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Old 04-22-2019, 02:41 PM   #8
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Join Date: Feb 2006
Location: NW Calgary

Cutting the corporate tax rate on the surface sounds like bad policy, especially for the 'everyone richer than me's taxes have to go up to pay for my daycare/pharmacare/insert gov't service here' but few people think about what the rate means for how corporations think about locating their head offices. Head offices are more important for high paid employment than regional offices. Lawyers, accounts, finance, communications personnel are all high paying jobs that don't necessarily need to be located where assets are. It's important for a location to keep them when they have them and attract them if they can. Two things have happened during the NDP's time in power that make addressing this more dire and important now than in 2015, and even made the NDP's decision to hike them worse in retrospect:

1) The lack of pipeline approval disaster has all but pushed our two largest energy infrastructure companies to the US. Due to how bad governments have handled approving new pipelines in Canada they each made huge US acquisitions to position their strategies towards US growth and profit harvesting in Canada. Hiking tax rates on them makes it even easier for them to leave, cutting them might make the math more competitive as far as location of the head office is concerned. It still might be a done deal for one or both of them though seeing as how hostile the country is to their line of business.

2)Trump's tax reconfiguration last year now shifts the competitiveness from Canada's statutory rate towards the US. A lot of corporations are going to located in the US anyway because it's the world's largest economy, but if you combine that with more competitive rates than being in Canada and basically every company that doesn't have to be here will/should leave. Re-jigging our tax structure to be more competitive with the US might keep some existing Alberta companies here and it might attract other Canadian companies to move here as opposed to a further step out of the country completely. This was a big reason why companies like CP moved here from Montreal in the first place.

Last edited by Cowboy89; 04-22-2019 at 02:48 PM.
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