“It’s time we get the facts on the table. Business investment has been a key driver of economic and job growth over the past five years, and lower taxes have contributed significantly to that growth.” This statement, made by CME President and CEO Jayson Meyers, summarizes a recent analysis done by the Canadian Manufacturers and Exporters (CME) on the recovery of the Canadian economy. The analysis looked at the correlation between the profitability of Canadian business (measured as after tax profits as a percent of GDP) to Canada’s unemployment rate. The data showed that every percentage point increase in after-tax profit led to a 0.8% decline in the unemployment rate. Meyers further states that without the federal tax reductions for Canadian businesses, Canada’s unemployment rate during the recession of 2009 would have exceeded 9%. He also points out that roughly 700,000 more Canadians are employed today than at the end of 2007.

Through the tax savings, companies have invested the additional income in capital assets. In 2012, the Canadian business sector invested $25 billion more in capital assets compared to 2007. Along with several funding programs and the new rapid depreciation that federal government made available to manufacturers, investment in industrial machinery and equipment has risen 12% since 2007 and 37% since the economic downturn. With no tax rate reduction, it is predicted that Canada’s unemployment rate today would be 1.1% higher at 8.4% and 0.2% higher than the US unemployment rate.