Of course, these arguments are difficult to explain to the ordinary citizen. So the party of the left -- the NDP is enthusiastically proposing large corporate tax hikes, while the party of the center-left -- the Liberals -- are proposing small increases, and it is left the the party of the right -- the Conservatives, to do the politically unpopular thing and advocate small decreases.But corporate tax, by its nature, has a reverse Robin Hood effect: It is regressive. Big corporations have no trouble avoiding it. They can do any number of things, including acquiring other companies or shifting profits to overseas divisions, that make their balance sheets legally register zero profit. So small- and medium-sized businesses end up paying the full burden – a situation that chokes off entrepreneurship, reduces competitiveness and damages economic growth. This proved to be a toxic recipe. By burdening small family businesses with a greater share of taxes and thus wounding domestic production while sending well-off individuals on an import-heavy spending spree, Washington created a debt crisis.
<snip>
In fact, the strongest arguments against corporate tax come from the left. They were most eloquently expressed by Robert Reich, the economist who was considered on the far left of Bill Clinton’s cabinet during his tenure as labour secretary. Corporate tax, he noted, is fundamentally regressive: It shifts wealth to the rich. And not just because General Electric avoids it and corner shops don’t. Since corporations do not physically exist, corporate tax is ultimately paid by individuals – and, as many studies have shown, those individuals tend to be the company’s workers more often than its shareholders or executives.
There is another strong argument against corporate tax: It gives businesses far too much power in politics, law and society. As “taxpayers,” corporations are given citizen-like rights in court and legislatures; as financiers of the state, they are given far too much lobbying power and influence over legislation – almost obligatory given their large taxpaying role. The Canadian documentary The Corporation ironically made the strongest argument against corporate taxation. It turns corporations into de facto humans, which is not healthy for democracy.
A truly fair and healthy tax system would place the burden entirely on personal income tax, which is the most progressive and far harder to avoid. That would solve all these problems. It would also dramatically raise income tax for people like me. Not an election-winner, but a necessary move to restore sense to the world.
I wonder why John McCallum, who after all is an economist, has nothing at all to say on this topic. Well, actually, he did say that the corporate tax increases would lead to a "minor" loss of jobs. But apparently the Liberal party leadership made him retract his statement and keep his mouth firmly shut from then on.
George