Saturday, August 16, 2008

Jack Mintz should be charged with impaired policy driving

There's nothing more dangerous than Jack Mintz's theories on the fly. First his wild and unsubstantiated views on tax leakage and this piece from April 2007 below espousing the virtues of trust takeovers.

His thinking is impaired by his huge bias against trusts on behalf of the special interests he advocates on behalf of, such as corporations-at-large (like Brookfield Asset Management on whose board he sits) and US Private equity firms who he gives tax advice to with the view to eliminate the payment of taxes in Canada.

Meanwhile Jack Mintz can hardly be viewed as being independent of the Department of Finance either, since he worked there and remains tied to them. He is the Department's surrogate spokesman and public foil.

Professors should be licensed as truly independent and/or certified as competent before they are allowed to run reckless over the Canadian economy with their wacky ideas cum hidden agendas.

Perhaps Jack Mintz can describe how well this lame post-action-rationalization theory of his panned out for BCE or the now 45 trust takeouts:

Tax expert says change in ownership could result in better management, productivity

Globe and Mail
April 4. 2007

OTTAWA -- Ottawa's hefty income trust tax is making trusts more vulnerable to takeovers -- but that's not necessarily a bad thing, because ownership changes tend to usher in better management, a leading Canadian tax expert says.

Jack Mintz, a business economics professor at the University of Toronto's Rotman School of Management, says trusts were shielded, to some extent, from takeovers prior to the federal trust tax announcement because their relatively high market values made purchases more prohibitive.

"It allowed managers maybe to avoid the threat of takeover -- and therefore encouraged inefficiency," said Mr. Mintz, who's not a fan of the trust structure.

"There's a lot of Statistics Canada evidence now to show that even foreign companies have done a pretty good job of running Canadian companies and improving their productivity -- that maybe this is all not such a negative thing after all."

here have been 12 takeovers of trusts announced or proposed in the five months since the Harper government announced a surprise 31.5-per-cent tax on income trusts, according to Deloitte & Touche.

The measure put downward pressure on income trust unit values, increasing the incentive for outside buyers to scoop them up. It has also made access to capital for these business more difficult.

Prof. Mintz says trusts could end up being run more efficiently and productively by new management.

"When you are operating as an income trust and have the high valuations at that point -- and the very high distributions -- it made it difficult for someone to come in and do a takeover based on such a very high valuation," Mr. Mintz said.

Finance Minister Jim Flaherty sold the trust tax as a way to recoup tax revenue that these corporate structures were not paying, but critics say the measure will ultimately cost Ottawa money as takeovers put trusts in the hands of entities, including foreign private equity funds, that won't pay Canadian federal taxes.

New foreign owners of trusts would pay less Canadian tax, says Ogilvy Renault LLP's Leonard Farber, a former Finance official. "Foreign takeover will result in less tax at both the federal and provincial levels," he said yesterday.

First, he said, there'd be no more tax revenue from Canadian investors, who generally pay tax at a higher rate than corporations.

"[Also], private equity will load up debt in Canada on the strength of the Canadian asset base, rendering the operation basically non-taxable in Canada, and interest crossing the border will be free of withholding tax."


Randy said...

All I can say is I've finally heard of someone more incompetent than Flaherty.

How wonderful is that!?

Dr Mike said...

Jack (I never saw a tax I didn`t love) Mintz would sell his soul to the highest bidder.

He is an expert alright---an expert in paying the least amount of tax possible.

He believes that moving from a high paying trust structure to a non-paying private structure is the way to go.

The amazing thing is that Jumpin Jimmy Flaherty believes whatever this guy says.

Jim -- time to wise-up.

This guy is promoting less tax for you--less tax means there is leakage somewhere.

Oh CRAP--just dawned on me--this must be the leakage Jim was talking about.

Finally , we have figured it out.

Dr Mike Popovich.

Anonymous said...

We need an investigation. Two questions are: (1) Who gave Carney the agenda to cripple trusts? (2) Why did the Dept of Finance use an outside exspurt?

Carney was hired under the Liberal watch, and he showed up with an evil eye for income trusts. We need to know more about who's who and what when in this connection. Not to forget that Goodale resisted a first attempt to weaken trusts.

Mintz's work is deeply flawed. Clearly he was given a conclusion and told to manufacture the proof. He's been rewarded with a cushy Chaise at the University of Claxton.

Also, this is a case where the Finance Madam ensured that BCE got hooked up with the right john.