Quotulatiousness

March 12, 2012

QotD: Corporate income tax rates

Filed under: Cancon, Economics, Quotations — Tags: , — Nicholas @ 00:05

If you assume that there’s no behavioural response, then each percentage point added to the federal CIT will generate roughly $2b in new revenues. So you’d conclude that the January 1, 2012 reduction in the CIT rate from 16.5% to 15% would reduce revenues by about $3b, and increasing the federal rate from 16.5% back to (say) 24% would increase CIT revenues by some $15b — almost one per cent of GDP.

This is the the sort of answer ‘static analysis’ gives. In a world in which multinationals file 57,000-page tax returns, one can only marvel at the faith in human nature among those who would make policy based on the belief that the only behavioural change on the part of corporations to an increase in CIT rates will be to put larger numbers on the cheques they send to the Receiver-General.

Stephen Gordon, “How much new revenue will be generated by an increase in federal corporate taxes?”, Worthwhile Canadian Initiative, 2012-03-11

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