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Tories are again lowering the corporate Taxes


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Lowering taxes so that people cheat less is silly. If people are evading taxes than you need to close loopholes and crack down on tax evaders. People arent going to stop cheating and evading just because taxes go down.

Close loopholes? Crack down? If a provincial government would rather choose to abandon the rule of law to an entire town, as with Caledonia, instead of using sufficient force to quell an illegal and violent protest by the natives, what on earth makes you think that they would do anything about the contraband tobacco?

Do you think the natives would stand quietly by while the government cut off millions of dollars of their income?

I agree with you that they SHOULD but I am nowhere near as naive as you to think that it would ever happen!

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Be fair, Star! You're choosing the very next year, which is too short a time frame to see strong effects from tax level changes. You're also choosing a year of deep recession. A few percent cut from the corporate tax rate was hardly going to save many businesses fighting a global depression!

You really should give it a bit of time. Maybe pick a year of more ordinary circumstances, too.

And how does one do this?

Given that corporations can carry back losses for 3 years and carry forward losses up to 20 years it is kind of ridiculous for any ordinary person (who is ignorant of how CDN corporate taxes work in the first place) to come to any conclusions vis-a-vis the laffer curve effect.

In fact, the presentation of the corporate tax revenue in dollar terms by year without any reference to corporate net income (or, taxable income) is a glaring oversight.

How do we know corporate tax revenue collection is up or down based on corporate income being, on average, up or down?

Throw in a bunch of other tax rules that can reduce corporate income tax (accelerated depreciation rates that the CPC have put in their budgets over the past few years, for example) and we can see that its a mug's game.

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Be fair, Star! You're choosing the very next year, which is too short a time frame to see strong effects from tax level changes. You're also choosing a year of deep recession. A few percent cut from the corporate tax rate was hardly going to save many businesses fighting a global depression!

Right. I already more or less acknowledged that I was wrong to form a conclusion from the figures for a couple of years. I am pretty convinced by msj's arguments that a comprehensive economic analysis is needed and I'm certainly not the guy to do that. Having said that, as I mentioned earlier, I find the example of Bob Rae's government unconvincing for similar reasons. The first part of his term was also a recession, and a slightly worse one in Canada: http://www.thestar.com/business/recession/article/795766--canada-s-great-recession-not-according-to-statscan .

Edited by Evening Star
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Right. I already more or less acknowledged that I was wrong to form a conclusion from the figures for a couple of years. I am pretty convinced by msj's arguments that a comprehensive economic analysis is needed and I'm certainly not the guy to do that. Having said that, as I mentioned earlier, I find the example of Bob Rae's government unconvincing for similar reasons. The first part of his term was also a recession, and a slightly worse one in Canada: http://www.thestar.com/business/recession/article/795766--canada-s-great-recession-not-according-to-statscan .

I've never denied that Rae's government faced challenges. That being said, the problem was that his approaches to solve the challenges all seemed totally loopy!

Rae never expected to win! People voted for him to force a minority on Petersen, who had started to appear too arrogant. The problem was that too many voters had the same idea! Rae got in by a razor-thin percentage to get a majority. I remember laughing at the folks at my work who had all championed the idea of voting for Rae for a liberal minority. When Rae actually won not one of those people would admit that they had voted for him! B)

When you don't expect to win you wind up very unprepared. Rae owed his support to all the fringe groups, who mostly didn't have very practical ideas, or even a realistic picture of how the world works. These were the people Rae had to draw on to form his cabinet and man his departments, to implement their screwy ideas. They thought business would always be there and was just something to gouge for their pet social projects. They used provincial departments like the Highways as an employment pool to hire temporary workers to give them enough weeks to file for EI. I had personal direct vision on what Rae did in this department. One of my best friends had worked there for years and saw it all happen. These temps were never even given what were thought to be obligatory safety training sessions! They were used to pour concrete on medians in the coldest part of the winter, when concrete freezes during pouring and dissolves into flakes come the warm weather. Those experienced with winter construction work promptly fell into 2 distinct camps, those that thought Rae's people were just loopy and ignorant and those who thought they were corrupt and didn't care. NOBODY praised them for hiring the temps and what they did with them, except the temps themselves, of course.

Rae did one of the most simplistic and outright useless things to fight a recession. He thought he could buy his way out of it with government projects! That never works. Other parties long ago learned this. They always PROMISED to do such, since it always buys votes from citizens who don't know how an economy works anyway! They just don't waste too much money while they're doing it. Long on photo ops and short on actually paying for shovels. Rae added over $10 billion dollars to Ontario's deficit and ended up with nothing to show for it but higher interest payments on the debts.

How much of Harper's stimulus money to fight this recession has actually been spent? How much new stuff have we seen built? Where are all the new businesses we expect to see? Yet there's always a big picture of him touring some RIM plant or whatever in the daily newspapers.

It truly seemed that Rae's real goals were to use government money as just more welfare for those who had lost their jobs in the recession. This is a kind thing to do in the short term but it doesn't offer anything long-term and sustainable.

Here in Stoney Creek my riding had a brand new NDP MPP, named Mark Morrow. Mark must have been surprised to win as he ran his campaign on a shoe string. He appeared to have maybe a half a dozen signs and perhaps his mother knocking on doors for him. Yet he rode the wave into power!

Almost immediately after Rae was elected we had a conflict with his government. For 20 years we had been dithering over building the Red Hill Creek Expressway. Hamilton and its suburbs had desperately needed to improve its transportation routes. Rae's people had always drawn their support from those against the project, who painted it as "pavement as far as the eye could see, furry animals dying under the asphalt spreader as it lay the stuff down and hundreds of acres of sacred Indian sequoias chewed into matchsticks to make room for those cars owned by people who should have been forced at gun point to take public transit!" There may also have been something in there about saving unborn baby whales from drunk drivers and nuclear power plants. My memory isn't 100% for all the details.

In actual fact the valley had long ago deteriorated into scrub maples, abandoned mattresses, garbage and the odd makeshift tent sheltering hobos who survived on a diet of pigeons, kites and limp balloons.

The issue had been decided and all the contracts to start construction had been given out. Bulldozers and equipment had started working. What then happened was probably something like this:

<ring> "Hello, Bob? This is the 'Save the Red Hill Valley' group down here in Hamilton. You have to do something! They're cutting down trees! You must put a stop to it!"

"Well, I'm not really up on that particular file. Wouldn't that cause some political problems for us"

"Hell no! The people in the city are all solidly behind us and will love you for it"

"Well, ok I guess!"

So Rae's people summarily cancelled the project and it all hit the fan! The opposition had never had many members and in fact the majority of Hamilton and area citizens had always felt "Just build the damn thing!" Because all the contracts had already been given out the cancellation fees added up into millions and millions and of course, were all passed on to Rae's government.

To quell the public anger a community meeting was called at a local banquet centre. I was there and I'll never forget what went on. There at the head table was our new MPP Mark Morrow, who spent all his time talking to the woman beside him. I swear he never heard a word of the discussion! In the interests of being fair to both sides, they set up 2 microphones on either side of the room, where those wanting to be heard could queue up to speak.

It turned out to be absurdly ridiculous. There must have been nearly 600 people in the room yet they could only scrounge up perhaps a dozen to speak in favour of what the NDP had done. The queue of angy people demanding the construction continue ran out into and down the halls!

They allowed each side to alternate with a speaker but after they ran through their dozen supporters they were at a loss as to what to do next. So they kept running through the same 12 speakers!

It was just so "Mickey Mouse"! Rae's government had been snookered by some of their own fringe group supporters into some political hot water. They tried to talk about alternatives but only embarrassed themselves, as it became obvious that Rae's people had no understanding of that area or its history. Alternatives had been talked out long ago. There weren't any! Yet even Rae's transport minister appeared on the local tv station and mentioned "Hwy 27" as a possible alternative. He only embarrassed himself as a 'Toronto boy', as anyone in Ontario knows that Hwy 27 is in Toronto. He should have said Hwy 20, which although already having been ruled out as an option would not have made him look so stupid.

Anyhow, we Ontarioans could cite such examples all day long. The bad feelings for the NDP as a provincial ruling party will need generations of people growing old and dying before they will fade down to the point where the Ontario NDP have another chance at Queens Park. It may not be entirely fair but it is indeed the truth.

It would be easier to get Mulroney elected again as PM than to see Ontario choose another NDP government.

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Well, they lowered corporate taxes before, and tax revenues went way up, and we are swimming in surplus money.

I always hear our federal politicians saying that they have too much cash, and have to invent ways to spend it.

So based on that truth, it makes perfect sense to lower corporate taxes even more, so then we will have an even bigger surplus.

Hooray!

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Wild Bill: While I don't know if I agree with all your claims, I do actually agree that Rae's government was a bit unprepared, clumsy, and less effective than they could or should have been. However, I originally thought you were using the example of his government to argue the claim that raising (or even maintaining) corporate taxes will inevitably lead to the departure of business and a loss of tax revenue. That is what I was questioning.

Well, they lowered corporate taxes before, and tax revenues went way up, and we are swimming in surplus money.

I always hear our federal politicians saying that they have too much cash, and have to invent ways to spend it.

So based on that truth, it makes perfect sense to lower corporate taxes even more, so then we will have an even bigger surplus.

Hooray!

Logically, if we eliminate taxes altogether, we can maximize government revenue!

Edited by Evening Star
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Wild Bill: While I don't know if I agree with all your claims, I do actually agree that Rae's government was a bit unprepared, clumsy, and less effective than they could or should have been. However, I originally thought you were using the example of his government to argue the claim that raising (or even maintaining) corporate taxes will inevitably lead to the departure of business and a loss of tax revenue. That is what I was questioning.

Logically, if we eliminate taxes altogether, we can maximize government revenue!

And there is the failing of logic! You can prove anything if you just restrict the factors to those that support your argument and ignore any that prove it wrong. Logic is a tool for reason but not in itself absolute proof.

All taxation schemes require some perspective and sense of balance. Your premise of zero taxes negates itself, since there is no revenue to accrue for the government. What smart governments try to do is to set their taxes so that people do not perceive themselves as overly gouged. No one minds paying when it doesn't really hurt. With corporate taxes, you have another factor that you have to make your own territory competitive in attractiveness for business, otherwise they will relocate somewhere else.

Lower them too much and your revenues suffer. Raise them too high and business just leaves. To make it more complicated, just when a government thinks they have things working fairly well some damn fool Arabs start a war and shoot the price of oil sky high! The economy tanks and you have to look again at all your tax rates.

As for my claim that raising business taxes reduces revenue, what would you do if you ran a business and taxes went up too high to make an adequate profit? Would you re-locate your business to a better tax climate or would you just let it go bankrupt? If you let it go bankrupt, what do you think all those little old ladies who hold stock for their retirement portfolio would do to you?

People can talk all they want but in business, money talks and BS walks! There are no other options.

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I was joking about logic, yes. I think it's clear enough that there is a level of taxation after which it is counterproductive to raise taxes any further because the taxes themselves will discourage investment and earning. This is the Laffer curve. I'm just not sure that we have reached that point in Canada, and am not even sure that we did under Bob Rae.

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Well, according to this it's a good thing,. sure it's a lobby group but if this does create more jobs in the long run, then we can't complain.

http://www.cbc.ca/money/story/2011/01/12/manufacturers-tax-jobs.html

Manufacturers say Canadian corporate tax cuts coming this year and next will create 99,000 manufacturing jobs while increasing the federal government's overall tax take.

The lobby group says in an analysis of Ottawa's controversial cuts, which will take the corporate rate from 18 per cent to 15 per cent by the beginning of next year, will be good for firms but also good for Canada as a whole.

Provinces are also scheduled to reduce their rate to 10 per cent in 2012, bringing the combined rate to 25 per cent.

"I don't think the average Canadian is going to take issue with a business measure that creates 99,000 new jobs and an additional $880 in their wallet," says Jayson Myers, president of the Canadian Manufacturers and Exporters.

"It's good politics and even better policy."

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Well, according to this it's a good thing,. sure it's a lobby group but if this does create more jobs in the long run, then we can't complain.

http://www.cbc.ca/money/story/2011/01/12/manufacturers-tax-jobs.html

Manufacturers say Canadian corporate tax cuts coming this year and next will create 99,000 manufacturing jobs while increasing the federal government's overall tax take.

That guy is payed by the companies pushing for this tax cut.

Maybe next time you can post a wolfs opinion on why its good to kill sheep. :lol::lol::lol:

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Well, according to this it's a good thing,. sure it's a lobby group but if this does create more jobs in the long run, then we can't complain.

http://www.cbc.ca/money/story/2011/01/12/manufacturers-tax-jobs.html

Manufacturers say Canadian corporate tax cuts coming this year and next will create 99,000 manufacturing jobs while increasing the federal government's overall tax take.

You know Scrib, I take this idea with a grain of salt. They're not stating the context behind all this increase in jobs and profits.

I can see it if we're talking large scale manufacturing, such as steel or the auto industry. When you're dealing with billions a couple of percent adds up to significant dollars.

However, much of our economy is small business. If you're a firm that employs maybe a dozen people or less you're not likely making millions of dollars in profit. You're probably lucky to have a few tens of thousands left over at the end of the year, after paying all the bills and the salaries, if that! A couple of percent decrease in your taxes is not going to give you enough to add even one more full-time employee!

I wonder if the "powers that be" have factored this in with their predictions or if they are just using whatever sounds good to make people cheerful about Harper and the government of the moment. It would be so easy to do. Even if the formula tracked large business, we've seen so much of that business die off in the past decade or two that it's not nearly the percentage of our economy that it used to be.

I know, I know. I'm just being cynical but I can't help it. I've lived a while and I've seen a lot.

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And how does one do this?

Given that corporations can carry back losses for 3 years and carry forward losses up to 20 years it is kind of ridiculous for any ordinary person (who is ignorant of how CDN corporate taxes work in the first place) to come to any conclusions vis-a-vis the laffer curve effect.

In fact, the presentation of the corporate tax revenue in dollar terms by year without any reference to corporate net income (or, taxable income) is a glaring oversight.

How do we know corporate tax revenue collection is up or down based on corporate income being, on average, up or down?

Throw in a bunch of other tax rules that can reduce corporate income tax (accelerated depreciation rates that the CPC have put in their budgets over the past few years, for example) and we can see that its a mug's game.

It's always been a mugs game.

Taxation has a lot to do with plain nomenclature.

While we can all agree that a person taking property from someone else for him to use for his own purposes and reasons is a criminal act called "theft".

If we change it to government (a nebulous entity) taking property from someone else for it to distribute or use as it decides it becomes "taxation".

We change a few words like theft to taxation and robber to government and everything is legtimate.

Economist Robert P. Murphy says it best in a recent article here

There is a strong moral presumption against the practices we call "taxation" and "war," because they involve systematic acts that would be obvious crimes — i.e., theft and murder — if we analyzed them from an everyday perspective.

Now there are various political philosophies that try to neuter this conclusion, yet most of them rely on the crucial plank in their reasoning that taxation and war are necessary evils.

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For those advocates of the Keynesian economist Paul Krugman. This article here debunks the straw man that Keynesian macroeconomics sets up regarding what it can then claim are market failures.

Keynesians believe that governments create wealth by fiat.

Edited by Pliny
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Yeah, I know but time will tell on this one, at least if the Tories can stay in gov't, otherwise the Liberals will raise them, so we'll never know.

You know Scrib, I take this idea with a grain of salt. They're not stating the context behind all this increase in jobs and profits.

I can see it if we're talking large scale manufacturing, such as steel or the auto industry. When you're dealing with billions a couple of percent adds up to significant dollars.

However, much of our economy is small business. If you're a firm that employs maybe a dozen people or less you're not likely making millions of dollars in profit. You're probably lucky to have a few tens of thousands left over at the end of the year, after paying all the bills and the salaries, if that! A couple of percent decrease in your taxes is not going to give you enough to add even one more full-time employee!

---------------

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Yeah, I know but time will tell on this one, at least if the Tories can stay in gov't, otherwise the Liberals will raise them, so we'll never know.

What evidence do you have that the Liberals will raise corporate taxes? What in recent history tells you that? Yes, the Liberals said they would stop lowering the taxes for now, but for part of that, the ship has already sailed. It's unlikely that they would raise the taxes.

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What evidence do you have that the Liberals will raise corporate taxes? What in recent history tells you that? Yes, the Liberals said they would stop lowering the taxes for now, but for part of that, the ship has already sailed. It's unlikely that they would raise the taxes.

:lol::lol:

Is that sarcasm?

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:lol::lol:

Is that sarcasm?

No its a very pointed question, meant to expose the misconceptions people hold about the difference between todays liberals and conservatives. A lot of people base their opinions on this on tradition, and just assume that a converative government will be fiscally responsible, shrink government, and lower taxes. The problem is it hasnt been true for almost 1/2 a century.

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:lol::lol:

Is that sarcasm?

No. When was the last time the Liberal Party of Canada raised taxes in any significant way? In fact, if you look, you'll find that they lowered them significantly during their last time in government. The cut corporate taxes by something like 7%, they indexed federal tax brackets to inflation, and they lowered the rates within those brackets by a few points in each category.

Edited by Smallc
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No. When was the last time the Liberal Party of Canada raised taxes in any significant way? In fact, if you look, you'll find that they lowered them significantly during their last time in government. The cut corporate taxes by something like 7%, they indexed federal tax brackets to inflation, and they lowered the rates within those brackets by a few points in each category.

Smallc, pliny and scribblet are ideological idiots.

Facts don't matter to them.

The Liberals reduced the lowest personal tax rate from 17% to 15%. The CPC, in 2006, raised it to 15.5% before coming to their senses and dropping it for good to 15%.

The Liberals raised income tax brackets significantly and created a fourth bracket to tax income at 22% rather than 26%.

Capital gains were brought down to 50% of the gain being taxable rather than 75%.

They cut corporate taxes as already shown in this thread.

To the II's none of this happened.

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It's always been a mugs game.

Taxation has a lot to do with plain nomenclature.

While we can all agree that a person taking property from someone else for him to use for his own purposes and reasons is a criminal act called "theft".

If we change it to government (a nebulous entity) taking property from someone else for it to distribute or use as it decides it becomes "taxation".

We change a few words like theft to taxation and robber to government and everything is legtimate.

But property ownership and property rights are in themselves only things that are defined, protected, and enforced by the government. Your right to e.g. claim ownership of a piece of land and charge other people rent to use it or have someone prosecuted for trespassing on it is made possible by e.g. government deeds and public legal institutions that will protect and defend you (maybe by using someone else's tax dollars). The concepts of "property" and "theft" are only meaningful in this context. And as part of the social contract that makes it possible for you to safely own property, the government also sets conditions on property ownership, which include the payment of taxes in order to maintain democratic institutions.

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This would be good if they actually had a working plan to pay off the debt.

Unforunately their "Reduction in corporate taxes" with continued many multibillion dollar deficits, just adds hidden costs.

They need to actually balanced the books before they reduce taxes. A general tax increase should be passed up until that point by giving selective tax credits/deductions - for specific things like capital investments and hiring of personnel.

Once the defifict is paid down actually tax reductions can be made.

However corporate taxes should only represent the actual cost of managing and offseting corporation within Canada - that is for services provided to corporations on a basis of cost to the government, and corporate savings by service provision by the government.

All income taxes should be removed, but corporate taxes need to pay down the debt since it has largely been racked up - at their profit.

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