"The Grits have argued that the Conservative plan to reduce the corporate tax rate to 15% from 18% is “not needed” and the money should be used to pay down the deficit and on other priorities. In effect, Mr. Ignatieff had no money to spend on his homecare and low-income student scholarship programs, so he set up the straw man of greedy banks and oil companies filling their coffers at the expense of the ubiquitous “hard working, thinly-stretched Canadian family”.
However, in a devastating article (external - login to view) in the Financial Post recently, tax expert Jack Mintz eviscerated the Liberal position. For one, the foregone revenue is really $4.5-billion, not the $6-billion the Liberals routinely quote. Secondly, Mr. Mintz pointed out that the revenue loss is almost neutral after a number of subtle behavioural factors are taken into account. For example, one study he carried out suggests a one-point reduction in the corporate tax rate expands the tax base by as much as 7.5%. Even if a conservative estimate for the Tories’ three-point reduction is made, he suggested the tax base could expand by 10%. A further off-setting of overall tax revenues would come from the provinces seeing their corporate income rise because of the expanded base.
As a result, for near neutral cost, Canada could see an increase in capital investment that Mr. Mintz estimated could reach $50-billion within seven years. “It’s a slam dunk in policy terms,” he concluded.
Neither side has a monopoly to the correct answers on these complex issues but they are at least offering voters clear and contrasting positions. How those different priorities are received by voters will shape the campaign."