Letter: We’re the ones who pay ‘corporate taxes’

Who pays corporate taxes? You do!

To the editor:

Who pays corporate taxes?  You do!

Many people like corporate taxes because it seems a cost-free way to finance government programs.  It isn’t.

No corporation has ever paid a tax nor can they.  Corporations are simply legal fictions that facilitate workers, investors and customers in producing and consuming goods and services.  When a corporation is taxed, the money comes out of the pockets of one or more of these three groups.  If a corporation is in a monopoly or semi-monopoly position, its customers pay the tax through higher prices.

Those who work for corporations may pay corporate taxes through lower wages.

Finally, the real targets of the advocates of higher corporate taxes, investors (including your pension plan or RRSP), might pay through reduced profits or dividends.

Of the three, investors are the least likely to pay because multi-national corporations can easily move profits from high tax jurisdictions to low tax ones.

In Canada, we benefit from the taxes collected on profits moved to their subsidiaries here by corporations in high tax jurisdictions such as the US.

Who pays then?

A C.D. Howe Institute study shows that, for the most part, a corporation’s employees pay corporate taxes through lower wages directly and also through lowered productivity caused by reductions in productivity enhancing investments.

So, why do Mr. Ignatieff and Mr. Layton want to raise corporate taxes?  Because you don’t know you’re paying them.  After all, you won’t be seeing a deduction from your wages on your T4 for corporate taxes. Your utility bill won’t show how much lower your rates would be were it not for corporate taxes.

Mr. Ignatieff wants to finance his promises by lowering your wages and raising your utility bills by an amount you won’t be told.



Peter Neville,



Kelowna Capital News