Look. I am getting a little tired of folks throwing around these scenarios of “what will happen” if we have tax reform in New Brunswick. I will completely ignore all the talk about flat taxes hurting women more than men, etc. because I am not a tax guy and, unlike 95% of people out there, I don’t pretend to be one.
But specifically to corporate tax cuts.
The reality is that neither AIMS, the UNB economists or the Discussion Paper itself have given even a shred of proof that the assertion that cutting the corporate tax rate to zero will lead to significant investment in New Brunswick. How about a few examples? Particularly examples that fit with New Brunswick’s situation? For most fair minded people, you need to provide some evidence before making wild assertions (just ask my editor over at the TJ – keepin’ me on my toes).
Here are the corporate tax rates levied by the U.S. states:
Alaska – as low as 1%
Maine – as low as 3.5%
Mississippi – 3%-5%
South Dakota – none
North Dakota – as low as 2.5%
Hawaii – 4.4% to 6.4%
Kansas – 4%
Look folks. Take it from me. These six locations are not bastions of new business investment.
Now, on the high side:
West Virginia – 8.5%
New Jersey – 9%
Rhode Island – 9%
You can see there is relatively low correlation between the corporate income tax rate and successful U.S. state economies.
Now, again remember the caveat that I am not a tax expert, in New Brunswick, corporations do not pay HST. This is a flow through tax. Businesses collect it and deduct any of their own HST paid off of their remittance to CRA. This is not so in many U.S. states. In fact, in many areas of the U.S. there are a host of other taxes such as inventory taxes and even local income taxes.
So, why haven’t NB businesses led North America for business investment? Why haven’t multinationals flocked here to take advantage of this positive tax environment? Because there is far more to business investment than tax rates and AIMS, and David Morrell and, yes, even NBT knows this.