At least David Murrell at UNB has some idea of the relationship between taxation and economic growth. He says:

Our government need only give such a large tax break to exporters. Consider the many fast food outlets run by corporations – an industry which sells its product to domestic consumers. If New Brunswick still maintains its 13 per cent tax rate on large-corporation income for the fast-food industry, the sector would not suffer appreciably, since it does not “compete” with out-of-province businesses.

Consider now two New Brunswick exporters: New Brunswick’s forest industry and Ganong’s chocolates. If the provincial government reduced its corporation income tax rate from 13 to zero per cent, for these two sectors, both could reinvest some of the tax savings and be in a stronger position to compete with out-of-province exporters. And, as said, prospective exporters would consider moving operations to New Brunswick. In 2007-08, New Brunswick collected $267-million in corporate taxes. If our province still taxed companies catering to in-province “consumption” (like fast food restaurants), the province would still receive about $135-million.

He is still assuming that there is enough corporate taxes paid now that would be in the future reinvested in expansion/growth if the tax rate was cut. And the statement (echoed by the discussion paper and AIMS) that “prospective exporters would consider moving operations to New Brunswick” once again has been thrown out there like a large matzah ball with no proof or even reference to other research that proves this.

I am not sure that a company based in Michigan that puts a small manufacturing plant in New Brunswick will pay much corporate income tax in New Brunswick. My hunch is that they will pay very little as I believe corporate income tax is levied based on local markets and not local operations.

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  1. nbt says:

    And the statement (echoed by the discussion paper and AIMS) that “prospective exporters would consider moving operations to New Brunswick” once again has been thrown out there like a large matzah ball with no proof or even reference to other research that proves this.

    A bit of a stretch, Dave.

    I guess it depends on the eyes the numbers, tax policies and statistics are being observed by, right?

    I mean, you have demonstrated that in spades on this blog by gerrymandering stats to suit your personal position on a government, think tank or individual. Not exactly independently factual.

    As Jonathan Kay said: “Few economic statistics are facts: most require thoughtful analysis and interpretation.”

    Thought analysis that is a daily occurrence here at It’s the Economy, Stupid!

  2. Anonymous says:

    5 readers and they all questions your censored existence.lol
    Oh well your names on google

  3. David Campbell says:

    Thank goodness you are one of the five…..

  4. mikel says:

    Why aren’t economic statistics facts? That makes zero sense. The reality is that like anything else in life it comes down to context. If I say ‘I love you’ it makes a big difference whether I am talking to my wife or an ice cream cone or my mother. Everything aims at a specific thing, but economics, like politics and increasingly science, is being ideologically driven-in other words, look at who is saying them.

    That especially goes toward AIMS, Mr. Campbell at least states his bias toward MNC’s up front and opens the comments for debate (and often isn’t even talking about that). That’s still ‘independantly factual’, as it can be refuted right here in the comments. Something that AIMS doesn’t have, they usually don’t even have their ‘studies’ peer reviewed and Cirtwill and Crowley are free to say whatever nonsense comes into their heads (like their position that more trucking jobs should mean hiring illegal mexicans, not training canadians for the jobs).

    Mr. Campbell is one guy with one view, of course he’s not going to sit and spout statistics that may not prove his case-I haven’t seen too many socialist themes here. That’s what the comments section is for. EVERYBODY thinks they are right and is blind to opposite views, NBT is far more guilty of that than Mr. Campbell, its not even a contest. Hell, gerrymandering could be what NBT calls his blog. I’m sort of glad that he banned me as it was getting too time consuming, and easy, to show just how wrong his ‘facts’ usually are.

    In this case Mr. Campbell is RIGHT. There IS no proof or reference, no doubt NBT will say “well, it works in the caribbean” or in Luxembourg. Well guess what, New Brunswick isn’t the caribbean or Luxembourg or Switzerland or even Ireland. Just because something works somewhere else does not mean it will work in New Brunswick.

    Like I said above, RIM is just as likely, before they pull up stakes and the dozens of buildings they own here in Waterloo, to go to the ontario government and say “we’d pay no tax in NB, what will you do for us?” In the end all it does is cost ALL canadians, which ends up hurting all canadians (except the wealthiest). Right now , of course, RIM is out of the question, the owner says his biggest problem is the guilt he feels over making so much money-if only other billionaires had such remorse.

    So, AIMS and other proponents could do some dirty work, go do a poll for example. Ask even a few companies if they’d pack up and leave to come to NB IF the province has no CIT. That at least is SOME indication. Keep in mind though that nowadays to ‘set up a corporation’ is done in some places just on a piece of paper. Irving can tell you all about that, most corporations in tax havens in the carribbean are simply a postal box, sometimes with ONE employee, often with none.

    So the province would brag “hey, two dozen corporations moved here” but what they don’t tell you is that no taxes will be derived from it and the only benefit has been 24 jobs (less than the Habitant Restaurant in Richibucto) and $1000 from post office box rentals.

    AIMS and other ideologues always come down to the same kinds of comparisons- “hey, look what low taxes Alberta has and look how well their economy is doing” and crazy things like that. When readers read those kinds of comments about how businesses would flock to NB they might want to remember those ads that sell cologne that will make you irresistable to women. Anybody can SAY anything.

  5. mikel says:

    We should note that there is ONE piece of ‘evidence’ provided in the article by AIMS, namely a study done years ago by the Canadian Bankers Association. These are the same guys who argue that ‘corporations don’t actually pay taxes’ and then in the next paragraph whine ‘we pay over 60% of revenue in taxes!’.

    The banks have a vested interest, I can’t quite remember the amount they paid in CIT to New Brunswick, it wasn’t inconsequention, but again we’re looking at less than 100 million.

    And this is a NATIONAL organization, which means that when Royal bank saves ten million dollars that amount goes to Ontario-it doesn’t go back into the communities. You can have legislation that MAKES it do that, but that’s wishful thinking.

    And one study that we can’t find doesn’t prove a point. So somebody could call up, say, a bank or insurance company here in ontario and ask if they’d pack up and move to NB.

    But as you noted before, a good many ‘corporations’ are actually DOCTORS and dentists, etc. Thats more money in their pockets, but that doesn’t mean higher wages and better working conditions or more investment. A government CAN make it those things, so lets say a fictional GOOD government would say ‘here’s how much these sectors pay in tax’. Once its cut, then the government can FORCE them to pay higher wages by raising the minimum wage or simply through pay equity legislation or new legislation. The businesses don’t care, UNLESS they simply wanted to line their pockets, buy a new boat, or stash the money in the carribbean.

    That’s the effect of legislation. However, you can tell AIMS is simply lying because they say that less CIT means ‘higher wages’. Well, doesn’t higher wages wipe out any of the gains? What kind of ‘growth’ do they expect from banks? Do banks in Canada simply not have the capital to fund all the investments in NB? How many projects are languishing in NB because the banks simply don’t have enough money to invest?

  6. nbt says:

    I am not sure that a company based in Michigan that puts a small manufacturing plant in New Brunswick will pay much corporate income tax in New Brunswick. My hunch is that they will pay very little as I believe corporate income tax is levied based on local markets and not local operations.

    You’re wrong about how corporations are taxed, David. For instance, Canada’s federal government levies a tax on all MacDonald’s restaurants at the national level. At the same time, the provincial corporate taxes collected for New Brunswick are based on a provincial
    allocator (i.e. total revenue or total wages paid by MacDonald’s in New Brunswick, versus the same allocator nationally). This is far from “local markets” as you are implying with your Michigan example.