Boosting Canada's Competitiveness by Reforming Business Taxation

Canada has an opportunity to change the way it taxes businesses and in doing so, could vastly improve the country’s attractiveness for investment, improving economic growth and raising living standards for Canadian workers.Specifically, the business tax system can exclude money reinvested by companies into new plants, machinery, equipment, and research and development, and instead only tax disbursements.The study suggests one way to reform business taxes would be to stop taxing all business profits, as is currently the model across Canada. Instead, only tax profit disbursements, which include dividend payments, share buybacks, and bonuses. Profits that are reinvested into the firm would face no business income taxes.