Quote:
Originally Posted by PoloniumMan
I am unsure of the correlation between personal income tax and, presumably, foreign based investment, and also the notion that taxation level has more of an impact than other factors, i.e. infrastructure, workforce, level of education, demographics, etc, in determining the prime location for investment. Could you perhaps explain this logic Newflyer, as you are obviously a proponent of this plan and, from other posts by you, a devotee to the neolib/neocon school of economic thought.
ps, first time poster, long time lurker
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Not to minimize years of study and even more years of experience in finance, but I will try to answer you inquiry within this limited thread. First off I never mentioned foreign investment particularily, but it as with all levels of investment actively looks to locations which offers adaquate levels of return to offset the underriding levels of risk. As corporate tax is an expense on success (profitable operations) and a deterant on expansion, it does not benefit any society to have tax levels which are not in line with neighbouring regions, or not competitive with the agrigate marketplace, if it wishes to incourage corporate expansion. Just to be clear one the largest benefits of an expanding corporate base, is an increase demand for workers, which in the long run helps supports higher wages. More workers means more tax payers and an expanded tax base.
Investment capital is extremely liquid, which means it can and does flow as investors see fit everyday. If one region is precieved to be uncompetive then investment capital will flow away from it, just as water flows away from higher land. If you examined capital flows you would understand that as clear as day. As with most first world economies, the largest investors in the local economies are from local residents, but if local investors are not attracted to the local economy, this can have a significant impact on the long term viability of that economy. This is what the Enterprise Saskatchewan has identified.
I am not suggesting that lowing Saskatchewan's taxes will entice any large financial companies into locating into the province, but it will assist local enterprises in attracting investment capital and thus assist in the expansion of Saskatchewan's economy.