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Economists and Corporate Tax Cuts

April 14, 2011

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The Prime Minister continues to use the line that all credible economists support further cuts to the corporate tax rate.

Jim Stanford's fabulous piece put out by the CCPA yesterday makes it clear that there is a huge debate among economists on the linkage from corporate tax rats to rates of real investment.

I would just add that, one year ago, David Dodge - former Deputy Minister of Finance and former Governor of the Bank of Canada - expressed skepticism about further rate reductions.

This is what he said in a lecture at Queen's University:

“In addition the final scheduled cut in the corporate tax rate might be foregone (or postponed well past 2013) without losing tax competitiveness as it now seems unlikely that major cuts in the U.S. or European corporate tax rates will take place. These additional revenues later in the decade would help to maintain the federal balance.”


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