Don't Buy The Simple Explanation

     An important political debate gets increased attention this week due to tax changes that took effect in Canada January 1st. The corporate tax rate drops while the amount we pay personally goes up slightly due to inflation and increased EI and CPP premiums. The non Conservative political parties say this is our government taking money from the worker and giving it to the corporations. This overly simple explanation is wrong. These parties and their supporters hope that people will form their opinions based on the five second explanation or the headlines.
     Studies of corporate tax rates shows that there is a direct relationship between wages and corporate tax rates. As corporate tax rates go down wages go up. This is because capital (investment) goes where the corporate rates are low. The more capital investment in a country per worker the more wages go up. Capital needs labour and as the demand for labour goes up.....you guessed it the price of labour goes up.
     The response from those opposed to cutting corporate tax rates is "our rates are already low enough.....or lower than the US etc." This is also wrong. Studies show that there is a direct relationship between the difference in tax rates of neighbouring countries and wages. The greater the difference in the tax rate between Canada and the US the more wages will rise. Your wages. Easily offsetting the increase in personal income tax.
     Please do some reading and thinking for yourself and don't allow the anti-establishment people and media to sway you with their simplistic argument that you are subsidizing the corporations. Read information and talk to people on both sides of the issue and form an opinion based on facts not sound bites and headlines.