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A Nordic tax agenda for Canada...

Reduce corporate tax rates

This would be fine as long as Canadian corporations also adopted the Nordic model as well. Nordic nations are highly unionized--80% in Sweden--which means that most workers in these countries earn a living wage that grows as their corporations get more tax breaks. The same isn't true in countries like Canada. All corporate tax cuts do here is add to the already overflowing corporate profits. The workers get no benefits from it and worse yet, are forced to carry a heavier tax load burden themselves.

there is a valid question raised about this on Mark Thoma's blog - what is the source of the data shown (particularly when is it from).


The data are all from the OECD. The graph that Mark posted was from 2002.

Please, would you date the data for us to give a better understanding of what we are seeing?

Ah, done already. Thank you, Stephen. Now to think through the relationships and how they might have been changing. Thank you and Reason.

I find your presentation very interesting. Do you have any information about tax regimes and social spending in developing countries?

That's a much more difficult problem. The stories we see in textbooks generally presume the existence of properly-functioning markets and all the infrastructure that requires. I'm pretty comfortable using these models for rich OECD countries; much less so for countries without those preconditions.

You're welcome to write your own textbook.

Is this data available somewhere?


My observation is that large countries (developed ones anyway, some others too perhaps, such as India) have had a tendency to think of themselves as closed economies, at least until recently, to some degree they still do. USA, Germany, France, Italy, Japan all tedn to at least aprtially think of themselves this way, noting that Japan probably has less elasticity than the others for cultural reasons.

This explains why they have gotten away with, at least until recently, having punitively high rates of corporate taxation. The other shoe has been dropping though, thanks in part to a higher return on capital in China than "the world rate of return".

It also may be my imagination, but I also think that international labor mobility has been increasing. To the extent that people are willing to overcome cultural friction this doesn't bode well for those who choose to have high rates of tax for income taxes/payroll taxes, especially for the highest earners. This may also explain why income tax rates are lower in the UK< Ireland, US, Canada, Australia and New Zealand as a rule, because if push comes to shove it is more conceivable that such citizens will simply move from one English speaking country to another.

Nice presentation though. I really wish more people would manage to grasp the incidence of corporate taxation (and capital gains and dividends) in an open economy and we could all dump such self destructive behaviour.

By the way, I am pretty sure Ireland's headline corporate tax rate is 12.5%. Do they have some sort of surtax I don't know about?

Consumption taxes do in fact have a negative effect on growth, because they create a tax wedge between consumers and producers similar in principle to income taxes and payroll taxes.

Thanks for pointing me here, Stephen. I have neither fully read nor (nearly) fully understood this, but I promise to struggle with it.

For international social democracy the document concluded in 2003 at the .... Revenue improvements are possible in the field of income taxation.

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