Canadian corporations are done paying taxes for the year, according to a new study that links massive corporate tax giveaways to hoarding hundreds of billions in cash.
Wednesday is Corporate Tax Freedom Day, meaning that corporations have now paid their entire share of taxes for the year to all levels of government, the Canadian Labour Congress report shows.
And instead of investing in creating jobs after a decade of massive corporate tax cuts, corporations are hoarding $541 billion in cash.
"In return for tax breaks, business has promised to invest in training, research and development and job creation but they have failed to do that," said the CLC's Hassan Yussuff. "Companies have instead been hoarding cash and paying out fat compensation to their CEOs."
Here are other key findings in the report:
Corporations and CEOs are getting richer
- Since 2000, the federal corporate tax rate has been cut at the waist, from 28% to 15%.
- Corporate after tax profit margins rose 6.9% in 2000 to 8.1% in 2012.
- During the same period, CEO compensation ballooned to an average of $7.96 million in 2012.
- Between 2000 and 2012, the cash reserves of private, non-financial private corporations in Canada grew from $182 to $541 billion — an increase of 300%.
- And the rest of us aren’t seeing any benefits:
- Corporate income taxes in 2012 amounted to only 7.85% of all government revenues, down from 10.1% in 2000.
- Unemployment has increased. While the official unemployment rate currently stands at 7.1%, the real unemployment rate (factoring in underemployment and those no longer actively searching for work) stands at 14% as of December 2013.
- Business investment in R&D has fallen from 1.13% of GDP in 2000 to 0.88% in 2012.
- Investment in employee training and skill training is down by 40% since the 1990s. Canadian companies spent an average of $688 per employee on training; in the U.S. it was $1,701.
- Economic growth between 2000 and 2012 was 1.14% — one of the longest periods of low economic growth in decades.
Happy Corporate Tax Freedom Day!