It may come as a surprise to many of my regular readers that I was once an advocate for no corporate taxes.
Upon graduation with a Commerce degree from the University of Alberta and having studied all economic theories, I favoured the supply-side, neo-liberal economic model that corporate taxation was a job killer.
In the academic world, it sounded plausible that corporations without taxes would use excess money to invest and create more jobs.
I could still argue that income taxes for corporations whose entire operations are located in Canada should have relatively low corporate tax rates as the vast sum of their earnings and profits are recycling within Canada.
But with globalization and the subsequent market power of multinational corporations, low corporate tax rate cuts have caused the rise of inequality and the decline of the middle class.
Alberta got rich when Premier Peter Lougheed was elected in 1971 and significantly increased royalty rates (taxation) on oil and gas.
His priority was to get Albertans to not only be the owners but act like owners of their natural resources.
Yet after 50 years of intensive development in the oil sands and billions of dollars of cash generation, we’ve never had enough money in the public coffers to complete a four-lane highway to Alberta’s cash cow—Fort McMurray.
Inconceivably, Alberta during the boom years didn’t have enough money to build schools and hire teachers to accommodate the bulging population growth.
Alberta did not have enough money to build medical capacity for a growing population but instead normalized long, protracted wait lists for necessary surgeries.
Alberta didn’t even have enough money to keep municipalities whole.
It wasn’t that many years ago when many bridges had reached critical failure rates in much of rural Alberta.
Calgary, the headquarters of this booming industry, never had the resources to invest in an adequate transportation system leaving its citizens in gridlock.
The corporate tax race to the bottom allowed the multi-nationals to amass the lion’s share of the profits from our oil sands.
It wasn’t their responsibility to build roads, bridges, schools and hospitals or fund police, doctors and universities.
Corporations have no obligation to keep their oversized financial gains earned in Alberta here nor to reinvest and create and sustain jobs during a bust cycle.
Therein lays the problem with the voodoo economics of low corporate taxes.
Scandinavian countries have always held that a prosperous country requires a high level of public investment in education, infrastructure, basic research, technology, health and protection.
In fact, investments by our governments in these areas during the golden age of the middle class (1950 – 1980) also helped support private investment and equitably grow the economy.
The wrong of globalization was to enable multi-national corporations and the wealthy to move their earnings to low-tax regimes away from the countries where the actual wealth was generated.
Some $300 billion of Canadian wealth is today hoarded in offshore tax havens and the two richest Canadians own the same amount as the poorest 30 per cent.
Poorer people spend a higher percentage of their income and keep their cash re-circulating in their own backyard.
Lougheed was the first and last Premier to treat Albertans as owners of their natural resources. As we were under the Social Credit government in the 1950s and 60s, we are again slaves to the oil industry – blaming Ottawa and clawing for leftovers as the majority of our wealth flees outside our borders.
It’s like giving a pig access to the whole crib of corn and expecting some to be leftover for tomorrow . . . and the next day . . . and the next day.