Corporate Tax Cut Revolution Continues

From the Canadian Financial Post:

The Conservative government delivered a mini-budget yesterday that lowered the Goods and Services Tax for a second time and reduced corporate taxes by one-third over the next five years as part of a $60-billion multi-year package of tax cuts…Perhaps the biggest surprise was Mr. Flaherty’s commitment to cut the corporate income tax rate deeper than planned, from its current 22.1% to 15% in 2012.

To put this in context, $60 billion over five years means about $12 billion per year. Since the American economy is about 10 times larger, the equivalent cut here would be about $120 billion per year, which is pretty big cut.

The average federal/provincial corporate tax rate in Canada today is 36%. Thus, cutting the federal rate by 7 points should drop the average combined rate to about 29%. By contrast, the combined U.S. federal/state rate is about 40%.

Here’s the interesting political part:

Liberal leader Stéphane Dion said his party would not oppose the measures, ensuring they receive Parliamentary approval as early as today…The proposal comes as Mr. Dion toured the country arguing for lower business rates and promising, if elected, to take the general corporate rate lower than the 18.5% the Conservative government had initially proposed.

That’s the Liberal party leader, in a country where “liberal” used to mean left-of-center statist. It seems that everywhere but Washington, the times are a changin’.