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http://www.thetelegram.com/Opinion/Columns/2011-01-29/article-2182050/A-federal-election-about-taxes/1

A federal election about Taxes

Summary

Our Prime Minister is preparing voodoo economics again and is trying to sell us a bridge that does not reach the other side. Once again, he wants Canadians to believe that the corporate tax cuts of $60 billion just were not enough and now plans to give some of the worlds largest companies another tax break of about $6 billion. Canada has been repeatedly slashing the corporate tax rate, from a historic low of 18% in 2010 to 15% by 2012. With these latest round of tax cut, how does the government except to cover these lost? Will this mean less government spending in programs such as education or health care? On the other hand, does the government plans to borrow from the banks that benefit from the tax cuts? In the end, it does not really matter as working Canadians will eventually have to pay for it.

Connection

The most recognizable concept related to the textbook is horizontal and vertical equity. With the government decreasing the corporate tax for the companies that make billions of dollars they neglect the ability-to-pay approach or a progressive approach. Because of this, many Canadians feel frustrated and unsatisfied by the action of the federal government. As a result, it does not seem “fair” that the world’s largest companies get another tax break while working Canadians do not. In the theory of taxation, taxes should be fair as stated in the textbook but because of this recent tax cut for corporations it causes Canadians to feel that the government is being unfair. Now the mind set for many taxpayers is, “the rich continue to become richer and the poor continue to become poorer.”


Reflection

I do not know if I agree with the recent tax break. However, I do know this topic is up for debate as the federal government has an acceptable reason for these tax breaks. According to reports, the federal government is doing this to increase the employment rate and stimulate the economy. By reducing the tax, corporations are encouraged to employ more workers (expand their business) and it attracts other companies to do business in Canada. Nevertheless, this is very controversial as there is many down sides in doing this such as whether it is “fair” or not and who will cover these lost in revenue. I feel that the government is trying something that does not necessary work. I have found no study that has concluded that decreasing the corporate tax rate has resulted in increase of employment. I feel instead of doing this the government should do something else to increase employment.