Depressing. A smarter thing to do would be to give the factories to the workers so they can run them themselves. Worker co-ops. It would be better for the workers and society as a whole. Jobs would be safer. These corporate welfare kings just turn around and lay off workers a few years after they get the pogey anyway.
This is completely on point. Some years ago I was at a contractors gathering with a premier. The first questions from the floor were about scrapping the carbon tax and lowering business taxes. The next set of questions were about when the government was going to fund more projects to employ said contractors.
Anyone doing a large direct investment nowadays spends considerable time lobbying the various levels of government and you end up with deals where each job costs the public exorbitant sums. It would be vastly cheaper for the government to do it themselves, which really messes up a lot of theories.
May 16, 2023·edited May 16, 2023Liked by David Moscrop
Governments subsiding investors?! Say it ain’t so!
UK, US, and Canadian governments have almost always subsidized investors, not just corporations, via lower rates (or no tax at all) for capital gains compared to labour or business income.
In the UK, there was no capital gains tax until 1965. Since then there have been a hodgepodge of lower rates and exemptions.
In the US capital gains actually were taxed like ordinary income at the time income tax was introduced in 1913, but have been taxed at lower rates with various additional exemptions since 1921.
Income tax was introduced in Canada in 1917, but there was no tax on capital gains (following the UK philosophy of protecting aristocratic wealth) until 1972 after being recommended by the Royal Commission on Taxation (aka the Carter Commission) in 1966. That Commission recommended full inclusion though - no 50% exclusion and no inflation adjustment. (It felt that getting the benefit of increasing value while deferring the tax until sale offset the the cost of paying tax on inflation - an argument I don’t happen to agree with. There is no real benefit without realization, but inflation is real, and ensuring there is no benefit prior to sale can be managed by deeming a realization if an asset’s inflated value is used as security.)
The Carter Commission also recommended that principal residences be fully taxed in the same way, but with a lifetime $25K exemption.
It should also be noted that the Carter Commission did not intend that capital gains be considered a replacement for the previous estate tax (inheritance recipients would be taxed instead).
As we all know, that’s not what happened.
Capital gains would be 50% exempt, principal residences would continue to be fully exempt, there would be no inheritance tax and there would henceforth be no estate tax either. Accrued estate gains up to that point that would have eventually been captured as inheritance tax were essentially swept aside, resulting in a windfall to wealthy taxpayers of about $12B ($88B in 2023 dollars) according to U of T economist John Bossons.
Investors may claim that their gains should be protected by beneficial tax rates because, after all, “they’re driving the economy by putting their money at risk!” But that’s a disingenuous argument for an honest capitalist.
It’s the market’s job, not government’s, to reward investment risk through ROI. A lower after-tax ROI would do what? Just drive down asset values to compensate!
The Bank of Canada has been criticized of late for propping up asset value with low interest rates. The real interesting question is not so much why does the BoC feel the need to underwrite asset values, but why have Finance Ministers been doing it for over 50 years?
And who exactly have been benefiting from inflated asset values?
The question is left as an exercise for the reader.
The reality is that since the freer movement of labour and capital across the globe major corporations no longer take a stakeholder view of their enterprises. This coincided with the decline of unions globally and the growth in real incomes. Now middle income earners are squeezed and it's unaffordable for them to buy homes.
Zoning rules in our provinces - and in BC here - had never contemplated where rental properties would be destroyed for units that could be sold.
While I'm confident Canada is closer to a basic income scheme if the Conservatives aren't in government, it's coming late and into a reality where the governments must play the corporate welfare game - especially in the Ontario base auto sector.
It's clear that in the USA even the Democratic Party would like to bring all the auto industry including materials and parts back into the USA forcing Canada's hand to provide handouts.
We the public aren't much help here to government as even corporate welfare here is not readily understood nor is there much time to bolster the union movement as back in the days of strong unions, union wage increases benefited all workers.
The other problem is getting the tax fairness back into our system and that means resources able to go after the hidden stuff offshore. This might be as tough a challenge as taking down drug cartels as that has proven near impossible in the war on drugs. Only the users pay there.
Stellantis in this case is doing what it's it did during FCA Chrysler days to the Canadian Motor Vehicle Arbitration Program when it left that organization as their buyers were winning too many arbitrations and CAMVAP wouldn't keep watering down the program for the benefit of auto manufacturers. There was a few year period before they left CAMVAP ( a free to consumer program) when they took arbitrator decisions they didn't like to judicial review and lost as the courts ruled the arbitrator's didn't err.
The painful thing about this particular extortion is that nobody using the words "crisis", "catastrophe", or "emergency" following the word "climate" - or even milder rhetoric that still acknowledges every day of delay in climate projects will cost lives and fortunes - can't complain.
It's like the Ukraine war money. I believe those who say that corrupt Ukrainians are profiting heavily, selling off donated arms, grabbing money directly. But that all comes down to loss-of-efficiency: the war will cost extra.
Inefficient companies profiteering will make climate projects more expensive, but the need to pursue them is still existential.
It's less aggravating than being soaked for public monies to do active harm, like the even-larger subsidies to fossil fuels.
the jobs promise is a smoke screen. i used to work in industrial automation enabled by 5G networks, computer vision, AI, and robotics. i quit because it's a fancy way of saying have as few humans on a payroll as possible. will this new tech create new jobs? yes, just a tiny fraction of what they will destroy. our team of 10 had almost 100 RFPs in the pipeline. phase 1 of the projects are chosen to be acceptable, like improve worker safety. who doesn't want that? then phase 2+ is make it even safer by not having workers in the first place. this applies to any new industrial projects. they are by far the easiest to justify. existing factories and mines are harder as it's more expensive to retrofit. But the end result is the same. the corporate capitalists and their enablers are selling this as creation of good jobs, but they fail to mention the fine print. it's all a massive con. i quit a high paying job because i wanted no part of this. these deals are not in our interest, but they can't be stopped. a government with a majority can't be stopped, especially when covid taught them they could openly get people killed and their families will still vote for them.
Capitalism only exists in venture capitalism which creates the corporation and means of production. Corporatism is fascism. In Canada, regardless whether using original nazi and fascist corporations 👇 as the examples or not, using pubic funds to finance Volkswagen 👇 and Stellantis (Fiat-Chrysler 👇) is a good example of contemporary fascism.
Bravo! This needed to be said. And the examples are all around us. 2008 bailout stands out but there are many other examples. It was only a few months ago that AOC's opposition to Amazon's ransoming was vindicated, but not before she was pilloried for having the gall to call out corporate abuse:
Depressing. A smarter thing to do would be to give the factories to the workers so they can run them themselves. Worker co-ops. It would be better for the workers and society as a whole. Jobs would be safer. These corporate welfare kings just turn around and lay off workers a few years after they get the pogey anyway.
This is completely on point. Some years ago I was at a contractors gathering with a premier. The first questions from the floor were about scrapping the carbon tax and lowering business taxes. The next set of questions were about when the government was going to fund more projects to employ said contractors.
Anyone doing a large direct investment nowadays spends considerable time lobbying the various levels of government and you end up with deals where each job costs the public exorbitant sums. It would be vastly cheaper for the government to do it themselves, which really messes up a lot of theories.
Governments subsiding investors?! Say it ain’t so!
UK, US, and Canadian governments have almost always subsidized investors, not just corporations, via lower rates (or no tax at all) for capital gains compared to labour or business income.
In the UK, there was no capital gains tax until 1965. Since then there have been a hodgepodge of lower rates and exemptions.
In the US capital gains actually were taxed like ordinary income at the time income tax was introduced in 1913, but have been taxed at lower rates with various additional exemptions since 1921.
Income tax was introduced in Canada in 1917, but there was no tax on capital gains (following the UK philosophy of protecting aristocratic wealth) until 1972 after being recommended by the Royal Commission on Taxation (aka the Carter Commission) in 1966. That Commission recommended full inclusion though - no 50% exclusion and no inflation adjustment. (It felt that getting the benefit of increasing value while deferring the tax until sale offset the the cost of paying tax on inflation - an argument I don’t happen to agree with. There is no real benefit without realization, but inflation is real, and ensuring there is no benefit prior to sale can be managed by deeming a realization if an asset’s inflated value is used as security.)
The Carter Commission also recommended that principal residences be fully taxed in the same way, but with a lifetime $25K exemption.
It should also be noted that the Carter Commission did not intend that capital gains be considered a replacement for the previous estate tax (inheritance recipients would be taxed instead).
As we all know, that’s not what happened.
Capital gains would be 50% exempt, principal residences would continue to be fully exempt, there would be no inheritance tax and there would henceforth be no estate tax either. Accrued estate gains up to that point that would have eventually been captured as inheritance tax were essentially swept aside, resulting in a windfall to wealthy taxpayers of about $12B ($88B in 2023 dollars) according to U of T economist John Bossons.
Investors may claim that their gains should be protected by beneficial tax rates because, after all, “they’re driving the economy by putting their money at risk!” But that’s a disingenuous argument for an honest capitalist.
It’s the market’s job, not government’s, to reward investment risk through ROI. A lower after-tax ROI would do what? Just drive down asset values to compensate!
The Bank of Canada has been criticized of late for propping up asset value with low interest rates. The real interesting question is not so much why does the BoC feel the need to underwrite asset values, but why have Finance Ministers been doing it for over 50 years?
And who exactly have been benefiting from inflated asset values?
The question is left as an exercise for the reader.
Todays “fReE mArKeT cApItAlIsT” is really just a corporate welfare lobby...
The reality is that since the freer movement of labour and capital across the globe major corporations no longer take a stakeholder view of their enterprises. This coincided with the decline of unions globally and the growth in real incomes. Now middle income earners are squeezed and it's unaffordable for them to buy homes.
Zoning rules in our provinces - and in BC here - had never contemplated where rental properties would be destroyed for units that could be sold.
While I'm confident Canada is closer to a basic income scheme if the Conservatives aren't in government, it's coming late and into a reality where the governments must play the corporate welfare game - especially in the Ontario base auto sector.
It's clear that in the USA even the Democratic Party would like to bring all the auto industry including materials and parts back into the USA forcing Canada's hand to provide handouts.
We the public aren't much help here to government as even corporate welfare here is not readily understood nor is there much time to bolster the union movement as back in the days of strong unions, union wage increases benefited all workers.
The other problem is getting the tax fairness back into our system and that means resources able to go after the hidden stuff offshore. This might be as tough a challenge as taking down drug cartels as that has proven near impossible in the war on drugs. Only the users pay there.
Stellantis in this case is doing what it's it did during FCA Chrysler days to the Canadian Motor Vehicle Arbitration Program when it left that organization as their buyers were winning too many arbitrations and CAMVAP wouldn't keep watering down the program for the benefit of auto manufacturers. There was a few year period before they left CAMVAP ( a free to consumer program) when they took arbitrator decisions they didn't like to judicial review and lost as the courts ruled the arbitrator's didn't err.
The painful thing about this particular extortion is that nobody using the words "crisis", "catastrophe", or "emergency" following the word "climate" - or even milder rhetoric that still acknowledges every day of delay in climate projects will cost lives and fortunes - can't complain.
It's like the Ukraine war money. I believe those who say that corrupt Ukrainians are profiting heavily, selling off donated arms, grabbing money directly. But that all comes down to loss-of-efficiency: the war will cost extra.
Inefficient companies profiteering will make climate projects more expensive, but the need to pursue them is still existential.
It's less aggravating than being soaked for public monies to do active harm, like the even-larger subsidies to fossil fuels.
the jobs promise is a smoke screen. i used to work in industrial automation enabled by 5G networks, computer vision, AI, and robotics. i quit because it's a fancy way of saying have as few humans on a payroll as possible. will this new tech create new jobs? yes, just a tiny fraction of what they will destroy. our team of 10 had almost 100 RFPs in the pipeline. phase 1 of the projects are chosen to be acceptable, like improve worker safety. who doesn't want that? then phase 2+ is make it even safer by not having workers in the first place. this applies to any new industrial projects. they are by far the easiest to justify. existing factories and mines are harder as it's more expensive to retrofit. But the end result is the same. the corporate capitalists and their enablers are selling this as creation of good jobs, but they fail to mention the fine print. it's all a massive con. i quit a high paying job because i wanted no part of this. these deals are not in our interest, but they can't be stopped. a government with a majority can't be stopped, especially when covid taught them they could openly get people killed and their families will still vote for them.
Capitalism only exists in venture capitalism which creates the corporation and means of production. Corporatism is fascism. In Canada, regardless whether using original nazi and fascist corporations 👇 as the examples or not, using pubic funds to finance Volkswagen 👇 and Stellantis (Fiat-Chrysler 👇) is a good example of contemporary fascism.
https://substack.com/profile/137849242-mason-hunter/note/c-16573887?utm_source=notes-share-action
"If the Canadian government is going to throw open the lid on the dumpster, we’re going to get racoons."
😆🦝 Thank you for making this entertaining and not just depressing
Excellent overview of Capitalism democracy.
Bravo! This needed to be said. And the examples are all around us. 2008 bailout stands out but there are many other examples. It was only a few months ago that AOC's opposition to Amazon's ransoming was vindicated, but not before she was pilloried for having the gall to call out corporate abuse:
https://twitter.com/AOC/status/1631706682597179405
She's still being pilloried is the comments are any indication. This is not a flaw, it is how capitalism is designed to work.