30 April 2022
The Fair Tax News, 30 April 2022
A BUDGET LAX ON CORPORATE TAX
As most of us were filing our own taxes, and the links between record-breaking corporate profits and inflation, inequality and the housing crisis were under scrutiny, the federal budget fell short on ensuring corporations pay their fair share.
Corporate profit margins in 2021, across all of Canada’s major economic sectors, were their highest in 20 years, thanks in part to corporate price hikes that are exacerbating inflation. Meanwhile, corporate tax rates hit an all-time low last year, despite decades of corporate tax cuts not resulting in more or better jobs, or increased investment in productive capacity.
Budget 2022 made limited progress towards fairer corporate taxation with a 1-time 15% surtax on the taxable income of banks and life insurance companies above $1 billion, and a permanent 1.5% increase on the same companies for any income above $100 million. Other large companies and their huge pandemic profits were left largely untouched.
The budget also moved to stop Canadian-controlled private corporations from avoiding tax by reincorporating in foreign jurisdictions, thus paying lower tax rates on their passive income. However the biggest loopholes, such as for capital gains exclusion, were left in place.
Meanwhile, little was done to address the role of our tax system in a housing crisis that’s turbocharging the wealth gap, with real-estate investment trusts (REITs) still able to collect profit tax-free while they undermine affordability of rents and home ownership.
As for taxing those who benefit most from record profits, Canada’s little-known alternative minimum tax is slated for a revamp. It’s welcome, and overdue since more than a quarter of people earning over $400,000 a year have been paying below the lowest tax bracket. That said, it would be far wiser to implement a reasonable wealth tax.
Our most notable victory in this Budget is the announcement of public searchable registries of the beneficial owners of companies and real-estate, following years of campaigning – a critical step in preventing crooks from dodging taxes, hiding ill-gotten gains or avoiding sanctions via anonymous Canadian shell companies.
Overall, the budget’s healthy spending continues to bury austerity as a viable economic theory.
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THE RISE OF CORPORATE PROFITS IN THE TIME OF COVID
DT Cochrane, 6 April 2022
Canadian corporations made record profit margins in 2021, which are contributing to inflation and will worsen inequality. Profit margins in 2021 exceeded 20-year averages for corporations in all of Canada’s major economic sectors. Last year’s profit margins averaged 16% overall, with the finance/insurance/real-estate sector boosting margins to 22%. These profits come at a time when the effective average combined federal-provincial corporate tax rate hit an all-time low of just 16.6%.
HOW FAIR TAX FARED IN BUDGET 2022
Darren Shore, 12 April 2022
Budget 2022 took some steps in the right direction for tax fairness, especially for corporate transparency. However, it will raise only a fraction of potential revenue from the most profitable corporations, richest individuals and biggest polluters, while leaving major tax loopholes wide open.
If we want Canada to recover economically, it’s time to raise the corporate income tax rate
DT Cochrane, Toronto Star, 22 April 2022
Liberal and Conservative cuts mean large corporations continue to pay the lowest tax rates in the postwar era. Canada can’t afford to maintain this.
What are Canada’s tax breaks for oil & gas companies?
John Anderson, 27 April 2022
To fight costly climate change, Canada needs to quickly transition toward a sustainable economy with low-emission energy sources. The tax system has an enormous influence on this transition. Currently, our tax system is not helping that transition move quickly. Instead, Canadian governments subsidize the fossil fuel industry to the tune of $4.8 billion per year.
A loophole Trump partly closed lives large in Canada
Darren Shore, Canadian Dimension, 28 April 2022
Why should working Canadians cover the cost of unnecessary perks for high-income corporate managers and their clients?
Better budget for taxing times
Tax the Rich, National Newswatch, 6 April 2022
As if a sixth wave of Covid wasn’t enough, Canadians are being hit hard by a wave of inflation, from food and housing, to gas and the general cost of life. Those with the most, however, will barely notice these rising costs, since a pandemic so hard for so many was also so good to a few.