Should there be special corporate taxes?

It has been estimated that two or three trillion dollars in cash are sitting idle in the coffers of large corporations. They are waiting for the economy to pick up, before investing in production or raw materials. Consequently the economy is waiting for them to invest.

I propose a modest tax on cash holdings. It used to be a side effect of inflation, but that’s pretty small right now with GDP barely moving forward. So one can sit on cash, and make enough interest to break even in constant dollars.

A very small tax – say a tenth of one percent – would bring in three billion dollars, by the above estimate. Governments could use this to re-fund things like meat inspection, pro bono lawyers, school classrooms, roads even.

Coroporations can move assets to other jurisdictions to avoid legal obligations. In today’s Star the article on Germany points out (among many other fascinating things) that money was moved by their banks to places like Ireland where they did not have to back up liabilities with assets. It was a way to get more leverage.

Since moving of money around is generally bad news for the country of exit, I propose a tax on large financial transactions. Again, a tenth of a percent seems reasonable. I note that such a proposal has been made in the Euro zone, quite recently. I seem to recall that, at the height of the 2008 panic, such a tax was discussed and shot down by our prime minister and his then minister of finance.

An additional benefit of these two taxes would be public knowledge. I think we all have the right to know exactly how much money are foreign-based ‘Canadian’ firms are holding out of the economy, and exactly how much they are moving to the Cayman Islands, or wherever.

Presumably if it is paid, it shows up in shareholder reports. We would know.

Now for the dumb question: What do you think the chance of either of these taxes coming into being, is? Hint: do you have, as a citizen, a lobby group and lots of money with which to influence public policy? Do the corporations have any such influence?

That’s why it’s a dumb question.    sigh.

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