Canada: More Than Neighborly

Annoyed that the U.S. owned more than half of its industry, Canada's government last June proposed a bill to chase investors back across the border. It would have raised, from 15% to 20%, the taxes on dividends that most Canadian subsidiaries send to their foreign parents. Last week the architect of the measure retreated from his "Canadianization" policy. "We believe," said Finance Minister Walter Gordon, "that a greater sense of partnership between Canadians and investors abroad will be of benefit to both."

More than neighborliness was behind the government's withdrawal. Foreign investment...

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