The Truth Behind Corporate Tax Cuts (in one chart)

Corporate Canada has reached a milestone in 2014. For the first time ever, it is now hoarding more cash than the national debt. What that means is that in one fell swoop, Canada’s corporations could pay off our entire national debt with just the cash sitting in their banks accounts, nevermind their other assets.

Corporate cash hoarding really ramped up as corporate tax rates were slashed in half from 31% in 1997 to 16% today. Corporate Canada argued in the late 1990s that they’d use that extra cash to build more factories, train more workers and make Canada more productive. Turns out … not so much.

Instead we dutifully cut social programs to pay for Corporate Canada to stuff those tax cuts under their gold rimmed mattresses (with memory foam). So far they’ve hoarded $630 billion and counting.

In fact, it appears that Corporate Canada has no idea what to do with the $630 billion they’re hoarding in corporate tax cuts. They’ve passed on making Canada more productive. So while they figure out what’s behind door number two, Canadians are left with weaker health care, veterans care and other social programs.

Corporate hoarding surpasses federal debt

David Macdonald is a senior economist with the CCPA.


  1. When Roosevelt rolled out the New Deal, he levied a 90%+ tax on corporations.

    Another thought, Ontario creditors re not panicking about Ontario debt because they see so much room to tax corporations which will lift Ontario out of debt.

    Yet another thought, Canada’s corporate tax rates are just about the lowest on the planet. Low rates are no longer about competitiveness in the global markets.

    So what are we waiting for?

  2. The only real comment I have is for Western Canada, or even just Alberta, to separate from Ottawa and let them look after themselves. I am sure a few other western provinces would follow real fast.

  3. Doug, why do you think western separation has anything to do with it? The western provinces are all giving corporations the same ridiculous tax breaks because they have the same ridiculous philosophy.

  4. like facts like that graph. Don’t like how this author uses these facts and accuses profitable businesses of “hoarding”. To me this implies that he believes that it’s not their money, and that he wants to use government power to take it from them. I don’t see how anyone can lay claim to someone else’s legal property. I may agree with him that Canada would be better served if those resources were invested into our economy in productive ways. However I only have that right to decide what to do with my own property and am open to entertain such investments. Furthermore I think most will agree that Government is by far the worst judge on productive uses of capital. Being an investor myself, I can only imagine that these companies like many individuals see the economic state of the world and are attempting to mitigate their exposure to risk, in other words, they use their capital instead of debt to finance worthy investments. With so many companies sitting on so much cash, it seems to me that they don’t see a worthy place for that capital investment at the moment, instead they are cutting their debt. Isn’t that what we all should be doing?
    By this authors assessments I am a hoarder. In that same time frame I have increasingly made more income every year, invested my capital into Canadian businesses that generate income (which is taxes), have also continued to built savings as well equitable assets all the while cutting debt and proportionally voluntarily directing my capital to what I deem as worthy causes, beyond and despite tax incentives. This was achieved by personal sacrifice, responsible fiscal behavior and motivation to better myself, my family, and my country. I value freedom and that means that individuals as well as freely associated individuals have the right to make decisions for their own interests, with their fruits of their own labour, even if I may not agree with them.
    The author carries on to link corporate Canada’s decrease in tax rate and growth of currency and deposits are directly associated with the failure of our government’s social programs. “we cut social programs to pay for Corporate Canada”.
    Either he is ignorant of the economical principles of tax models or he is being deceitful to infer that the two are linked to attract attention to his obvious political slant. Lowering taxes is known to increase profitability and margins for businesses, which can result in growth of the economy and job creation which in turn creates more income hence more taxes. The decisions to decrease taxes is never giving money away, it is reversely, not taking by force what doesn’t belong to you, or allowing you to keep more of your own property, which is never a bad investment.
    As for the social programs, as in many areas of the world, governments are beginning to realizing that debt is dangerous and well meaning and noble politicians that continue to commit generations of their citizens to serfdom over ever increasing entitlements as election promises or in some cases with incentified collusion, will see their end come soon, as the world learns that standards of living, wealth creation and opportunity are not functions of government but rather of freedom induced prosperity in conjunction with accountable private ownership through individual responsibility. Something far from what we have today. I find it peculiar that the Canadian Centre for Policy Alternatives endorses such a position which is no alternative at all to what governments in Canada and around the world have been doing for well on 90-100 years. The re-distribution of wealth, is does not work!! Time for some real alternatives.

  5. Give Canada back to us. Give us something to work for and feel pride in. Industry should be a tool of and for the people, not people a tool of industry.

  6. Fritz, I find your analysis to be lacking. First, you don’t account for the fact that cronyism is a driving force of capitalism in Canada today. When lobbyists and corporate dynasties collude with government to ensure favourable conditions for themselves, at the cost of competitors that would pay an honest tax rate, I don’t see how you can defend corporate Canada. Second, fiat currency is declared a store of value by government. In Canada, much of we do is a privilege granted by the Crown. Corporations may be considered individuals in the United States, but this is Canada. The idea that corporate interests which collude for favourable positions in trade agreements, government contracts, and industry associations somehow are entitled to what they have without paying for the roads and institutions that make this country a safe and secure place to do business is ludicrous. Third, the idea that government cannot innovate to become more efficient and transparent is not reasonable. Besides, the power vacuum will always be filled. What do you want, anarchy? So as bridges in Canada are on the verge of going out of service, railways are unfit for transport, roads are in dire need of repair, you think these cheapskates that want another cottage or yacht are entitled. As if they earned what they took through manipulation and collusion? Fourth, no one is talking about expanding government. Healthcare is something a majority of Canadians support. It is in shambles because we have crippled our own capacity by cutting corporate tax rates. And this all happened because we were told jobs and investment were on the way. The jobs we add are primarily part time service jobs in today’s corporate crony Canada. A few trades jobs pop up for juicy government contracts awarded to insiders and others are paid a paltry percentage of vast wealth gained because we dig things out of the ground and shit in the water throughout the process.

    Sounds like you want more of the same. You don’t give a [hoot] about quality education, healthcare, or safe roads. You want more plutocracy and to undo whatever strides the previous generation made toward a middle class. This is shameful. So sad you think the answer for society is to cripple the middle class.

    The way forward is strong health care, infrastructure, and investment in start ups. But the cheap bastards in corporate Canada are greedy pigs. They don’t care if our kids get decent jobs or have the support and resources to innovate.

  7. What business, and “trickle down” economists, have not yet realized is that business does not create jobs.

    If you have ever owned a business you know that you don’t go out and hire people just because you have money in the bank. You hire people because you have work that needs to be done and the money to pay people to do it.

    You have work that needs to be done because you have customers.

    Customers create jobs.

    Unfortunately, your employees are also customers – not necessarily of your own business, but of other businesses. Your employees buy and rent houses. They buy groceries, and clothing, and shoes, and cars, (and mattresses). They go out for dinner, buy a bottle of wine, or some beer, and they go to the movies and they go on vacation and they can’t do any of that unless they are working and earning enough money to do so.

    When people aren’t working, or aren’t earning more than the bare minimum for survival, have temporary, or part time work, and no pension plan, they don’t spend, and they don’t go out and play. They worry, a lot, and they might even stuff what they do have into their mattress just in case – which means that none of that money is available to circulate in the economy.

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