[suburbia]

LINK - https://www.nationalobserver.com/201...orate-tax-cuts

When first announced, Kenney claimed the corporate tax cuts would boost Alberta’s economy by $12.7 billion and increase provincial revenues by $3 billion for a net $1.2 billion in 2023. That was magical thinking.

The UCP revised the platform to forecast more moderate growth, projecting the tax cuts would lead to $700 million in revenues, for a net revenue loss of over $1 billion annually in 2023.

After taking into account the negative economic impacts of Kenney’s planned cuts to government spending, Alberta’s economy would instead shrink as a result of the UCP fiscal plan, and government revenues would decline further than they expected. Economist Hugh Mackenzie estimates that the net impact of the UCP plan would be to reduce Alberta’s GDP by 2.5 per cent over four years. These estimates are more consistent with figures published by Finance Canada and by Statistics Canada.

Canada’s combined average federal-provincial corporate tax rate was cut from 42.9 per cent in 1998 to 26.8 per cent in 2018 -- a drop of 38 per cent over 20 years. This was supposed to boost business investment. Instead the rate of business investment has declined almost in lock-step with the lower tax rate, but even faster, by 45 per cent over the 20-year period.

Instead of investing, corporations have put the proceeds from these tax cuts and their higher profits into excess corporate surpluses, or “dead money” as former Bank of Canada governor Mark Carney called them. As households have gone into ever higher debt, Canadian corporations have built up surpluses that now amount to over $500 billion, equivalent to over $15,000 per Canadian.

The U.S. Congressional Budget Office estimates that 75 per cent of corporate tax cut benefits go to capital owners and shareholders with 25 per cent going to labour. The U.S. Treasury assumes the share going to capital is higher, at 82 per cent, while other experts estimate that substantially all the benefits of corporate tax cuts go to the owners of capital with nothing going to labour.

Of the twelve most profitable corporations based in Alberta, ten are substantially owned by foreign shareholders. Among them are Suncor, Cenovus, Husky Energy and Imperial Oil.

Accordingly, a large share of the benefits of these corporate tax cuts would flow out of the province to foreign owners and shareholders, and do nothing to benefit the people of Alberta.

The experience we’ve had with corporate tax cuts in recent years and broadly accepted evidence about their impacts by U.S. and Canadian government agencies demonstrates that the large corporate tax cuts Kenney is promising would have very small positive economic impacts, if any at all.

Instead, a large share of these billions in tax cuts would flow out of Alberta to the foreign owners of the province’s large resource companies, at the great expense of ordinary Albertans.