The Facts on Tax Cuts: How to respond to tax-cutters - BY MURRAY DOBBIN

After nearly a year of hysterical calls for tax cuts by the National Post, Preston Manning, the Fraser Institute and other voices of the New Right,
corporations and the wealthy got their way. Paul Martin's 2000 budget, despite a few progressive crumbs, was even worse than his 1995 budget, which  cut $6 billion from health care. Over five years, Martin's plan will drain the government bank account by $58 billion, making it even harder for Ottawa to pay its fair share for health and education in the future.

Yet the tax cuts are not over. After his budget, Martin declared that there is "no doubt" the cuts will go much deeper. (In June, he announced a further $500 million tax cut for the banks.) 

The following are some tax facts to help you fight back against this campaign of myths and distortions. 

• Tax-cutters claim that lowering tax rates actually increase revenue by spurring economic growth. In fact, there is no evidence to show that tax cuts increase revenue. Former U.S. president, Ronald Reagan slashed taxes and the U.S. ended up with record high deficits.
  

• Canadian corporate taxes are low in comparison to other developed countries, including the U.S. In a KPMG study of the G7 countries (minus Japan but including Sweden), Canada had the lowest effective (taxes actually paid) 27.4%. The U.S. rate was 40%. Germany and France had rates of 60.5% and 54% respectively. Regarding two other taxes corporations pay payroll taxes (EI, pensions etc.)
  And property taxes Canadian rates are well below those in the U.S.
  

• Contrary to the propaganda, the wealthy in Canada aren't over-taxed they have one of the best tax deals anywhere. They pay no inheritance tax, no wealth tax and people earning $1 million a year pay the same rate as someone earning $70,000. The U.S. tax system has an inheritance tax and two additional high-income tax rates for those earning over $150,000 and those earning over $250,000. 
  

• Taxes are now blamed for the so-called Brain Drain. In fact, each year Canada takes in over 32,000 university-educated immigrants from around the world, while losing 8,000 to the U.S. But the reasons for the "drain" are due largely to the much higher salaries U.S. companies are willing to pay, and the simple fact that there are huge numbers of opportunities in the largest developed country in the world.
  

• Some of the loudest calls for tax cuts come from corporations that already receive the biggest tax breaks. John Roth, CEO for high-tech giant Nortel, has been one of the most aggressive. By 1995, the taxpayers' subsidy to Nortel had reached $800 million in research and development tax credits. In 1999 alone Nortel received a taxpayers' R&D hand- out of $300 million. Between 1988 and 1993, Nortel
  also received at least $400 million in Export Development Corporation financing.
  

• Tax-cutters claim that high taxes are driving down the standard of living for working Canadians. Low- income Canadians do pay more than their fair tax share, but it is the relentless corporate drive to decrease wages that really accounts for the drop in the living standard of ordinary Canadians. According to the Centre for Social Justice: "In 1973, the top 10% of families with children under 18 earned an average
  income 21 times higher than the 10% at the bottom.  By 1996, the top 10% made 314 times as much."  Between 1990 and 1997 average personal taxes increased by $177, but average real income before taxes actually dropped by $1,129.
  

• It is always argued that Americans are taxed much less than Canadians, but it turns out even this isn't the case. It is true that if you compare just income tax rates, ours are higher. But Standard and Poor's DRI Research showed that if you add in Americans' out-of -pocket spending on health and education, the tax bill is virtually the same. In fact, a StatsCan study reveled that, except for the wealthiest 20%, in every
  income group Canadians had more disposable income than their U.S. cousins.
  

The call for tax cuts is an appeal to selfishness, based on misinformation. If pursued, it will inevitably lead to the further erosion of public programs like health care. In every poll where a choice is offered, Canadians put tax cuts low on the priority list - below new spending on health, education, child poverty and job creation. In other words, Canadians don't really want tax cuts. It's a message Paul Martin should hear more often. #