Canada, more than many countries, has embraced the dubious notion that corporate tax cuts are an economic panacea, a sure way to spur economic growth and drive job creation.

Over the last three decades, successive governments, both Liberal and Conservative, have cut the federal corporate tax rate from 36 per cent to 15 per cent, now among the lowest in the developed world and lower than even in the tax-allergic United States. During this time, corporate profits have soared, yet the purported public benefits of these cuts have by and large failed to materialize.

Touted as among the best ways to create jobs, corporate tax cuts have by most accounts turned out to be no such thing. According to Ottawa’s own numbers, every dollar spent on infrastructure spending, income supports or housing investments is seven times more effective in creating jobs.

Moreover, predictions of a boom in business investment have proved unprescient. Between 1981 and 1990, for instance, the corporate tax rate was cut by 8 percentage points, yet business investment as a share of the economy actually fell. Between 2000 and 2009, the tax rate was slashed by a further 10 points; meanwhile, businesses invested no more than they had in the previous decade, choosing instead to sit on ever greater piles of money or to use that money in ways that increased short-term profits without creating jobs.

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