Tax cuts create jobs. Paul Ryan and the Republican nominee Mitt Romney told a group that Canada just cut their corporate taxes to 15%.
Paul Ryan was obviously insinuating that these tax cuts put America at a disadvantage, and that the Canadian economy is going to explode and take all of our jobs. Corporate taxes in 2006 were already just 21%. In January 2011, Canada cut the corporate tax rate to 16.5%, then cut them again to 15% January 2012.
Overall, Canada has cut corporate taxes by almost 30% in 6 years.
The only problem is, the Canadian economy isn’t blasting off at all. It is still stuck in an anemic recovery. just like the United States. The Canadian economy only grew 1.8% in the second quarter of 2012. The United States on the other hand has a much higher statutory corporate tax and the economy grew at 1.7% in the same quarter. How can this be? Higher taxes hurt job creation, right? Yet both countries are stuck in the same slow recovery.
Unemployment in Canada has only dropped 1% since the recession ended, less than the drop in the United States which dropped almost 2%.
Unemployment should be dropping like a rock in Canada, not staying pace with the United States.
So for the last 3 years, 2009- 2012 the Canadian economy has failed to produce jobs at a healthy clip, even though corporate taxes are on the verge of being the lowest of the G7 countries.
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A Walkaway
Sep. 1st, 2012 at 4:22 pm
Do you have information on the gap between the rich and the rest of us?
That is an important factor in this discussion… and I’d bet that like this country, the rich in Canada have grown far richer at the expense of everyone else.
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fedded-up
Sep. 1st, 2012 at 5:04 pm
My God, I am so shocked, surprised and appalled…not. It’s the same problems everywhere, every damned one of them knows it. It has NOTHING to do with taxation, and they know that better than anyone. The problems are multi-faceted – every single one of them was created by unbridled greed – they were given the green light to move all manufacturing to countries where they could hire workers for – literally – pennies on the dollar, with no pesky overhead like insurance, workers’ comp, OSHA or EPA regs or any other regulatory agency sticking its nose into THEIR business. The overall picture is unchanged, and it is NEVER gonna be fixed until the American people grow enough clankers to stop this shit, once and for all. Bring the manufacturing plant back or we can always tax you the same amount you would have paid the workers you laid off and expected US to take care of. And NO you are NOT gonna raise your prices an ungodly amount to cover it – you’re gonna dig out the profits you raped from this country over the last decade or two, or rake em back from the stockholders you hold so dear. After all, all that ‘cost-saving’ horse kaka didn’t translate to one red cent of savings in the COST of your product to us consumers, now did it???? No, no, no – that was considered PROFIT and SMART BUSINESS. Uh huh. There are better words for that.
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Maple
Sep. 1st, 2012 at 10:34 pm
However…..the Canadian economy didn’t fall into quite as deep a pit as the U.S., largely because of strong banking and mortgage regulations. The housing industry is doing well – over 130 individual condo buildings going up in Toronto alone, while house prices are healthy (though starting to fall back a bit in Vancouver, where they were greatly overpriced). Unemployment hovers around 7% and the Cdn dollar is slightly above par. The country is resource-rich, but manufacturing has suffered quite a bit and the lowered corporate tax rate has not prevented that.
Unfortunately, we have a Conservative government in power, with a wily PM who is covertly and slowly taking the country in the direction the Repubs want to take the US — except for social issues. We Canucks love our universal healthcare, and we demand that the government stay out of the bedrooms, and especially the wombs, of the nation!
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chronoss
Sep. 2nd, 2012 at 6:32 pm
really you call secretly giving away 108 billion to banks and adding 150 billion a record to the national debt while the top 100 corporations hold onto 590 billion doing nothing with it….as good?
this govt also is mired in potential illegal scam elections ….screwed softwood lumber in 2006 and just keeps on bending over to the usa and china.
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Penny
Sep. 2nd, 2012 at 9:30 pm
You’re right about the banking regulations, but mistaken about the mortgage regs. In 2006, I believe, Flaherty had allowed 0% down payments and 40 year mortgages. It hadn’t gone on long enuf to cause what happened in the US. 2012 he goes back to 25 yr mortgages, so it’s possible many who got 40 yr mortgages won’t be able to renew. Methinks Canada’s mortgage foreclosures will start soon.
Harper is all for de-regulation of the banks. He just wasn’t able to pull it off. It may be why he is so keen to get us into the Trans Pacific Partnership because leaked documents show this so-called trade agreement is for the benefit of corporations, including lots of de-regulation,so be ready for US casino style banking here.
Flaherty bailed out Canadian banks too; he just didn’t call it that. He also made CMHC responsible for their mortgage debt, as they would be for high risk mortgages. Fitting isn’t it?
We were just lucky Harper hadn’t had power long enough for us to have quite the disaster the US did. No country was untouched by the banksters and it’s still going on.
By the way, there is not a shred of evidence anywhere that lowering corporate or wealth taxes create jobs. When we have money to spend, WE create jobs. The rich only buy so many cars, houses, planes & clothes, then they sit on the money (invest) as the corporations are doing.
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Sandra
Sep. 2nd, 2012 at 11:07 am
Canadian PM Harris like Bush, squandered the budget surplus he inherired from the previous Liberal Government buying votes. He is a disaster, cutting spending on programmes to give tax cuts to corporations who donate $$$ to his campaign slush fund. He’s dragging our once prosperous country down and I hope he gets his ass kicked in the next election. People are finally waking up to him and his agenda.
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Jonas
Sep. 2nd, 2012 at 2:19 pm
“Canadian PM Harris”? Seriously? If you don’t even know who the Canadian Prime Minister is (and/or you confuse him with a former Ontario Premier), I’m not particularly inclined to take your comments about “our” country seriously.
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Ryan
Sep. 2nd, 2012 at 6:28 pm
Nice try, Harper’s cronies.
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Michel
Sep. 2nd, 2012 at 11:34 am
A somewhat misleading article. First off, Canada has much more stringent labour laws than the US. Corporations can’t bend you over the barrel like they can in the good old US of A. Secondly to say Canada’s unemployment only dropped 1% since the recession ended is easy to explain when you realize it never got anywhere near the highs that it did in the US. So it has far less to fall than the US. Lastly Canada’s banking and mortgage industry is tightly regulated, they don’t get away with bloody murder like the US which explains why we didn’t go into the deep recession like the US did.
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chronoss
Sep. 2nd, 2012 at 6:34 pm
you mean like the secret 108 billion harper gave banks that they declared as profits and ceo bonuses?
all they needed in effect was 6 billion
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Dan Cummings
Sep. 2nd, 2012 at 11:48 am
You’re wrong. Canada doing very well, except in Ontario where green energy plan has mired province in debt and doubled electricity prices, killing jobs. Yet Canada unemployment less than US, while typically much higher. By this metric alone, US unemployment 3% higher than should be the case in recovery.
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bob
Sep. 2nd, 2012 at 11:55 am
Canada is suffering from ‘Dutch Disease’ and won’t be doing well until oil goes below $60/barrel.
The resource sectors job gains are being wiped out by raw material exports – it hasn’t occurred to Canadians to refine their resources at home.
The manufacturing sector has been abandoned by the federal government and is taking an irreversible beating with massive job losses.
As well as a low corporate rate foreign companies export dividends tax free which robs Canadians of HUGE revenues.
When China’s economy falters and the global demand for resources drops you can bet Canada will lead the race to the bottom.
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adam
Sep. 2nd, 2012 at 6:24 pm
Forgetting the auto industry bail out? The government stepped up to the plate in 2009 and saw no reward for their investment. No surprise.
The manufacturing industry in Ontario is failing for the same reason manufacturing sectors right across north america have failed in the past 20 years. It’s simply not profitable to use Canadian Labour.
Actually one could point to the mass over inflation of the value of those manufacturing jobs, backed by the unions, in the steady decline of manufacturing in Ontario. I can get ANYTHING made for a THIRD of the price overseas; mainly because of the cost of labour here.
Actually by lowering corporate tax rates the government has made it cheaper for those manufacturing companies to stay here. They are trying to create incentives to prevent the big manufacturers from leaving Canada for cheaper overseas labour, but as long as the unions continue to push labour rates higher, and we continue to place such high administrative burdens on these companies they will continue to leave for cheaper pastures.
Quite simply, even with corporate tax cuts, the cost of doing business here is simply to high.
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Shiva (Moderator)
Sep. 2nd, 2012 at 6:39 pm
so 10% of the workers in the US that are in unions are destroying the country? Really? The US saw a reward for the investment, in lower unemployment and more money going into the economy from workers.
None of our corporations are over taxed. They are paying lower taxes now than at any time. They are setting on a few trillion $$$ laughing at people like you who protect them. Obama has lowered taxes on small business 18 times while in office and we still have people like you mouthing the RWNJ talking points.
Material costs are far higher than labor costs. The corps who left didnt leave because the cost of labor was too high, they left for lower labor costs to boost their bottom line. And they expect the people they left stranded to hold them up.
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Ridedit
Sep. 2nd, 2012 at 12:00 pm
Has the US economy proven without a doubt that trickle down economics don’t work?
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Shiva (Moderator)
Sep. 2nd, 2012 at 4:24 pm
Did you just arrive here?
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Rosemary Breslin
Sep. 2nd, 2012 at 12:03 pm
Add to the delusional thinking in Canada and here in the U.S. that cutting taxes will GROW the economy, the opposite side of the equation that cutting government spending (EXCEPT for defense?) will FORCE it’s “lazy” unemployed citizens to magically not need assistance. Yeah… that “austerity” movement in Europe is working SO WELL!
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T Major
Sep. 2nd, 2012 at 5:47 pm
Rosemary is exactly right…don’t be fooled by the numbers. Unemployment figures that are broadcasted are not anywhere near the reality. As far as Canada’s banking system is concerned, we are in the same boat as the U.S., minus the dirivatives markets. Hope that the world doesn’t decide to call our bluff, revealing that our Bank of Canada, like the U.S. treasury is printing money out of thin air, that isn’t backed by anything concrete.
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clarence swinney
Sep. 2nd, 2012 at 5:56 pm
Thanks DNC–3 full time–our of state–work here 7 + long hours on get out vote. Great
FACT CHECK
Romney plans appear to be:
Cuts to teaching jobs, student loans, research and technology, Medicare and Social Security.
Slash funding for education while cutting taxes for richest
No plan to pay for $5 Trillion in new tax cuts
End Medicare as we know it and make deep cuts to Medicaid by repealing Obamacare
Increase defense spending significantly raising deficit.
Take us back to the failed policies that created record breaking debt and Great Recession
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T Major
Sep. 2nd, 2012 at 6:01 pm
Bob is exactly right as well… however Michel must have been living in Tangiers if he thinks that our labour laws are so much more stringent… I’d like to point out to him that the Right to work states in the U.S. have nothing on our Canadian Government… of the people that are employed, studies will surely show that our gross incomes are plummetting….while the costs are still rising. In short, the canadian economy will slow that much further, which will cause more austerity measures to be put in place…sound familiar? We are by far, not out of the woods yet… if you doubt me look up Elizabeth Warren and learn a thing or two.
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chronoss
Sep. 2nd, 2012 at 6:36 pm
damn right kraft dinner in last 3 years has tripled in price and bread has doubled….
whats a poor guy to eat.
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Shiva (Moderator)
Sep. 2nd, 2012 at 6:44 pm
For one thing you might look into why diesel costs more than gasoline. Thats one reason your food costs are so high.
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Maple
Sep. 3rd, 2012 at 3:54 pm
Actually, diesel is — most of the time — less expensive here than regular gas.
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Shiva (Moderator)
Sep. 3rd, 2012 at 5:07 pm
not here. It always used to be cheaper but not for the last 4-5 years
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A Walkaway
Sep. 3rd, 2012 at 5:29 pm
Diesel has been more expensive than gasoline in this area for years. I’ve heard the Big Oil lies, but the fact is, it’s far less cheaper and easier to convert crude into diesel than into gasoline, and you get a lot more per barrel of oil (takes less energy to make to boot).
During the last crunch (70s), Big Oil tried to pull this stunt and got caught lying to Congress about the difference. It turned out that they figured they had the truck drivers (and trucking companies) over a barrel and were going to stick it to them. It backfired badly. They got away with it this time (so far), and that probably because so many of the representatives are in Big Oil’s pockets.
Two things could really drop the cost of fuel and reduce greenhouse gases… one is to slow down and have a national (enforced) speed limit of 60mph, the other is for people to switch to diesel and avoid gas guzzlers.
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Fr0sty
Sep. 2nd, 2012 at 8:59 pm
This article is pretty disingenuous. A couple of facts not mentioned:
US unemployment rate = 8.3 vs. 7.3 for Canada
US labor force participation rate 63.7 vs. 66.5 for Canada.
While it is true that the US rate has dropped more than the Canadian rate, it is also true that the US rate climbed much higher than Canada’s, which never reached 9%. It is patently ridiculous to suggest there are “no jobs” in Canada. This article does not come close to proving anything about either country’s tax rates. It’s just silly.
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Damian
Sep. 2nd, 2012 at 9:28 pm
Well considering it is a global economy and the world is in a downturn what do you expect? If companies are not selling as much product as before, to increase profits and make investors happy then the most likely outcome is streamlining. What cutting taxes will provide is more cash assets to maintain the employees, again this all depends on the global market. What people should understand is what person ever received a job from a poor person? Not I. Also it’s not the corporations fault that tax breaks are part of law. Just like people complaining about Romney, don’t be mad that he pays tax lawyers a lot of money to maintain his wealth. It’s all part of the system. Even if taxes on the 1% are increased tax lawyers will find where the breaks are an exploit it, period. No one complains about Bill Gates, ” Oh he is leaving his billions to a charity”, yeah one he set up that means as a charitable trust it becomes a tax haven and his children will be board members or trustees and still be able to pull money from it. It’s a big joke that most people don’t get because they are blinded by the world charity.
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Shiva (Moderator)
Sep. 2nd, 2012 at 9:37 pm
BTW, why would people need tax cuts when the middle class doesnt have the buying power it once had? So the right wing DOES beleive in welfare
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Mip
Sep. 2nd, 2012 at 11:47 pm
This is the problem with economics, and it’s why no one will ever be able to prove their points on the basis of empirical data.
There are too many variables that go into an economy.
Just because USA is one way and Canada is another way in one variable, even if you think that Canada should be better off with lower taxes, that doesn’t account for the thousands of other things that are also affecting the respective economies. One might argue that Canada isn’t doing all that much better with their lower taxes, but then you could say, “Oh, well they’d be doing worse without the lower taxes” But neither argument nor counter argument holds water.
What creates jobs though? Really think about it. When people have money, and want something to get done, and they would rather pay money and do it themselves, then a job is created (in theory).
But then comes along the government and they say, “Oh, but any money you make, you have to give us a cut.” Well if I’m paying out 30% of what I make, I can’t hire as many people as if I could keep it all. Then they come in and make regulations that make it harder to work efficiently because I’m busy with compliance to regulations. That makes it even more expensive to run my business. Then I have payroll taxes, which makes the cost of having an employee go up.
So yeah, a tax works against my ability to create more jobs. If you want everyone to be wealthy, we need to have more capital, more stuff. Buying stuff on debt doesn’t make you wealthy. You can’t just have it, you have to own it. Government moving money around doesn’t create more wealth, it just moves it from me to other people. If you want everyone to be richer, you need to create more stuff and being to exchange what you create with other people. Government can’t make the masses richer, they only get in the way and misallocate resources.
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Patrick
Sep. 4th, 2012 at 3:55 pm
Very well put Mip, you just saved me some time as I was about to post something similar.
A redditor also provided a great response to this article: www.reddit.com/r/politics/comments/z89ph/canada_proves_conservatives_wrong_by_cutting/c62dr4e
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Nadine Lumley
Sep. 3rd, 2012 at 12:10 pm
Trickle Down Economics one big sham.
There was always skepticism about claims that, as the rich became richer, income would “trickle down” to others.
What wasn’t perhaps foreseen was that the trickling would actually be in the other direction, and that it would be more of a torrent than a trickle.
But the evidence is now clear. Over the last three decades, the tables of the rich have overflowed, with barely any scraps falling off. On the contrary, there’s been a massive transfer of income and wealth from Canada’s middle and lower class to the rich.
The result is that Canada has become a highly unequal society.
This is bad news, since a growing body of empirical evidence shows that extreme inequality has a clearly negative effect on a wide range of health, social and economic problems, as well as undermining democracy.
http://www.thestar.com/opinion/columns/article/911829–canada-discovers-trickle-up-economics
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as promised
Sep. 3rd, 2012 at 4:55 pm
I am always boondoggled by the union-haters and corporate-lovers who are, in effect, actively WISHING for lower wages for themselves, their neighbours, their family members.
You are stuck in the 80′s when Reagan’s almost insane fear of inflation started the downward trend in wages. We’ve never recovered. Remember how we were convinced that if we took pay cuts, worked longer for less, gave up vacations, or allowed parts of our workforce to be severed we would ALL BE BETTER OFF?? Didn’t work, did it? But we still have that mindset.
Really people, go look into the successful economies in Europe. High-paid workers with great benefits.
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Bookkeeping
Sep. 4th, 2012 at 3:22 pm
Great article Ray! Jobs in Canada, especially in the manufacturing sector, have been shipped off to other developing economies around the world. This is just one factor of the many affecting the Canadian economy. One remedy for increasing employment would be for more and more Canadians starting in their own business and creating jobs this way. Since Canadian tax law favours the entrepreneur a lot more than the employee, people starting their own business will not only see greater fortune, but open the doors to many more jobs for Canadians. One example of a great small business idea would be Bookkeeping. Many companies like this one have opened up and hiring more and more Canadians.
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Bruce
Sep. 8th, 2012 at 12:02 pm
Giving the rich money is exactly that. Giving them money.
Follow me here: I own a business and I make widgets. There is enough demand for me to sell 10,000 widgets per month. You just gave me a tax break. How does this change the premise of my being able to sell only 10,000 widgets a month? Sure, I could use the tax break to lower my price creating demand for and extra 100 widgets a month,but, why would I do that to generate extra profit when you simply increased my profit with the tax break with NO ADDITIONAL EFFORT ON MY PART? Hell, I’m just gonna take that additional money and stick it in my Cayman account.
If you want to give business a break then give the money to the middle class first who will then give it to businesses anyways via the purchase of goods and services. Put the money on the consumer demand side where it belongs and we will drive demand ensuring that business will expand if they want this money.
This is the tragedy of the “Reagan Legacy” on the world. That somehow, through some mechanism unknown to any realistic economist, that giving the rich money will “drive demand” as if the rich are somehow immune for the human emotions of greed, corruption and desire and will use their money for the best possible benefit of all mankind.
Jesus, what sort of sucker falls for that? That trickle you feel from giving the money to the top first is the rich pissing on your head while they laugh all the way to the Caymans.
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