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Profits are important and higher corporate tax rates are a bad idea: CME

Published by Brad Fougere on September 23, 2015

A report issued today by Canadian Manufacturers & Exporters examines the contribution that business profits make to the Canadian economy and the economic consequences of hiking corporate income tax rates.

“We want to emphasize just how important corporate profits are for Canadians,” explained CME President & Chief Executive Jayson Myers.

The report emphasizes that corporate profits play a vital role in the Canadian economy because:

  • The dividends they generate make a major contribution to personal incomes, pensions and savings;
  • Higher after-tax rates of return on capital increase rates of business investment and economic growth; and
  • Higher profit margins reduce Canada’s unemployment rate and accelerate job growth.

“Corporate income tax rates have come down in Canada over the past 15 years, helping to boost business profits, investment, economic growth and employment,” Myers noted. “However, some provincial governments have recently reversed that trend.  And corporate tax rates have also become an issue in the federal election campaign.”

Based on current financial data, the report finds that every percentage point increase in the corporate income tax rate would:

  • Transfer $2.86 billion in business profits to the federal government, $560 million from manufacturers;
  • Cut dividend payments to Canadians by $1.8 billion and reduce their savings by even more;
  • Reduce business investment by 0.4% or approximately $7.0 billion;
  • Depress manufacturing investment by $2.8 billion;
  • Lead to a net loss in GDP of $4.1 billion; and
  • Eliminate 73,000 to 75,000 jobs.

View CME's report at: http://cme-mec.ca/_uploads/_media/5457sq3ke.pdf

Found in: Profits

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