How to talk about increasing government revenue?

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UnionSupporter
How to talk about increasing government revenue?

Andrew Jackson has raised the debt and deficit phobia in his recent post at Progressive Economics:

We seem set to go into the next election - which could be in a matter of  days -  with both the Conservatives and Liberals firmly committed to bringing the federal Budget back into balance in a relatively short time frame, with no tax increases.  There appears to be no sign of a break in the conventional wisdom that "exit strategies" from  temporary fiscal stimulus should be pursued as a matter of urgency, and I fear that the NDP may well be pushed in the same direction.

That would leave us with remarkably little to talk about over the course of a campaign.  If we are not prepared to countenance some combination of deficits and tax increases, then there can be no significant increase in public investments in services, social programs or in green infrastructure and jobs.  To the contrary, the only  thing left to have an honest debate about would be where to cut spending (which won't stop politicians invoking a fantasy world in which we return to strong growth while balancing budgets.)...

Mr. Jackson raises an important question, but doesn't attempt an answer. How does a political party with aspirations of forming government successfully engage an electorate mired in a morass of "no deficits, lower taxes, more services" in a discussion about the merits of more deficit spending? How does the same political party convey an optimism that debt will not weigh heavily on future aspirations? Are there revenue measures that a majority of the electorate will embrace if framed appropriately? Is there an example(s) of a winning campaign that has run on such a message?

George Victor

If you are conservative, you promise lower taxes to win the election and then cut services when in power.  That's happening in B.C. now. Harper/Flaherty would do a Mike Harris replay. 

The progressive party has to convince a hungry electorate that the conservatives lie through their teeth.

Sven Sven's picture

UnionSupporter wrote:

Mr. Jackson raises an important question, but doesn't attempt an answer. How does a political party with aspirations of forming government successfully engage an electorate mired in a morass of "no deficits, lower taxes, more services" in a discussion about the merits of more deficit spending?

Your question reminded me of something recently said about California (where voters have significant direct voting control over many issues): The citizens vote to be taxed like libertarians and to spend like socialists.  Result?  A complete fiscal trainwreck.  Too many people want it both ways...and politicians (understandably) try to satisfy the mutually exclusive voter desires.

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[b]Eleutherophobics of the World...Unite!!![/b]

Sven Sven's picture

George Victor wrote:

The progressive party has to convince a hungry electorate that the conservatives lie through their teeth.

I remember when Mondale was running against Reagan and Mondale (refreshingly) said that he was going to raise taxes (and that Reagan would too, but that Reagan wouldn't tell you he was going to do it).  The reward for Mondale's honesty?  Crushing electoral defeat.

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[b]Eleutherophobics of the World...Unite!!![/b]

Fidel

I liked one fictitious American's comment about it in The Onion. He said that he was tired of all the honesty about the state of the economy. He said he wanted politicians to start lying again and tell Americans that everything is alright. The honesty is depressing and he preferred to know that everyone has a job and pensions and that he could afford to save for his daughter's college tuition. "Just lie to my face", he said.

George Victor

California's Proposition 13 (1978) was the leading edge of the trainwreck.  Looks good on the lying conservative bastards.

Sven Sven's picture

George Victor wrote:

California's Proposition 13 (1978) was the leading edge of the trainwreck.

Giving citizens the ability to nix tax increases while leaving them free to push their legislators for more and more spending is a problem.

State constitutions that prohibit legislatures from engaging in wild deficit spending is key: If the population wants more spending, then they must have tax increases.  Likewise, if they want to cut (or stablize) taxes, then they must cut spending (or stablize spending levels).  People can't have it both ways.

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[b]Eleutherophobics of the World...Unite!!![/b]

George Victor

But how about exposing the conservative forces that have played the "taxpayers and consumers" like a banjo ever since Ronnie's time?

Or would that tend to expose the ignorance of the Great Led?Undecided

And you offer up these elements as capable of making laws for the benefit of humankind far into the 21st Century?  In the name of some kind of democratic  freedom?

Should we not, like Bill Moyers, expose them as the Children of Barnum and Bailey? The Lumbaughs can function only as long as there are people ignorant and sick enough to take them seriously.

Snert Snert's picture

Quote:
Giving citizens the ability to nix tax increases while leaving them free to push their legislators for more and more spending is a problem.

 

In that context, voters not only "get the government they deserve" but the standard of living, and the local economy, that they deserve.

 

You'd think they'd only need to try it once, though.

janfromthebruce

this is a cross post from federal election - yes and no forum but it fits here too:

The federal government’s ratio of debt to GDP will reach a peak of 35.5 percent in 2010-11 and decline to 32.1 percent by 2014-15, according to the document.

“We are still in excellent shape,” said John Clinkard, chief economist at Deutsche Bank Canada in Toronto. “Our debt to GDP ratio is among the lowest in the G-7.”

That is what Jackson said here:

Quite unlike the late 1980s and early 1990s, the stage is set for interest rates to be lower than rates of economic growth for some time.  Long-term government bond rates are now in the range of 3-4%, or 1-2% in real terms.  Even if we get back to only modest nominal GDP growth rates of 4-5% and interest rates rise a little,  the gap between growth rates and interest rates means that we can run modest deficits without increasing the debt to GDP ratio at all.  Increasing that ratio for a few years is not a big deal, certainly so long as the investments funded by borrowing are intelligently invested so as to improve longer term productivity growth and sustainability. It should ot be a huge challenge to think of investments - from child care and early learning, to renewable energy development and infrastructure - which yield a return far in excess of the low costs of borrowing.

So we a progressive economist saying the same thing.

One thing I been thinking of here but haven't thought out well is the huge corporate taxcuts that come into play soon - I think 56 billion (Fidel, I need that info) and how it appears those corporations really don't need that "promised" reduction.

The backlash against "corporate welfare" at the expense of Mary and Joe Canadian received outrage from both (for want of better term), the left and the right.

So the NDP should run on not giving that corporate giveaway - being responsible corporate entities who need to see we are not in any financial shape to do so - and anyway, reducing their tax rate sure has not prevented another deep global recession. This would free up money for EI, and those other services mentioned by Jackson.

I also think we need to offer a national income program, but not thought of that too much. That goes with the unifying vision discussion.

Uncle John

Government revenues are not necessarily maximized by increasing tax rates, and they are not necessarily minimized by reducing tax rates. If we want optimal government revenues, we need to find the tax rates which encourage the most economic activity. If people are left with more money after taxes, they tend to spend it, which is good for everyone else.

malcolm1

the issue is 'what kind of taxes'?

 

taxes are taken by society to create society, we are society,

if all resources are owned by society then we can tax it, we all operate/live in this environment, we can only operate in this environment, we all benifit from it so we all pay for it, it stems from the history,

 

we should tax those that have the money, we tax the operations of the society, we should tax the corporations that we all support as we guarantee them by definition, they take advantage of the society that has been created thus far,

 

we have no money today as we have reduced taxing where the money is since the time of trudeau,

 

lets be honest and say that corporate taxes have come down but regressive taxes on individuals have gone up,

 

i suggest we dramatically reduce the taxes on individuals and raise it more than that on the corporate structure, then we would invest, buy, etc. and the corporate structure would grow,

'it would not work in a globalised economy' you say, i suggest it would 'work' as well as what we have now.

malcolm1

the issue is 'what kind of taxes'?

 

taxes are taken by society to create society, we are society,

if all resources are owned by society then we can tax it, we all operate/live in this environment, we can only operate in this environment, we all benifit from it so we all pay for it, it stems from the history,

 

we should tax those that have the money, we tax the operations of the society, we should tax the corporations that we all support as we guarantee them by definition, they take advantage of the society that has been created thus far,

 

we have no money today as we have reduced taxing where the money is since the time of trudeau,

 

lets be honest and say that corporate taxes have come down but regressive taxes on individuals have gone up,

 

i suggest we dramatically reduce the taxes on individuals and raise it more than that on the corporate structure, then we would invest, buy, etc. and the corporate structure would grow,

'it would not work in a globalised economy' you say, i suggest it would 'work' as well as what we have now.

ygtbk

I think Sven has described the problem very well. If you ask voters whether they want to pay more tax, most will say no. If you ask them whether they'd like to cut services, most will say "hell, no!". What California has pioneered (if that's the word) is the technique of having an entity that is constitutionally bound to balance the budget ask the questions separately, with the resulting obvious trainwreck.

The Canadian experience starting with Trudeau and continuing with Mulroney shows, on the other hand, that if debt is an option then politicians can separate the questions quite successfully for say 25 years before the accumulated debt becomes an obvious problem.

Uncle John

You can also devalue the currency to abrogate the debt. It seems to be working well for Obama, and it worked well for Canada.

George Victor

And printing money also works to end speculation on the currency. Kind of important in a country with a "petro-dollar' value created in Alberta and causing the demise of eastern industrial export.

Sean in Ottawa

Uncle John wrote:

You can also devalue the currency to abrogate the debt. It seems to be working well for Obama, and it worked well for Canada.

If you devalue the currency your offshore debt goes up not down-- don't see how this helps.

It can help competition and exports but you need an export market and now there isn't one to exploit.

Fidel

Sean in Ottawa wrote:

Uncle John wrote:

You can also devalue the currency to abrogate the debt. It seems to be working well for Obama, and it worked well for Canada.

If you devalue the currency your offshore debt goes up not down-- don't see how this helps.

It can help competition and exports but you need an export market and now there isn't one to exploit.

The feds do have that policy option. Ottawa doesn't have to pander to foreign money speculators and bondholders. The impotence is self-imposed.

 

UnionSupporter

Mr. Jackson's argument for sustainable deficits is greeted with enthusiasm in forums like this, populated with informed and progressive types. How is the messaged tuned to a broader electorate, or are we simply saying the NDP should try to duck the issue in the campaign?

The NDP did campaign against the corporate tax cut [some $50 billion] last fall, and it didn't seem to hurt them, but didn't win the election, and was a defensive position rather than visioning enhanced government revenues to pay for increased services and programs.

Stelmach campaigned after raising royalties, but has since reversed, giving back sizable royalty reductions to industry.

In Japan, the newly elected government campaigned on a heady mixture of service/program enhancements and consumer tax cuts, all to be paid for through greater efficiencies in "government operations", a formula that will no doubt see their existing national debt to GDP ration of 200% soar.

I'm hard pressed to find a successful campaign fought on a message of increasing government revenues anywhere in Canada, as I don't think that the Campbell government's tax cuts = greater economic activity = increased government revenue is what Mr. Jackson is alluding to.

Sean in Ottawa

Fidel wrote:

Sean in Ottawa wrote:

Uncle John wrote:

You can also devalue the currency to abrogate the debt. It seems to be working well for Obama, and it worked well for Canada.

If you devalue the currency your offshore debt goes up not down-- don't see how this helps.

It can help competition and exports but you need an export market and now there isn't one to exploit.

The feds do have that policy option. Ottawa doesn't have to pander to foreign money speculators and bondholders. The impotence is self-imposed.

 

That you can change that dynamic -- perhaps true in theory, debatable in practice. But this is more complicated than just devalueing your currency.

The fact that as long as your debt is foreign-owned devaluing your currency increases your debt is a simple mathematical fact. Please explain how you think it isn't? You essentially have to repatriate your debt to accomplish this any other way.

Printing extra currency increasing money supply can risk doing the same thing but there is a chance you can get away with it. But straight up devaluation as a policy initiative can have not other effect than increase your foreign debt.

That said this might be affordable if it makes your exports more competative but that does not change the foreign debt math at all.

mybabble

Harper is confused to say the least as talks of the recession being over have like how, because bank of Canada says things are looking good.

What is the real indicator of a recovering economy?  Employment you say? When in truth unemployment is growing?  Recession over? And Canada growing deficit of $60 billion ring true or is that more Harper confusion.

 

http://www.canajunfinances.com/tag/stats-canada/

 

Harper lies like a sidewalk, the same sidewalks he has uinemploymed Canadians sleeping on.

 

janfromthebruce

[quote=UnionSupporter]

"How is the messaged tuned to a broader electorate, or are we simply saying the NDP should try to duck the issue in the campaign?"

No duck the issue!

"The NDP did campaign against the corporate tax cut [some $50 billion] last fall, and it didn't seem to hurt them, but didn't win the election, and was a defensive position rather than visioning enhanced government revenues to pay for increased services and programs."

visioning enhanced govt revenues in combination with rescinding corp tax give aways.

I think that you are right - increased govt revenues have to come from some where, like rescinding corporate taxcuts. And you are right, it didn't increase revenue. We know that more taxcuts don't work.

I found your post very thoughtful - thank you. Please keep posting - I appreciate your critical reasoning.

Tommy_Paine

 

Establish a .0001 cent per word tax on economists.

mybabble

The NDP did oppose corporate tax breaks as well they should.  Iggy I'm not sure what his stand is on corporations getting all the breaks while Canadians go without.   Tax breaks to big corporations do not amount to increased employment as the trend in bigger organizations is big profit, fewer taxes and employee reduction as measures to increase profits for investors.

In BC the largest part of employment growth was in small business and not big and this will continue to be the area where most new employment will be created.  And now devastated with the prospect of going under once Harper's hated HST takes place and will cause many to go bankrupt or close their doors.  BC will be the hardest hit with employment loses.

So why are all of Canadians tax dollars going to big corporations when tax payers don't owe them anything but a thanks for nothing and how about cleaning up your mess?  Now cleaning up after big business now thats job creation and only the right thing to do you would think.

mybabble

Tommy_Paine wrote:

 

Establish a .0001 cent per word tax on economists.

good one!

 

janfromthebruce

Iggy I'm not sure what his stand is on corporations getting all the breaks while Canadians go without.

The liberals supported this and historically when in power con't to cut corp taxes while in power. Actions speak louder than words.

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Uncle John wrote:

Government revenues are not necessarily maximized by increasing tax rates, and they are not necessarily minimized by reducing tax rates.

Not necessarilybut certainly generally these things are true - and so generally your premise is false.

Fidel

Sean in Ottawa wrote:

If you devalue the currency your offshore debt goes up not down-- don't see how this helps.

I think it would be a problem in a global downturn, a time when unemployment is high and government revenues are less than they would be otherwise. But Jack has said that the Bank of Canada could be put to better uses. I believe he meant at the time that some amount of debt should be financed through the Bank instead of through private banks at a premium.

Quote:
It can help competition and exports but you need an export market and now there isn't one to exploit.

Will the US refuse our oil and natural gas? Our massive amounts of hydroelectric power? What else besides energy and raw materials has Canada been world renowned for exporting?

Quote:
That you can change that dynamic -- perhaps true in theory, debatable in practice. But this is more complicated than just devalueing your currency.

The fact that as long as your debt is foreign-owned devaluing your currency increases your debt is a simple mathematical fact. Please explain how you think it isn't? You essentially have to repatriate your debt to accomplish this any other way.

The feds could could change dynamic. This same debate took place in the 1990's among Liberal government members. Paul Martin was pressured by advisers like Peter Nicholson who said that federal deficits would soar through the roof unless there were massive spending cuts. Nicholson maintained that his view was based purely on arithmetic and free of either ideology or assumptions. Martin accepted the advice because of that. But Nicholson later recanted and said that what he claimed was true was based partly on a "smuggled-in assumption" - namely that interest rates had to remain the same.

Linda McQuaig goes on to describe how the Liberals were taking advice from people whose advice they preferred to listen to leading up to the terrible federal budget of 1995.

Quote:
[Pierre]Fortin's whole point, however, was that the Bank of Canada could lower interest rates, thereby completely changing the arithmetic. Nicholson agreed that Fortin's point is a legitimate one that can be debated, but one that was "never seriously entertained" in the internal discussions that led up to the budget"

Linda McQuaig a few pages before that describes how governments really had no policy autonomy under the world gold standard, a time when governments had no choice but to favour the interests of international capital and lower deflationary policies on their populations in order to maintain currency stability. Under the post war Bretton Woods agreement, governments had a new tool, which was use of capital controls. Under the new liberal financial regime, in which capital is fully mobile, governments can still have  policy autonomy, but stability of exchange rates has to be sacrificed. Iow's, we would have to challenge capital in a way in which Britain's Labour government of 1976 decided not to in the face of IMF demands(US and Germany) that Brits submit to austerity measures. The problem with market diktats is that marketeers and capitalists are not always rational. And that was true of 1976 Britain when "investors"(speculators acting with herd-like mentality) began punishing British currency for no apparent reason other than the fact they probably didnt like the Labour government and welfare state socialism.

George Victor

Folks here had best begin distinguishing between "speculators" and "investors" to some extent. The bad guy speculators being somewhat held in check now are the currency traders who buy Canadian bucks when the world price of oil increases. Threaten them with printing more money and they back off at the prospect of losing money. These are the bastards who, with a free-market administration under Steve, screwed Ontario's export markets by pricing product out of competitive reach.

Investors are us (as Pogo would have put it). We want a roof over our heads, food in the belly, and seasonal changes of clothing in our old age (forget the trips to warm beaches and Cuba libres).  Right now, our pensions make us "investors", along with our RRSP's, education funds for the kids, etc. etc. etc.

It's called globalization resulting from the discovery of the autonomy of finance capital by the Chicago School.  No sense comparing with '76, Fidel. Our means of extricating ourselves from this rather pathological mess is within ourselves,and must begin with recognizing our culpability, eh?

George Victor

The Cons and Libs are not talking about "increasing gov't revenue", but just balancing books.Flaherty said the Cons would cut future growth in program spending. As the Globe reported, he said "the Tories wouldn't balancde the budget by cutting transfers to individuals or provinces. The former Chretien government slashed payments to privinces in the 1990s to eliminate the deficit.

"Liberal finance critic John McCallum brushed off Mr. Flaherty's accusations, saying his party would not raise taxes or cut transfers to balance the budget. He noted that the Tories aren't keeping all levies steady, point out they will be hiking Employment Insurance premiums in the years ahead."

They accuse each other of haing no "credible" plan to end the deficit.  And looking at their promises, one can understand that. But the REAL final solution will come after the election, of course.

And so it goes.

Tommy_Paine

Funny, I only get a sentence into my speculator diatribe at work these days before I get interupted and someone carries on in the same course.   

When the shit started to hit the fan in manufacturing, management all of a sudden lost interest in their post modern metrics and started looking at real numbers.   And one of the things they looked at was who was value added and who weren't.

I was not value added in my old job in Q.A.  Meaning, I didn't do something that added value to the steel as it moved through the plant.  Mind you, in my Q.A. capacity I think I gave good return on my wages, or at least did my best to do so. 

But in the end, as they say, money talks and bullshit walks.

The economy really needs an adjustment along these lines.  Obviously, speculators that increase prices without adding value to a good or comodity have to be taxed out of existance, and told they're lucky that's all we're doing to them.

That's what this recession should have been about-- basically a reassesment on value, and adjustments made to favour those who add value to it.

But, surprise, surprise, someone whispered "recovery" and already we are reving up the practices that got us into this mess just a year and some ago.

Yee Haw.

 

George Victor

Finance capital "got us into it", TP. The folks who move our investments around for us. We ae letting them take us back into it because we don't understand the  ways of creating safer investment alternatives. "They" are given the job. 

And, unfortunately, deciding "value" in a largely service economy, in some Marxian sense, ain't on.

 

Sean in Ottawa

My point was that currency rate manipulation is not the right lever-- and as Fidel pointed out the export market we do have is fairly imune to the rate. So we would not increase our exports but would increase the foreign debt we have.Also it is hard to devalue a currency when interest rates are so low. Normally you do this by dropping rates to discourage demand for your currency.

While there is some risk to the same thing, the upsides are better doing this on money supply levers which is using the central bank to create more supply. It would take some major changes to restore this lever as it has not been used in a long while. In fact the Canadian financial system is strong and can get away with some additional supply.

 

George Victor

You again fail to mention "petrodollar", Sean. THAT is the central factor in Canada having not one, but TWO economies. That is recognized as THE Canadian dilemma in trying to balance the exchange rate...we were the first to float the dollar and were applauded for it as piioneers.  And that is what screwed us with a Conservative administration at the alter of non-regulated markets.

The media are sort of too embarrassed to mention this divisive little bomb, but we have yacked about it in the past, hereabouts. Always brought derisive catcalls from the West.

Fidel

McQuaig also mentions Fortin's point of view that, certainly international capital markets have powerful influence on governments. And that foreign speculators might rally against the Canadian dollar for whatever reasons a Canadian government might provoke them to. The debt is still there after years of corporate tax cuts and spending cuts at the federal level. However, it appears to me from McQuaig's interviews with economists like Fortin that the feds in Ottawa could buck Bay Street and capital and pursue policies that are more popular among Canadians. But Fortin also points out that speculators would not necessarily dump their Canadian dollars and bonds in the event. There is always the opportunity for them to buy dollars at lower values and Canadian debt at lower yields. The profit is realized down the road when the Canadian begins picking up steam and dollar rises in value. It's what capitalists do and are good at. Some of it is a bluff, and it appears to me that this is what happened in 1976 Britain under Labour. British Labour faced a challenge from money speculators, even though inflation was on course for lowering and debt paying down. And Brits were finding it difficult to borrow money from other western countries in order to prop-up the pound. Apparently they did have options which were never considered, such as offer of loans from Germany's Helmut Schmidt. US officials at the time were scared silly that British Labour would mount a challenge to the new liberal financial regime, but British Labour blinked under the threat.

Sean in Ottawa

George Victor wrote:

You again fail to mention "petrodollar", Sean. THAT is the central factor in Canada having not one, but TWO economies. That is recognized as THE Canadian dilemma in trying to balance the exchange rate...we were the first to float the dollar and were applauded for it as piioneers.  And that is what screwed us with a Conservative administration at the alter of non-regulated markets.

The media are sort of too embarrassed to mention this divisive little bomb, but we have yacked about it in the past, hereabouts. Always brought derisive catcalls from the West.

I did not "fail to mention it" -- it was not relevant to my response. I agree it is a significant issue in relation to the value of our currency but not relevant to the issue of any benefit in devaluing our currency with respect to the deficit or debt.That was the narrow question I was answering.

In some respects the petro-dollar angle is a benefit since it might well be the one aspect of our currency value that will allow our interest rates to be lower than they otherwise might be as our economy struggles. On the other hand it is pushing up the value of the dollar hurting exports but as I said there is little export market to exploit presently since what we are selling now is not subject to currency shifts-- if the economy is doing better and there is demand for oil we will sell it regardless of the value of our currency. the big problem with the petro dollar issue is not now but if there is a global recovery that could create demand for our other exports but instead raise the price of oil pushing the dollar so much that our export market does not recover. While serious, this issue is unrelated to the answer I gave which stood on its own.

Sean in Ottawa

Also the fact that Canada has one, two or arguably three economies is also important but not germaine to the question I answered which was the impact of manipulating the currency to manage the volume of debt.

George Victor

The Bank of Canada has been threatening to print money, suppressing speculation, for about a month now.  A loon equal to the greenback means no recovery of the economy. I think the tug of war within the country regarding the rate of exchange is germaine. And I  don't understand your "there is little export market to exploit " now. There is a helluva lot to be recovered, including in the car industry.

Fidel

UnionSupporter wrote:
Mr. Jackson raises an important question, but doesn't attempt an answer. How does a political party with aspirations of forming government successfully engage an electorate mired in a morass of "no deficits, lower taxes, more services" in a discussion about the merits of more deficit spending? How does the same political party convey an optimism that debt will not weigh heavily on future aspirations? Are there revenue measures that a majority of the electorate will embrace if framed appropriately? Is there an example(s) of a winning campaign that has run on such a message?

Jack Layton hinted at it in the 2004 election campaign. And now, according to Canada's Leo Panitch, that idea has infected the London School of Economics, a world renowned think tank for capitalist ideas. The idea is to make the financial system subserviant to society and ordinary people. The new liberal financial regime since the late 1970's has achieved the opposite. Western world citizens have become embedded in the economy and people existing to serve the economy run by financial capitalists not elected leaders. Our bought and paid for stooges are there to enforce general impotence when it comes to undermining democracy and empowering market forces.

 Jack Layton also said in 2008 that bank bailouts around the western world represent somewhere in the neighborhood of $580 dollars for every citizen. Jack said there is no real reason for it when the productive labour economy is the real economy and in dire need of real investment today after too many years of spending cuts and lower taxation. A labour induced recovery is what's needed. The western world capitalist financial system is hopelessly bankrupt, and we need to begin investing in people and green infrastructure jobs. It's why I'm voting NDP.

George Victor

Spot on, Fidel.

Sean in Ottawa

George Victor wrote:

The Bank of Canada has been threatening to print money, suppressing speculation, for about a month now.  A loon equal to the greenback means no recovery of the economy. I think the tug of war within the country regarding the rate of exchange is germaine. And I  don't understand your "there is little export market to exploit " now. There is a helluva lot to be recovered, including in the car industry.

Again you are missing my point with a parrallel argument-- I am not arguing against a devaluation nor am I saying there is no market to protect-- just not presently enough new market to exploit to make an argument about doing it to reduce the debt. I was responding to a statement that we could use devaluation to cut our debt-- it will not do that. Some how you are taking that discussion out of conext and trying to evaluate it within a discussion you want to start but have not-- why don't you just make your point and then we can look at it in that context rather than twisting points that are irrelevant to yours?

I am not arguing agains the points that you are making but you keep raising them as an argument against points it is not relevant to.

I totally support devaluing the currency I just do not think this will impact the debt in the way the poster upthread thought it would.

 

 

Fidel

Slap green taxes on Canada's massive fossil fuel exports to the states. Raise per barrel oil royalties to Norwegian levels, or even Alaskan levels.

Slap massive taxes on our massive hydroelectricity exports to the US. And if they refuse to pay, then use the massive surplus power to electrify our own economy, and cancel Ontario's massive diversion of public funds into more bottomless nuclear money pits.

Buy Canadian not American.

Raise taxes on those most able to pay them.

Cancel Harper's half a trillion dollar US-style military expansion program

Create public sector jobs on a massive scale, and invest massively in Canadian R&D to Swedish levels ~ 4% of GDP.

We could make countries like China appear to be running backwards with green and bustling economies of the future. Canada's potential to become a world leader in green economies of the future is simply massive.

UnionSupporter

I don't believe the hype that the Washington consensus is dead, but there are occasional signs that the discussion of an alternative will be tolerated rather than shouted down.

The Globe and Mail's editorial today comes to a similar conclusion to Mr. Jackson's posted above: "If symptoms persist, the discussion of public finance in the probable autumn election will be notably barren."

The Vancouver Sun comes to a different conclusion, but also states the challenge frankly: "Balancing a budget is really quite simple. A government can only spend as much as it collects in revenues. The message from the $164 billion shortfall Flaherty is projecting over the next six years is that at some point, whether now or later, the government will have to find more revenue, most likely by raising taxes, or cut spending."

Despite the Sun's optimism, all indications are that both the Cons and Libs will likely campaign like the Democratic Party of Japan, ignore any question of how to pay for all this over the long term. It might even be the right strategy for the NDP, if we assume that eventual economic recovery will restore budgets to balance, that this is a cyclical deficit as opposed to a structural deficit.

But, if the NDP is to differentiate from the Libs and Cons, if it is to speak frankly to the aspirations of the many Canadians who don't see their needs represented in a longer term strategy of tax cuts and smaller government, if it is to point to a broadening of programs and services, then it does have to address the question of how to pay for it.

  • chronic deficits?
  • increased income taxes?
  • increased royalties on resources?
  • increased fees/consumption taxes/corporate taxes?

My concern is that these have historically been very difficult to win an election on. Is there an opportunity to defy history, and if so, what is the message for one or many of these measures that will attract a majority of the electorate? Are there examples where campaigns are winning on such a message?

Fidel

It's more than the end of a business cycle. The western world financial system is irreparably bankrupt. I think the situation now is comparable to that of 1929-32. There are leaders around the world saying there needs to be a new Bretton Woods financial agreement between countries, because there are many hundreds of billions of dollars worth of what amount to junk paper iou's floating around the world, and banks and investment houses can't pay them. The new liberal financial system needs to be put through bankruptcy proceedings. It's finished.

Canadian William Krehm reminds us of the Bank of Canada's potential to create money as it was between the years 1938 and 1974. Unlike the US Federal Reserve, which was privatized sometime after turn of the last century, Canada's Bank is still nationalised. Mulroney's conservatives screwed up with doing his part for the half-baked neoliberalisation when they rammed a bill through Parliament ending the bank's role for creating non-interest bearing money and without any debate in 1991. 

Bookish Agrarian

I normally would never post media releases - however this is so blatant it needs to be read in full.

How Harper Plans to not tax us by taxing us

 

Harper plans deficit tax on workers and employers

 

Conservatives plan to raid Employment Insurance once again

 

OTTAWA - The Harper Conservatives plan to reduce the deficit by levying $19 billion in higher taxes on workers and their employers, says New Democrat Finance Critic Thomas Mulcair.

 

"In the fiscal update Finance Minister Flaherty released on Thursday, he showed that he plans to raise $19 billion in new revenue by increasing the Employment Insurance payroll tax. Yet he's telling Canadians the opposite, that he won't raise taxes," said Mulcair.

 

Two months ago, New Democrats warned that an analysis by the Parliamentary Budget Officer and actuaries showed that workers and employers were facing huge increases in payroll taxes in 2011 because of a decision by the Harper government to invest only $2 billion in its new Employment Insurance account.

 

The Conservatives, with the support of the Liberals, plundered the $57 billion surplus paid by every worker and employer in Canada for EI. They then gave these $57 billion in tax cuts to the most profitable businesses. In fact, businesses in the forest and manufacturing sector, that didn't qualify for tax cuts since they weren't profitable, were therefore subsidizing the richest companies. Now, businesses, whether they were profitable or not, whether they had access to the tax cuts or not, have to pay $19 billion to correct this culpable negligence.

 

"The issue now is what choices should the federal government make to tackle the ballooning deficit," said Mulcair. "The Conservatives and Liberals think that it's ok to transfer billions from workers and employers to fund tax cuts to the most profitable businesses. New Democrats fundamentally disagree."

Erik Redburn

This is a promising start.  Almost been tabu for the last generation, but what we're facing now could be seen as taxation crisis as much as anything.

Has anyone ever challenged our governments in court on taking money out of worker paid programs that are supposed to be there for the protection of workers?   If that was ever upheld in court it could even be used to defend pension funds under threat from corporate raiders, as a matter of broader principles.

George Victor

The alternatives to taxation, when balancing budgets, are growth of economic activity and the cutting of social seervices and government activity generally.

Be certain of where you want to go on tax-cutting, folks...in this climate of growing awareness about ...climate.

Sven Sven's picture

Lard Tunderin Jeezus wrote:

Uncle John wrote:

Government revenues are not necessarily maximized by increasing tax rates, and they are not necessarily minimized by reducing tax rates.

Not necessarilybut certainly generally these things are true - and so generally your premise is false.

I think it's incorrect to say that increasing tax rates will "generally" result in lower tax revenues or to say increasing taxes will "generally" result in higher tax revenues.

Instead, I suspect that there is a tipping-point tax rate above which tax revenues would decrease because the incentives would become negative.  In other words, there is likely a range of tax rates (0% to ???%) over which tax revenues would "generally" increase as tax rates increase and an upper range of tax rates (???% to 100%) over which tax revenues would "generally" decrease as tax rates increase.

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[b]Eleutherophobics of the World...Unite!!![/b]

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

I'd say that's still mostly bullshit, actually.

There may be a trend where tax avoidance will increase as rates increase; but there are people who try to avoid paying their fair share at the lowest rates, and people who are honest at the highest, most punitive rates. I've yet to see anyone anywhere provide an example where a legitimately recognised government-in-control raised taxes and received less revenue.

Sven Sven's picture

Lard Tunderin Jeezus wrote:

I'd say that's still mostly bullshit, actually.

So, are you saying that if a government were to raise the average tax rate from, say, 40% to 100% (or to 99% or to 98% or...) that tax revenues would increase?

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[b]Eleutherophobics of the World...Unite!!![/b]

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

We all know that is not realistic.

Couldn't supply the example I requested, eh?

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