Wednesday, February 1, 2012

The High Cost of Corporate Tax Cuts

The Harper government's plans to reduce the deficit with savings from Old Age Security, are absolute nonsense.  Their argument is that it will be more beneficial for younger workers.  Just how is forcing Canadians to work two years longer, going to help those entering the workforce?

They will have to wait two more years for a job to open up.

However, this decision does provide an opportunity for Canadians to sum up this government's performance and goals, and determine who is really benefiting.

In a letter to the Ottawa Citizen, David Hobson says:  Harper government takes from the poor
If I understand the economics of the Harper government, it is this: first, lower taxes for the wealthy corporations; second, maintain MP's pension plans. Harper, I understand, at 55 will receive a pension of $250,000 per year from public funds. By the time he is 67 he will have received $3,000,000.

Now for the rest of us: first, payroll taxes will be up; second, Old Age Security and Guaranteed Income Supplement eligibility age will be raised from 65 to 67. This mostly affects low-income seniors and those in poor health.  I guess it is a matter of priorities. Give to the rich and take from the poor. Why didn't we hear of this plan during the election?
Why didn't we hear of this plan before the election? I know why. Because Harper WOULD NEVER have been re-elected. In fact back in the day, when his Reform Party was being created, they lost a lot of support from seniors when it was discovered that they wanted to gut OAS. He learned from past mistakes that honesty is the worst policy.

Dobson mentions the payroll tax increase, which not only affects workers, but small business.
Employers and employees will be taking a hit in the pocketbook due to increases to employment insurance and Canada Pension Plan deductions starting Jan. 1, says a new report by the Canadian Taxpayers Federation.  Both groups would pay a total of $306 extra in payroll taxes in 2012.
The EI rate will rise to 1.83 per cent from 1.78 per cent for employees, and for employers, the employers, the rate will increase to 2.56 per cent from 2.46 per cent which, along with corresponding increases in maximum EI and CPP amounts, will bring their contributions up by $164 per employee.  This amount could be substantial to a struggling small business.  They will either have to raise their prices or reduce their staff to cover the extra costs.

Large corporations are fine.  When Harper took power the corporate tax rate was 21%.  It is now 15%.  By comparison, the U.S. corporate tax rate is 35%.

And where are all these great jobs promised with these gifts to the wealthy?  According to the Canadian Labour Congress, corporations are hoarding their cash,  paying out larger dividends to shareholders and beefing up executive salaries.

Corporations that do hire are places like McDonalds and Walmart.  Low pay, mostly part-time, and with few if any benefits. 

And this government's support of union busting corporations, like Caterpillar, is going to further reduce the middle class.

I had a conversation with a conservative friend of mine who operates a thriving restaurant.  She supported Harper's solidarity with Caterpillar saying that unions hurt her ability to find good staff.  Clearly she was reading Tim Hudak's balderdash.

So I asked her what her business would look like with no middle class.  If everyone is making minimum wage, or only slightly above, how many could afford the luxury of eating out?  Was her customer base corporate executives or teachers, civil servants, factory workers?  She went a little red faced and I could tell that the message had hit home.

She knows who frequents her establishment and I doubt she'd ever even met a corporate executive.

The Washington Post's Ezra Klein, created a little chart of what programs and government policies best stimulated the economy.  The GOP fought for an extension of George Bush's tax cuts for the wealthy, while gutting social services.  This is what the chart looked like.

Food stamps, something the Republicans are hoping to do away with, were the big winner.  What will the business of grocery stores look like, without them?  Those billions the GOP want to cut, mean billions in lost sales.  Note that corporate tax cuts provided a net gain of zero.

Low income Canadians spend their benefits locally and our middle class props up most small businesses.  Corporations hoard and corporate execs hide their money in the Caman Islands.  So who should we support?

Toys For the Boys

Liberal MP Judy Sgro is right when she says  “The government has caviar tastes when it comes to jets and jails, but a baloney budget when it comes to seniors.”  And NDP finance critic Peter Julian, reminds us of some of the costs of Harper's boy toys and "build it they will come" prisons.
“A single F-35 costs $450 million.  That would pay Old Age Security benefits for 70,000 Canadian seniors. Its prison plan costs $19 billion. That would pay annual benefits for 2.9 million Canadians seniors...
And Peter Mckay is mulling over the purchase of nuclear subs, that would cost billions to purchase and maintain.

This government's priority is not Canadians.  Jets for Lockheed Martin and pipelines for the U.S., Korea, China and Norway.  It's time we start fighting back.

Someone reminded me of a post I wrote in 2010, about a fiesty senior citizen named Solange Denis.  She took on the Mulroney government when they put corporations above seniors.  Her efforts caused them to back down.  Do we have a Solange Denis out there today?

Or will my premonition come true, that one small voice would now be "lost in the deafening silence of 34 million"?  We need to find our voice.


  1. You're so right, Emily. We need a spokesperson like Solange Denis to lead the charge, but if we try to protest, Harper will send out the troops, and fiesty senior citizens will get their heads bashed.
    Rock and a hard place, Em. And several other sayings I won't put in print.

  2. A really helpful perspective Emily. Those anti-union, anti-benefits and pro-corporate people are the hardest to argue with. They just fail to look at how the whole picture comes together to make a functioning community. I would also remind people of this government's tactic of promising tax relief "after" the deficit has been conquered. Brilliant! And people nodded and believed it. That just astounds me. They accept the cutting of all kinds of social programs in return for a promise of a tax cut down the road. But tax cuts for corporations first and foremost. Honestly, it's brilliant.