Reduce the cost of doing business

Andy Prockow denies that redistributing income from richer to poorer people can promote economic growth. However, contrary to Prockow’s view, people with low or modest incomes spend more of their income on goods than do rich people.

Moreover, spending by low or modest income people creates more jobs per dollar spent than does spending by rich people. For example, 10 people buying 10 homes at $250,000 each create many more real estate jobs than does one person buying a $2,500,000 home. This can be generalized to all goods sold at significantly different price points.

What Prockow does support to stimulate the economy is reducing taxes on business. However, what is to ensure that businesses would spend greater after-tax income on expanding their business or increasing productivity? The Conservative government has already reduced corporate tax rates in Canada with no evident effect on economic growth or productivity.

It seems to me that rather than reducing taxes on company profits, the government ought to make it easier for companies to make a profit by reducing their costs. For example, the government can reduce taxes and import duties on capital goods and lower payroll costs for newly hired workers. This way, businesses can benefit from these reduced costs only by actually investing in new technology or hiring more workers. And modestly paid workers given more money to spend can create a demand for the increased goods these businesses can produce. Robert Hajaly, Montreal