Published: November 10, 2011
We're glad to see such strong bipartisan support for a more globally competitive corporate tax rate to spur economic growth and jobs. Now, granted, it's in Canada, but that's still instructive for U.S. policymakers.
National Post columnist John Ivason provided the political lay of the land in his report on latest fiscal update by Finance Minister Jim Flaherty, a speech delivered Tuesday in Calgary that had a key member of the Conservative federal government sounding like a moderate of the Liberal sort. (Brief reminder: The Conservatives under Prime Minister Stephen Harper won a majority government for the first time in last May's national elections, while the Liberals were ground away and the Bloc Québécois was nearly wiped out. The leftist NDP won seats to become the official opposition.)
Harper's government is adjusting its fiscal policies in reaction to global conditions (European debt, etc.) but is still continuing its multiphase lowering of corporate tax rates. The NDP's finance critic, Peter Julian, wants to spend money instead on infrastructure. Sounds familiar.
By mid-2013, when Ontario reduces its corporate tax rate to 10%, Canada will have a marginal effective tax rate on new business investment lower than the OECD average and significantly more competitive than such countries as the United States, United Kingdom, France and Germany.
Mr. Julian may portray this as "tax cuts to friends in already profitable corporations" but it is a job-creation plan for which the NDP government in Manitoba and Ontario Premier Dalton McGuinty have signed up. And you don't get much more radical centre than Dalton McGuinty. Except, these days, maybe Stephen Harper and Jim Flaherty.
McGuinty is a Liberal, so that's backing from Conservatives, provincial NDP leaders and the Liberals. Tripartisan support!
As for south of the 49th parallel, tax competition is in full swing between Virginia and Maryland. The Examiner reports, "Virginia goes after Maryland jobs." Some of Virginia's advantages come from using the traditional incentives, financing packages, etc., but it's also due to lower corporate tax rates.