We’ve heard it all before – there’s no money and cuts have to be made to some of our most cherished services, including hospitals. But is it true?
The Chatham-Kent Health Alliance is just the latest hospital to announce cuts to cope with a freeze in base hospital funding this year. Last week it was reported the hospital was closing 22 beds and cutting 23.5 full-time equivalent jobs. With these cuts, the hospital is still expecting to run a $1.3 million deficit this year.
While we are told there is no money for public hospitals, there have been some revealing stories in the last few weeks to suggest that there is an “Everest” of cash out there, much of it held by corporations that have been bleating for the necessity of even lower taxes.
A report at the beginning of July by economist David Madani noted non-financial Canadian companies have acquired a pile of cash that they are neither investing nor paying out in dividends to shareholders. The amount is staggering — $526 billion. That’s an increase of 42 per cent since the end of the most recent recession.
The Globe and Mail’s David Parkinson notes that “Corporate Canada is sitting on Mount Everest” compared to the U.S., where roughly $1.3 trillion in cash is similarly held by U.S. Corporations. Canada’s economy is roughly one-tenth the size of the U.S. That means for every dollar of cash held by a corporation south of the border Canadian companies have stashed away $5.
The financial press have echoed Madani’s call for a shareholder dividend from the pile. If just five per cent of that stash were paid out to shareholders, it would increase the average personal disposable income in Canada by 2.5 per cent and do much to jump-start the economy. Such a payout would also do much to bolster Canadian pension plans.
This should also be a wake-up call to politicians who have repeatedly made the argument that corporate tax cuts would lead to more investment and growth in the economy. The evidence is in – Canada’s corporations have had the means to reinvest in the economy all along, but have chosen not to.
Madani suggests Canada’s corporations are flush with cash but reluctant to “deploy” because of an uncertain economy – one made more uncertain by their own actions. It is the ultimate catch-22. The private sector boasts it is up to them to move the economy along, but nobody wants to go first.
There is a simpler way to solve this problem – given corporations are not reinvesting that pile, provincial and federal governments should take back those tax cuts and invest the money directly – perhaps in our ailing hospitals.
A July report from the U.S. Tax Justice Network adds further fuel to the fire as it revises its estimates on how much global wealth is being secretly squirreled away in offshore tax-free havens.
James S. Henry, a senior advisor/global board member with the Tax Justice Network, writes in his July report The Price of Offshore Revisited that at least $21 to $32 trillion has been invested “virtually tax-free through the world’s still-expanding black hole of more than 80 ‘offshore’ secrecy jurisdictions” as of 2010. This is a very significant portion of global wealth, estimated by Credit Suisse to be $231 billion.
The TJN report notes that these tax havens now include jurisdictions within the United States, where financial vehicles are being developed “whose level of secrecy, protection against creditors, and tax advantages rival those of the world’s traditional secretive offshore havens.”
If one of every ten dollars of wealth is going untaxed, imagine the impact on the provincial budget and the services we receive if those loopholes were closed for the super wealthy?
The money is clearly there, whether it be taxing corporations, spurring dividends or closing offshore tax havens.
The question is, do we have politicians with the will to get it?
In 2008 closing offshore tax havens was a priority for all governments. In 2012 it’s not even on the radar.
It seems governments are even more afraid of the rich and powerful than angry hospital users in Chatham Kent.