This paper assesses Ontario's fiscal climate in terms of how it impacts on the cost of doing business for multinational and entrepreneurial businesses. Unlike previous studies that only consider taxes, we include both taxes and expenditure subsidies to compare Ontario with five US states, following Mintz (2001). Public subsidies provided through programs such as infrastructure, research and development, health, education, and social security reduce the cost of doing business as governments take on responsibilities that organizations would otherwise need to provide. Taxes on income, capital purchases, assets, salaries, wages, and consumption increase the cost of doing business by discouraging owners from providing labour and capital inputs needed to produce goods and services. Once expenditure subsidies are taken into account, we find that in 2003, the marginal fiscal burden in Ontario was twice as high as that in the five US states.
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