Thank you very much. I'm very happy to be here.
In addition to my work as an economist for the United Steelworkers union, I also serve as the volunteer chair of an organization called the Progressive Economics Forum, which has about 200 members across Canada. I'm very proud of the fact that four of those members are sitting in front of you on this panel. Angella, Eric, and Jim are also members of the PEF. Typically we hold sessions at the Canadian Economics Association meetings, and I'm very pleased that we're able to hold a session at the House of Commons finance committee.
A positive aspect of having these other eminent economists on the panel is that you already have a good overview of the labour market, fiscal policy, and the Canadian economy. What I want to do is focus a little more specifically on the question of whether corporate income tax cuts have helped create jobs by spurring investment.
In that vein, I would refer you to the document we provided you entitled, “Have Corporate Tax Cuts Increased Investment and Employment?”. It shows that the federal corporate tax rate, as we all know, has basically been cut in half since the year 2000. It's gone from just over 29% down to 15% today. It's quite a dramatic corporate income tax cut.
After-tax corporate profits as a share of gross domestic product have increased quite dramatically over that period of time. It started out at a little below 10% in 2000 and it's now up to about 14% of gross domestic product. That has been caused by an increase in pre-tax corporate profits, by a reduction in the federal corporate income tax rate, and by corporate tax cuts at the provincial level.
We've seen this huge drop in the corporate tax rate and a huge increase in after-tax profits. One would hope that would have led to a pretty impressive increase in business investment. That prompts the question of how we should measure investment. Often the way we measure business investment in the economy is to look at non-residential structures, machinery and equipment as a component of expenditure-based GDP.
I think that is a decent proxy for what we're trying to look at, but the problem is that it includes some investment in non-residential structures, machinery, and equipment by non-corporate entities, and it also excludes some residential investment by corporations.
I looked at Statistics Canada's financial flow accounts in order to zero in on the corporate sector. Business investment by the corporate sector as a share of gross domestic product has been pretty flat. Actually, in most years it's been lower than it was back in 2000 when these corporate tax cuts began.
It's not a particularly encouraging picture and it's even weaker when you compare it with after-tax profits as a share of the economy. In 2000 when this process started, corporate investment was actually bigger as a share of GDP than after-tax profits. That's exactly what you'd expect if you look at—
Yes?