Tories are again lowering the corporate Taxes

[Topaz]

The Tories are again lowering the corporate taxes down to 16.5% from 18%. The PM says that the government has increased government revenues by lowering the tax rate. How can the government increase revenues from business if the rate has been cut? The Liberals want the Tories to stop lowering the business tax and do something for Canadians instead. If you watch the following video, you hear both sides and which one is better for Canadians? http://www.cbc.ca/video/#/News/Politics/1244504890/ID=1726864094

[Wild Bill]

It's quite simple, Topaz. If you cut corporate taxes, they tend to grow larger and do more business, which is still taxable. Also, more businesses are formed and they pay taxes too! So your tax revenue goes UP!

If you keep raising taxes, you tend to choke off businesses. They do less business so there is less to tax. Also, many people don't bother forming new businesses, thinking that by the time they pay all the taxes it's just not worth it.

People also forget that even if a big corporation has enough deductions and loopholes to pay NO corporate taxes, they still pay a huge amount from personal income taxes on every employee's pay cheque. Jobs and that tax money comes from businesses. Public sector and welfare/pension cheques usually have income tax taken off of them but this is really kind of silly. They're taking off taxes from a cheque that came from taxes!

ALL money, taxes or otherwise, comes from the private sector! If that weren't true we could have a healthy growing economy by just drafting everyone into the post office and have us all deliver letters to each other.

Edited January 11, 2011 by Charles Anthony
deleted re-copied Opening Post

[Topaz]

The downside to that is if foreign companies come here because of the taxes, they stay until they can go back home for tax advantages there and that leaves Canadians out of work and on EI. There are companies that pay no taxes at all, and yet they leave for Mexico where they do pay taxes but, what 6.00 hrly wages? Another point, if you keep reducing the business tax, then the personal income is going to have to pay for the void in taxes. The boomers are retiring and the work force will shrink , and so will the revenues from workers. What about the increase wages at the Federal level. Harper has the largest Fed government and each of those people will get a good pension.

[Evening Star]

It's quite simple, Topaz. If you cut corporate taxes, they tend to grow larger and do more business, which is still taxable. Also, more businesses are formed and they pay taxes too! So your tax revenue goes UP!

That is supply-side economic theory, yes... Is there any evidence that it actually works? I've tended to believe Krugman that it doesn't but I am open to and interested in hearing evidence to support it. (If you haven't read this before, Topaz: http://www.pkarchive.org/economy/TaxCutCon.html )

And it is possible for productivity to be generated by the public sector btw. Ask the Norwegians.

[August1991]

The downside to that is if foreign companies come here because of the taxes, they stay until they can go back home for tax advantages there and that leaves Canadians out of work and on EI.

WTF? By your logic, a company should not raise salaries because other companies will also raise salaries.

Or, sales are bad because other stores just offer sales too.

There are companies that pay no taxes at all, and yet they leave for Mexico where they do pay taxes but, what 6.00 hrly wages? Another point, if you keep reducing the business tax, then the personal income is going to have to pay for the void in taxes. The boomers are retiring and the work force will shrink , and so will the revenues from workers.

Topaz: Corporations don't pay taxes. People pay taxes.

IOW, the government cannot tax corporations. The government can only tax people. At some point or another, a living, breathing person pays the "corporate tax".

And with corporate taxes, it is not obvious who that person is. You may think that a corporation tax falls on rich people but you're likely wrong (think of pension funds) and anyway, if the government wants to tax rich people - it should do this directly. Why impose a complicated "corporation tax" if the purpose is to tax the rich?

----

No one likes paying taxes. My general view of taxes is that a good tax incites less foolish behaviour in trying to avoid paying it. IMV, the measure of a tax, the way to judge a tax, is the potential foolishness of people to avoid paying it. A good tax is unavoidable.

The GST is a good tax. If you want to buy something, you pay GST.

Tax on liquor, gasoline or cigarettes are good. If you want booze, gas or smokes, you pay excise taxes.

Corporate taxes lead to all kinds of crazy accounting, legal nonsense in an effort to avoid them. They're a bad tax.

Edited January 11, 2011 by August1991

[Battletoads]

Economic Policy by Republican Party of America Stephen Harper

1: Cut Taxes

2: Increase Spending

3: ?????

4: Balanced Books (Profit!)

Makes perfect sense right?

[Moonbox]

And with corporate taxes, it is not obvious who that person is. You may think that a corporation tax falls on rich people but you're likely wrong (think of pension funds) and anyway, if the government wants to tax rich people - it should do this directly. Why impose a complicated "corporation tax" if the purpose is to tax the rich?

That's not really true. If you didn't tax corporations and only charged personal income taxes then shareholders would move to the Cayman Islands and draw dividend income and nobody wealthy would live here. You need corporate taxes so that corporations pay their share of the burden on society. Corporations are paying for the education, healthcare and infrastructure that benefit from.

The question of how much to tax the corporations is a little more tricky. You try and line up supply and demand to such an extent that further tax decreases don't provide any further marginal gains and leave it at that sweet spot. Where the sweet spot is? Anyone's guess.

[August1991]

That's not really true. If you didn't tax corporations and only charged personal income taxes then shareholders would move to the Cayman Islands and draw dividend income and nobody wealthy would live here.

Precisely my point. Moonbox, there is no "corporate tax". All taxes are paid by a person, somewhere.

In this, there are two questions: 1. Who is the person who ultimately pays the tax? 2. What will other people do to avoid paying the tax?

IMV, the second question is far more important. No society is wealthy when people waste time avoiding taxes.

Economic Policy by Republican Party of America Stephen Harper

1: Cut Taxes

2: Increase Spending

3: ?????

4: Balanced Books (Profit!)

Makes perfect sense right?

Battletoads, you entirely misunderstand the State, and government.

To begin, I suggest The Federalist Papers.

Edited January 11, 2011 by August1991

[Evening Star]

Precisely my point. Moonbox, there is no "corporate tax". All taxes are paid by a person, somewhere.

I don't see why the concept of "corporate tax" is any more problematic than "corporate profits" ('All profits are received by a person, somewhere') or "corporate property". If it makes sense for a corporation to e.g. own a copyright or patent (on intellectual work done by individual people), why is it so much harder to conceive of corporations being able to pay taxes?

Battletoads, you entirely misunderstand the State, and government.

Are you sure he or she doesn't just understand them a little differently than you do?

[punked]

Precisely my point. Moonbox, there is no "corporate tax". All taxes are paid by a person, somewhere.

In this, there are two questions: 1. Who is the person who ultimately pays the tax? 2. What will other people do to avoid paying the tax?

IMV, the second question is far more important. No society is wealthy when people waste time avoiding taxes.

Battletoads, you entirely misunderstand the State, and government.

To begin, I suggest The Federalist Papers.

Read the Federalist papers they have nothing to do with what you quote.

[Battletoads]

Battletoads, you entirely misunderstand the State, and government.

And here I thought one of the roles of the Government was not to incure rampant debt.

Well you sure told me.

(Sarcasm)

Edited January 11, 2011 by Battletoads

[August1991]

And here I thought one of the roles of the Government was not to incure rampant debt.

...

(Sarcasm)

Sarcasm? The US State can put people like Bill Gates and Warren Buffet in prison unless they pay their taxes. Is it any wonder that the US federal government borrows money from foreigners at the lowest interest rates on the planet.

----

Debt? Debt is someone else's savings. We, collectively, cannot be in debt - unless we can borrow from Martians.

When others say "Debt is too high", I say "You mean, saving is too high?"

Edited January 11, 2011 by August1991

[Evening Star]

But don't you think that excessive debt transfers wealth - and thus, ultimately, control over policy - from a nation's people as a whole to a narrower class of private investors, given that debt is repaid with interest? I mean, I do agree that a country's debt = more savings and dividends for private investors and speculators. I'm just not sure that's always the best transfer.

http://www.theglobeandmail.com/news/politics/second-reading/brian-topp/the-irish-tragedy-and-its-lessons-for-canada/article1809235/

[August1991]

But don't you think that excessive debt transfers wealth...

"Excessive"?

I get the Cadillac, and you get a piece of paper. Who's the winner?

----

I think too many women or amateur economists (usually leftists) view life as a zero-sum game. It's not.

[dre]

That is supply-side economic theory, yes... Is there any evidence that it actually works? I've tended to believe Krugman that it doesn't but I am open to and interested in hearing evidence to support it. (If you haven't read this before, Topaz: http://www.pkarchive.org/economy/TaxCutCon.html )

And it is possible for productivity to be generated by the public sector btw. Ask the Norwegians.

One of the architects of supply side economics had some interesting things to say recently.

"We've demonized taxes," said Stockman. "We've created almost the idea that they're a metaphysical evil."

Basically he attacks the foolish "notax" religion and the idea that we can perpetually increase spendind and borrowing and keep cutting taxes. The public has been duped...

Essentially whats happening is the government is helping the rich steal from the poor by cutting the top brackets and relying on borrowed money to fund the government. It represents a huge transfer of wealth, because once governments are mired in debt they use it as an excuse to cut programs that benefit the lower income classes.

"We should call it for what it is," he said. "If these people were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. So, to stand before the public and rub raw this anti-tax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves."

The wealthy and their politicians have ran a huge con on the rest of us. Theyve tricked us into basically thinking taxation is immoral and evil.

"We have now got both parties essentially telling a Big Lie, with a capital 'B' and a capital 'L,' to the public," said Stockman. "And that is that we can have all this government, 24 percent of GDP, this huge entitlement program, all of the bailouts. And yet, we don't have to tax ourselves and pay our bills. That's delusional."

Youre probably reading those quotes and thinking the guy is some kind of left wing hippy... But thats David Stockman. Ronald Reagans budget directory and the architect of supply side policies in the 80's.

Edited January 11, 2011 by dre

[August1991]

Essentially whats happening is the government is helping the rich steal from the poor by cutting the top brackets and relying on borrowed money to fund the government. It represents a huge transfer of wealth, because once governments are mired in debt they use it as an excuse to cut programs that benefit the lower income classes.

This quote demonstrates well typical leftist zero-sum thinking: "The rich get richer, and the poor get poorer."

dre, are you a divorced single, the unfavoured child - or just a leftist?

Edited January 11, 2011 by August1991

[msj]

A few things to add to this:

1) Yes, the Laffer curve has some merit to it, however...

2) It was the Liberals who brought down the corporate tax rate from 28% to 21%.

3) It was the Liberals who, in their 2005 budget, were going to bring them down to 19%.

4) It was the CPC who then got elected and then turned Income Trusts into corporations (scheduled completion is 2011).

5) As such, the CPC decided to push corporate taxes down further as a pay off for this decision.

6) The Laffer curver is a joke - yes, to go from 70% marginal tax down to 45% likely will lead to more tax revenue.

To go from 28% to 19% may be enough too - since it is a 32% reduction.

7) To go from 19% to 16.5% will do very little other than to reduce corporate tax revenues since that is only a 13% reduction.

8)The reason corporate tax levels are higher is because corporations have been making money recently (this will change).

9) Income trusts have been converting to corporations over the past couple of years (and will complete this process later this year) so this brings in more corporate tax revenue.

10) Lets wait for a real study that takes these facts into consideration before throwing our own ignorant opinions out there.

[August1991]

I don't see why the concept of "corporate tax" is any more problematic than "corporate profits" ('All profits are received by a person, somewhere') or "corporate property". If it makes sense for a corporation to e.g. own a copyright or patent (on intellectual work done by individual people), why is it so much harder to conceive of corporations being able to pay taxes?

Evening Star, what's your problem?

Corporate profits (even shared) are paid to a person. Ownership can be shared but the buck stops somewhere. People pay taxes. No corporation pays a tax.

----

Ultimately Evening Star, it is wrong to believe that "evel corporations" control the universe. State dictatorships maybe, but not corporations.

Edited January 11, 2011 by August1991

[dre]

This quote demonstrates well typical leftist zero-sum thinking: "The rich get richer, and the poor get poorer."

dre, are you a divorced single, the unfavoured child - or just a leftist?

Thats it? Just some thinly vailed personal attack and no comment at all on what I posted? Pretty fuckin weak.

Is Ronalds Reagans budget director a leftist too?

dre, are you a divorced single, the unfavoured child - or just a leftist?

None of the above. You dont have to be a leftist to see the scam thats being run here you simply have to have eyes and a brain.

Edited January 11, 2011 by dre

[Evening Star]

There is much debate about the Laffer curve anyway, with many placing it around 60%: http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

"Excessive"?

I get the Cadillac, and you get a piece of paper. Who's the winner?

If my piece of paper means I can repossess your Cadillac at any time and also tell you when and how you can use it or that I can force you to trade it in for a Segway and give me the difference, I'm probably winning.

I think too many women or amateur economists (usually leftists) view life as a zero-sum game. It's not.

I'm not sure what you're on about re women (!) but Krugman (the economist I cited) isn't exactly an amateur. (Neither is Topp fwiw: http://www.theglobeandmail.com/news/politics/second-reading/brian-topp/ ). Life, and even economics, may not be a zero-sum game but that doesn't mean that there is no such thing as class. Nor does it mean that putting control over a country's policies in the hands of investors and speculators is ultimately going to benefit everyone. The piece about Ireland makes this case.

[Evening Star]

Evening Star, what's your problem?

Corporate profits (even shared) are paid to a person. Ownership can be shared but the buck stops somewhere. People pay taxes. No corporation pays a tax.

----

Ultimately Evening Star, it is wrong to believe that "evel corporations" control the universe. State dictatorships maybe, but not corporations.

And a tax on corporate profits means those profits are taxed before they are paid to the shareholders. Seems straightforward enough. If you prefer, you could say that the individual shareholders are in fact really paying the tax but it just seems like a semantic issue to me at that point.

Just because someone thinks that corporate tax cuts may not be the greatest idea does not mean that they necessarily think that 'evil corporations control the universe'. No one has said that in this thread. As it happens, msj's post makes sense to me and I would also be interested in that study.

[August1991]

And a tax on corporate profits means those profits are taxed before they are paid to the shareholders. Seems straightforward enough. If you prefer, you could say that the individual shareholders are in fact really paying the tax but it just seems like a semantic issue to me at that point.

To be exact: Shareholders, employees or customers pay corporate taxes. I suppose that corporations can also push taxes on to other taxpayers.

My simple point is that ultimately, a person pays a tax. There is no secret corporate taxpayer, no free lunch.

---

As to Krugman, he is as fearful of US government debt as I am. IOW, we (even Mankiw) share no fear of government debt - given the US federal situation.

Sadly, a politician such as Obama still has a wide margin to spend more.

Edited January 11, 2011 by August1991

[Evening Star]

Yes, shareholders pay the tax. They may also likely try to recoup this from their employees or customers. (This is not exactly the same as saying that employees and customers are paying the corporate tax. If my income is taxed more heavily, I may spend less at the nearby pub. That doesn't exactly mean that the pub is paying my income tax.) I think we can all recognize that taxes are paid by people and not by abstract concepts. After recognizing this, it is still possible to question corporate tax cuts!

-

And I cited Krugman re supply-side economics and corporate tax cuts. I suppose we're having more than one discussion then!

Edited January 11, 2011 by Evening Star

[August1991]

2) It was the Liberals who brought down the corporate tax rate from 28% to 21%.

3) It was the Liberals who, in their 2005 budget, were going to bring them down to 19%.

4) It was the CPC who then got elected and then turned Income Trusts into corporations (scheduled completion is 2011).

Bottom Line: msj doesn't like Conservatives/Reform. msj supports anyone who opposes Harper.

Hey, msj caters to clients like the rest of us.

[Evening Star]

Krugman does seem a little fearful of at least some approaches to deficit/debt management, although you're right that he doesn't advocate a balanced federal budget every year:

http://www.nytimes.com/2011/01/07/opinion/07krugman.html?_r=1&partner=rssnyt&emc=rss

http://www.nytimes.com/2010/12/31/opinion/31krugman.html?partner=rssnyt&emc=rss

Relevant, perhaps?: http://www.cbc.ca/world/story/2011/01/07/f-vp-macdonald.html