In Canada, the federal corporate tax rate is headed to 15% in 2012, and the federal Conservative government has called on the provinces to get to a 10% business levy by the same timeframe – for a combined 25% rate on corporate income. Alberta is already at 10%, British Columbia will be there in 2011, Ontario by 2013, and New Brunswick will go down further, to 8%, in 2012.
In the United States, the top corporate tax rate is in the mid-30% range. As a result, the U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries.
Finally, there is the current White House proposal to remove the incentives for U.S. companies to invest overseas, and curb the use of offshore jurisdictions by companies and investors.
“If the U.S. tightens up on the tax treatment on foreign income, many Canadian companies — as well as other foreign entities operating in the U.S. – might look to put headquarters and holding company functions in Canada since dividends from foreign affiliates are not taxed by Canada,” said Jack Mintz, a public policy expert from the University of Calgary and a renowned tax expert.