Problem
I have no problem with tax credits. The decrease in EI payouts, and the increase in income taxes/GST/PST will offset the losses from the corporate tax. In fact, I'm against corporate taxes in general, except at a minimal level, since they probably get downloaded to the consumer in the form of lower pay/higher prices. Haven't done much research on the subject, though.
The problem with the logic that income taxes etc. etc. will off-set the loss from the tax credits is that it only applies if either:
A) The people who receive Ubisoft jobs are currently unemployed, on EI etc .
B) Those same people currently do work at significantly lower wage rates.
I find either scenario to be unlikely.
For the most part I don't think we have an abundance of unemployed and underemployed software engineers. Undoubtedly we have some, as we do have some unemployment in almost all sectors, in any economy.
However, a profession where we don't have enormous number of graduates, in a growing profession, where those workers are comparatively high-skill does not sound like a likely profession to have an inordinate unemployment rate.
So it would seem unlikely that these jobs will represent, in the majority of cases, workers going from EI or Social Assistance to employment.
Rather, there will likely be some competition for existing employers of this type in the City, in which employees are poached and average wages go up modestly....
And there will likely be some workers poached from other Cities, including, likely other Ubisoft offices.
Under this scenario, the gains are not nearly as large.
If one assumes that workers are already employed, and in Toronto, but simply switch jobs for a modest pay hike, then there is some peripheral increase in income tax, but only on the marginal increase in income; and the higher wages are partially offset by likely reducing the profitability of other Toronto area employers in this sector in short-term due to a wage spike from competition for workers.
If one assumes a large number of workers from out-of-province relocating here, there is indeed a gain. But the marginal gain is the 'profit' the government shows after deducting for new service delivery costs.
This is far less than the gross increase in income taxes.
Further, to the extent these workers are just poached from Quebec or somewhere else in Canada, that other province will suffer a decline in circumstances, which will be compensated for through Federal Equalization payments which will take back a portion of any gain.
I'm not opposed to strategic intervention, particularly though education, infrastructure and basic social supports, but corporate welfare looks very thin-end-of-the-wedge to me in terms of government giving away tax dollars for very little gain, except to the recipient business.
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As a side note to the suggestion that doing away with corporate taxes makes sense.
The problem is the same as doing the Income Trust situation, which didn't last.
First off, the government needs some money from somewhere to function.
If you create a tax-shelter scheme under which you can amass an unlimited profit, tax-free, so long as those profits remain within the tax shelter (in this case the company) then why wouldn't everyone parking their money in the shelter, leaving the gov't with a revenue collapse? In turn this either leads to drastic spending cuts; or you would have to raise other taxes significantly to compensate.
Of course its true that taxes businesses taxes their consumers/shareholders etc. But taxing consumers, reducing their discretionary spending effectively taxes businesses; everything affects everything else. The key is striking a balance that comes closest to delivering the most desirable results with the fewest consequences.
As our corporate taxes are already below those in the United States and set to drop to among the lowest in the developed world in the next few years, it would seem, should room be available for tax cuts, it would be more prudent to reduce income taxes on low-income earners, an area where we tax inordinately to the rest of the world, and to our own detriment.
