Sunday, February 20, 2011

Paradox of the Rate

It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion. 
Adam Smith, The Wealth of Nations..., Book V, Chapter II, Part II, Article I, p. 911

It is with increasing consternation that I and you, have to deal with the logic of the Conservative Party of Canada Bund in respect to further lowering of corporate tax rates. If you are presently alive and breathing on your own, and have the luxury of an I. Q. greater than a houseplant, you are aware of the presence of corporations in your everyday life. A corporation is essentially a legal person created to pool capital for ventures while protecting the investors with something called; limited liability. Or the great deal of putting up money, and not having to worry about being called on to pay way more in the future, like could possibly happen in the nightmare scenario of a proprietorship. I don't want get too deep into this here and now. But the creation of the modern day corporation as we know it today is a very interesting story. A really great little book that will bring you up to speed real quick is; " The Company" - A Short History of a Revolutionary Idea. By; John Micklethwait and Adrian Wooldridge. 

Congratulations! Your an Owner!!
 Now today there are thousands of listed corporations. You and (for sure) I can buy shares or essentially pieces of ownership in the entity we are interested in. Great idea all around isn't it? There are as a rule of thumb i.e the rule I use to select company shares to buy and hold for eventual profit is that there are essentially three kinds of companies. Growth companies, think RIM and APPLE. Value companies, think Trans Canada Pipe and Russell Metals. Then there are all the rest...or known in the business as commodity plays. For example an airline is a commodity business. You can choose from a score of the damn dogs to take you where you want to go. Essentially a crummy business, throat cutting competition, high constant risks.. nothing but more of the same to look forward to in the future.... (But air freight! Can be a hell of good ride...)

As you are no doubt aware, there are good corporations that you never even hear about and there are,truly are, bad corporations that are in the news darn near all the time. When I was a just a little kid in the 1960's the corporate tax rate in Canada was 40%. There seemed to be corporations all over the place even then! I can't seem to recall any leaving the calm and stability of Canada because the corporate tax rate was to high!

Now part of Sony Corp.
  As the Tory's continue to lower the corporate tax rate ever lower, which companies do you think in the future will find Canada attractive? Oh you in the back! Your sharp! You are going to have a skidmark flood of companies like "Acme Lead and Acid" or "Gimcrack Radioactive Undisposable Waste Inc."  It will be a freaking NIGHTMARE!! That is the paradox of low corporate rates! Meanwhile as this is happening, all the posh outfits, like the drug companies and the cutting edge manufacturers, will be heading to the European Union! To the high tax rates and the golden stability found therein.   

The argument that the Tory's give to you and I is the cover story. The cover story hides the hidden agenda. The hidden agenda is to reduce all the social treasures of Canada to a memory. The ultimate goal is to convert Canada to a social penal colony. (Co-ordination by the Bilderberg Group.)  I am deadly serious folks. If you want the society you dream of with all the best companies beating at the doors to get in, put the corporate tax rate back to 40% ! 


 See! I am not the only one upset with wee Jimmy.....

No comments:

Post a Comment