Tax cuts for corporations penalize the rest of Canada

Mayor Rob Ford has built his entire successful political career on labelling Toronto residents as “taxpayers” instead of “citizens.” It is a simple-minded but effective emotional appeal to a Ford Nation comprising one third of voters. It ignores the responsibilities of active citizenship, the cornerstone of a healthy democracy. Instead it considers residents as simple, passive consumers of services only concerned about price.

There is a discouraging saying that we all face two unavoidable things in life: death and taxes. It is certainly true of death. We also face taxes as the price of a livable and civilized society. But the extent, collection and distribution of taxes has dramatically changed over the last roughly 30 years.

This political change began by British Prime Minister Margaret Thatcher (1979-90) and U.S. President Ronald Reagan (1981-89). They basically advocated cutting income taxes and reducing government spending and activities. Canadian prime ministers following them, Mulroney, Chrétien, Martin and Harper have pursued the trend.

Canada has not always been like this. After the devastating Great Depression of the 1930s followed by the immensely destructive Second World War, Canadians longed for a more stable and just society. They wanted to participate in a more equal distribution of our nation’s considerable wealth. This led to new social and economic programs such as unemployment insurance (1940), old age security (1952), the Canada Pension Plan (1966) and universal health insurance (1984). Everybody benefitted from these despite the business community always complaining we could not afford them.

Taxes were considerably higher in the post-war period, particularly for high-income individuals and businesses. Yet a broader middle class was created by rising incomes propelled by active labour unions. There were also inheritance taxes to aid a needed redistribution of wealth. They were abolished as early as 1972 (United States still has them). Our fine National Arts Centre in Ottawa of 1964 was made possible by the large inheritance tax on two Canadian tycoons, Sir James Dunn and Izaak Walton Killam.

Today’s world is precarious. Instant, worldwide communications and transfer of technology have made nation states vulnerable to the dictates of big, multinational corporations playing national governments against one another. Corporate tax avoidance has become rampant. Giants like Apple, Cisco, Microsoft move foreign earnings to other countries with low tax rates paying only 1%, 5% and 11% respectively when their domestic tax rates may be as high as 41%.

Another drain on government revenues is some 80 foreign tax havens. An enormous, estimated $32 trillion (that’s 1,000 million) of world-wide corporate and private money is stealthily salted away unseen by home governments.

Through today’s persistent corporate tax cuts from 21% in 2008 to 15% in 2012, Canada now has one of the lowest rates in the Western world. The cuts have increased corporate profits, notably of banks. Instead of investing in the creation of badly needed jobs, corporations are now sitting on half a trillion dollars of what Mark Carney, Governor of the Bank of Canada, calls non-invested “dead money.” Corporate tax cuts have also made ordinary people’s income taxes pay a larger proportion of government services.

The unbridled corporate quest to avoid taxes and maximize profits led to the recent disastrous, worldwide financial catastrophe of 2008. The painful effects of this are still felt by many ordinary people in Canada and elsewhere.

This present Great Recession is noticeably helping the privileged 1% and hurting the rest: 99% of us. Why then are we electing the tax- and services-cutting governments of Rob Ford and Stephen Harper after we experienced the economic and social ravages of former Premier Mike Harris?

Harris increased government debt by borrowing billions to cover income tax cuts of 30%. The argument was that these cuts would increase economic activity and, therefore, increase government revenue. The final, costly end result at the end of eight turbulent years of Harris’ “Common Sense Revolution” was a deficit of $5.6 billion! When will we ever learn? To use the refrain of Pete Seeger’s classic, old song: Where have all the flowers gone?