Thursday, 7 April 2011

Those Corporate Tax Cuts Don't Do What They Are Supposed to Do: Or Another Reason the Cons are Wrong

By Wednesday night the story had fallen off The Globe and Mail's main web page, but it clearly deserves more attention than that. "Corporate tax cuts don't spur growth, analysis reveals as election pledges fly" read the headline in the print editon. Karen Howlett's careful analysis uncovered how corporations in recent years have hogged, not invested, the money they've been getting in tax breaks that are supposed to encourage investment.

At one time, businesses did use the money for just that, Howlett writes. "From 1960 until the early 1990s, corporations invested almost every penny of their after-tax cash flow back into the business.

"But the tax cuts appear to have reversed decades of tradition. Investment in equipment and machinery has fallen to 5.5 per cent in 2010 as a share of Canada’s total economic output from 6.8 per cent in 2005 and 7.7 per cent in 2000."

Why? I'd say greed, as well as a perception that business can get whatever it wants from governments like Stephen Harper's.

No comments: