Corporate tax cuts are not working
- Thread starter mentalfloss
- Start date
Canadian Airlines International suffered that very fate because Buzz Hargrove believed that he could be the tail that wagged the dog... CUPE (or whatever union it was) learned that without the financing commitment to stand behind the corporate entity - there is no company and therefore no jobs.
That union rolled the dice on roughly 10 thousand jobs (or there abouts) and that bet cost all of those people their livelihood.
Salaries don't exist without corp profits MF... You be wise to get it through your head that no one invests in a risk-venture unless there is a form security along with profit... The employees salaries are a byproduct of this basic relationship.
So then, do you have the data in hand to show the reduction in consumer prices as the corporate tax rate has dropped?
In WWII, it was increased spending, not tax increases, that stimulated the economy. However, tax increases helped to make the spending increases more sustainable over the long run so as to avoid debt problems later. We still had debt problems along with inflation, but tax increases helped to mitigate against them at least somewhat.
There has been no proven causal relationship. Businesses are hoarding their additional profit from tax revenue instead of putting them toward jobs, operations, price cuts or any other economy boosting measures.
The government needs to step in and begin regulating markets a bit more.
No. The corporations first duty is to maximize profit to its shareholders because they are the ones risking their capital. The wages the corporation negotiates with its emplyees cannot be tied to profits because then the workers would get $0 in the years where the company reports a loss. A bonus might be paid in very profitable years but that also would have to be in the negotiations.
Read my post about competition.
We've been through this before; gov't regs are what caused the mess in the first place telling US banks, through the Community Reinvestment Act, that the banks must make loans to folks who had no way of ever paying them back.
Have you ever been in business before MF?
Money gets reinvested every day by damn near every company in existence. That said, if you are somehow under the impression that it's a company's duty to pursue expansion when the market doesn't support it or price cuts, you're on glue.
With that logic, why not demand that the employers cut wages and then pass that 'savings' along to the consumer instead of taking a run at the corp itself?... Would you personally sign up for that in terms of taking a pay cut so as the corp could reduce the sticker-price?
When a corporation hoards profit, it not only hurts the economy, but also its own industry in the long run.
And to Walter's point about Government regulation, any regulation must be in the interest of consumers, naturally.
And to Walter's point about Government regulation, any regulation must be in the interest of consumers, naturally.
Who says corps are hoarding anything?... You?
Fact is, when times are lean (as they are now) those corps have to sock away some cash to maintain ops for the duration of the down cycle to keep the doors open and pay their people.
I think that your view of the process looks to the short term and does not consider the medium and long term responsibilities, let alone the myriad of variables that are factors in the equation.
We are over regulated as is and all it has really accomplished is to fatten the size of gvt which is, you guessed it, more money towards the cost of a product/service that gets tacked onto the prices of what you pay.
For years, the London plant was what kept EMD alive, but under Progress Rail, they obtained a huge facility inMuncie, 3/4 of which is presently empty. With the incentives given by the US, the move to close London would not have been a surprise to anyone.
Me neither, but I heard it was in the neighbourhood of $5 million delivered in 2008, by none other than Harper himself.
Thanks. The so-called tax break was not given to EMD, it was given to companies who bought locomotives from EMD allowing them to deduct the depreciation cost of the locomotives at a quicker rate than other capital expenditures and thus, it was hoped, increase the purchase of machines built by the London plant. CNR bought over 40 locomotives after Harper introduced the incentive.
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My understanding from the local business gossip around town was that there was never any intention of making a long term go of this plant. Why exactly they purchased in the first place no one is sure. I don't know what they paid for it initially but it seems like it would be a lot of cash outlay for just capital assets but then it's hard to sometimes guess when one doesn't know the long term business plan. Either way, the writing was apparently on the wall from day one.
I also understand, and I may be wrong here, that most if not all of the money was a subsidy intended to provide incentive for buyers to purchase product made at this plant. So you're looking at a 5 million dollar investment to derive benefit in the local economy over a 4 year period. Seems excessive for four years to me.