How we got from there to here - Macleans.ca
 

How we got from there to here


 

The Star sorts out how the federal books got the way they are.

Taking over the reins of government in early 2006, the Conservatives were bequeathed a $13.7 billion budget surplus by the Liberals. But by last January, the fiscal cupboard was nearly bare. Even before this year’s economic rescue package, Ottawa was poised to overspend its budget by $15.7 billion, according to Finance Canada documents …  This situation results from the Tories’ decisions to sharply reduce sales taxes and lower personal and corporate income taxes while simultaneously allowing a relentless upsurge in Ottawa’s spending. The Conservative budgets in 2006 and 2007 were notable for their largesse. The government committed to such large spending plans as $5.3 billion for defence, $39 billion for cash transfers to the provinces and $3.7 billion for a new baby bonus.

Beginning in 2006, the Conservatives cut the Goods and Services Tax, in two steps, to 5 per cent from 7 per cent, a move that now costs $11 billion annually in lost revenue … Besides lost GST revenue, the government as of this year is also foregoing $15.3 billion as a result of personal income tax cuts and $7.1 billion from corporate income tax reductions. In all, Conservative tax measures have trimmed Ottawa’s revenues this year by $33.9 billion…


 

How we got from there to here

  1. In all, Conservative tax measures have trimmed Ottawa's revenues this year by $33.9 billion…

    What's worse is that despite creating a record deficit the Conservatives are going to continue trimming. Corporate tax rates for instance, are scheduled to drop from 18 to 15 percent by 2012. Of course, this isn't an unintended consequence but the main goal. Since Conservatives can't get rid of the government programs they despise but that the majority of Canadians want, their only option is to starve the government of its ability to fund them.

    • Your argument might make sense if Cons had not increased spending anywhere between 5-8% each year since 2006. Also, we have had 40 years of experience that pols are more inclined to run deficits than they are to 'starve' anything.

      That article was pretty good, at least for TorStar. Normally their articles make it seem that all the wealth that Canadians have belongs to the government and the hoi polloi should be thankful that we are allowed to keep as much money as we do.

    • Your argument might make sense if Cons had not increased spending anywhere between 5-8% each year since 2006. Also, we have had 40 years of experience that pols are more inclined to run deficits than they are to 'starve' anything.

      I am an economic con and am curious to know when you think this secret agenda to starve the gov't will start.

      That article was pretty good, at least for TorStar. Normally their articles make it seem that all the wealth that Canadians have belongs to the government and the hoi polloi should be thankful that we are allowed to keep as much money as we do.

      • "I am an economic con and am curious to know when you think this secret agenda to starve the gov't will start."

        Heh, good one.

        Would someone please explain to me why a corporate tax rate cut is desireable, when you increase payroll taxes at the same time? You don't have to be profitable to pay payroll taxes, and that just might tip you over the edge into closing.

          • Thanks for trying, but that served to make it worse. I didn't realize an entire industry had sprung up to avoid paying corporate taxes, which would of course result in massive lay-offs if it were no longer a concern.

      • I am an economic con and am curious to know when you think this secret agenda to starve the gov't will start.

        What part of, "In all, Conservative tax measures have trimmed Ottawa's revenues this year by $33.9 billion," or, "What's worse is that despite creating a record deficit the Conservatives are going to continue trimming," are you having trouble understanding.

        • I think the part where they cut the spending, at least that's what I was laughing at.

        • The part I am having trouble understanding is how government running a deficit of $55 billion to pay for a shortfall of $33.9 billion is considered starving. Borrowing $20 billion more than needed does not strike me as belt-tightening, never mind starving.

          • I am having trouble understanding

            That's painfully obvious. Wiki sums up the Starve the Beast strategy perfectly.

            "Starving the beast" is a fiscal-political strategy of some American conservatives to use budget deficits via tax cuts to force future reductions in the size of government.

      • It's true, the Cons tried to make eensy weensy cuts to an area that is not one of their priorities, namely culture, and that was treated as a monumental faux-pas in Quebec. So the end result is that they spend more money on Conservative priorities and they don't cut spending elsewhere.

      • Spending increases were made to woo voters towards granting Mr Harper a majority.
        The grander plans will begin once a majority renders the opposition powerless.
        The first order of business will be ending party funding on a per vote basis. After that? The sky is the limit

      • "I am an economic con and am curious to know when you think this secret agenda to starve the gov't will start. "

        When the voters give him what he wants?

  2. I believe Mr. McClelland is completely correct. This is Harper's "quiet" agenda. It isn't hidden, but it might as well be. What keeps it "quiet" is that its central underpinning — the idea successfully promoted for the past two decades that "taxes are bad" — isn't even thought to be newsworthy, or worth mentioning, anymore. So Harper and other conservatives are free to quietly go about their business of starving and wrecking our public sector assets.

  3. Calling out these specific, verifiable facts is proof of Wherry's bias.

    • I get suspicious whenever a writer brings up, "facts" and "the truth".

      Reality has a well-known liberal bias.

  4. The GST cut was a corporate tax cut, as few merchants made any change in their price of day-to-day items. That 7 or 8 cents on every movie ticket, the one cent on a chocolate bar, and the quarter on a small appliance might not seem like much, but multiply it by millions of movie tickets, chocolate bars and can openers and see what it adds up to.

    • That's a very interesting point. Have there been any credible study of the effects – for ill or good -of these cuts? Icertainly hav'n't noticed a jump in my consumption of chocolate bars of the frequency of movie outings.

      • Just about every economist in the land said the cuts were ill-conceived right from the get go.

    • Most buisness applies the GST to the advertised price. So the savings go to the customer not the buisness.

      • Do you have a source for that claim?

        EDIT: Apologies, I misread. I think you're correct.

    • You cannot say that few merchants made any change in their price of day-to-day items. That is because inflation is generally a constant phenomenom, so you cannot say whether the inflation rate was lowered because merchants did not raise their prices as much as they would have. You can't expect prices to change overnight.

      • What are you guys talking about? Why would a merchant change their price because of the GST rate? GST is generally charged after the merchant's price is set out, and in cases like fuel it must be disclosed when it is included. Also, the merchant gets an offsetting input tax credit at the same rate, so I really don't see what difference it makes to a merchant what the GST rate is. To consumers, it makes a difference, but I don't see it with merchants.

        • Is this true in all cases? I'm the world's worst businessman – so bear with me. I buy supplies for my busness, gas etc but i hav'n't passed any savings on, largly because my competitors have not and, the the price of just about everything else [ insurance, WCB etc ] keeps on rising. This for me is the real story. I don't find inflation figures to be all that credible. Even during this recession i see prices generally continuing to rise. I don't see the GST cuts being either stimulative or effecive inlowering prices to consumers – but it sure made a hole in our fed bottom line.

          • A business making more than $35,000 in revenue must register for the GST. Businesses not registered for the GST cannot charge GST and therefore aren't relevant to this discussion.

            The GST cut helps consumers because after you charge for whatever you sell, the GST gets added on top of that. If what you sell costs $100, GST at 7% means the consumer pays $107. Obviously, a GST cut to 5% means the consumer pays $105. Doesn't affect you because you still get your $100. When your business is buying from other businesses, you are paying less GST, but you aren't saving anything becuase a business that charges GST also claims GST input tax credits. Since the input tax credit is at the same rate as the GST, this means your input tax credits are reduced, meaning the net effect to business is a wash. (Instead of paying $7.00 on your supplies, you only pay $5.00. But instead of claiming $7.00 in ITCs, you are only claiming $5.00) The GST you collect is reduced by the ITCs you paid, then that amount is paid to (or refunded by) the government.

            So I don't see why a GST cut or increase should affect the price of goods, themselves.

          • Thanks. It made my head hurt reading that but i see what you mean. However i don't agree with the concept of cutting consuption taxes – as much as anything else because it merely leads to yet more conspicuous consumption and is often inequitable at that. While i'd rather the 2cents off my chocolate bar go to a useful national cause, the guy who wants a new mercedes is all for it.

          • Here's the thing. A $10 movie ticket is the final price, with GST. When the GST cut came in, my movie ticket did not drop in price. That's 10 cents, times how many million tickets, that the theatres collect from me, and do not have to remit as GST.
            So, while I'm still paying the same price, they reap an additional profit with no strings attacjhed. I know it sounds like a small thing, but it's one way the GST cut became a corporate subsidy.

          • I never thought about movie tickets–maybe because I go so rarely. So, if they are scooping the GST cut, let us all remember that when the HST comes in, shall we?

          • Yes, that is true, I am commenting on businesses that give you a quote that includes the GST, such as airlines, or movies.

            kcm has a good point, the expenses of corporations may also have been lowered by the GST cuts, which is like a corporate tax reduction.

            M_A_N was also insinuating that vendors adjusted their prices so the final amount was the same, thus providing more income.

            My point is simply that even if such businesses did not pass on these improvements in their bottom line to consumers right away, that does not mean it did not happen. In fact, I would expect that the primary result is that they would not raise prices as soon as they would have otherwise.

            For instanvce, I've noticed the price of a coffee increasing in small amounts the last few years. WOuld this have been more pronounced without the GST cut? Probably. Instead of 3% inflation we may get 1% inflation with a 2% GST cut.

          • Yes, that is true, I am commenting on businesses that give you a quote that includes the GST, such as airlines, or movies.

            kcm has a good point, the expenses of corporations may also have been lowered by the GST cuts, which is like a corporate tax reduction.

            M_A_N was also insinuating that vendors adjusted their prices so the final amount including GST was the same, thus providing more income.

            My point is simply that even if such businesses did not pass on these improvements in their bottom line to consumers right away, that does not mean it did not happen. In fact, I would expect that the primary result is that they would not raise prices as soon as they would have otherwise.

            For instance, I've noticed the price of a coffee increasing in small amounts the last few years. Would this have been more pronounced without the GST cut? Probably. Instead of 3% inflation we may get 1% inflation with a 2% GST cut.

          • I understand all the rationale of why merchants would net the same after GST cut, but I would expect that those selling big-ticket items adjusted their pricing so the consumer was out of pocket the same amount with GST in. At the time of the cut, a friend of mine bought a new luxury car and boasted of how much she saved, I didn't have the heart to tell her she was probably taken.

            An income tax cut a la Martin would've been better, at least I would have been in the position to decide whether to spend it, save it, or whatever. Now, I have the many merchants I deal with deciding whether they want to take cut at no extra cost to them.

    • Not only a corporate tax cut but a 'rich people' tax cut. Those who can afford their Mazaratis and plasmas are the ones who actually end up saving thousands and tens of thousands. In a way, the Cons have adopted the US Republican specialty of playing average Joe against the rich.

    • Not only a corporate tax cut but a 'rich people' tax cut. Those who can afford their Mazaratis and plasmas are the ones who actually end up saving thousands and tens of thousands. In a way, the Cons have adopted the US Republican specialty of playing average Joe against the rich using populist smokescreen to obfuscate a corporate agenda.

      • Any moment now someone's going to come along and explain how the GST cut really…really helps the poor cus they spend such a higher percentage of their income. Whatever benefit they do get is often immediately taken back in the form of higher user fees for parks etc. You are absolutely right. The more disposal income you have the more you like the concept of a GST cut.

      • And it works every time. What is up with that?

  5. Kudos to The Star for telling Canadians what they need to know about the reason for our dismal financial situation thanks to Harper's not-so-hidden agenda of gutting everything from government except Defence.

  6. Potter's full article alludes a good point; once the government has crossed into deficit territory, it is all that much easier to hide poor management or lousy decisions that have lead to that deficit being larger than it would need to be because of an economic downturn and big stimulus program.
    Now they essentially get a free pass for bigger deficits and more debt, as they can play the "worldwide-economic-downturn- that-was-not-our-fault" card, when it looks like shoddy decisions would have led to a deficit anyhow, according to the gov'ts own documents.

  7. The Cons were forced into spending more money by the coalition. All this other bluster is smoke and mirrors.

    • The coalition is still waiting for Harper to give them credit. Maybe at the next funding announcement in Central Nova.

      • The coalition is too busy slamming the deficit that they created.

        • For supposedly having two consecutive non-leaders as heads of the Official Opposition, the Tories sure do seem willing to blame them for everything that's wrong with the Tory government's plans. If Dion and Ignatieff were/are such terrible leaders, why did the Tories follow them?

          I can't believe the Prime Minister of the country would himself actually make the argument that he's been letting the parties across the aisle run the economy since January. If the opposition's plans are so horrible, the government really ought to stop implementing them.

          Not to mention that every time I turn around the PM or a cabinet minister is out bragging about all the spending they're doing that's actually causing the deficit to rise. You can't brag about the economic stimulus spending, simultaneously brag about large tax cuts, and SIMULTANEOUSLY brag that the opposition parties caused the deficit.

          Well, clearly one CAN do that, as that's what Tories seem to be doing, but it lacks any logical coherence whatsoever.

          • You can't brag about the economic stimulus spending

            That's a straw man. I never have, and I never will. It's a complete and total waste of money that is sacrificing the standard of living of future generations for the benefit of a small group of people today. Stimulus doesn't work. It never has before, and it never will.

          • tell that to recent convert Steve. apparently, stimulus spending in a big way can buy you love!

    • Poor Stephen was led astray by the treachery of others.

      Do you think it's easy making priorities?

    • “ You had an option, sir. You could have said, 'I am not going to do it. This is wrong for Canada, and I am not going to ask Canadians to pay the price” – Brian Mulroney

      • That's how Mulroney won the election. And if Harper had done the same, that would be how Harper failed to work with the other parties and thus triggered a no-confidence vote in January. So the comparison is flimsy.

    • The coalition? You mean, the parliament?

      • And there was that little commitment he made to the G8. Not that he fully lived
        up to that either.

  8. As pointed out above by others, it's hilarious how to conservatives, Dion and Ignatieff are the worst leaders ever… not even leaders at all.

    And yet in decision after decision the government will say, with a straight face, "Don't blame us, we were led here by the opposition!!!".

    I mean, if the opposition has such terrible ideas… STOP IMPLEMENTING THEM!!!

    It's not rocket science.

  9. Conservatives tend to act like they're going to be fiscally responsible in elections, then spend like drunken sailors while simultaneously slashing the taxes meant to pay for the spending, and inevitably lead us in to deficit.

    Meanwhile, Liberals act like they're going to spend like drunken sailors during elections, and then spend prudently, sometimes even "conservatively", while modestly lowering taxes, and often lead us in to surpluses. This has been the case for as long as I've been old enough to follow politics.

    Why do we continue to be surprised?

    • Wow,

      you guys need to learn some economics. All of these assumptions are based on static growth and therefore static revenue.

      Fact is that there is a reason why we were last in, first out of the recession. Pro-growth tax policies can actually INCREASE economic activity, employment, and therefore tax revenue.

      I'd say we're in the sweet spot on the curve, Laffer's curve that is.

      • Hasn't there been at least one credible study in the US calling this BS? After a certain point revenue lost to tax cuts are not realised later, due to increased economic growth.

        • I think the question is whether there's been a single, credible study that *hasn't* called the Laffer curve utter BS in real-world applications.

          See Wikipedia for the quote: According to Nobel prize laureate James Tobin, "[t]he 'Laffer Curve' idea that tax cuts would actually increase revenues turned out to deserve the ridicule with which sober economists had greeted it in 1981."

          It's an interesting academic idea that was used as a fig leaf to cover tax cuts for the rich. Had there been a President Rudy Giuliani (*shudder*), he would have featured the Laffer Curve prominently in his policies.

          • These "studies" look at tax cuts in the aggregate, failing to distinguish between what types of taxation are the most harmful or the least harmful to growth.

            Aren't the Liberals right now pushing the notion that payroll taxes are one of the worst kinds of taxation ? Even they agree that not all taxes are created equally.

            And there's plenty of annecdotal, real world evidence of cases where tax rates were cut and growth increased.

            The one that comes to mind is the capital gains tax in the US, Bill Clinton cut it a few points and actually got MORE revenue then when it was at a higher rate.

            Cuts to investment/bussiness taxes are the most likely to pay for themselves or if they do not at least have a positive effect on the employment situation. When talking stimulus its generally agreed they have one of the highest multiplier effects.

            Let's face it, Harper's tax policy is the only reason we're not still seeing rising unemployment in Canada.

            Its actually down three points here, up three points in the US. I'd say that's a pretty good real world demonstration.

          • The Laffer curve is common sense. Tax revenues peak somewhere well before 100% tax rates. So if governments are to the right of the peak, whatever that is, than reducing tax rates will increase revenues.

          • "I think the question is whether there's been a single, credible study that *hasn't* called the Laffer curve utter BS in real-world applications."

            The Laffer curve is statement of common sense. Tax revenues peak somewhere well before 100% tax rates. So if governments are to the right of the peak, whatever that is, than reducing tax rates will increase revenues.

          • Fair enough – I suppose it's not so much the Laffer Curve that's absurd, but the attempts to apply it to modern economies.

            In real-world applications (particularly the US economy), the government is nowhere near the right of the peak. So, predictably, some rightwing leader will promise Free Money via the Laffer Curve. And predictably, tax cuts will lead to a drop in gov't revenues because the country was on the left of the curve all along. And deficits will grow and the rich will get richer and a few years later, somebody will pull the same con again.

          • "I suppose it's not so much the Laffer Curve that's absurd, but the attempts to apply it to modern economies."

            I should have add sentence about how an agreement on where peak revenues occur will never happen. Lots of conservatives argue that all of the taxes we pay should not total more than 35-37% of income.

          • "I suppose it's not so much the Laffer Curve that's absurd, but the attempts to apply it to modern economies."

            I should have add sentence about how an agreement between left and right on where peak revenues occur will never happen. Lots of conservatives argue that all of the taxes we pay should not total more than 35-37% of income.

          • Fair enough, again. Might be a tough sell, given the program cuts that such a low tax rate would require :)

            I would point out that the Laffer Curve has had two *huge* opportunities to demonstrate which side of the curve the US is on – both Reagan's and Bush's signature tax cuts drove tax revenues way down, and deficits way up.

            Also, as the article points out, the GST cut reduced gov't revenues by ~$11B/year, suggesting Canada is on the left side of the Laffer Curve as well.

          • That was all a very interesting discussions of laughs and curves, but broadly speaking had little to do with the fact that both our major parties act like they'll do one thing when they're on the campaign trail, and do something entirely different once elected (at least in the last 25 years or so).

            My point was a more broad one in that we might as well all act as though election campaign periods are a long string of "opposite days", and vote accordingly. It's tough to be sure, but despite electoral rhetoric, I'd be willing to bet that another Paul Martin government would have been WAAAAY more fiscally conservative than what we got from Harper.

            Liberals traditionally feel a need to campaign to the left and govern to the right, while Tories feel the need to campaign to the right and govern to the left. Vote accordingly (ymmv).

          • These graphs correlate the top tax rate with tax revenues. Correlation does not imply causation.

            Those charts ignore a huge number of relevant variables, such as demographic shifts, improvements in productivity, other tax rates, shifts in the economy, etc.

          • Correlation does not imply causation

            True, but the evidence points in one direction, in a direction that suggests that the lowering of tax rates over the last fifty years has never had a negative effect whatsoever on tax revenues, suggesting that rates should continue to go down, and not up.

          • "True, but this cherry-picked sliver of evidence points in one direction…"

            Fixed that for you.

          • You are using Heritage Foundation supplied material? Hard to take the argument seriously. In any case they talk about top tax rate, no mention of what proportion of the population that applied to, what the cut off was for the top rate, no factoring in overall rate for the entire population. Those charts are a joke. In fact, one could draw the conclusion from the graph that there would be no difference to the total take if top rates were jacked up to 1950's levels. If we did that, then I suppose there would be room for tax reductions at the lower end of the income scale.

          • You are using Heritage Foundation supplied material

            Both of those graphs can be found in a million places. Shooting the messenger is pointless. Those are nice, clear graphs. It really annoys me when you provide simple background evidence and all people can do is shoot the messenger.

            that there would be no difference to the total take if top rates were jacked up to 1950's levels

            Exactly, so why would it make sense to do that?

            I suppose there would be room for tax reductions at the lower end

            47% of Americans pay no income tax whatsoever. There is no room at the lower end.

          • You are using Heritage Foundation supplied material

            Both of those graphs can be found in a million places. Shooting the messenger is pointless. Those are nicely done graphs. It really annoys me when you provide simple background evidence and all people can do is shoot the messenger.

            that there would be no difference to the total take if top rates were jacked up to 1950's levels

            Exactly, so why would it make sense to do that?

            I suppose there would be room for tax reductions at the lower end

            47% of Americans pay no income tax whatsoever. There is no room at the lower end.

          • You are using Heritage Foundation supplied material

            Both of those graphs can be found in a million places. Shooting the messenger is pointless. Those are nice, clear graphs. It really annoys me when you provide simple background evidence and all people can do is shoot the messenger.

            that there would be no difference to the total take if top rates were jacked up to 1950's levels

            Exactly, so why would it make sense to do that?

            I suppose there would be room for tax reductions at the lower end

            47% of Americans pay no income tax whatsoever. There is no room at the lower end. I don't think it's ethical to increase that number to the point where a minority of the population pays all of the taxes.

          • You are using Heritage Foundation supplied material

            Both of those graphs can be found in a million places. Shooting the messenger is pointless. Those are nice, clear graphs. It really annoys me when you provide simple background evidence and all people can do is shoot the messenger.

            that there would be no difference to the total take if top rates were jacked up to 1950's levels

            Exactly, so why would it make sense to do that?

            I suppose there would be room for tax reductions at the lower end

            47% of Americans pay no income tax whatsoever. There is no room at the lower end. I don't think it's ethical to increase that number to the point where a minority of the population pays all of the taxes, I believe that almost everyone should pay at least a little.

          • Heritage Foundation is hardly a 'messenger', they are an advocate for the looney policies that put the US in the mess its in now. In any case, their data are presented in a misleading fashion to support a pre-determined thesis. (The same technique climate change researchers are accused of using, oddly enough) Now about the other responses:

            No difference – not saying it would make any difference, so why do people claim that reducing taxes results in increased revenues. You can't suck and blow at the same time.

            Lower end reductions – OK, then how about room at the middle end? The point is, I agree with the ethics angle, we all should pay our fair share, I am just saying that the claim of increased revenue with lower taxes is just bollocks. If it were though, it would make more sense to reduce taxes toward the lower end, as those are more likely to spend more of their income on taxable goods and services.

          • Like I said, the heritage foundation just produced the pretty chart. Google this: "income tax rates vs government revenue". Pick your web page.

            Here it is again:
            http://divisionoflabour.com/archives/EDAH556B_ran

            And again:
            http://www.mymoneyblog.com/images/0901/nyt_tax.gi
            http://home.earthlink.net/~bigeye/IncomeGDP.gif

            As for reducing taxes producing increased revenues, the reasoning is very sound if you look into it. Taxes depress economic activity and wealth production. They kill businesses and they lower investment activity. If you can imagine a world with a 100% tax rate, that is a world where no business can survive, all revenues go to to the government, and no revenues are available to pay for any future investments or to expand, essentially suffocating all businesses since no business can expand, businesses can only shrink.

            So at some point, it is a fact that further increases start lowering revenues.

            It's not bollocks at all, it's essentially a fact that is beyond dispute, the only arguments concern where exactly the turning point is in a given economy.

          • Like I said, the heritage foundation just produced the pretty chart. Google this: "income tax rates vs government revenue". Pick your web page.

            Here it is again:
            http://divisionoflabour.com/archives/ED-AH556B_ra

            And again:
            http://www.mymoneyblog.com/images/0901/nyt_tax.gi
            http://home.earthlink.net/~bigeye/IncomeGDP.gif

            As for reducing taxes producing increased revenues, the reasoning is very sound if you look into it. Taxes depress economic activity and wealth production. They kill businesses and they lower investment activity. If you can imagine a world with a 100% tax rate, that is a world where no business can survive, all revenues go to to the government, and no revenues are available to pay for any future investments or to expand, essentially suffocating all businesses since no business can expand, businesses can only shrink.

            So at some point, it is a fact that further increases start lowering revenues.

            It's not bollocks at all, it's essentially a fact that is beyond dispute, the only arguments concern where exactly the turning point is in a given economy.

          • Now you're just being silly.

            "So at some point, it is a fact that further increases start lowering revenues. " No one said anything about raising axes to that level. The argument here is essentially over the location we're at on the Laffer curve, at some points tax reductions lower revenue, on other points they raise the, you have offered no evidence whatsoever as to what point we are at, one might assume the maimum of *your* curve is at a rate of zero. However, most of the credible evidence seems to favour that we are on the left of the peak. The pretty charts you provided are bollocks for the reasons others and I have pointed out: relating top personal income tax rate to total take (i.e. your first chart is incomplete data, does not take into account all tax sources and only the top personal rate), i.e, cherry-picking, and implying correlation is causality.

          • I was under the impression that you were arguing that the curve does not exist.

            As far as the choice of the top personal rate for the graph, the fact of the matter is, something like 75% of the total of all income taxes come from that one rate, so if you choose a rate, that's the one to choose! Also, one of those additional charts has all tax rates in it, which you have conveniently ignored.

          • I was under the impression that you were arguing that the curve does not exist.

            As far as the choice of the top personal rate for the graph, the fact of the matter is, something like 75% of the total of all income taxes come from that one rate, so if you choose a rate, that's the one to choose! That is why everyone is choosing it! Anyway, one of those additional charts has all income groups in it (it is not just income but all taxes), which you have conveniently ignored. All rates have been dropping over time, while revenues have been increasing.

          • I was under the impression that you were arguing that the curve does not exist.

            As far as the choice of the top personal rate for the graph, the fact of the matter is, something like 75% of the total of all income taxes come from that one rate, so if you choose a rate, that's the one to choose! That is why everyone is choosing it, it's where most of the revenue comes from! Anyway, one of those additional charts has all income groups in it (it is not just income but all taxes), which you have conveniently ignored. All rates have been dropping over time, while revenues have been increasing.

          • scf Friday: "Do you realize Media Matters is a Democrat-funded web site? Fair.org, media matters, moveon – they're all propaganda and filled with partisan garbage."

            scf today: "Shooting the messenger is pointless… It really annoys me when you provide simple background evidence and all people can do is shoot the messenger."

          • Hey TJ, there's a difference between something that can be found everywhere and something that can be found in only one place. Not only that, there is a huge difference between the heritage foundation and media matters. And there is a huge difference between an academic paper, an article, and a chart.

          • Uh huh. So whether or not it's ok to shoot the messenger depends on your subjective opinion of the messenger.

            Everybody loves a hypocrite.

          • There's nothing subjective about the difference between black and white.

          • Dude, nothing you can say will change the fact that you regularly dismiss people's references because you don't like the source (you "shoot the messenger").

            And you came here today, complaining that somebody doesn't trust the rightwing Heritage Institute as a source (you accused them of "shooting the messenger"). That's back and white alright. Nothing subjective about that.

          • If you think media matters is a good source for articles, then fine, enjoy the web site.

            And if you think an article from that web site and an academic paper from UCLA are equally credible, fine.

            If you think that a simple chart using data provided by the Office of Management and Budget of the United States government is equally credible as a web site article written by an individual promoting the Democratic party, then fine.

            It just seems to me you cannot tell the difference between propaganda and data. But if that's how you feel, fine, there's not much point talking further.

          • If you think media matters is a good source for articles, then fine, enjoy the web site.

            And if you think an article from that web site and an academic paper from UCLA are equally credible, fine.

            If you think that a simple chart using data provided by the Office of Management and Budget of the United States government is equally credible as a web site article written by an individual promoting the Democratic party, then fine.

            It just seems to me you cannot tell the difference between propaganda and data. But if that's how you feel, fine, there's not much point talking further, because I completely and totally disagree, and it doesn't matter whether you call me a hypocrite or crazy or a liar or whatever, that's how I see it.

          • If you think media matters is a good source for articles and actual honest arguments, then fine, enjoy the web site.

            And if you think an article from that web site and an academic paper from UCLA are equally credible, fine.

            If you think that a simple chart using data provided by the Office of Management and Budget of the United States government is equally credible as a web site article written by an individual promoting the Democratic party, then fine.

            It just seems to me you cannot tell the difference between propaganda and data. But if that's how you feel, fine, there's not much point talking further, because I completely and totally disagree, and it doesn't matter whether you call me a hypocrite or crazy or a liar or whatever, that's how I see it.

          • Again: nothing will change the fact that you whined today about somebody doing what you did yourself on Friday.

            That's a hypocrite.

            I never called you a liar or crazy, BTW. Neither did I call you an "idiot" out of the blue based on some error I remembered from weeks ago. That was you on Friday.

          • Again: nothing will change the fact that you whined today about somebody doing what you did yourself on Friday.

            That's a hypocrite.

            I never called you a liar or crazy, BTW. Neither did I call you an "idiot" out of the blue based on some error I remembered from weeks ago. That's what you pulled on me on Friday. How about you just tone down the arrogance a little?

          • There's nothing subjective about the difference between black and white.

            Aren't you the one who repeatedly compains about name-calling? Yes, that's you.

          • You are using Heritage Foundation supplied material

            Both of those graphs can be found in a million places. Shooting the messenger is pointless. Those are nice, clear graphs. It really annoys me when you provide simple background evidence and all people can do is shoot the messenger.

            that there would be no difference to the total take if top rates were jacked up to 1950's levels

            Exactly, so why would it make sense to do that?

            I suppose there would be room for tax reductions at the lower end

            47% of American households pay no income tax whatsoever. There is no room at the lower end. I don't think it's ethical to increase that number to the point where a minority of the population pays all of the taxes, I believe that almost everyone should pay at least a little.

          • I read somewhere that the ideal level of taxation versus GDP for maximum economic growth (based on historical analysis) is about 28% (I think this includes all types of taxes, not just income). At this time, I believe the US is in the mid-to-high 30s, while some European countries have passed the 50% mark.

          • I've not got the time to read that now… but at first glance, it reminds me that the content of any article that states things like "XXX economics, RIP" or "capitalism/socialism/XXX is dead" or "XXX party will become extinct" or anything along those lines, is usually full of more holes than Swiss cheese. Usually.

          • I'm in favour of supply-side, demand-side, macro and micro-economics. The more we know, the better. I also think a lot of economists fail to see the obvious.

            For instance, one of my pet peeves is the alomst universal argument that high home prices are good. And the argument is that this is the sign of healthy consumption – ie demand-side economics in simplistic terms. You would never hear the same argument about any other economic good other than housing. The reality is, lower prices is almost always better (except in a deflationary economy), mostly because they usually mean improvements in productivity. There is nothing inherently wrong with low house prices. The reason most economists argue for high house prices is that the economists doing the arguing happen to own houses themselves.

          • I'm in favour of supply-side, demand-side, macro and micro-economics. The more we know, the better. I also think a lot of economists fail to see the obvious.

            For instance, one of my pet peeves is the alomst universal argument that high home prices are good. And the argument is that this is the sign of healthy consumption – ie demand-side economics in simplistic terms. You would never hear the same argument about any other economic good other than housing. The reality is, lower prices is almost always better (except in a deflationary economy), mostly because they usually mean improvements in productivity. There is nothing inherently wrong with low house prices. The reason most economists argue for high house prices is that the economists doing the arguing happen to own houses themselves.

            Anyway, if economists and politicians really wanted to support affordable housing, they would welcome low house prices. It's that simple.

          • Thanks, Sisyphus. That is amazing. Amazing that we're still having this discussion after the great example of what not to do to our south. It's not like we could miss it–especially when you have guys like this admitting to what common sense told us all along. This guy pretty much says exactly what I was thinking in spite of my not knowing the first thing about economics, although whoever wrote the next bit, relying on graphs to make a point I never did understand, should stay in the classroom and not expose his theories to actual practice

            Absolutely, in the 1950s, most countries overtaxed. But look how far down taxation has come! Except, I maintain, for those employees making over 1 million, because I don't believe they have any business making that much money and so I think anything above that should be surcharged at 100%. But that's my own theory, not Bruce Bartlett's.

            Continued . . .

        • Who put us in the sweet part of that curve? I'd say of the political forces that may receive credit, about 70% should go to those who preceded Canada's New Government… Righting deficit spending, maintaining prudent regulations on banking/loan industry, paying down debt and establishing reasonable tax breaks while nurturing a little nest-egg appears to be good enough advice for all fathers/mothers to their offspring…

    • Canadians discuss politics like they're responsible citizens and then behave like drunken sailors on voting day

    • I disagree, the Liberals are responsible for many of the big spending items that exist, namely arts/culture spending, government medicare, government-funded education, CBC, gun registry, EI, equalization, Atlantic Canada slush funds, and the list goes on.
      They wanted to continue the tradition of big-government programs with the Kelowna accord and national daycare. Fortunately, that has been stopped.
      The only thing the COnservatives spend more money on is the military. Liberals and NDP are the big spenders.

    • I disagree, the Liberals are responsible for many of the big spending items that exist, namely arts/culture spending, government medicare, government-funded education, CBC, gun registry, EI, equalization, Atlantic Canada slush funds, and the list goes on.
      They wanted to continue the tradition of big-government programs with the Kelowna accord and national daycare. Fortunately, that has been stopped.
      The only thing the Conservatives spend more money on is the military. Liberals and NDP are the big spenders, everybody knows that. Just because Paul Martin managed to hold the line for a few years does not negate the basic facts.

    • I disagree, the Liberals are responsible for many of the big spending items that exist, namely arts/culture spending, government medicare, government-funded education, CBC, gun registry, EI, equalization, Atlantic Canada slush funds, and the list goes on.
      They wanted to continue the tradition of big-government programs with the Kelowna accord and national daycare. Fortunately, that has been stopped.
      The only thing the Conservatives spend more money on is the military. Liberals and NDP are the big spenders, everybody knows that. Just because Chretien/Martin managed to hold the line for a few years does not negate the basic facts.

      • Just what drugs are you on SF? It's generally acknowledged that the Harper govt is to date the biggest spender of the lot. Mulroney actually managed to outspend Trudeau – a major acomplishment. And it may have escaped your notice, but there has never been a federal NDP govt. The provincial ones have had a mixed fiscal record, some good, some bad. As to the social programmes, Canadians by and large think they're a fine idea – even some cons i hear.

        • It's best if you ignore the evidence if you want to see s_c_f's point. "Reality" just complicates matters.

          Sure, Mulroney outspent Trudeau (except , ironically, on military spending, where Trudeau wins out in inflation adjusted dollars) and Harper's arguably outspent even Paul Martin's electoral promises, let alone what Martine would have actually DONE (see my points above) but these are what we call "facts" and "reality". This is Canada in 2009, and these things have no place in the political debate.

          I particularly loved these lines from s_c_f: "The only thing the Conservatives spend more money on is the military". LOL. That one is just hilarious on it's face. Given how much the Tories are spending these days, if that were true we'd have one of the most powerful forces in the world!!!

          and this: "Liberals and NDP are the big spenders, everybody knows that" has got to be one of the best applications (at least wrt the Liberals) of Wells' 2nd Rule, ever.

          • LOL, you keep on using that bold type!

            If Wells comes along and applies one of his rules, then I'll give it some weight. But I don't think you're qualified to be applying his rules. Start with the rules of etiquette and manners, and once you've got a handle on those rules someday, you might be able to move up to Well's rules.

            Wow, these facts and reality are great. The fact is, you're out of your tree, and the reality is, your hat is on too tight for you to think clearly.

        • Thank you for your kind inquiries about my drug habit. This is such a friendly and jovial comment board! Your answer – the drug I am on is caffeine.

          Firstly, there was a stimulus that has blown spending out of the water, and if you remember it was the opposition that demanded it, not the government. And it just so happens that the opposition included the NDP! Them's minorities for ya.

          As for your comments on social programmes, I'm glad you managed to poll the country so quickly to confirm what Canadians think. Who needs pollsters with you around? And who needs elections when we all agree! Fantastic! Frankly, maybe one or two or more of those programmes is a good idea (most of them aren't), but one thing is for sure, they all cost a lot of money, they don't come for free, so when you start whining about government taxes and huge deficits then you have to consider whether the number of these programmes and the level of spending is something that is affordable and desirable. And you also have to wonder whether these things might be delivered more efficiently and affordably outside of government.

        • Thank you for your kind inquiries about my drug habit. This is such a friendly and jovial comment board! Even more than usual these days, I wonder if the latest polls have anything to do with it. Your answer – the drug I am on is caffeine.

          Firstly, there was a stimulus that has blown spending out of the water, and if you remember it was the opposition that demanded it, not the government. And it just so happens that the opposition included the NDP (I know, how unfortunate that there are NDP MPs)! Them's minorities for ya.

          As for your comments on social programmes, I'm glad you managed to poll the country so quickly to confirm what Canadians think. Who needs pollsters with you around? And who needs elections when we all agree! Fantastic!

          Frankly, maybe one or two or more of those programmes is a good idea (most of them aren't), but one thing is for sure, they all cost a lot of money, they don't come for free, so when you start whining about government taxes and huge deficits then you have to consider whether the number of these programmes and the level of spending is something that is affordable and desirable. And you also have to wonder whether these things might be delivered more efficiently and affordably outside of government.

          • The drug comment was just a figure of speech. Quite a common one as it happens. Your complaining about manners is a bit rich, given your past attachment to name calling [ remember the anti-semite crack and racist and un-patriotic? Not that i carry a grudge ] The present govt was in deficit before the stimulus and the largest spending govt too. Blaming the deficit on the oppsition when you are the govt is morally bankrupt and gutless.
            Social programmes are popular- why do you think Harper hasn't touched them?
            Yes they are expensive and yes i'm willing to hve my tax dollers support them. If they could be delivered as efficiently, fairly and at a lower cost then i would support the private sector administering them.

          • Oh, that seems to ring a bell, I think you were kc before, perhaps?

            No, I can handle the name-calling, not that I won't say something about it, although this was pretty harmless, and I thought it might be just an expression (I've heard it before), but even so, I'm not a fan of that particular expression. No big deal. Please excuse my past transgressions as well.

            Yes they are expensive and yes i'm willing to hve my tax dollers support them. If they could be delivered as efficiently, fairly and at a lower cost

            In that case, we may have a lot in agreement.

            Even when the private sector delivers, I still think there needs to be a way to give consumers an incentive to economize. This seems to be a big problem with some programs. It is also true with private sector programs. For example, with public or private health insurance, the costs go up and up because consumers have no incentive to economize when making claims. This needs to change, there must be some way to reward the consumer for at least seeking to economize. Once costs are hidden, people tend to abuse the system.

          • Oh, that seems to ring a bell, I think you were kc before, perhaps?

            No, I can handle the name-calling, not that I won't say something about it, although this was pretty harmless, and I thought it might be just an expression (I've heard it before), but even so, I'm not a fan of that particular expression. No big deal. Please excuse my past transgressions as well.

            Yes they are expensive and yes i'm willing to hve my tax dollers support them. If they could be delivered as efficiently, fairly and at a lower cost

            In that case, we may have a lot in agreement, although in general I think the government is far too pervasive in far too many ways.

            Even when the private sector delivers, I still think there needs to be a way to give consumers an incentive to economize. This seems to be a big problem with some programs. It is also true with private sector programs. For example, with public or private health insurance, the costs go up and up because consumers have no incentive to economize when making claims. This needs to change, there must be some way to reward the consumer for at least seeking to economize. Once costs are hidden, people tend to abuse the system.

  10. And the tax credit business! I cannot understand how Conservatives, professing to hate big government, are perfectly okay with government getting into the minutiea of our lives (you are to have children–here's some incentives. Have a job–here you go. Take the bus to work–here's more. Invest in a Canadian business–check this box. Or just put it in the bank–use this form.)