From: Maureen Flynn-Burhoe
Sent: April 24, 2005 5:39 PM
To: Jamie Brownlee
Subject: Ruling Canada

Hi Jamie Brownlee,

It took me an hour to choose a book last week in an Ottawa bookstore. I finally chose yours, Ruling Canada: Corporate Cohesion and Democracy. I have been engaging with your well-crafted arguments ever since. So it is not surprising that I thought of you while reading a front-page article in the Globe and Mail entitled “Canada’s top 10% pay 52% of total tax bill.”

I am concerned by the lack of participation in public debates in the mass media by strong, well-informed writers capable of countering prevailing arguments that continue to pit economic efficiency against social services. Your book was clearly written in accessible language. You understand the crucial role of the mass media in informing the public (Hackett and Zhao 1998). Recently a couple of articles were published by the Ottawa Citizen (Paraskevas 2005) and The Globe and Mail (Grant 2005). Your book responds to these blatant manipulations of statistics. Your section on the indecent disparity between rich and poor is convincing because you have the most recent research to support your statements. The fact that 100 Canadian citizens are worth $120 billion may help to explain why Canada’s top 10% pay 52% of total tax bill. If 94.4% of the wealth is controlled by 50% of family units then suddenly the 52% of the tax bill seems insufficient! If 50% of family units only earn 5.6% of the wealth they are paying too much in taxes!

Although I have taught human rights as an introductory course, I do not have your level of literacy in political sociology. A response from you would have more weight because you have already published on the way in which contemporary political and corporate power relations exacerbate social inequalities in Canada.

The community with which I work most closely is the Inuit community. I was deeply shaken by the suicide clusters while teaching human rights in Iqaluit. I am aware of the prevailing political arguments that continue to produce budgets that protect the belongings of those who have, and heighten risks of social exclusion through poverty and violence of the most vulnerable sectors of our society (Stavenhagen 2005).

Would you consider writing a succinct response to these outrageous, self-serving manipulations of facts evident in these articles (Paraskevas 2005 Grant 2005)? Even if the Globe and Mail or the Ottawa Citizen would not print it, it could get exposure through the internet. I personally would happily draw attention to your informed response any way I could.

Maureen

PS. Congratulations on the publication of your book. I would certainly add it to my course reading list when and if I teach again.

Brownlee, Jamie. 2005. Ruling Canada: Corporate Cohesion and Democracy. Halifax: Fernwood Publishing.

Grant, Tavia. 2005. “Canada’s top 10% pay 52% of total tax bill.” Pp. A1-A10 in The Globe and Mail. Toronto

Hackett, Robert A. and Yuezhi Zhao. 1998. Sustaining Democracy? Journalism and the Politics of Objectivity. Toronto, ON: Garamond Press Inc.

Paraskevas, Joe. 2005. “Richest 10% of Canadians pay highest portions of taxes, get smallest share of tax cuts.” Pp. D2 in The Ottawa Citizen. Ottawa

Stavenhagen, Rodolfo. 2005. “Report of the Special Rapporteur on the situation of human rights and fundamental freedoms of indigenous people of Canada.” Commission on Human Rights. StavenhagenReportE.CN.4.2005.88.Add.3.pdf

Maureen Flynn-Burhoe


From: Jamie Brownlee
Sent: Monday, May 09, 2005 4:24 PM
To: Maureen Flynn-Burhoe
Subject: RE: Ruling Canada

Hi Maureen,

I haven’t read the articles on taxation that you mention, but they appear to be familiar jargon. They point to the same kind of misleading information that is all too common in our media, especially places like the Globe and the National Post. The fact is that our tax system favours corporations and the wealthy to an extraordinary degree. The Conservative and Liberal governments of the past few decades have shifted the tax burden on to the backs of workers and middle-low income earners. In fact, our tax system is one of the least progressive of all industrialized nations. The GST, for example, was an extremely regressive tax that transferred billions of dollars in taxes away from corporations on to the backs of individuals and families. Today, corporate taxes in Canada are well below that of the United States, which is really saying something (the statutory federal corporate tax rate in the US is 34% and the rate in Canada is now 21%. The combined, effective tax rate in Canada is just under 6% lower than in the U.S.). Canada is one of only three industrialized countries without a tax on inherited wealth. In the book I mention Paul Martin’s record-breaking program of tax cuts which radically reduced much needed revenue for future social programs, and help to lock in existing program cuts. Overall, the plan cut federal taxes by $100 billion. Having already decimated public services in his crusade against the deficit, Martin essentially wiped out the government’s fiscal capacity to rebuild the services and transfers that were cut in the 1990s. The massive tax cut package was so disproportionate in its favouring of the highest-income taxpayers that it makes Brian Mulroney’s conservatives look like progressives.

There are a number of specific cases that you may be familiar with too. For example, a tax ruling in 1991 by Revenue Canada allowed the Bronfman family to move more than $2 billion worth of Seagram company stock to the United States tax-free. This decision permitted the family to avoid paying as much as $750 million in taxes, money which otherwise could have been used for healthcare, education, etc. In response, a social activist from here in Winnipeg actually launched a class action suit against the feds. For more information this you may want to look at: Smith, Doug. 2002. How to Tax a Billionaire: Project Loophole and the Campaign for Tax Fairness. Winnipeg: Arbeiter Ring Publishing. In a similar case some years earlier, the government allowed the Reichmann family to save $500 million in taxes in connection with the purchase of Gulf Canada.

I’m sure you heard about Ralph Goodale’s plans to cut corporate tax rates even further. The announcement, outlined in Mr. Goodale’s latest budget, would have seen Canada’s statutory corporate tax rate reduced from 21% to 19% as of 2010 (the statutory rate was 36% as late as 1987 and has been slashed ever since), and the elimination of a general corporate surtax. The cuts were valued at around $4.6 billion. I think it is very important that we support the deal worked out between Martin and the NDP to shift these tax cuts toward critical social goals. This is how minority government are supposed to work, and we got the best of both worlds: more money for important policy areas and the elimination of tax cuts for those who need it least. Of course, we should be prepared for the media to scream about this for some time. After all, we are continually fed the worn out media-myths that Canadians and Canadian business are over-taxed, that taxation threatens the incentive to work, that corporate taxation stifles investment and threatens “international competitiveness,” etc. etc. These arguments have little to no merit, but are useful justifications for the elimination of taxes for the most affluent members of society, and for ensuring that the government lacks the money to reconstruct Canada’s decimated social programs and services. For example, evidence suggests that taxes are not a major factor in corporate investment decisions. Surveys of CEOs, for example, show that taxes rank from 5th to 7th place in terms of priority, behind things like an educated work force, access to resources and markets, land costs, labour costs, and social infrastructure. There is a lot more to say. The Canadian tax system preserves (and continues to enhance) the rampant inequalities that now exist in Canada. Of course, under the right political circumstances, it could be used to do just the opposite.

Unfortunately, I don’t have time to write a specific response to those articles as I am set to hit the road again tomorrow, but I can direct you to a few sources if you are interested. Are you familiar with the Canadian Centre for Policy Alternatives? I would suggest looking at their website to access some excellent information on taxation. As you probably know, countering prevailing myths propagated by elites and the mass media is one of the CCPA’s specialties. Their website is www.policyalternatives.ca. For specific information on taxation, go to “Research and Publications” at the top of the page, then “Reports and Studies” at the left. Then, if you search the topical index, “taxes and tax cuts” is near the bottom. Also, I would highly recommend the work of Neil Brooks, a professor of law at Osgoode Hall Law School in Toronto. He is a committed and passionate scholar and one of Canada’s foremost experts on taxation.

Jamie Brownlee


From: Maureen Flynn-Burhoe
To: ‘Jamie Brownlee’
Subject: RE: Ruling Canada

Thank you for your thoughtful response. Your letter is already a well-crafted response to the newspaper article! Perhaps I could at least post my letter and your response on my web page with your permission?

From: Jamie Brownlee
To: Maureen Flynn-Burhoe
Subject: RE: Ruling Canada

Hi Maureen,

Certainly you can post my response on your web page. If you do so, please use the copy that I modified and reprinted below (I changed a few of the sentences and added a bit of material).

[This is reflected in the section above.]

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