Tax Cuts Don’t Work
Even in Canada.
The CBC reports on a new study on corporate tax cuts in Canada:
With the future of federal corporate tax cuts playing a role in the election campaign, a new study says the planned reductions will not stimulate the economy.
A new report from the labour-oriented Canadian Centre for Policy Alternatives, a non-profit research organization, suggests historic trends show businesses’ fixed capital spending has declined as a share of GDP and as a share of corporate cash flow since the early 1980s, despite a series of federal and provincial corporate tax cuts.
If you cut taxes, corporation won’t invest the extra money, they will hand it out as dividends or buy back stock. When management is rewarded based on profits, it would not be logical for them to reduce their profits by building new facilities. The system is totally focused on this quarter, not the future.
