Last year a large tax cut took place in the US. In particular, the corporate tax rate was reduced from 35% - one of the highest in developed countries, to 21%, closer to the average (he data on tax rates are here. This is much closer to the rate in Canada (15%) and so reduces the incentive for investment in Canada.
A report to be released today by PwC warns that, as a result, "the U.S. tax changes put 635,000 Canadian jobs at risk and could potentially reduce Canada’s GDP by $85-billion, representing 4.9 per cent of the Canadian economy", according to an article by the Globe and Mail.
That strikes me as a huge exaggeration. The effect on the US economy is estimated to be between 0.3 and 0.9% of GDP. But, in any case, it shows the importance of the economic links between Canada and the US. No wonder the NAFTA negotiations are crucial to the Canadian economy
No comments:
Post a Comment