The recent relocation of Caterpillar’s Electro-Motive operations in London has NDP and Canadian union leaders’ shorts in a knot. Union leaders really cannot be criticized for balking at the company’s demand that their employees take a 50 per cent pay cut to help keep Electro-Motive going. NDP spokespersons, however, should be admonished for their seeming lack of understanding of our tax system.
Frankly, I expect more from our lawmakers—even our socialist ones.
To listen to them rail about corporate tax cuts, you’d believe that in Canada all annual wages and profits initially belong to governments, i.e., a 100 per cent rate of tax. Governments then, apparently, reduce the rate for various groups, including corporations, in return for concessions or benefits.
But our free-market, democratic system doesn’t work that way—it only seems to.
In reality, of course, all annual wages and profits initially belong to those who earn them. It’s their money, some of which they share by paying taxes.
Opposition MPs’ have called on Prime Minister Stephen Harper to demand that Caterpillar return the millions of dollars in tax breaks and incentives it has received. This implies the MPs believe Caterpillar’s profits belonged to the government in the first place. No they did not!
Corporations and individuals have first claim on their wages and profits. And they have every right to do with them as they please. To demand that corporations be made to re-invest profits to provide jobs is a socialist construct and has no place in a democratic system that is based on a free-market economy.
I too am disappointed to hear that Caterpillar is closing its plant and I sympathize with the workers who have lost their jobs. But let’s be realistic. If consumers demand ever lower prices for goods—even driving across the border to get them—corporations who make the goods will seek out lower-cost jurisdictions, even if they have to cross the border to do so.
And that is their democratic right.