INFOGRAPHIC - From the Globe and Mail - showing you the Canadian Budget breakdown. P.S. for us young people - that 40.4 BILLION reserved for the Elderly is only going up, with the Boomers - so buckle in Gen Y.
I have no other countries to compare this to, but is it me, or does the disparity between corporate income tax and personal income tax seem rather large? Shouldn’t the revenue from corporate taxes be a LITTLE higher than a THIRD of what comes in from personal income tax?
Scandinavian countries have an even greater disparity while providing more services to their population and having generally more advanced, vibrant economies. Here are the reasons to reduce taxes for corporations:
- If you take the view the “corporations are people” then you should tax them at personal income tax levels. However, that is not the view most people take and in that case, corporate taxes are a form of “double taxation”, as people’s work is taxed once in corporate taxes, then a second time in personal income tax. We need to focus on personal income taxes, while reducing loopholes for the rich so that their effective tax rate approaches the rate for their income group.
- If corporations are not people, corporate income taxes should reflect services offered to corporations. Corporations are much easier to move to countries with low taxes than people. We should strive to become an attractive place for corporations to set up their operations here not just through low taxes, but more importantly, making it easy / cutting red tape.
- In a corporate-friendly environment with fair but strict rule (and that includes lower taxes) corporations might spend less on corrupting / lobbying the government to create loopholes and there will also be less incentive for regulatory capture.
Ah-hah! Thanks for the comment re Scandinavian disparity, that was actually exactly what I was wondering about.
that being said, in your list of reasons to keep corporate taxes low, I’d say the US has provided fairly generous tax breaks to corporations, and if anything, lobbying there is WORSE.
Not that taxes are the only reason for that (culture, and their election finance laws cannot be ignored) but still a point.
Also, Ireland is a good example of having made every effort to keep their country easy for companies to move to. I seem to recall the EU had to give them quite a bit of help in the last few years.
I’m not saying that your statements are necessarily incorrect, so much as there’s a balance needed and I think, sometimes governments take those “rules” you’ve referenced above as “common sense, works 100% of the time”, and then don’t pay attention to the actual impact of their decisions and examine them critically.
But that is something I have literally been saying to myself about half of politics I disagree with for AAAAAAGES, so you know. It doesn’t just apply to this.