Tag Archives: The Corporation

Tax Changes Worth Considering

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In the world of fiscal and monetary policy, once you make specific changes, it’s very difficult to turn back on them.

Unfortunately, this is true for reductions that we’ve seen in the past with specific tools like the GST (now HST) which was reduced by Stephen Harper, Dalton McGuinty and other leaders in an economically questionable tactic to get into office.  Today, our economic instability continues and yet our leaders still commit to reducing corporate tax rates, forcing us to shake our heads at the gross inequality of Canadian citizens compared to capital owners.

With this in mind, I’d like to spin the topic a little towards something more positive:  eliminating or reducing tax deductions.  I’m sure lots has been written about this, but I personally feel that little has been done to explore the impact of altering deductions when it comes to corporate and income tax policy.  Here are some standard deductions, all of which create questionable policy outcomes:

  • Car and gas:  the more I drive for business, the less I pay in tax.  Larger organizations would have entire ‘fleets’ that are deductible for tax purposes.  Also, allowing car, gas and other fleet deductions encourages the consumption of the wrong kind of transportation and carbon-based fuels.  My mind would change if someone actually developed a functional hydrogen vehicle or mode of transport that used an alternative fuel, but allowing these carbon deductions only keeps us stuck in the 20th century.
  • Meals and entertainment:  the more I eat and the more hockey games I go to, the less tax I pay.  This makes no sense.
  • Land and real estate assets:  I don’t know a lot about this, but my instincts are that if we taxed inactive land assets, they would be used for economic activity or put on the market.  While this might push down the value of land in the short-run, it would ease the cost for entrepreneurs to open up office space or local retail locations.  It would also help put an end to the miles of waste that we see everywhere now with closed offices, land for lease and excessive apartment costs.
  • Business losses:  my understanding is that business losses that are accumulated in any given year can be carried forward for use indefinitely years for the company in question and are also transferable to other subsidiary or parent companies.  Are there ways to proactively reduce losses that are carried forward against profitable organizations?  I know I’m playing with fire on this, but at what point should we just force unprofitable companies to be shut down?
  • Charity activity:  ‘charity’ runs counter to the goals of profit maximization, so why do we allow massive deductions against corporate activity (some might argue ‘meddling’) with charities and non-profits?  Why don’t we just increase the deduction at the personal level?
  • Professional services:  how many lawyers are enough?
  • Dividend tax preference:  once again, I’ll concede that the economics on this topic are grey, but giving preferential tax status to dividend income seems to run counter to income earned from non-dividend sources.
  • Special incentives and investment programs:  All levels of government are hobbled by excessive grant giveaways and most of the companies that benefit from these programs have shareholders that simply don’t need handouts from the public.  Great examples of this are the Canadian Magazine Fund and the Canadian Film and Video Tax Credit.  Do we really need to give CTV and Quebecor hundreds of millions of dollars each year to produce what amounts to propaganda?

Of course, most of you who are intensely more familiar with tax policy would quickly jump on me and argue that many of these deductions are equal in the sense that small businesses and co-ops can make use of them as much as a large corporation can.

Unfortunately, most small businesses can’t even afford these expenses and rarely take a moment to spend any more than a couple of hundred dollars per year on the odd hockey game or taking a buddy to brunch.  As someone who describes himself as a small business owner, I know this to be true.

All I’m suggesting is that we consider caps on these deductions and for some, look at ways to eliminate them all together as effective ways to shape social policy and reaction out of prudent fiscal measures.  For example, now that we live in the digital age, why do we need to drive to meetings?  Why don’t we just do more via Skype calls or by leveraging other video-conferencing tools?

In an ideal world, we address simply questions of ‘equality’ and ‘fairness’ by understanding that our tax system is excessively skewed to the benefit of those that own it:  governments and the corporations that own them.

Simple modifications will improve financial liquidity for our governments and ensure that fairness is restored to average citizens.  I think this is something we can all accept, possibly including those with #occupywallstreet.

Ultimately, any or all of these changes push the needle towards a flat tax, but that’s something best discussed in another article.

Make Them Pay

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Citizens for Tax Justice and the Institute on Taxation and Economic Policy in the US research shows that nearly a third of 280 corporations surveyed didn’t pay taxes or even got a tax break.

More shocking with this news is that the corporations that were part of the survey – a mere fraction of the corporations in the US and Canada – received more than $223 billion in subsidies from various levels of US government.

All of this is proof that high corporate taxes are not the problem.

The more I read stuff like this, the more I want a simple tax system where there are NO deductions from income and a very reasonable and lower flat tax of, say, 10% on all activity.  This would solve a LOT of problems in most economies.

It would also put a lot of lawyers and lobbyists out on the street!

Koch Konnections (aka “If They Can Do It, We Can Too!”)

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The Koch Brothers.

What can I say about them?

Anyways, they have made a commitment to connect the 1% as thoroughly as possible with a view to ensuring that Americans and people elsewhere are constantly barraged with messages about libertarianism, anti-government sentiments and opposition to any kind of labour / union efforts.

So … if they can, why can’t ‘WE’?

What are WE doing to integrate our associations, affiliations, money flow, donations, charities and other efforts related to the progressive message in Canada, the US and elsewhere?  How are we presenting a unified front against these people who, ironically, look at solidarity as the model for their own survival?

What are WE doing to educate people everywhere about what the needs of all of us and not just those who can donate millions to political campaigns?

What are WE doing to protect ourselves?

Another Gentle Coup …

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Egypt.

Libya.  Kind of …

Now Greece?

Word has it that this morning, while Greece Prime Minister George Papandreou was meeting with French and German lenders leaders, he may have been chucked out of office by his own cabinet.

Quote:

Finance Minister Evangelos Venizelos led lawmakers opposed to the premier’s surprise decision to put membership of the euro to the Greek people after European leaders meeting in Cannes last night cut off aid to Greece. Papandreou will hold a meeting of his Cabinet at midday in Athens, according to a statement from the premier’s office.

These people that have effectively turfed the elected Prime Minister out of office would clearly prefer to eliminate democratic options than stare down their lenders:

“Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt,” Venizelos said in an e-mailed statement from the finance ministry. It “cannot depend on a referendum,” he said.

This ‘gentle coup’ – the replacement of a leader without any or much bloodshed – is another example of the western attacks on any country that dares to be different from the mainstream leadership.

As discussed yesterday, Greece is currently lead by socialists and social democrats, something that has a lot of corporate insiders and bankers in a state of horror.

Take caution is your country starts to lean left or you have a legal infrastructure that supports anti-usury laws (like the routinely maligned Arab League).  You’ll be next.

Quebec Outbreak: High Rate of Measle Infection Despite Vaccinations

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More than 50% of kids who got the measles in a recent Quebec outbreak (52 of 98) were vaccinated.

Meanwhile, we shove buckets of cash into vaccination programs without fully understanding the contents of these products and the budget implications of holding back on vaccinations.

It’s time we all started asking some serious questions about why we’re doing this to our kids.