I'm a business owner, and corporations are not paying their share of tax
Terry Hussey: I'm a business owner, but I wonder if we are oblivious to an act of corporate thievery
I think something might be wrong.
A few weeks ago, I dug into the reality of corporate taxation as a revenue source for Newfoundland and Labrador. I wanted to consider the sum total of what we collect as an economy from the businesses that operate and generate value in our province. It started out as exploring something that I was curious about. It ended with questioning the very nature of our entire economic and social system.
In 2016, our economy was $31.82 billion. The government of Newfoundland and Labrador received $1.38 billion in personal tax revenue. It received $323 million in corporate tax revenue.
Approximately 333,897 Newfoundlanders and Labradorians (76.5 per cent of all workers) earn $55,000 or less per year. Those same 333,897 people paid $330 million in personal tax.
So, 76.5 per cent of our workforce paid the same total amount as every corporation who operated in our province — combined. That feels wrong.
Think about that. If you view this from the highest perspective: our society as a whole generates $32 billion in value to the world in some form. Our government operates with a $8-billion budget, so that means that the remaining $24 billion is largely created by the private sector. The society that enables private businesses to generate $24 billion in economic value only receives $323 million in taxation.
People in our province are not prospering; 77 per cent of us make less than $55,000 per year. Many lived paycheque to paycheque before COVID-19 hit the world. Now, the sense of despair and hopelessness is palpable.
The pandemic has affected people very differently
Just about every person reading this article will know someone who is suffering because they do not have enough money to make ends meet. Why is that acceptable to us?
Yet somehow stock prices have been at record levels during the pandemic. Front-line grocery workers in our province were given a $2 an hour "hero pay" increase as acknowledgement of their sacrifice while working during a time of enormous fear, stress and risk.
While we huddled in our homes they went to work every day for less than $15 an hour. Recently, the "hero pay" was cut across the entire sector despite profits and stock prices being higher than ever. How can that be allowed?
A recent report from Ricochet detailed how profitable the COVID-19 pandemic has been for the wealthiest people in Canada. The richest 20 people in our country have gained $37 billion in wealth since March. What could that $37 billion do for the people in our country who are struggling to pay rent? Who are watching their meagre life savings disappear as they try to survive each week?
We don't have to look far to see the human cost of not thriving economically. Every day can be a struggle.
Parents put on a brave face for our children while crying into their pillows at night, not knowing how they will find the money to pay for their clothes for school. We have done this for decades. Nothing has changed.
While families try to find a way just to survive many corporations are finding more creative ways to hide profits and minimize the already small amount of tax they owe to our society. Whether it is moving labour to a country where it is cheaper because labour rights laws are nonexistent or simply lobbying our politicians to pass favourable tax legislation, the end result is the same.
Companies are worth more than ever yet always find a way to report the tiniest of "taxable profits."
Why I'm frustrated
Much of my frustration with this situation stems from the fact that I am a business owner in Atlantic Canada. I know all too well how much this system advantages corporations of all sizes, but especially the largest ones.
I see other business leaders fight aggressively against more taxes and increasing the minimum wage. I understand their arguments and I reject them completely.
They are built on false narratives that ignore the reality facing the rest of our society. I've wondered whether we could afford to pay more in taxes each year. The answer is yes. Would it be difficult? Yes. Would it kill my company? No, it would not. It would require us to innovate and adapt, which we are capable of. If my tiny business can afford to pay more in tax then surely a company making hundreds of millions in profit should be able to.
Back to N.L., how can it be acceptable that the corporations who financially benefit from our society to the tune of $24 billion in economic activity pay only $323 million in taxes to support public services for that same society?
We keep arguing about trivial issues when the largest issue has been hidden from our view; our economy generates more value than any point in our history but none of it is helping regular people. Another recent study shows just how horrific that fact is.
After the Second World War, the earnings of the workforce of the U.S. grew linearly with the gross domestic product of the country. This was a period of unprecedented economic growth and prosperity in the U.S. and here in Canada as well.
Since the early 1970s, the majority of the wealth generated by the U.S. economy has been captured by a tiny fraction of the population. If worker earnings had continued to grow in line with the economy as it did in the 1950s and 1960s the average person in the U.S. would be earning $102,000 per year instead of the $55,000 they currently earn.
This study calculates that nearly $2.5 trillion per year is taken by the wealthiest rather than making its way to the working class.
Imagine how much better life would be for people in our province if 77 per cent of us made $110,000 or less, instead of $55,000 or less.
Have we been caught unaware?
I started out wondering whether something was wrong, and now I wonder how we didn't recognize an enormous act of thievery.
Nearly 50 years ago, Milton Friedman published an essay that stated that corporations exist with a sacred responsibility to make money. Friedman and other free market proponents argued that if corporations focused on earning as much money as possible and governments did not interfere, the economy would be stronger and all of society would benefit. This philosophy has been at the heart of our capitalist society ever since.
We have been admonishing corporations for years to act with "social responsibility" but nothing has changed. Things have just gotten worse. Our society is being plundered for its riches every day and we spend our time being distracted by our digital addictions and whatever wedge issue currently being pushed on us to keep us from realizing the ugly truth: we are all being robbed by the wealthiest and most powerful people in our society.
They don't care about us. They don't care that you are barely scraping by. "Work harder," they will think as they sit down for a gourmet seven-course meal.
The pandemic has not hurt them economically. It has merely inconvenienced them since they cannot freely travel around the world like before. They refuse to acknowledge the human cost of this corrupt system of theft and greed.
That human cost is worsening every day. This isn't about whether corporate tax in N.L. is the same as it is in Alberta, or Ontario, or the U.S.
That is a distraction from a singular truth: corporations have been weaponized by the ultra-rich and powerful to extract wealth from all of us. It is happening everywhere. Our leaders talk about whatever issue makes them look good while we keep suffering. We wait for someone to step forward and point the way to a better future, while more and more people slip into depression and despair.
I think something might be wrong.