Business Roundtable

The government of Ontario bought a half-page ad in today's Washington Post (Page A7), promoting its advantages to U.S. businesses considering expansion or relocation. The selling points used in the "Your Next Big Idea" campaign are telling.

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They are:

• 62% of Ontario's worker have a post-secondary education: The highest percentage in the G7
• 26.5% corporate tax rate: Ontario's combined provincial/federal corporate tax rate is lower than the U.S. federal/state average. Since 2010, it's dropped 5.5 points to 26.5%.
• 50% reduction in R&D costs: Ontario's R&D incentives are among the most generous in the world

Educational quality, modernization of the corporate tax system, and a permanent, more robust R&D tax credit? These are all priority issues for Business Roundtable, identified as essential policy changes if the United States is to improve its competitiveness. (See the December 2010 report, "Roadmap for Growth.")

Incidently, Ontario's Premier is Dalton McGuinty, a Liberal -- left of center in the Canadian context -- and the pro-business pitch comes at a time when Ontario's economy is stuttering. From John Ibbitson,  The Globe and Mail, "Other provinces have no cause to gloat over Ontario’s economic woes":

Anyone who might take satisfaction in watching Ontario, once the richest province in Canada, get its comeuppance as it grapples with low growth and high debt should remember that the province’s troubles are everyone’s troubles. In this country, when Ontario suffers, everyone else suffers, too.

BRT President John Engler cited Canada's competition and favorable corporate tax rate in an interview last Saturday with Larry Kudlow (audio starts at 58:20 mark):

The CEOs at the Roundtable, there’s 210 of them, they’re smart men and women, they do business all over the world. In fact, they meet with people coming from other countries s who say,” Hey, you ought to come over to our country, you ought to invest here, because we’ll treat you more equitably, we’ll do things the right way. “

I think they would say, look, just let us compete.

BRT principles calls for modernizing the U.S. system of corporate taxation, broadening the code while lowering rates and moving to a competitive territorial system. A reasonable target for rates after eliminating deductions and exemptions, Engler and Kudlow agreed, would be the average rates in the OECD countries, circa 25 percent combined state (or provincial) and federal.  "Just adding the certainty of the lower rate and being in the more competitive structure, for many kinds of companies, that works out very well."