to...think about them more.

http://www.theglobeandmail.com/servlet/sto...ness/columnists

Ever get the feeling the government is trying to avoid the question? Perhaps that's understandable. The real question, rather than the politically correct version that's being posed, is an uncomfortable one. This isn't really about "state-owned enterprises," it's about China. More specifically: What happens if Beijing comes to buy Canadian oil?

Here's what this debate is not about: It's not about "reciprocity," or the notion that Canada should demand equal rights - i.e., we'll let you buy our companies if you let us buy yours. Reciprocity is one of those goofy economic ideas that sounds great in theory but works like crap in reality, because it inevitably leads to protectionism.

Quite aside from that, it would mark a huge break from the current rules. Under reciprocity, TD Bank could forget about buying an $8-billion bank in New Jersey; Inco shareholders could have said goodbye to that sweet cash takeover offer from CVRD (the Brazilian government holds "golden shares" that give it a veto over many things at CVRD, including a change in head office, effectively making it takeover-proof).

Here's what else this debate is not about: It's not about Islamophobia or trying to stick it to undemocratic or authoritarian states, nor about ensuring that, if foreigners are going to own our mines and our oil sands, they'd bloody well better be the kind of people you can share some ribs with at Jack Astor's.

Last time we looked, the United Arab Emirates was not exactly a beacon of democracy or of liberal, Western values. Yet few would suggest that Ottawa should block Abu Dhabi National Energy, or Taqa - a state-controlled company - from spending $5-billion to buy Calgary's PrimeWest. At the very least, the government has the power to say that the deal will have to pass the new national security test (assuming that such a test will be added to the Investment Canada Act). But no: Mr. Prentice took pains to assure the company that it won't do that. The Tories, and most Canadians, do not seem alarmed by the notion of the Arabs getting a piece of our natural gas.

South Korea's state-owned oil company bought some oil sands leases, and has declared its ambition to own more. Nobody is spooked. Yet the mere mention of a Chinese company making a play for Noranda a few years ago set off a flurry of indigestion in Ottawa. What makes China different? It is an authoritarian state, yes, and one where property rights are weak, and one that uses the power of the state to show its economic might. But all of those things could be said of Russia as well, and a Russian with close ties to President Vladimir Putin was just allowed to buy a share of control in Magna International, without a peep of protest from the feds.

[no queenslave]

As far as I remember, the budget of 2005 said the tax decrease would start in 2008. The Tories went along with that proposal. The reason the number was set for 2008 was because the Liberals left in place the income trusts which represented a huge tax break for business already.

As you know, the Tories flip flopped on the income trusts.

And we all know the liberals ran on doing away with the GST.

[jdobbin]

And we all know the liberals ran on doing away with the GST.

A policy I totally disagreed with.

[jbg]

And we all know the liberals ran on doing away with the GST.

Which, being tellers of truth, they did. [/sarcasm]

[jdobbin]

Which, being tellers of truth, they did. [/sarcasm]

And Harper flip flopping on his promise on income trusts during the election is somehow better?

[Michael Bluth]

Which, being tellers of truth, they did. [/sarcasm]

Yup, the Liberals had no intention of keeping that promise. Never gave a valid reason for breaking it. Just a flat out lie the minute that promise was made.

Edited October 15, 2007 by Michael Bluth

[Moxie]

I'm paying combined personal income tax to the tune of 52% and the liberals want to reduce Corporate taxes to 19% yea that's really fair to us who work in the trenches daily. Sucking up to to big business is the liberal way. We need to increase their portion of tax not reduce it.

The surplus is the result of Unemployment Insurance Deductions, a policy that denies 49% of it's applicants based on the new criteria by the Liberals. If you get fired- benifits denied, if you quit- benifits denied. In fact unless you are on maternity leave or laid off you don't qualify. Hardly a ringing endorcement for a social program that is turning a heavy profit at the expense of the unemployed. Socialism is getting damn profitable for the both the left and right, and starving those it's suppose to aide.

[jdobbin]

I'm paying combined personal income tax to the tune of 52% and the liberals want to reduce Corporate taxes to 19% yea that's really fair to us who work in the trenches daily. Sucking up to to big business is the liberal way. We need to increase their portion of tax not reduce it.

I disagree. However, I do agree that your personal income taxes need to come down fast. I hope to hear a 10% reduction in personal income taxes in the next year.

Edited October 15, 2007 by jdobbin

[msj]

I'm paying combined personal income tax to the tune of 52% and the liberals want to reduce Corporate taxes to 19% yea that's really fair to us who work in the trenches daily. Sucking up to to big business is the liberal way. We need to increase their portion of tax not reduce it.

Do you really think it's fair to compare the federal portion of corporate tax rates to your alleged combined personal tax rate of 52%?

The top federal marginal tax rate kicks in around $120,000 of income. It is 29%.

Sure, maybe if you live in Quebec or NFLD then you may approach 48-49% marginally.

But then, to be fair, we should be looking at the provincial portion of corporate rates too, so we are being sure to compare combined corporate to combined personal rates?

Also, please note that in AB the top marginal rate for personal taxes is 39% for BC 43.7% and for ON ~43.7%. Nowhere near 52%.

But hey, why try to be fair about comparing federal rates to federal rates when you can overstate marginal income rates!

Edited October 15, 2007 by msj

[jbg]

And Harper flip flopping on his promise on income trusts during the election is somehow better?

Yes, when it became obvious that major corporations were going to convert to income trusts, and the floodgates of national revenues really opened, he had no choice.

[jdobbin]

Yes, when it became obvious that major corporations were going to convert to income trusts, and the floodgates of national revenues really opened, he had no choice.

Harper didn't believe it when the Liberals indicated it could be a problem. In fact, he said that it would hurt seniors if the Liberals did end the break for income trusts. The situation was predicted but it didn't matter when he hammered the Liberals on it.

Edited October 15, 2007 by jdobbin

[jbg]

Harper didn't believe it when the Liberals indicated it could be a problem. In fact, he said that it would hurt seniors if the Liberals did end the break for income taxes. The situation was predicted but it didn't matter when he hammered the Liberals on it.

And the Liberals didn't address the problem in their 12 years. Why? No guts?

[jdobbin]

And the Liberals didn't address the problem in their 12 years. Why? No guts?

Perhaps with $14 billion in surpluses they figured they didn't need those taxes.

[Michael Bluth]

And the Liberals didn't address the problem in their 12 years. Why? No guts?

Do nothing governments methinks...

[capricorn]

Through calling for higher corporate tax cuts than advocated by the Conservatives, the Liberals are trying to woo private sector support. This is an attempt by the Liberals to counter balance the support that Conservatives have garnered from the grass roots.

IMO this is a good strategy. The only way to measure its success will be when we get an updated report on party finances.

[Keepitsimple]

Harper didn't believe it when the Liberals indicated it could be a problem. In fact, he said that it would hurt seniors if the Liberals did end the break for income trusts. The situation was predicted but it didn't matter when he hammered the Liberals on it.

Sure Harper tried to make hay by criticizing the Liberals on this issue....but the real prblem was in the way the Liberals handled it - they did not keep their mouths shut.....the information that they MIGHT do something became public so investors who were "plugged in" sold their Income Trusts in a massive selloff. The first people to sell didn't lose anything but by the time the last guys sold (the little guys) the losses were major. Then everybody had to figure out if they wanted to buy back in.....of course the guys who were "plugged in" bought back in at a discount.....so the rich got richer and the little guys got screwed - all because Mr. Dithers couldn't make a decision and they didn't have the cabinet discipline to keep their mouths shut. The Conservatives, rightly or wrongly, showed how to do it right - they caught everybody by surprise. You might not agree with what they did but you have to give them credit for doing it properly.

[jdobbin]

The Conservatives, rightly or wrongly, showed how to do it right - they caught everybody by surprise. You might not agree with what they did but you have to give them credit for doing it properly.

What the Tories did was completely flip flop on the issue. There was still people angry about it after he promised not to do it.

Talk to the some of the Alberta energy companies. They are still riled by it. Not to mention that closing of the tax write-off on foreign investments. That is costing them $2 billion a year.

Edited October 15, 2007 by jdobbin

[Canuck E Stan]

That is costing them $2 billion a year.

That move cut heavily into their oil profits, eh?