After a decade of corporate tax cuts, the benefits to Canada’s largest corporations are clear but the job creation payoff for Canadians hasn’t materialized, said a study released by the Canadian Centre for Policy Alternatives (CCPA).
The study tracked 198 of the 245 companies on the S&P/TSX composite that had year-end data from 2000 through 2009 and found they are making 50 per cent more profit and paying 20 per cent less tax than they did a decade ago. However, in terms of job creation, they did not keep up with the average growth of employment in the economy as a whole. From 2005 to 2010, the number of employed Canadians rose six per cent — from 16 million to more than 17 million — while the number of jobs created by the companies in the study grew by only five per cent — from two million to 2.1 million.
“Despite their growing profits and massive tax savings, the number of jobs created by Canada’s largest corporations was lower than the average employment growth across all sectors of the economy,” said CCPA research associate David Macdonald, author of the study. “In essence, the largest beneficiaries of corporate tax cuts are dragging down Canadian employment growth.”
If those 198 companies paid the same tax rate as they had in 2000, federal and provincial governments would have collected an additional $12 billion in revenue in 2009, found the study, Corporate Income Taxes, Profit, and Employment Performance of Canada’s Largest Companies. The loss in revenue from all Canadian corporations would be larger still.
“It’s hard to find so expensive a program with so few tangible benefits as corporate tax cuts,” said Macdonald.
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