On accumulated losses

I've previously linked to Erin's post on trends in corporate tax revenue over the past decade. But particularly in the face of budget deficits being used as the primary excuse for plans to slash social spending or push public services into the private sector, I'd think it's worth adding some more information into the mix.

Here's a slight reorganization of information from the same chart (all dollar numbers in the billions) with two new columns: the amount of corporate tax revenue which would have been collected at the 2000 effective rate of 23.4% calculated by Erin, and the difference between that amount and the revenue actually collected:

Year	Profits	Effective Rate	StatCan Revenue	Revenue @23.4%	Revenue Loss
2000	$136.0	23.4%	$31.8	$31.8	0
2001	$127.1	19.1%	$24.2	$29.7	$5.5
2002	$135.2	17.9%	$24.3	$31.6	$7.3
2003	$144.5	19.3%	$27.9	$33.8	$5.9
2004	$168.2	18.9%	$31.7	$39.4	$7.7
2005	$186.6	17.3%	$32.2	$43.7	$11.5
2006	$197.3	19.5%	$38.4	$46.2	$7.8
2007	$200.9	18.5%	$37.1	$47.0	$9.9
2008	$217.0	15.8%	$34.2	$50.8	$16.6
2009	$146.9	15.8%	$23.3	$34.4	$11.1

Totalling up the differences, we arrive at a grand total of $83.3 billion in lost revenue compared to what the federal government would have taken in if the same corporate profits had been taxed at the 2000 effective rate - in recent years averaging over half of the federal contribution to, say, health care through the Canada Health Transfer. And that's before the Cons' final two sets of corporate tax cuts kick in.

So what do we have to show for that lost potential revenue?

The tax-slashing argument is that the reduction in rates should result in increased economic activity. But the fact that both corporate tax revenues and broader economic conditions have fluctuated immensely based on factors such as resource prices and international economic events serves as fairly compelling reason for skepticism about any traceable benefits. And there looks to be little difference between the growth in corporate profits in the 1990s (before the current tax-cutting binge) and that since 2000.

Of course, in the heady days of the early naughts it may have seemed easy to get away with fitting the loss of billions of dollars a year into a budget that had plenty of room for movement. (Though even that hardly looks wise, particularly in retrospect.) But there's extra reason not to double down now that we're already in the red thanks to a decade of profligacy from Libs and Cons alike.