Wednesday, February 18, 2009

The Economic Benefits of Income Trusts

Economist, Dr. Avery Shenfeld, on “The Economic Benefits of Income Trusts,” Economic Perspectives, CIBC World Markets, March 7, 2003.

Income trusts encourage a flow of investment capital to projects with solid rates of return.

2. Income trusts tie the ability of managers to retain earnings and thereby prevent the “burning” or waste of excess cash flow.

3. Income trusts lower the effective corporate income tax rate in Canada, which enhances Canada’s competitive position as compared with the United States.

4. Income trusts do not represent “special treatment” in their ability to shelter income from corporate-level tax by means of the deduction of corporate interest expense, which is available on corporate indebtedness generally.

5. Income trusts do not result in an absolute revenue loss, since lost corporate revenue is offset, in part, by increased and accelerated personal tax collections.


Dr Mike said...

Who should we believe here , Dr Avery Shenfeld a practicing economist or a fly by the seat of his pants lawyer Jim Flaherty.


Dr Mike.

Anonymous said...

Wow, actual facts about Income Trusts. Hmm actual DR. credential in front of his name and the word ECONOMIST in his job title. I will take this guy's word over Flaherty's on income trust any day.

Sounds like Dr. Mike received the York U alumni mag and saw the spread with Jim F, Ernie Eves and Jack Layton on their celebrity page?
Pathetic! Shame on their editorial board for doing that. But we do know from that stupid spread neither Mr. Flaherty or Mr. Layton spent anytime with the old business school or the new Schulich one.