Dear Editor:
Thanks for your editorial (Housing seniors too important to rely on charity, Our View, The Record, April 2) denouncing service cuts to seniors in our community. Why is it happening?
Largely because governments refuse to tax corporations and corporations' refuse to reinvest profits. The Great Recession "officially" ended five years ago, but investment remains sluggish. Instead, companies enjoy huge profits while sitting on mountains of cash.
Firms are not short of profits: 2013 pre-tax profits were 11.6 per cent higher than in 2007, $594.1 versus $532.1 billion. But in 2013 corporations paid 5.7 percent less tax as a proportion of profits than in 2007. Governments claim tax cuts stimulate investment. They don't: 2013 real investment in machinery and equipment was 3.7 per cent below 2007.
So where do profits go? To shareholders and owners. Canadian firms actually paid more in dividends than the total of pre-tax corporate profits in 2013, just as in every year since 2009. Hoards of cash sit idle. Canadian companies' "dead money" equalled under 10 per cent of GDP in the late 1990s; now it's over 30 per cent. StatsCan says corporate hoards totalled $626 billion at the end of 2013. That could provide a lot of services to seniors!
Isn't time we end the tax holiday and redirect wealth back into our communities?
K.B. Pollock, Sapperton
