There are tax breaks, and then there are TAX BREAKS
So the [Canadian] Federal Government recently announced some tax breaks.
As I recall, they were described thus by the CBC, when the cuts were first announced (The Globe & Mail may have done the same) -
The first three items are fine. Item #3 reminds me of a Liberal tax cut (from just before they fell from power) that the Conservatives then axed; good to know that they've seen the light on that one. The Conservatives also get good P.R. from this because the first three measures can be said to be aimed directly at the lowest earners (while, of course, benefiting everyone, and benefiting high earners a little more - dollar-wise, at least).
The first thing that jumped out at me was that, although they gave reference points for the first three items (tax rate X is dropping/increasing from A to B), they carefully omitted that for the corporate tax rates. So we have no way of comparing how well corporations are doing in this round of tax cuts, compared to us mere citizens.
It turns out that the corporate tax rate is currently in the low twenties, percentage wise (22.1%, to be precise). This means that they're cutting them by approximately 1/3. In presenting the list as done above, a false comparison is created between the personal tax rate and the corporate tax rate, leading the observer to believe that the cuts are balanced.
I've absolutely no experience in finance, and no strong opinion (yet! ;) of where corporate tax levels should sit compared to personal income tax, compared to consumption (sales) taxes, etc. My only observation here is about the optics, and the subtle suggestions given by the original presentation of the tax breaks. They full context when it's beneficial (or at least, not detrimental) to their image, and giving what is bound to be less popular news in such a way as to distract from its true impact - all by arranging a list in a specific order, and (perhaps) by picking the right numbers. It's rather impressive, really.
As I recall, they were described thus by the CBC, when the cuts were first announced (The Globe & Mail may have done the same) -
- 1% cut to the GST, to bring it down to 5% - while not reducing the GST credit accordingly
- increase of exempt earnings from (approx.) $8,900 to $9,600 (or so), with a later increase to $10,100
- reduction of the base tax rate from 15.5% to 15%
- corporate tax rate reduction down to 15% (over a couple of years, I think)
- small business tax rate reduction down to 11%
The first three items are fine. Item #3 reminds me of a Liberal tax cut (from just before they fell from power) that the Conservatives then axed; good to know that they've seen the light on that one. The Conservatives also get good P.R. from this because the first three measures can be said to be aimed directly at the lowest earners (while, of course, benefiting everyone, and benefiting high earners a little more - dollar-wise, at least).
The first thing that jumped out at me was that, although they gave reference points for the first three items (tax rate X is dropping/increasing from A to B), they carefully omitted that for the corporate tax rates. So we have no way of comparing how well corporations are doing in this round of tax cuts, compared to us mere citizens.
It turns out that the corporate tax rate is currently in the low twenties, percentage wise (22.1%, to be precise). This means that they're cutting them by approximately 1/3. In presenting the list as done above, a false comparison is created between the personal tax rate and the corporate tax rate, leading the observer to believe that the cuts are balanced.
I've absolutely no experience in finance, and no strong opinion (yet! ;) of where corporate tax levels should sit compared to personal income tax, compared to consumption (sales) taxes, etc. My only observation here is about the optics, and the subtle suggestions given by the original presentation of the tax breaks. They full context when it's beneficial (or at least, not detrimental) to their image, and giving what is bound to be less popular news in such a way as to distract from its true impact - all by arranging a list in a specific order, and (perhaps) by picking the right numbers. It's rather impressive, really.