U.S. could lose business to Canada, according to new comparison of tax
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CALGARY, Feb. 23 /CNW/ - Today, Prof. Jack Mintz, director of The School
of Public Policy at the University of Calgary, released a paper
co-authored by Duanjie Chen analyzing tax regimes of 83 developed and
developing countries. In a global economy, this kind of comparison is a
strong indicator of future investment, job and economic growth for
"Over time, wage rates will slowly equalize around the world, so we are
getting to the place where tax rates on business will be a key factor
in determining where capital flows and business sets up shop," Mintz
Mintz has frank advice for the United States: "Either reduce your
exorbitant taxes on corporations and get in line with international
rates, or face a bleeding of capital, business and jobs to more
competitive countries, including Canada because of its geographic
proximity, as well as developing nations."
While Canada finished mid-pack amongst the countries studied, this is a
vast improvement over competitiveness just six years ago.
"In 2005, Canada was the fourth highest taxed jurisdiction in the world.
Since then, corporate tax cuts in Canada have made Canada an attractive
place to do business - but there's still work to do," Mintz said.
"Corporate taxes should still be reduced further, and to scrap planned
corporate taxes reductions would be a job killer - plain and simple."
Is Canada on its way to becoming a northern tiger? "Yes," said Mintz.
"The future looks bright for Canada. The combination of resource
wealth, a favourable tax regime and our proximity to the U.S. is very
There are, however, two clouds on the horizon.
"The threat posed by the unfavourable U.S. tax regime is so great, that
the damage done to the U.S. economy could seriously affect Canada. And
the political threat to continued corporate tax cuts could send
uncompetitive signals to global businesses. We need those cuts to take
Canada to the OECD competitive average, and businesses have already
factored in those cuts."
A copy of the paper is available at www.policyschool.ca under the "latest papers" section.
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SOURCE University of Calgary - School of Public Policy
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