Corporate Tax Freedom Day: CEOs dancing in their suites
Corporate executives in Canada will be dancing in their suites to celebrate Corporate Tax Freedom Day on January 30. A research study by the Canadian Labour Congress (CLC) -- called What did Corporate Tax cuts Deliver? -- shows that by that date corporations will have paid their taxes to all levels of government for the entire year.
When the CLC observed Corporate Tax Freedom Day last year, spokespersons for big business rushed to defend both tax breaks and the high level of corporate cash reserves. They said that Canada has to be competitive with other countries. That is just talk. Canadian corporate income taxes are already competitive and did not have to be lowered. Business representatives also claimed last year that corporate income tax as a share of government revenue would soon increase. That has not happened. Corporate income taxes fell from 8.8 per cent of government revenues in 2010 to 8.3 per cent in 2011. Back in the 1960s and 70s, corporate income tax represented an average 11 per cent of government revenues.
In return for tax breaks, companies are supposed to be investing their windfall, but studies have shown that rising corporate after-tax profits are not all invested in increased productivity and the creation of good jobs in Canada. There were 1.35 million unemployed Canadians in December 2012 compared to 1.1 million unemployed in October 2008, just prior to the recession. Today's unemployment rate of 7.1 per cent remains well above the pre-recession rate of 6 per cent.
Our CLC study shows that between 2001 and 2011 the total cash reserves of private, non-financial private corporations in Canada grew from $187 billion to $575 billion. Between 2010 and 2011 alone, there was an astounding one-year increase of $72 billion. This is a figure more than double the entire $33.4 billion federal deficit for 2010-11.