Tag Archives: tax cuts

British Columbia, Christy Clark, Class War, Corporations, Democracy, Economics, NDP, Neoliberal Economics

Politics, Re-Spun on Coop Radio, April 18, 2011

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Imtiaz Popat and I celebrated the beginning of the last two weeks of the federal election campaign on “The Rational” last night. The video podcast is below. Here is what we talked about:

  • the BC NDP leadership race/outcome
  • how yesterday is the beginning of how Clark and Dix will define their leadership and competition, regardless of how the various leadership campaigns went
  • the HST referendum and the travesty that the government will spend most of the summer sitting on the results
  • the Vancouver-Point Grey by-election
  • how voter fatigue is somewhat a ploy by the right wing to encourage us to be lazy and not embrace our democratic power
  • Clark is not at all about families first
  • reversing corporate tax cuts is not going to affect the poorest 95% of BC/Canada, just the rich and corporations
  • how the federal debates went
  • why the NDP is polling higher and why people like Jack Layton so much
  • Harper’s scare tactics are failing
  • why Canadians are beginning to understand and appreciate life after majority governments
  • how people are tired of Harper’s politics of hate

http://vimeo.com/22595307

A Better World is Needed, Activism, British Columbia, Class War, Corporations, Democracy, Economics, Labour Theory of Value, NDP, Neoliberal Economics, Privatization

Embracing BC NDP Corporate Tax Increases

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It’s time to start this new era of the BC NDP by pre-emptively spinning the fear-mongering campaign that the BC neoLiberal party will embark on any hour now: that the new BC NDP will raise corporate taxes and destroy our economy and put everyone out of work. Far from true, despite the 30 years of indoctrination we’ve been brainwashed with.

A couple things to consider:

  1. Corporate tax cuts don’t create jobs and grow the economy because of any unicorn-inspired trickle-down theory elfin mythology. Why? Because that great bastion of communism, the Globe and Mail, says so. So don’t be duped by government rhetoric to come because the BC Liberal party is funded to the armpits by the corporations benefitting from the tax cuts. They’re hardly unbiased.
  2. The BC Liberal party has been in a corporate tax cut frenzy for a whole decade to create a justification for the “New Era” “tough choices” of cutting services, privatizing, contracting out, closing hospital beds, undermining crown corporations’ social capital, cutting people off welfare, closing schools and generally eroding the public sector. Would you like some proof, beyond how the first $500,000 of corporate revenue will be tax free in 9.5 months? Try this from the BC Liberals’ own budget documents from the fall of 2010, it’s textbook Shock Doctrine:

So when you start hearing how the new BC NDP will be bad for business, remember these facts.

Facts are good. They are the silver bullet for voodoo fear tactics. Embrace hope and principle and reject zombie neoliberal economics designed to impoverish the poorest 95% of the citizens.

And if you would like to read more about how low corporate taxes have dropped in BC in this past decade, read all about it here.

Class War, Neoliberal Economics, Poverty, Privatization, Society

Tax Cuts Are To Blame for Cities’ Bankruptcy Risks

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Just days before Christmas, there are warnings that dozens of large cities and states in the industrialized world may be going broke next year. But it’s not just a ripple from the Great Recession. It comes from three decades of neoliberal tax cuts that have defunded public services and institutions.

Three days ago, the Guardian ran a short but damning piece about the civic vulnerabilities in North America and Europe: $2tn debt crisis threatens to bring down 100 US cities | Business | The Guardian.

Below are a number of descriptions of the conditions our public bodies are in. I would argue that the neoliberal motivations of the rich since the socio-economic purges beginning with Reagan/Thatcher/Mulroney have caused or largely contributed to each of these. We’re not talking complex logarithmic supply-demand curves here; we’re talking the basic arithmetic of collecting enough income to match expenses, something households do every day…or don’t, since so many of us are addicted to consumer debt to keep our unsustainable economy afloat.

But as you read what 2011 will look like for many sub-national governments, beware the neoliberal solution from the Citigroup zombie below: austerity and more spending cuts, not increasing taxes for necessary services; this will all pad the privatization agenda:

  1. New Jersey governor Chris Christie summarised the problem succinctly: “We spent too much on everything. We spent money we didn’t have. We borrowed money just crazily. The credit card’s maxed out, and it’s over. We now have to get to the business of climbing out of the hole. We’ve been digging it for a decade or more. We’ve got to climb now, and a climb is harder.”
  2. American cities and states have debts in total of as much as $2tn. In Europe, local and regional government borrowing is expected to reach a historical peak of nearly €1.3tn (£1.1tn) this year.
  3. Detroit is cutting police, lighting, road repairs and cleaning services affecting as much as 20% of the population.
  4. Illinois has spent twice as much money as it has collected and is about six months behind on creditor payments.
  5. California has raised state university tuition fees by 32%.
  6. Arizona has sold its state capitol and supreme court buildings to investors, and leases them back.
  7. Public sector indebtedness needs to be cut, it needs a lot of austerity, and it hit the central governments first, and now is hitting local bodies,” said Philip Brown, managing director at Citigroup in London.

A Better World is Needed, Activism, Canada, Class War, Conservative Party of Canada, Education, Environment, Health, Identity, Morality, Neoliberal Economics, Psychology

Harper is Testing A New Tax Cut Ad Campaign: Boo!

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It is fitting that during Halloween, the Harper Reform/Alliance/Conservative government of “Canada” is test driving its new ad campaign on how awesome tax cuts are. Perhaps they’re gearing up for an election by making sure their messaging is juicy, particularly with Gordon Campbell’s announcement last week of a…15% tax cut!

The government contracted Angus Reid Forum to survey 400 people over the last few days to show the love. And they’re paying for it. Most Reid surveys pay $1.00. This one paid $2.50.

Here is a print ad mock-up and below are three 30 second video mock-ups of ads embarking on the love-in about how awesome tax cuts are. The third commercial mock-up is particularly galling because it suggests tax cuts are for everyone, when we really know that tax cuts are really, truly, spectacularly awesome for the rich, while they deprive them and everyone else of necessary government services like education, health care and clean water…and about 900 other things.

The follow-up questions were all about whether it was clear to me that the messages taught me something about being a good, law-abiding citizen by filing on time, as well as filing electronically and taking advantage of tax credits that are geared for the richer half of the country.

But one of the questions that continued to show up was about whether I got the message from the broad demographic examples in the ads that tax cuts are for everyone. That, my critical thinking, re-spinning friends, is the irrational desired message: that we all get tax cuts.

Really.

Most of us get screwed with a further defunded government. So if you end up seeing print and TV ads extolling the juicy love juice of tax cuts that the Conservatives have injected into our eyeballs, get irate and write a letter to the editor, or me, about why tax cuts assert the high morality of greed and neglect of our fellow human beings and environment.

Please.

Here are the first two videos, which are just annoying, tax cuts are all about us!

FirefoxScreenSnapz001

FirefoxScreenSnapz002

And here is the third video which is quite repulsive because it starts with the lie that tax cuts are for everyone:

FirefoxScreenSnapz003

Activism, British Columbia, Class War, Corporations, Democracy, Education, Health, Labour Theory of Value, Neoliberal Economics, Privatization, Psychology, Society, Work

Massive Increase in the Rich and Corporations Paying No BC Income Tax

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Does not include the 15% personal tax cut the BC Liberals announced last night.

BC is truly becoming a Caribbean tax haven for corporations and the rich. From 1999-2008,

  • the number of corporations paying no income tax in BC is over 5 times higher
  • the number of people making $100-200k/year yet paying no income tax is over 8 times higher
  • the number of people making over $200k/year yet paying no income tax is almost 3 times higher.

A few weeks ago I wrote about how the BC government’s new financial documents show a history of intense tax cuts in the last decade. Based on information I received this week from a freedom of information request to the Ministry of Finance, we can explore how the BC Liberals are intentionally defunding the government through tax cuts, which starves public services and motivates privatization and a whole host of other socio-political diseases.

Further, you’d think that with such massive tax cuts, businesses would be able to afford an increase in the minimum wage at least once in the last nine years. I guess not.

Corporations Paying No Taxes

Here is the 10-year breakdown of “corporations with a permanent establishment in BC that filed tax returns and paid no BC Corporate Income Tax”:

Year Corporate
Tax Rate		 Number
of Corporations with over $500k in Revenue Paying No Tax
1999 16.5% <50
2000 16.5% 61
2001 16.5% 96
2002 13.5% 115
2003 13.5% 116
2004 13.5% 165
2005 12% 169
2006 12% 199
2007 12% 254
2008 11% 266
2009 11% No data
2010 10.5%
2011 10%
2012 10%
39% Decline Increased by over 430%

What do we learn here?

From less than 50 in 1999 to 266 in 2008, we see a more than fivefold increase in the number of corporations paying no tax. While their taxes will decline by 39% from 1999 to 2011, that drop does not cause the increase in the number of corporations paying no tax since there are many variables that lead to tax freedom. But, gosh, does it sure correlate strongly in describing a defunding tax regime.

Small Businesses Paying No Taxes

Here is the 10-year small business breakdown of “corporations with a permanent establishment in BC that filed tax returns and paid no BC Corporate Income Tax”:

Year Small
Business Revenue Ceiling		 Small
Business Tax Rate		 Number
of Small Businesses with under $300k in Revenue Paying No Tax		 Number
of Small Businesses with $300-400k in Revenue Paying No Tax		 Number
of Small Businesses with $400-500k in Revenue Paying No Tax
1999 8.5% 135,165 <50 <50
2000 4.75% 125,450 <50 <50
2001 4.5% 134,820 <50 <50
2002 $300,000 4.5% 137,246 <50 <50
2003 $300,000 4.5% 144,400 53 <50
2004 $300,000 4.5% 145,424 <50 <50
2005 $400,000 4.5% 147,852 68 <50
2006 $400,000 4.5% 147,295 98 <50
2007 $400,000 4.5% 152,826 147 51
2008 $400,000 2.5% 140,947 133 67
2009 $400,000 2.5% No data No data No data
2010 $500,000 2.5%
2011 $500,000 2.5%
2012 $500,000 0% All of them
 All of them
 All of them
100% Decline Increased by over 160% Increased by over 33%

What do we learn here?

We learn that the backdoor tax cut in 2005 when the government increased the small business ceiling from $300,000 to $400,000 meant a great deal of businesses dropped from a 12% tax rate to a 4.5% tax rate that year, which while not causing the rise in the number of corporations paying no tax, it reinforced the defunding priority.

Not only will corporations with revenues below the new $500,000 small business ceiling pay no income taxes in BC in 14 months, but larger businesses will pay no taxes on the first half million in revenue. Look out, Cayman Islands!

But in 2012 it will be clear that a 0% tax rate will then actually cause all businesses earning less than half a million dollars to pay no taxes.

Sitting through Gordon Campbell’s condescending TV address last night was a flashback to the idiotic campaigning they did to get elected in 2001: tax cuts along with service improvements. That’s inherently contradictory, but people bought it. And they’ve bought it twice more this decade despite the carnage the BC Liberals have visited upon us all. How can we be so foolish? It’s because “we” have been socialized into this way of crazy thinking. How else would we explain why people vote for tax cuts when anyone who can balance their own chequebook can see that a decline in income leads to a decline in spending.

But we also learn that well over 100,000 businesses pay no tax. In discussing this very high number with a BC Finance Ministry official, it became clear that many of these are businesses set up that are designed to earn no money to be write-offs for people, so the sheer size and flux in that number is of little significance for my purposes here.

Individuals Paying No Taxes

“Individuals who filed a BC tax return and paid no BC Personal Income Tax.”

Year Tax Cut Number
of Individuals under $100k in Income Paying No Tax		 Number
of Individuals with $100-200k in Income Paying No Tax		 Number
of Individuals with over $200k in Income Paying No Tax
1999 952,756 92 58
2000 993,427 128 58
2001 25% 1,070,020 139 56
2002 1,130,013 201 65
2003 1,144,123 269 97
2004 1,148,479 280 68
2005 1,398,577 325 74
2006 1,380,328 491 124
2007 10% 1,360,101 690 176
2008 5% 1,414,854 776 169
2009 No data No data No data
2010
2011 15%
Increased by almost 50% Increased by over 740% Increased by over 190%

What do we learn here?

We learn that it’s harder to criticize the government for massive tax cuts for the rich and for corporations when they increase the number of poor people who pay no taxes, which is what the 3rd column describes. Shockingly, this is even true in a province where the government has chosen to not increase the minimum wage in over 10 years.

We also know that massive tax cuts have been matched with clawbacks through MSP increases and a decline in services for the poor, so in the end, there is no real gain for those in poverty.

So if you’re fine with corporations paying no income tax, for whatever reason, you ought to be quite thrilled right about now, even more so in 2012. But if these facts disturb you, it’s time to find ways of changing the culture shift that has brainwashed enough people so that the premier can feel confident getting on TV when his approval rating is 9%, then pander to these core instincts with tax cut rhetoric as if it were 2001 again and people have forgotten the real cost of tax cuts.

If you would like the raw spreadsheet file with all these numbers, just email me and I’ll send it along.

Activism, British Columbia, Class War, Corporations, Democracy, Labour Theory of Value, Morality, Neoliberal Economics

Corporations Already Pay Virtually No Tax in BC

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Do you find it to be a compelling argument whenever the BC Liberals claim we need to reduce corporate income taxes, for whatever reason they toss out on any random day?

I knew the BC Liberal government was a big fan of corporations, reaping millions in campaign donations from them over each election cycle. But did you know that corporations in BC pay virtually no income tax?

You might re-assess the state of the province if you knew that corporations pay only 10% of their taxable income in taxes, and a quarter of that for small businesses making under $500,000/year in taxable income. But more, in less than two years, small business will pay NO income tax [see this graph from the bottom of page 2 of the 2011 budget consultation document]!

The core data is at the bottom, but here’s a summary.

Small businesses pay 2.5% in BC income tax today. That number is down from 4.75% when the NDP left office, which itself was a tax cut from before the 2001 election, down from 8.5%. The drop from 4.75% to 2.5% happened leading up to the 2009 election as a gift from the governing Liberals.

So the NDP cut small business taxes almost in half before 2001, when they happened to lose the election: a wasted gesture.

The Liberals cut small business taxes almost in half before 2009, which paid off better for them.

The Liberals also gifted corporations with a back door tax cut by increasing the limit of what it takes to be a small business before the 2005 election from $300k to $400k, meaning business with income in that band saw a 50% tax cut because they were suddenly small businesses. Then as a celebration of being re-elected a second time, the Liberals increased the upper limit of small businesses by another $100k.

What about big business then?

We saw the same kind of reduction of taxes by the NDP, from 16.5% in the 1990s, or one dollar in taxes payable for every six dollars in taxable income to 10% in January 2011, when it will be one dollar in taxes payable for every ten dollars in taxable income.

If you had some utopian notion that corporations should pay a significant amount of taxes to support public services, your vision is not matched by reality. In fact, corporate taxes can’t be much lower in BC without being zero.

Did you plan to live in a society in which corporations paid no tax? When we think of Caribbean tax havens, that’s what comes to mind. And if we don’t change the trend, BC will be a corporate tax haven too, and not just for small businesses who will pay no corporate income tax in 2012.

By the way, since a few of my recent posts have included requests I’ve made under BC’s Freedom of Information Act, this topic is no exception. I asked for 70 numbers: for each of the last 10 years, how many corporations and individuals have paid no provincial income tax, broken down into seven categories of taxable income. So check back in six weeks to see the results of that request.

I encourage you also to make FOI requests under BC’s Freedom of Information Act of anything that intrigues you about how the BC Liberal party is destroying the commons in BC.

And for more random context, the BC government expects to collect more money from tuition fees starting next September than from corporate income taxes.

If that works with your notion of justice in BC, sleep well. If it doesn’t it’s time to wake up and get busy.

What can you do?

Until October 15, 2010, the BC legislature’s Finance Committee is accepting input from citizens and groups on next year’s budget.

It’s not a complex task. Click on the link. Read the consultation document while re-spinning in your mind the gratuitous self-promotion from the government in the document; don’t forget to look again at the chart on the bottom of page 2 showing how the government wants to stop collecting taxes from corporations as soon as possible.

Then put your ideas into the text boxes on the online form.

But one word of warning about the 3 horrible choices we are given for extra revenue: fund new programs and services, reduce the debt, or cut personal income taxes. You can choose o-3 of the choices. Don’t chose cutting taxes unless you want to help the government justify it’s decade-long reckless tax cutting spree. Also, don’t choose reducing the debt because that also gives cover to the government to avoid restoring the billions cut from programs and services to fund the previous tax cuts.

In the end, the BC Liberal government will do whatever it wants with our money. We elected them for a third time, after all. But by filling out your views in this online survey, you add new ideas to the debate that takes place in the Finance Committee and the media. The more people who submit progressive preferences for our budget, the harder it will be for the government to negate our priorities.

British Columbia has two rates of income tax – a higher rate and a lower rate.

The income eligible for the lower rate is determined using the British Columbia business limit. The British Columbia business limit is:

  • $500,000 effective January 1, 2010
  • $400,000 effective January 1, 2005 to December 31, 2009
  • $300,000 from April 1, 2002 to December 31, 2004

General Rate (higher rate)

Effective January 1, 2011: 10.0%

January 1, 2010 – December 31, 2010: 10.5%

July 1, 2008 – December 31, 2009: 11.0%

July 1, 2005 – June 30, 2008: 12.0%

January 1, 2002 – June 30, 2005: 13.5%

July 1, 1993 – December 31, 2001: 16.5%

The Small Business Rate applies for Canadian-controlled private corporations with active business income.

Small Business Rate (lower rate)

Effective December 1, 2008: 2.5%

July 1, 2008 – November 30, 2008: 3.5%

January 1, 2001 – June 30, 2008: 4.5%

July 1, 2000 – December 31, 2000: 4.75%

July 1, 1999 – June 30, 2000: 5.5%

January 1, 1999 – June 30, 1999: 8.5%

via Finance – Corporation Income Tax.