U.S. tax reform has changed everything — even if the prime minister refuses to believe it. Justin Trudeau evidently missed the news that companies in the U.S. have been using the sudden shift to lower corporate taxes to shower bonuses and raises on workers, and plowing yet more investment into new productivity and growth. In his speech to the World Economic Forum in Davos Tuesday, Trudeau offered his own ill-informed approach, saying he would refuse to try competing with U.S. business tax cuts because “People have been taken advantage of, losing their jobs and their livelihoods … (as) companies avoid taxes and boost record profits with one hand, while slashing benefits with the other.”
This is no time for clapped-out anti-corporate cant. If Canada fails to respond to America’s resurgent competitiveness, it’s at our peril. The old rules no longer apply. Pre-2018, companies looking to invest in North America knew they had a business tax advantage in Canada, even though it suffered from having smaller market than the U.S., a weaker labour pool and colder climate. With NAFTA, businesses operating in Canada could also count on decent access to the U.S. market, despite all the border frictions that come from dealing with two different regulatory systems.
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