Wednesday, January 26, 2011

Liberal corporate tax policy folly.

I was thinking that the use of the word folly might be a bit over the top, but looking at the Ignatieff Liberals new found position on corp tax cuts, I can't think of another word that better describes the Liberal Party of Canada and their corporate tax policy than "folly".  See if you don't agree as we look at some history and how the Liberals are trying to spin what could be a major policy plank for them in any upcoming election.

First up it is a complete flip flop and a radical change from what has been a long standing Liberal policy. This graph courtesy of LPC shows that since 2000, when Jean Chretien was PM with Paul Martin as his finance minister, through Martin's term, and right up until Ignatieff decided otherwise, Liberal policy has been to reduce Canada's corporate tax rate.

 Link to graph.
Ignatieff himself ran 2 times with corporate tax cuts included as part of the Liberal platform, the first under Paul Martin in 2006, and again in 2008 under the leadership of Dion, which makes that the position Ignatieff was elected on and promised to implement for the people of Etobicoke-Lakeshore as their MP.  Some have tried to spin this abandonment of part of the platform that Ignatieff  was elected on by claiming that the LPC tax cut plan was just a minor part of part of Dion's platform, but history says otherwise as it was those promised corporate tax cuts that Dion cited as the reason why he would not form a coalition government with Jack Layton and the NDP.  In fact Dion called the NDP position "damaging".

Mr. Dion, speaking after an address to a Vancouver-area business crowd today, said he could not work with Mr. Layton in this way because the NDP leader wants to hike taxes on business.

“We cannot have a coalition with a party that has a platform that would be damaging for the economy. Period,” the Liberal leader said.  (If Dion cited them as the reason for not joining Jack and Gilles (at that point in time still a silent partner) they WERE indeed a major part of the platform.)

The Liberals themselves can see how this reversal of a sound LPC policy doesn't look good so they have decided to spin the flip flop by claiming to support corporate tax cuts but not while in a deficit position. Not a bad angle to use if you are trying to play both ends and cover the obvious hypocrisy of ones position, but a couple of little details are going to make that spin job difficult if not impossible. First is the fact that when Dion was touting his tax cut plan in the 2008 election we were ALREADY in recession and headed for a deficit, making it tough to say now that they support tax cuts but not in a deficit when the Liberal Party ran on cuts and were fully prepared to implement those cuts while the country was in a deficit; but expect them to try and do just that in the hope that nobody is paying attention. Another thing that makes this a tough sell happened just last night when some guy named  Barrack Obama (who causes both reporters (see bio) and politicians to swoon) openly called for corporate tax cuts in the USA at a time of record US deficits in the neighborhood of 1.3 Trillion dollars a year!
 “But all the rest [of our companies] are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change. So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years – without adding to our deficit.”  (Is Obama wrong?  I await to see how the Liberals twist themselves in knots trying to spin this as I am sure hilarity will ensue.) And in case anyone has forgotten , the Liberals had ample opportunity in the past to vote against these tax increases and for their own reasons chose not to do so; to claim now that you are against tax cuts that you allowed to pass into law is approaching silly.

Next up is a 'little detail' that so far seems to have eluded most of our MSM  in their coverage of the subject.
The Liberal plan on corporate tax cuts is not just rescinding a proposed cut, it is actually a tax increase as  these rates are now in place and are already the law.

 "The Liberals are calling for rates to be restored to the 2010 level of 18.5 per cent, up from the 16.5 per cent rate that came into effect this month." (So much for any Liberal promise not to raise taxes as they have already broken that promise before the writ is even dropped.) I am sure our MSM will soon realize the error of their ways and be more accurate in their reporting of the Liberal corporate tax increase in the future.

Is there really a better word than' folly' to describe this?

Update: Ignatieff is claiming that education creates more jobs than corporate tax breaks will.   True to form Ignatieff ignores the realities of just who provides the jobs and wealth in our country. Hint: It is not government.  Education on its own is not going to create jobs; sure there may be some entrepreneurs in there who may start their own  businesses (which will be hindered by paying Ignatieff's tax increase) but the majority will seek and hopefully find work in the private sector who have been suffering through tough economic times.  The truth is that education on its own will not create more jobs than a tax cut for those that provide the jobs would and it certainly will not protect already existing jobs that may be in danger today due to the poor economy (sorry Jack but all companies that pay taxes are not banks or big oil)    Look at it this way: If every company in Canada closed their doors tomorrow because they could not afford to remain open and put everyone out of work, all that education would have done would be to make our EI recipients smarter.  More from Freedom is my Nationality and Angry in the great white north.

Ignatieff must know this but yet he continues on with the follies.


The NDP, bless their little socialist hearts, put together an overview of the Liberal corporate tax position that can be seen here, and kudos to the NDP for for doing so because not only have they outed Ignatieff on the tax cuts they inadvertently also skewered  themselves in the process by revealing just how willing the NDP is to toss their so called principles in the quest for power.

Remember earlier when I wrote about how Dion ruled out a coalition with the NDP during the last election? Well think back to how that ended up turning out as Dion did end up forming a coalition with Layton and the NDP. What could have possibly changed Dion's mind you ask, well the answer to that is simple.

Jack Layton agreed to keep and fully support Dion's proposed corporate tax cuts (which were larger than the Conservative cuts BTW) just so he could get a cabinet seat. You want to see hypocrisy Mr. Layton, just look into the mirror because that sir is a classic example of hypocrisy of the worst kind.

And where was Micheal Ignatieff during all of this? He of course was fully aware of the deal between Dion and Layton on the corporate tax cuts and must have been in agreement because after all, he did sign on to it.

Links: Ignatieff doesn't get it. Financial Post.

A look at the numbers.


Bert said...

The only thing I can think of as far as Iggy not supporting corporate tax cuts is that his handlers (likely influences by Knob Rae) told him that since the Conservatives are for them, it would be a good idea to be against them. I can't believe that someone who is supposed to be as smart as Iggy is, is actually that dumb.

Anonymous said...

I think it's about time the NDP realized the Liberals are after NDP voters. The Liberals left of center and left of NDP.

Ardvark said...

Bert, that is the entire Liberal policy position in a nutshell. Oppose everything, whether or not it is sound policy or good for the country, and hope that they eventually hit on something that the voter agrees with.

The Liberal record in opposition has been a joke and yet they expect the voters to ignore that and return them to power anyway.

Anon, I agree. The Liberals want to call themselves the party of the centre but in reality have gone hard left on many issue. (mostly because hard left is the opposite of what the Harper government is doing. See above)

Calgary Junkie said...

One more Liberal folly:

They are running their ads a lot on the Business News Network ! LOL

Talk about targeting the wrong audience. Just about every panelist, expert and host on that network is strongly in FAVOR of the corporate tax cuts. And of course the viewers, who are investors like lower taxes so that companies they bought stocks in, have the ability to pay higher dividends. And they also obviously want the TSX (which has factored in Flaherty's schedule of tax cuts) to keep going on its Bull run.

Another point: Most people are corporate animals. They wouldn't survive in the concrete jungle out there without a corporation to HIRE them.

I don't think the Lib brainiacs have thought this thing through very much.

maryT said...

I would like to have everyone who is against the tax cuts to keep track of all their spending for 1 wk, what they buy and where they buy it. Then investigate how many of those items were bought from a corporation, and how many people were employed where they bought them. Banks and oil companies are not the only corporations in Canada. They might get a big surprise to find out that they actually work for a corporation. So they are saying take taxes from my boss so he doesn't have any left to give me a raise or better benefits, or maybe save my job.

maryT said...

Any predictions on who will steal the most seats from each other, libs or ndp. If they just trade seats, we will still have the majority.
Don't you think voters might punish the liberals for keeping such a horrible PM in power for 5 years. LOL
And I still wonder what the liberals are getting for a payoff for their interference in the UAE.

Anonymous said...

"Oppose everything, whether or not it is sound policy or good for the country, and hope that they eventually hit on something that the voter agrees with."

Yep. but have made a partial hit when it comes to the certain aspects of the copyright reform. Thats just about the only thing.

I don't see how they can use that against the whole CPC or even the PMO since PMSH essentially* left the file in the hands of Tony Clement and James Moore. So any possible fallout voters may have against the current government would/should be directed at the cabinet ministers in charge of that file. Either through votes or campaign finances against there etc.

I don't see them losing control of government over it.
It shouldn't be a partisan issue. Whatsoever.


*something to the effect of, "get it done and over with. Just make the U.S. happy." not an exact quote, anyone interested should look it up.

You do have to realize the timing of when this was said and who it would be pleasing or made acceptable to since the democrats were in control of congress at the time. If I'm not mistaken. Before the world new just how far left(to the NDP**!) the democrats really are. (**making them blush on a daily basis)

And no I don't argee with some of the copyright reforms. DRM locks should have expiration internal dates. So when the copyrights are no longer enforceable the DRM unlocks or are legal to break.
The Libs/Dips/Seps haven't made that argument to my recollection as I was the one who came up with it ages ago. Time proofed.

Ardvark said...

That "save my job' part is important maryT and it seems lost on Ignaiteff and the Liberals. A tax cut may not create as many jobs as some like to say but it will and has saved many jobs in the past.

BTW weren't the Liberals recently screaming about the increase to EI premiums*? If that was a job killer, what do they think a 1.5% Liberal tax hike will do?

*Yes EI has gone up under the CPC but think back to what the Liberals and NDP were proposing for EI and think how much more you would have had 2 pay.

wilson said...

The 2008 coalition of losers stimulus plan was $30 billion in spending plus corp tax cuts down to 14%,
plus what ever Quebec wanted.

flip flop time again

Instead of adding to the deficit to create revenue generating jobs,
Iffy would add to the deficit to pay for social programs Liberals have promised to the NDP since 1993 and never delivered,
even with 3 back to back majorities and 6 surplus budgets.

Why believe a word of it?

CanadianSense said...

"Breaking: Peter MacKay reveals part of the Conservatives hidden agenda. Annexing Washington State and Oregon!" another Twitter user, Albertaardvark, joked.

sweet joke!

Ardvark said...

Thanks for the heads up CS! There goes the invite to 24 Sussex now =)