Cutting corporate taxes create profits for CEOs, not jobs
The coronavirus pandemic certainly opened a Pandora’s box, making it apparent that much needs to change in Canada’s (and the world’s) socio-economic structures, including reducing economic inequality, increasing wages and protecting precarious workers from unreliable gig jobs.
Canada is currently going through its largest unemployment crisis since 1982, and at 15.5% unemployment in May, Alberta had one of the highest unemployment rates in the country. Unemployment among Canadian youth under-25 is at 30%. So it’s little wonder that Premier Jason Kenney’s economic recovery plan full of outdated tactics to boost the economy, such as corporate tax cuts, is being met with very little enthusiasm.
Alberta’s Recovery Plan, revealed on June 29, says it will “create jobs now (50,000 this year) that will set Alberta on a path for economic growth, diversification and renewal for the future”.
According to Kenney’s plan, these jobs will be created by cutting the corporate income tax rate to 8% by 2022, and by reducing bureaucratic red tape so that corporate growth is not constrained. In the plan, cutting corporate tax has even been called the Job Creation Tax Cut. Recent history, however, shows enough evidence that cutting taxes for corporations does not create jobs. What it does do is take income away from the province to invest in communities, and instead line the pockets of company CEOs with more money.
When Kenney took office in April 2019, he promised to balance the books and create jobs, but by August 2019, Alberta had lost 14,000 full-time jobs and unemployment figures remained much the same as 2018. In cutting corporate taxes, the hope is that corporations will use increased profits to hire more people and invest in news products or research and development, but that remains wishful thinking. Cutting taxes actually leaves provincial governments with little money to spend on public services. Again, little surprise that Kenney has made zero concrete commitments to schools, hospitals and childcare.
The pandemic made the stark inequality between the wealth of the average working person and corporate elite evident, making it clear that essential workers, like grocery workers and frontline healthcare workers, who were putting their lives on the line, needed to be paid a living wage. Their daily wages were padded with a mere extra $2 (now being cut even though the pandemic continues), while corporate elite safely worked from home. It also revealed that there wasn’t enough money flowing into the healthcare systems and long-term care homes, which were not properly prepared for the onslaught of Covid-19 cases.
So what the economy and workers need right now is not to help corporations generate more profits, which companies already successfully do through tax loopholes and havens. In 2019, The Canadian Revenue Agency found that in 2014 corporations earned $298 billion in taxable income but only paid $40.9 billion in federal taxes, which means that Canadians lost out on a quarter of corporate tax revenue that could’ve been invested in social programs and Canadian families. During this pandemic alone, Canada’s five richest billionaires have made $5.5 billion, while millions of Canadians have lost jobs or are living paycheque to paycheque.
The first place politicians go when they’re up for election or doling out plans and budgets is promising to “create jobs” and it’s exactly what Kenney did. But people are tired of politicians like Jason Kenney re-hashing the same ideas that have done little to improve the quality of life for the average worker, but made the corporate elite richer. It’s becoming clear as day that for right-wing politicians, “creating jobs” is just a euphemism for helping corporations get richer.