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Conservative corporate tax cuts = ‘horse and sparrow theory’

You might wonder what I mean when I am comparing the “horse and sparrow theory” to the Conservatives wanting to give corporate tax cuts to the richest and biggest corporations in Canada despite the fact we are now under a 56 billion $ deficit. For that matter, you might wonder what the “horse and sparrow theory” is. Very simply, it’s the same theory as Ronald Reagan’s ‘trickle-down’ economics, but a much easier understood terminology is the elegant but sarcastic way that the economist John Kenneth Galbraith used to describe it:

‘If you feed the horse enough oats, some will pass through to the road for the sparrows.’

That in a nutshell describes the Conservative corporate tax cut policy better then anything. Let’s give the richest corporations a tax break, even as we are in deficit, and economic prosperity will surely flow from them to the rest of society.

The response to that comes best, I think, from a US Democratic politician in the 1890’s:

“There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. (We believe) however… that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests up on them.”

The Liberals have taken a very similar stance in saying that money should be spent on families – ie. homecare to help people take care of their ailing family members at home – rather then on big business and banks who are making billions of dollars in profit now.

UPDATE: PS – Canadians massively do not support the Conservatives position on this. That has now been reflected in a couple of polls on the topic.


6 comments to Conservative corporate tax cuts = ‘horse and sparrow theory’

  • Redrum

    So it turns out that even Diamond Jim once saw the wisdom of changing his mind about planned tax cuts once the economic situation changed significantly such that the gov’t now needed the money:

    “Flaherty supported corporate tax freeze
    Posted on February 1, 2011

    When Jim Flaherty was Minister of Enterprise, Opportunity, and Innovation for the Government of Ontario, he supported a freeze in corporate tax rates because of a financial downturn.

    Jim Flaherty announced a planned corporate tax rate cut from 12.5% to 11% effective January 1, 2003, in the 2001 Ontario budget. But he then voted for the 2002 Ontario budget which delayed $1.5 billion in planned tax cuts, including the corporate tax cut, because of a financial downturn.

    According to media reports, Mr. Flaherty “applauded” the budget (Brantford Expositor, June 18, 2002; National Post, June 18, 2002) and defended the tax cut delay at the time: “Enterprise Minister Jim Flaherty sat smiling beside Ms. Ecker on Monday as she disowned many of the tax-cut promises contained in his budget last year. “This was a year in which — like last year actually — in which there were some difficult decisions to be made,” was his defence of the government’s new direction.” (Globe & Mail, June 19, 2002)

    Mr. Flaherty defended the corporate tax freeze again during the 2003 provincial election: “The delay was created by a financial downturn related to the ‘extraordinary circumstances’ of the terrorist attacks in the United States in September of 2001, [Flaherty] said.” (Globe & Mail, September 12, 2003)”

    www +

  • Small businesses don’t pay much in the way of Corp tax, if any. The tax is paid on *profits* and roughly the first $500,000 in profits is tax-free.

    Our corp tax rate is quite low. By reducing it further, Harper will just be placing more of the burden on paying back the debt he’s made onto those of us who pay HST and income tax.

    Businesses in Canada are already sitting on a mess of cash they aren’t investing in increasing production. Adding to that shit pile of cash won’t change anything.

    Apply the money onto the deficit. You know, do the * fiscally conservative* thing.

  • billg

    Ask Europe how the whole tax the crap out of business’s and spending it on more social programs went? Or, better yet, take a little look at the US and see how Obama now wants to lower business taxes to help business’s grow and hire people.
    Or is John Manley not a good Liberal anymore? This is Harpers majority issue, because, all around us are signs that small business’s and big business’s pay for the bulk of our social programs, play nice with them and you can find a middle ground, make them start to look at other places to do business and your, well, your Europe. This should not be a left or right issue.

    • Redrum

      @billg, puhleeze. Why don’t you ask bankrupt Ireland how the whole ‘cut corporate taxes to the bone’ thing worked out for them? And Obama only wants to lower their rate if they can afford it after tending to things like doing more education, first, and only because their rate is so much higher than ours is. And John Manley is lobbying for the biggest CEOs, who stand to gain the most personally from this; he is not speaking for the Liberal party at all. And small biz here only pays 11% tax: we’re not even talking about them. And individuals provide many times more revenue to the gov’t than businesses, esp. since biz’s tax rate has been slashed so much over the past decade. And most Canadians DISagree with these corporate tax cuts, so so much for riding that to a majority. And taxation is SO a left-right issue… it’s THE biggest issue dividing them. Your post is such BS from beginning to end.

      • Jon Pertwee

        @Redrum, you’re expecting billg to read and not just rehash bits of conversations he eavesdropped on in Timmys? That’s quite the challenge Redrum

    • TofKW

      @billg, “Ask Europe how the whole tax the crap out of business’s and spending it on more social programs went?”

      Top-7 more Prosperous Nations (2010) – Legatum Prosperity Index
      1 – Norway
      2 – Denmark
      3 – Finland
      4 – Australia
      5 – New Zealand
      6 – Sweden
      7 – Canada

      Not sure about the Aussies and Kiwis, but the other nations above us on that list are; (a) in Europe and (b) tax the crap out of businesses and provide better social services than Canada’s. They also seem to be doing well regardless of the recession.

      Any more myths from Reaganomics-101 you’d like blown up in your face?

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