links for 2011-04-06

  • The Globe's original story on Corporate Tax Cuts:

    "But an analysis of Statistics Canada figures by The Globe and Mail reveals that the rate of investment in machinery and equipment has declined in lockstep with falling corporate tax rates over the past decade. At the same time, the analysis shows, businesses have added $83-billion to their cash reserves since the onset of the recession in 2008."

  • Stephen Gordon's rebuttal to the Globe's headline story on Corporate Tax Rates:

    "Data problems: It’s important to make the proper distinction between prices and quantities. Nominal expenditures are the product of prices and quantities, and in this context, what matters is the quantity: the number of new machines installed matters more than what was paid for them….

    Policy evaluation problems:…Although modelling strategies and data sets vary from study to study, the consensus from the peer-reviewed academic literature is clear: lower CIT rates are associated with investment levels that are higher than what they would have otherwise been."

  • Armine Yalnizyan's rebuttal to Stephen Gordon on Corporate Tax rates:

    "Some of that investment replaces obsolete technology and introduces important efficiencies. Some of that is simply keeping up with the latest gadgets and software. It is an open question how much productivity improvement results from these investments.

    But there is little question that some business investments actual lead to a decline in value-added production. For over a decade, foreign corporations have been buying up our resources and shipping value-added production elsewhere …. Along with middle class jobs. The Vale Inco story is a striking example, no pun intended."

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