Friday, 15 April 2011

Increasing Corporate Taxes Hurts Low Income Families And The Economy

By increasing taxes, Iggy and Mr. Layton say their revenues will increase allowing them to spend money on real priorities...helping Canadian families.  I have argued that this will end up doing the reverse, see:
Socialism Devalues Low Income People

Corporate profits advance causes.  When a corporation makes a profit, it uses the money to reinvest in people, machines, infrastructure and growth.  This allows people to be hired and advance their pay through increased opportunities. 

When a government says, "give me that profit, I will spend it", they are really saying, "the good that cooperate profit accomplishes through increased jobs, employment and opportunity is LESS THEN the good accomplished by the government taxing and spending on the people's behalf: hence the tax!".  This 'value proposition' made by left-leaning policy is rarely called out. 

I call out increased corporate taxes as:
·         An insult to those who take risk
·         Punishment on success
·         Demotivating those who work hard
·         Immoral way of 'leveling the playing field'
·         Intolerant government judging that their good is better then the good of corporate profit being reinvested

Left leaning policy is trying to sell you on them helping out families.  But it is not free.  The immediate tax is corporate profit.  The long term tax is your future growth and opportunity, and consequent INCREASED dependence on the government services... exactly what they want. It's a strategy for control over the economy and your choices via limiting free market.

So what is it going to be?  The government planning the economy and allocating resources to ensure you get that helping hand? Or the free market rewarding hard work, success and through that, additional opportunity comes knocking on your door?

Entitlement says, "Your success should also be mine... so hand it over buddy"
Freedom says, "Teach me how you got that success so I too can enjoy the same rewards".

Freedom via low corporate taxes permits a 'free market' to reward work ethic and success. I love freedom because it offers choice (by definition).
Do not buy left-leaning policy which squashes freedom by choosing for you.
The same logic I argue for low corporate taxes, is the same logic I have been encouraging you in: increase your skills, connect with people, own your jurisdiction and take responsibility and enjoy the choices you get to make with those rewards.  This is also the same logic I use to counter the 'loving socialist heart'. I say, use your surplus money, time and abilities to invest and love on others. To build yourself and others is the answer to putting less of a strain on government. 

I want to help those in need.  I think it ought to be done better and differently then left-leaning policy.


  1. Very Clear message!!!

    Thanks again for the carifying points. It's difficult to see "free" money coming your way as a negative thing. That's why it's imperative to hear the core issue of why that's only a cover-up for deeper issues which in the long run will hurt all of us!!!

  2. so true. makes me more passionate about politics hearing all this stuff ryan! thanks!!

  3. Very well said! I totally agree with this...that is why a lot of the time people who rely on the government get burned by it in the long run. I believe they are not continuing to learn and grow and get the necessary skills to make that money on their own because they are getting free money, so what's their incentive to do so?

  4. I'm not sure why corporate taxes are such a targeted issue. There are lots of private companies or individuals out there making more money than small/midsize corporations and they get zero attention. People hear "corporation" and put some evil label on it. Ultimately the deciding factor should be what generates the largest benefit to the country as a whole, whether it's corporate tax, personal income tax, consumption tax and go from there.

    A corporation is merely a legal entity as defined by the Canadian tax act. Profits are distributed to the people either through compensation (wages, etc), or to shareholders through dividends. Ideally the tax rate on both corporate taxes/dividends and wages should make it so that individual is indifferent as to which is their source of income. I don't think the legal structure of a business is relevant if we are trying to determine the optimal way to tax a society to reduce hoarding by the wealthy and get these profits down to the lower income folks.

    "When a corporation makes a profit, it uses the money to reinvest in people, machines, infrastructure and growth. This allows people to be hired and advance their pay through increased opportunities." This statement is not factually accurate. A corporation can be just as wasteful with resources as a sole proprietorship, partnership, or a public (government) entity. A corporation also has the ability to hoard resources and not reinvest. The roughly 20% corporate tax rate vs a 40% personal rate means that you can hold on to that 20% until a dividend is issued and the income is then taxed at the personal level.

    I'm not pro government or pro corporation. My statements are purely based on the economic and taxation reality of our country. Unfortunately people become brainwashed into thinking corps are either "bad" or "good" when really we should just look at what is the most efficient way to use and distribute our limited resources to maximize our national productivity. Suggestions like cut corporate taxes, decrease taxes for low income families, give tax credits for kids etc. are typically just political tools rather than based on sound economic policy. All parties get locked into an ideology that can negate the raw economic truth.

  5. Brian, a corporation is a not a person. corporations exist to make profit. If a corporation is charged higher taxes, it will still find ways to profit. Lets say the corporate tax rate goes up by 5 points in Canada to 21.5, which amount to about a 30% increase, will corporations see 30% less in profits? Or will they pass it on to the consumer? Of course they pass it onto the consumer, that's the only way to make sure they continue to fulfill their purpose (which is to profit). The other option corporations have is to move to another location, maybe another province or even another country. Do we want either of these options? I will tell you that if I were a CEO and my goal was to profit, I would have no choice but to pick one of these options. Businesses are way more efficient then government and they adapt to changes much quicker then the government. Some corporations may "waste" the money but where does that money go? Unless its spent outside the country it goes right back into the economy.


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