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Corporate tax cuts don't spur growth, analysis reveals as election pledges fly

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applegrove Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:03 PM
Original message
Corporate tax cuts don't spur growth, analysis reveals as election pledges fly
Corporate tax cuts don't spur growth, analysis reveals as election pledges fly

KAREN HOWLETT
From Wednesday's Globe and Mail
Published Wednesday, Apr. 06, 2011 3:00AM EDT
Last updated Wednesday, Apr. 06, 2011 2:53PM EDT


http://www.theglobeandmail.com/news/politics/corporate-...


"SNIP.........................................

The issue boils down to this: At a time when Ottawa and many provinces are awash in deficit, should governments invest scarce resources in making life more affordable for families by enhancing social programs or in giving corporations additional tax cuts?

Successive federal governments have chosen the latter path in recent years in a bid to make Canada more competitive and attractive to international investors. In 2000, the combined federal-provincial tax rate was just over 42 per cent, ranking Canada near the top among industrialized nations. The combined rate has since fallen to 28 per cent, placing the country in the middle of the pack, and Conservative Leader Stephen Harpers goal is to reduce it to 25 per cent by fiscal 2013.

Businesses were widely expected to use the extra money from successive rounds of tax cuts to build factories and offices and buy new machinery and equipment. At one time, they did just that. 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 Canadas total economic output from 6.8 per cent in 2005 and 7.7 per cent in 2000, The Globe analysis shows.

.................SNIP"
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Canuckistanian Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:06 PM
Response to Original message
1. Wow, the Globe and Mail said that?
They don't exactly suck up to liberals.
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Brigid Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:08 PM
Response to Original message
2. Why is it that after 30 years . . .
so many people still don't get this?
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Zoeisright Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:30 PM
Response to Original message
3. No Shit, Sherlock.
We've had a real world experiment in this and it has been a total FAILURE. I'm fucking sick of repuke lies about this.
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:32 PM
Response to Original message
4. Corporations will invest or hire when they feel they will make money on the transaction.
Taxes can have an impact on how much money they expect to make. So the threshold for taking action would be lowered by reducing taxes.

In other words the obstacles would be lessened if taxes were lowered making the chances of investment more likely.
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HowHasItComeToThis Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 10:53 PM
Response to Original message
5. TRY THIS
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ChoppinBroccoli Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 11:43 PM
Response to Original message
6. From This Month's Edition Of "Duh" Magazine
How anyone can look at what's happened over the last 10 years and still claim that tax cuts spur growth strains the bounds of credibility, to put it as kindly as possible. Or to put it another way, people who claim that tax cuts spur growth are essentially insisting that tomorrow the sun will rise in the West. NONE of the available evidence at hand bears you out.
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Beartracks Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-06-11 11:54 PM
Response to Reply #6
7. Quite agree. If that proposition were true...
... then the Bush tax cuts would have PREVENTED the Bush Recession.

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