Policy Forum: Business Tax Reform in the United States and Canada

Canadian Tax Journal/Revue fiscale canadienne, Vol. 67, No. 1, 2019

10 Pages Posted: 23 May 2019

See all articles by Kenneth J. McKenzie

Kenneth J. McKenzie

University of Calgary - Department of Economics; University of Calgary - The School of Public Policy

Michael Smart

University of Toronto - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 23, 2019

Abstract

The authors examine some of the key features of the US Tax Cuts and Jobs Act (TCJA) and discuss the implications for Canadian corporations and government revenues. They show that the tax advantage that Canada enjoyed prior to the TCJA has declined significantly, in terms of both statutory and effective (marginal and average) tax rates. They discuss the economic effects of possible responses to the TCJA by Canadian governments, including cutting statutory rates and accelerating tax depreciation deductions. Looking ahead, the authors argue that it would be preferable to focus on a more fundamental tax reform based on the taxation of economic rents.

Keywords: tax reform, corporate taxes, investment, tax rates

Suggested Citation

McKenzie, Kenneth and Smart, Michael, Policy Forum: Business Tax Reform in the United States and Canada (April 23, 2019). Canadian Tax Journal/Revue fiscale canadienne, Vol. 67, No. 1, 2019, Available at SSRN: https://ssrn.com/abstract=3362906

Kenneth McKenzie (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

University of Calgary - The School of Public Policy

Calgary, Alberta
Canada

Michael Smart

University of Toronto - Department of Economics ( email )

150 St. George Street
Institute for Policy Analysis
Toronto, Ontario M5S 3G7
Canada
416-978-5119 (Phone)
416-978-6713 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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