Disappearing Jobs

[Hamloc]

Dominic Barton head of the federal government's economic advisory council said about 40% of existing Canadian jobs will disappear over the next decade or so due to automation. This paints a rather gloomy picture for our economic future. Any thoughts?

[sofa.king]

I guess those of us left paying tax will have to pay a hell of a lot more. Oh well I guess we will have a clean environment in canada

[Oliver88]

The carbon tax will likely take away more jobs than automation.

When will the "green" jobs start to show up?!

[blackpowder]

Evolution always leaves the unadapdable stranded.
Buffett says govt job to assist those inevitable stranded ride off into sunset.
I say not govt job to increase stranded for sfa.

[15444]

I guess those of us left paying tax will have to pay a hell of a lot more. Oh well I guess we will have a clean environment in canada

I am betting that corporate taxes will go through the roof and kill the remaining 60% of jobs.

[chuckChuck]

It is irrational to think a 5 or 10% increase in energy prices due to a carbon tax will kill 60% of the jobs in Canada. If this increase in energy prices could do that, then we would have seen the job losses when gasoline or diesel went from 1.00 to 1.10 per litre which has happened numerous times.

[Hamloc]

The unfortunate reality in my opinion is that corporations look at the savings in labor costs that can be achieved through automation. Computers and robots do not require a pension and they don't have unions always pushing for more. Unfortunately the next step of governments will be a basic income payed for by the 60% of workers that are left and a large increase to corporate taxes. Let's be realistic what will be left for governments to pay this basic income from. The left wants our resources left in the ground and equal incomes for all. By automating corporations are sowing the seeds of their own demise. Call me crazy if you want.

[chuckChuck]

Corporate tax rates are getting ridiculously low. Guess who will pay more?

Eric Reguly

The Globe and Mail

Published Wednesday, Feb. 01, 2017 5:00AM EST

Last updated Wednesday, Feb. 01, 2017 5:00AM EST

If the people speak to governments through elections, governments speak to the people through taxes. Tax rates and the activities being taxed, from transferring a house deed to filling your tank, tell you a lot about a government’s direction, economic philosophy and vulnerability to lobbying power. Yearly changes can be minor. But trends emerge over the long term, and the one that stands out now says that governments are far kinder to corporations than they are to individuals.

Governments in the industrialized world are allowing corporations to pay ever-smaller proportions of the national income tax haul, meaning that individuals have had to pick up the slack. When the middle class in Canada, the United States and Europe whine about being taxed to death, they have a point. But probably few of them realize the extent of the tax burden piled upon them in recent decades.

Take Canada, a country that is not regarded internationally as a lavish corporate coddler. The historical revenue tables published by the Department of Finance suggest it is. In the 1966-67 fiscal year, 64% of Ottawa’s revenues from personal and corporate income taxes came from individuals, and companies paid the remaining 36% (this excludes revenue from other tax sources, such as sales taxes, non-resident taxes and employment insurance premiums). By the 2015-16 fiscal year, the proportion paid by individuals reached 78%, while the corporations’ share fell to 22%.

The shift of the burden to personal taxpayers is clear by other measures as well. Personal income taxes as a share of Canada’s GDP climbed from 4.7% in 1966-67 to 7.3% in 2015-16, while corporate income taxes fell from 2.7% to 2.1%. In Britain, corporate tax revenues (including bank surcharges and levies, and the petroleum revenue tax) have declined since the 1980s, when they were close to 4.5% of GDP. In the latest fiscal year, they were 2.5% of GDP.

Is it time for the trend to reverse itself? Not a chance. The tax race to the bottom is actually picking up momentum in the United States and Europe. Unless governments choose to run up budget deficits to crisis levels, individuals will almost surely be forced to pay more. But individuals, like old oil wells, start to run out of puff. Before then, they may very well grab pitchforks and lanterns and storm the taxman’s fortress.

The trouble is that the ugly side of globalization is relentless corporate tax competition. Big companies migrate to tax havens, which is why Apple set up a factory in Ireland.

In Britain, there is little doubt Prime Minister Theresa May’s Tory government will soon cut its corporate taxes substantially. Even before George Osborne was ousted as Chancellor of the Exchequer after last June’s Brexit referendum, he wanted to reduce corporate rates to 15% from 20%. The referendum result boosted pressure on his successor, Philip Hammond, to get on with the tax-cutting job. The government is now terrified that banks and industrial companies will flee to European Union tax havens such as Ireland, Luxembourg and the Netherlands, or to the United States.

In last year’s U.S. presidential election, Donald Trump won the hearts of corporate America with his campaign promise to cut the federal corporate tax from the top posted rate of 35% (the effective rate was often far less) to 15%. The new rate would be among the lowest in the industrialized world.

Trump wants to reduce personal taxes, too—he promised to “massively cut taxes for the middle class, the forgotten people.” But various studies have concluded that those Trumpian reductions would benefit America’s richest 1% the most, far less so the middle class, and would actually raise taxes for working single parents.

As Britain and the United States drive down corporate taxes, Canada and other Western countries will have to do the same. Canada’s basic combined federal-provincial corporate tax rate, after abatements, is 26% to 31%, depending on the province. But executives are always whining about that load, which they say is uncompetitive and sends jobs overseas. The whining will surely intensify.

A decade ago, corporate Canada was gripped by the income trust craze. Between 2000 and 2006, the value of income trusts on the TSX went from $18 billion to $200 billion, as companies all but vanished from the tax rolls by converting into trusts and shooting the lion’s share of their profits to their investors. Trust unitholders then paid tax on the hefty, post-conversion distributions. But Conservative Finance Minister Jim Flaherty killed the income trust market. Having argued that the average Canadian was overtaxed, he didn’t want to shift more of the national tax burden onto individuals.

Yet the push for lower corporate taxes never disappeared. Relative corporate tax loads are still coming down in pretty much every country. The message from governments is that they consider individual taxpayers to be chumps. For decades, that assumption has never been proved wrong.

[sumdumguy]

What is sad is that all governments are the same. They pander to the ones that create nothing but know how to protest and demonstrate. We need engines in this economy! No taxes or automation should be able to keep up with the growth in this resource-rich country. Even Harper was unable to turn the bus around.

Carbon that is the backbone of photosynthesis for food and oxygen is getting bashed. Its a crazy world and the fact that some people are daft enough to actually believe in the plan to kill capitalism and destroy the world as we know it - it is insane.

[chuckChuck]

Hamloc, farmers have been no different in adopting labour saving mechanization and technology.

There are major changes occurring in our economies that are very unsettling.

The previous article highlights the fact that the tax burden is being shifted to individuals.

In a globalized world a lot of investment has and will continue to occur in the lowest cost regions. If this is to to be turned around we will need to be smart.

But we still need roads and infrastructure, healthcare and education etc., and somebody has to pay for it.

We have seen that we can't rely on the resource sector to provide long term jobs.

Even the resource sector is getting more labour efficient and using automation.

[blackpowder]

Well the answer is not for the govt to increase hiring.

[Retired]

Not being a religious man but somewheree there is a saying let the man without sin cast the first stone. How many of you havent got bigger machinery to make more money with less labor and by doing so you displaced someone that was making a living on his own, but you priced him out of the market.

[GDR]

So think about it this way, assuming automation or Labour were the same cost even though I'm sure they aren't. If a $50000 annual machine cost replaces a $50000 job, either way a tax deduction to the business. Problem is the machine doesn't pay income taxes like the employee would. Lost tax money plus perhaps now have another person on social services - double whammy.

Maybe the business tax system should be changed to a much higher rate with credits given back for each employee / salary dollar or whatever. Or find a way to tax the automation.

We can't have everyone sitting around collecting welfare.

Automation for most things probably makes a better product. But I sure hate the self checkout crap these days. I for one stand in line for the one till with a real person running it and I'm usually not alone. Grocery, hardware, Walmart, McDonald's all going that way.

[ajl]

Financial repression with artificially lower interest rates further skews the labor vs capital decision in favor of capital. This is why having central banks go nuts with the printing press all around the world was the dumbest thing to do and the fallout from it will be felt for decades.

[macdon02]

Anyone follow Canadian demographics? Lol we are screwed. Automation will be the least of our worries. I see it everywhere. Baby boomer generation family consisted of 4 minimum, if not 8 or 10 or more. I was born in the 70s, 3 kids was normal. Well I had 2 before I got snipped. So how exactly are the boomers pension getting paid if young worker population continues to decline? Life expectancy continues to go up with better health care. This just isn't gonna end well. Peter Zeihan has a decent presentation on YouTube regarding demographics. I don't agree with everything he says but I do on birthrate. I won't even venture into the discussion on which segments of society have the higher birthrate. It's plain as day. I see a day coming when relying on govt for income is over. We might have to rely on children to take care of us in retirement as the previous generations did without care homes. I suspect it was Obamacare premiums jumping 40% this year that put the writing on the wall as far as automation is concerned. One needs to look past the backyard sometimes this didn't start in Canada. Just read tonight that Bank of America is running 3 branches with no staff, atm's and video conference to lending staff. I'm really pushing for my teenager to look at computer programming or repair for a career. Artificial intelligence will be the other big sector. Even if he farms I suspect in 10-20 years iron will drive itself and our skill set shifts from pulling wrenches and welding to more tech. There will be no position for someone that drives anything, cabs, bus, truck. Anyone been to an airport lately? Scan your own passport and self checkin. I saw McDonald's has a machine that will cook and package a meal on its own. Like the industrial revolution employment will shift again. So many were employed in ag till iron came along, so it'll shift again. There's absolutely massive change going on in the world if you stop and look around. Nothing is impossible. Who knows maybe consuming for a living will shift back to its roots and everyone will do the vertical farm in the basement and use a 3d printer to manufacture what you need at home.