'Orange Shift' rolls along, takes flak

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KenS
'Orange Shift' rolls along, takes flak

 

KenS

Continued from [url=http://www.rabble.ca/babble/ultimatebb.php?ubb=get_topic&f=1&t=008107]An NDP plan to slash corporate tax rates?[/url]

My reply to a comment was blocked by the closing of the thread. So I guess I'll open Round 2.

quote:

Unionist is a fifth columnist sent to infiltrate the NDP via rabble and implement the Fraser Insititute agenda.

The Fraser Institute agenda is to lower corporate taxes, [i]within a context of general lowering of the tax "burden".[/i]

They would be implacably opposed to a lowering of corporate taxes compensated by other taxes targetting wealth.

What unionist proposes follows the lead of European [and some Latin American] social democratic governments.

Those governments have not needed to explicitly incorporate compensation for the tax cuts, since they already have very high marginal income tax rates on wealth, and high consumption taxes [with those paid by low income earners funneled back to them through transfers].

So they have been able to simply reduce corporate taxes and increase transfers to low income households, while doing their ongoing thing of 'tinkering' with income, wealth, and consumption taxes that are already high for top income earners.

European governments have been able to realize new revenues more than sufficient to compensate for corporate tax reductions without lifting a finger: simply by allowing 'bracket creep' to run its course.

And by the way, in terms of fiscal planning, taxes on corporate profits are far more prone to heading south than taxes on income, consumption, and wealth.

[ 30 October 2008: Message edited by: KenS ]

Adam T

Ok, I'll repost here. You can close up my thread.

quote:

I don't know of too many corporations with 'vast pools of cash', that would be an enormous waste of resources...
Banks have them. That's why they hate capital taxes.

1.There are a tiny number of corporations that may have a lot of excess cash at any time. I understand that is why General Electric started up G.E Finance Corp. However, for most large companies, it isn't exactly 'free' money. For instance, many companies invest in order to pay off future liabilities like pensions (and, in many cases, they don't appear to be investing enough) or to replace warn out assets.

2.In the case of banks, I don't know if you're attempting to be snarky or not, but obviously the banks aren't actually the owners of the cash.

3.'Capital taxes' are badly named. Most people assume capital means money, but that is not the case. In economics, capital means all of land, equipment, buildings... In B.C, the 'corporate capital tax' would better be termed a 'corporate equity tax', as it appears to be a tax that follows this: assets - liabilities. Which leaves equity. Again, equity is not actual cash sitting somewhere in a bank.

1948

The first comment was sarcastic. I hope people understand that.

The second wasn't. Though I may be wrong. My understanding is that banks get substatially dinged on capital taxes because their business is holding mass amounts of capital. While it's true they don't actually hold all of the assets of their depositors at any one time, they do (and are required) to have pretty big reserves of cash on hand. And they pay capital tax on that - in addition to physical assets.

Now, it seems I may be wrong, if the "cpaital" of banks is ascertained by deducting their liabilities from their assets, they don't actually have much at all.

The Ministry of Finance says:

quote:

Banks are subject to capital tax under Part I.3 and Part VI of the Income Tax Act. While the definitions of "capital" for regulatory and tax purposes differ slightly, the components of a Canadian bank's regulatory capital are generally subject to capital tax. Thus, the regulatory capital requirements applicable to Canadian banks guarantee that those entities have a minimum amount of taxable capital employed in Canada...

The federal government taxes the capital of all large corporations (large corporations tax) and of large financial institutions (financial institutions capital tax). The financial institutions capital tax acts as a minimum tax and ensures that large financial institutions pay tax every year. All provinces levy capital taxes on financial institutions and seven provinces levy a capital tax on other corporations. Provinces rely more heavily on corporate capital taxes than the federal government.


[url=http://www.fin.gc.ca/news99/data/99-015_1e.html]source[/url]

Adam T

I don't know how the Federal Government defines 'capital' for their capital tax.
Even as a former accountant, much of the tax code is fairly indecipherable to me.

KenS

Ditto about not knowing exacly how capital taxes work- other than to say they work with a VERY narrow definition of what capital is compared to any sort of common usage.

I think capital taxes are generally seen as an anachronism.

And its manufacturing firms that hate capital taxes.

And 1948, I think it was clear enough that it was sarcasm saying unionist is fronting for the Fraser institute.

Thats partly why I didn't attribute the quote: since I was choosing to adress it as expressing that many on this board see any kind of corporate tax cutting as doing the rights work for them.

[ 30 October 2008: Message edited by: KenS ]

Unionist

I'm glad not everyone has given the Orange Shift Short Shrift (try saying that 5 times fast).

I'm still waiting for Stanford or Gordon or the like to get on here and tell me why my proposal is full of shift. I'd be very surprised if it makes any sense at all. [img]wink.gif" border="0[/img]

Regards,

The Fraser Institutedamn, I mean:

Your brother, unionist

1948

quote:


Originally posted by KenS:
[b]I think capital taxes are generally seen as an anachronism.[/b]

I think capital taxes are hated by the manufacturing sector, and with good reason, owning a plant means you have quite a bit of expensive "capital" and keeping it in good repair (or building a new one) means you have more "capital" and thus more taxes.

I'm less convinced it's a bad way to tax banks which make absurd amounts of money just by holding the money.

thorin_bane

I know private sector Capital taxes are dividends from stocks. It may also incluse money earned on the stock market from buying and selling(electronic wealth)at present it is only taxed at 50% of the money earned. So if you earned 100,000 from the markets you would only pay taxes on 50,000 and therefore not only pay less taxes but also at a lower marginal rate from 29 to 25 percent. The worst part is stock money does very little for productivity as most of it isn't invested in capital expenditures for new equipment. Which in a way is good because I know first hand how much of our regular jobs could be automated. Remember this next time you check out your own groceries.

thorin_bane

quote:


Originally posted by 1948:
[b]I think capital taxes are hated by the manufacturing sector, and with good reason, owning a plant means you have quite a bit of expensive "capital" and keeping it in good repair (or building a new one) means you have more "capital" and thus more taxes.

I'm less convinced it's a bad way to tax banks which make absurd amounts of money just by holding the money.[/b]


No it doesn't because buying new equipment means you are earning less profits therefore paying less taxes. In addition there are tax credits for buying new equipment. Secondly we have yearly audits for so called depreceation of our machines, this is also written off against our taxes. Capital(as in taxes) doesn't mean the quantity of stuff you own in the economics sense(economic capital). If you rent a house and then sell it before living in it for 6 months, this is a capital gains. You don't even own the home, but you pay on the money you earned between the purchase price and the selling price, with some other loopholes in there.

Sp looking at my above post, if you bought a house for 28,000 rented it for 20 years and it somehow got to 128,000 you would have earned 100,000 on it. But the taxes you would pay would be 10,000, on the resale if you didn't live in the home prior to selling. If the capital gains wasn't 50%(ad the want to bring it to zero) then the taxes would be 29% of 100,000(highest tax bracket) or 29,000 dollars. that is 180% more than the current system. If you own money it is easy to make money. All taxes are made to benefit you without you having to do any actual work.

[ 30 October 2008: Message edited by: thorin_bane ]

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

quote:


Originally posted by thorin_bane:
[b]
Which in a way is good because I know first hand how much of our regular jobs could be automated. Remember this next time you check out your own groceries.[/b]

I never check out my own groceries.
And I always give store managers shit for standing around looking at long line-ups.

thorin_bane

quote:


Originally posted by Lard Tunderin' Jeezus:
[b]I never check out my own groceries.
And I always give store managers shit for standing around looking at long line-ups.[/b]

Open a till, if you are a manager you ran one at one time. I also refuse to use the checkouts. Mostly cuz I always screw up the produce. I have seen us eliminate 20 of 24 jobs in one single door line. To make matters worse with new flextooling we can do 3 different doors with the same workers at much faster rate than 10 years ago. So how many more jobs are eliminated. Also a lot of our work has gone to tier 1 suppliers instead of the big 3.
From the people I talk to at these plants the earn 30-40% less than an assembly plant, where the same job use to be. 18 dollars an hour isn't a good wage in Toronto, it isn't 10 buck an hour, but is a far cry from 33 an hour chrysler workers earn here in windsor.

In regards to pensions, we have seen our pension wiped out. In addition to taking a hit at sun life, we are now having to pay a greater portion along with paying more for our benefits because of globalization and competition. They did this because "Profit margins are small from tier 1 work" Umm we are a private company(no public shares) owned by 4 brothers, how do profits margins over keeping your workforce square with us your employees. Or in otherwords how fucking greedy are you. This was all done because the dollar has been at par for the last little while. Now the company has finally shipped out the last bit of our machinery we bid on last year so they will get paid. In addition to the regular profit margin, they will now earn a 20% increase because the dollar has fallen. Do you think they bought new machines to make us more productive while the dollar was high(better to import) NO instead they had squandered their money on purchasing a plant in india and shipping our jobs there.

George Victor

quote:


I'm glad not everyone has given the Orange Shift Short Shrift (try saying that 5 times fast).
I'm still waiting for Stanford or Gordon or the like to get on here and tell me why my proposal is full of shift. I'd be very surprised if it makes any sense at all.


Not sure we need formal economic advice - micro or macro at this point u. In the face of the grim postings about economic prospects I'm going to bravely suggest that we have to consider the environmental aspects of re-situating the corporation in our producing world, as well as its competitiveness.

All too much already?

I'm told we have to consider both economics and environment. What the hell, in for a penny, in for a p....penny for your thoughts, u. Or is this aggravating the fine balance of ideas already entered?

thorin_bane

My reply to the orange shift is read above. Corporation don't employ people anymore. Not here. so they would move their HQ here in name only and not pay taxes while everything is produced with zero workers. If you earn a profit you pay! Simple as that.

George Victor

quote:


My reply to the orange shift is read above. Corporation don't employ people anymore. Not here. so they would move their HQ here in name only and not pay taxes while everything is produced with zero workers. If you earn a profit you pay! Simple as that.


I'm afraid you're bogged down in a "what-is-must- be" scenario as we enter an apocalyptic world situation, tb. Think "the sky's the limit" because we are entering a situation where we don't have to justify our thinking to a world economic community as much as we have to prostrate ourselves before Ma Nature, look to her for clues whether we're doing the right thing.

It's a brand new ballgame, so don't just think along the paths laid down for us by "Voltaire's Bastards" (John Ralston Saul). They had NO CLUE what they were setting us up for...although Engels did say in correspondence to someone on the thoughts of Malthus, that when the wheatfields of eastern Europe and the open spaces of the Western Hemisphere were completely taken up - that would perhaps be time to "sound the alarm."

Of course he didn't imagine what tree-felling marvels were opened up with the technological revolution that has kept the alarms from sounding for a little while longer, eh?

Fidel

[url=http://www.straightgoods.ca/Election2008/ViewNews.cfm?Ref=12]USA sinks, Canada treads water[/url] [b]Productivity has dropped during Harper's regime[/b]

quote:

The complete stalling of productivity growth in Canada represents a major long-term economic risk to our future prosperity. Finance Minister Jim Flaherty, urging Canadians not to worry about recent negative economic news (such as the shrinkage of real GDP during the first half of 2008, or recent job losses), has repeated many times that Canada's economic "fundamentals" are strong.

However, there is nothing more fundamental to the long-run prosperity of a society than productivity: that is, how efficiently and productively we are able to produce the goods and services we need. On this score, Canada's economic fundamentals have deteriorated dramatically since the Harper government came to office. No other elected government (since Statistics Canada began collecting this data) has done as much damage to national productivity as has Stephen Harper's.


Based on their performance record, big business, and much of it foreign-owned, doesn’t deserve more tax cuts. Canada's became a hewer and drawer ecomomy, once again, as of 2005. We're falling behind. I think that if we pay them even [i]more[/i] money to siphon-off our energy and fossil fuels and raw materials, they will do it even faster than before. Canada has precious resources and energy that should at least be bargained for by free market methods.

PB66

On the previous thread, I claimed (1) that eliminating corporate taxes would lead to large corporations growing even larger, since the owners would rather the corporations reinvested (most of) their profits to grow rather than pay out the additional profits as dividends.

One response fell for the Fraser Institute line that corporations, not economic activity, create jobs, and seemed to say that it'd be good if the corporations reinvested the money rather than letting the government take the money in taxes.

Another asked what percentage of capitalists actually followed the strategy of keeping their money in a single corporation rather than selling it off to get personal income. I have no idea, but obviously some do, since this is exactly how Bill Gates and Sam Walton made their fortunes.

The effect of of eliminating corporate taxes is to increase the concentration of power and capital in corporations like Wal-Mart.

Doug

quote:


Originally posted by PB66:
[b]
The effect of of eliminating corporate taxes is to increase the concentration of power and capital in corporations like Wal-Mart.[/b]

But to a degree we need that in Canada. One problem is that a lot of our small and medium-sized companies never get to be large companies. They - or their intellectual property - get bought out. When that happens, we lose important head office, research and design jobs.

janfromthebruce

quote:


Originally posted by Doug:
[b]

But to a degree we need that in Canada. One problem is that a lot of our small and medium-sized companies never get to be large companies. They - or their intellectual property - get bought out. When that happens, we lose important head office, research and design jobs.[/b]


Or, for the most part small and medium size companies have no interest in peddling their wares internationally (like approx. 75% of Canadian Companies), and due to the local natural of their business and other characteristics are never going to do research and design jobs.

George Victor

And Jim Prentice, the only Conservative minister worth spit, has been appointed to Environment.

His opening concern:

Economic questions and environmental are two sides of the same coin!

Question now. Are we going to be able to keep up with the Conservatives on this one? I mean, go beyond talk about manufacturing wind turbines in Canada...although that sure as hell would be a start.

George Victor

Oh well, I'm sure Jim Prentice will have something to say on this subject soon, to which the rabble can respond in rage as from the old, familiar opposition benches. [img]rolleyes.gif" border="0[/img]

Fidel

quote:


Originally posted by Doug:
[b]

But to a degree we need that in Canada. One problem is that a lot of our small and medium-sized companies never get to be large companies. They - or their intellectual property - get bought out. When that happens, we lose important head office, research and design jobs.[/b]


And I think this is a line of thought that was dominant during years when neoliberal ideology was at its peak. And it said that corporations need to be multinational and globally competitive. Denmark has a number of multinationals and said to contribute to to that country's competitive economy.

But at the same time people like Sir Tony Benn have said that, sure, British state-owned companies might have been a little inefficient, but at least they could be controlled in the 1970's. Today's marauding capital and multinationals know no sovereign boundaries. They are so big that they influence our econmies and sovereign decision making at governmental levels. I never voted for Wal-Mart or for Bay Street bond salesmen to wield so much clout.

Fidel

According to [url=http://www.canada.com/edmontonjournal/news/culture/story.html?id=9c92e38... Hurtig's new book, The Truth About Canada[/url]:

quote:

"...Canada also ranks [b]27th in corporate taxes-to-GDP[/b], despite complaints of over-taxation. Hurtig said corporations are putting their profits in offshore tax havens, leaving governments no choice but to lean on individuals for their revenues.

"If you draw a line of business taxation, it goes from top left to bottom right," he said. "If you draw a line of personal taxation in Canada, it goes from bottom left to top right."


Unionist

quote:


Originally posted by Fidel:
[b]Hurtig said corporations are putting their profits in offshore tax havens ...
[/b]

You see? Even with a low-ish tax rate, corporate owners get away with murder. That's why Item #4 is such a crucial element of the Orange Shift™. No wealth created in this country leaves this country. That, plus hefty hikes in taxes on the rich, is why the Orange Shift™ can work for Canadians.

Adam T

quote:


One response fell for the Fraser Institute line that corporations, not economic activity, create jobs, and seemed to say that it'd be good if the corporations reinvested the money rather than letting the government take the money in taxes.

I'm not 100% sure what this even means. What does the poster think "economic activity" is other than producers producing and consumers consuming?

Reinvested earnings that go to increasing capital stock and improving technology are the only way in the long run to boost the economy (along with improving worker health, education...).

"Long run aggregate supply (LRAS) - Over the long run, only capital, labor, and technology affect the LRAS"

I know historians generally hate Wikipedia, but I have to say, it's quite good on economics topics.

[url=http://en.wikipedia.org/wiki/Aggregate_supply]Primer[/url]

[ 01 November 2008: Message edited by: Adam T ]

Fidel

quote:


Originally posted by unionist:
[b]

You see? Even with a low-ish tax rate, corporate owners get away with murder. That's why Item #4 is such a crucial element of the Orange Shift™. No wealth created in this country leaves this country. That, plus hefty hikes in taxes on the rich, is why the Orange Shift™ can work for Canadians.[/b]


[url=http://www.straightgoods.ca/ViewFeature8.cfm?REF=557]Linda McQuaig[/url] says, yes, taxing the rich may not only be a good idea, it could be essential to our economic survival. You go guy.

PB66

quote:


Originally posted by Adam T:
[b]
Reinvested earnings that go to increasing capital stock and improving technology are the only way in the long run to boost the economy (along with improving worker health, education...).

"Long run aggregate supply (LRAS) - Over the long run, only capital, labor, and technology affect the LRAS"
[/b]


I think we agree on this point. The question is whether we believe that a corporation will invest this better than a democratic state. The point was raised earlier that there seems to be no clear correlation between corporate income tax and growth. One might imagine that a corporate income tax which is used to fund, for example, excellent health care and education systems might produce better economic results than whatever corporations want to invest in. Similarly, one might imagine that if the state raised corporate taxes to lower income tax on low and middle incmoe earners, it might allow them the freedom to experiment with better ways of doing things and to develop new technologies.

My point being, there seems to be no evidence that corporations invest wealth better than others and I would rather limit their power than enhance it.