How to talk about increasing government revenue?

Sun, 2009-09-13 14:09

UnionSupporter

The Mulclair release is arguing against increasing government revenue from one source. In BC, the NDP took a position against the carbon tax that, if elected, would have seen an overall decrease in government revenue. The BC NDP are now campaigning against the HST, which is essentially a tax shift with potential for a modest increase in government revenue. In several provinces, the NDP has favoured decreased small business taxes.

But what are the measures for increasing revenue that the NDP should champion? What is the fairest means of doing so, and what will inspire the voter to mark their ballots for the NDP rather than give the Cons and Libs a club to beat the NDP with?

I recall the 2004 inheritance tax proposal, which was very narrowly targetted so should have been safe with a vast majority of Canadians [after all, a tax should be fine as long as I never have to pay it]. Yet that proposal attracted a lot of negative interest and the NDP backtracked.

Sun, 2009-09-13 14:34

#53

George Victor

This is talking about increasing gov't revenue? In Canada or the U.S.? Under Obama or Steve? Going completely hypothetical, Sven, will not be particularly helpful. Think of other ways of increasing gov't revenue rather than the tax bogeyman. Unless you can come up with a "top tolerance" figure across a broad range of taxpayers and an infinite variety of justifications.

Sun, 2009-09-13 14:35

#54

Sven

Lard Tunderin Jeezus wrote:

We all know that is not realistic.

Couldn't supply the example I requested, eh?

That's "not realistic"?

Look, the question is: Is there tax rate above which further increases in the tax rate will result in less government revenue? If an increase in a tax rate from 0% to 1% will not reduce revenue but an increase in a tax rate from X% to 100% would result in a reduction in tax revenue, then, by definition there is some tax rate between 0% and 100% at which further tax rate increases would result in a reduction in revenue.

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Sun, 2009-09-13 14:54

#55

Sven

George Victor wrote:

Going completely hypothetical, Sven, will not be particularly helpful.

I was simply responding to LTJ's post #26.

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Sun, 2009-09-13 18:40

#56

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

It wasn't really a direct response, it was simply as close as Sven could come to an honest admission that there was no real-world example he could provide.

So thanks Sven, I know how hard that was for you.

Sun, 2009-09-13 21:51

#57

Sven

Lard Tunderin Jeezus wrote:

It wasn't really a direct response, it was simply as close as Sven could come to an honest admission that there was no real-world example he could provide.

So thanks Sven, I know how hard that was for you.

Look, you were the one claiming that tax revenues generally rise when tax rates increase. I'm simply asking you: Is that true for any tax rate increase regardless of how high the tax rates may be?

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Sun, 2009-09-13 22:01

#58

Fidel

They pay their taxes in other countries. It's not an impossibility.

Sun, 2009-09-13 23:34

#59

Sven

Fidel wrote:

They pay their taxes in other countries. It's not an impossibility.

Here's the acid-test of LTJ's assertion: Would a 100% tax rate result in the maximum possible tax revenue to the government?

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Sun, 2009-09-13 23:43

#60

Erik Redburn

Not any test, but reductio ad absurdum. Counter example, would lowering taxes (to zero) result in increased tax revenue through increased growth?

Sun, 2009-09-13 23:56

#61

Fidel

Sven wrote:

Fidel wrote:

They pay their taxes in other countries. It's not an impossibility.

Here's the acid-test of LTJ's assertion: Would a 100% tax rate result in the maximum possible tax revenue to the government?

It all depends. I think that if enough Canadians(or Americans) thought they were getting good value in return for their 100% taxes, the billionaires would still be out numbered by the working class either way.

European and Nordic countries are home to the largest concentration of millionaires in the world, and taxes are highest in those countries. There are no obvious tax rebellions or tea parties in the works in those countries.

Mon, 2009-09-14 00:16

#62

Sven

Fidel wrote:

It all depends. I think that if enough Canadians(or Americans) thought they were getting good value in return for their 100% taxes, the billionaires would still be out numbered by the working class either way.

News Flash: There wouldn't be any billionaires -- or millionaires -- or one-hundred-thousandaires with a 100% tax rate. And tax revenues would be a tiny fraction of what they are today.

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Mon, 2009-09-14 00:27

#63

Erik Redburn

Oh I'd personally sacrifice every living billionaire to Kali, Baal or Huitchlipochtli -any diety that would take them- and feel no qualms about it all in the morning. Work would still need to be done and money would still be made, maybe even more for ourselves. But please read my post again. Wrong question, wrong answers.

Mon, 2009-09-14 00:31

#64

Sven

Erik Redburn wrote:

Not any test, but reductio ad absurdum. Counter example, would lowering taxes (to zero) result in increased tax revenue through increased growth?

Shelve the Latin and just read what I wrote in English in my posts above.

I said that an increase from a 0% tax rate to a single digit tax rate would certainly result in an increase in tax revenues. But, if you read what I wrote, I said that there is almost certainly a "tipping-point" tax rate above which additional increases in the tax rate will result in a reduction in overall tax revenues. The only way that wouldn't be true would be if a 100% (confiscatory) tax rate would result in the maximum possible amount of tax revenue -- and that's clearly not the case. How many people do you know who would go to work on Monday morning if the government took everything people earned?

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Mon, 2009-09-14 00:34

#65

Sven

Erik Redburn wrote:

...unless perhaps we eliminate the middle men altogether...

What does that even mean in the context of tax rates?

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Mon, 2009-09-14 00:34

#66

Erik Redburn

Again, read My post. Of course there are points of diminishing returns -unless perhaps we eliminate the middle men altogether- but that argument has long been used by the right to reduce functional taxation to well below diminishing returns for government from a point that was Already below diminishing returns for business. Business started escaping effective taxation again in the sixties, the rich in the seventies, where the public "deficit" problem really began. True lost history.

Mon, 2009-09-14 00:36

#67

Erik Redburn

Means the possibility of eliminating the need to go hat in hand to guys living off our labour and land in the first place. Socialism I believe its called. Just one other possibility.

Mon, 2009-09-14 01:13

#68

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Sven wrote:

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 necessarily; but 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.

Look, Sven - I didn't say that a tax increase will necessarily under any and all circumstance provide more revenue, as you've attempted to pretend. I said that in the real world generally increasing taxes brings in more. And I asked for one example to the contrary.

Which you haven't provided, seven posts later.

Mon, 2009-09-14 01:17

#69

Sven

Lard Tunderin Jeezus wrote:

Look, Sven - I didn't say that a tax increase will necessarily under any and all circumstance provide more revenue, as you've attempted to pretend. I said that in the real world generally increasing taxes brings in more.

Ah, so you do agree, after all, that a 100% tax rate will not result in the maximum possible government revenue?

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Mon, 2009-09-14 01:19

#70

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

~ yawn ~

Mon, 2009-09-14 01:20

#71

Sven

Lard Tunderin Jeezus wrote:

~ yawn ~

Sounds like a "yes" to me.

Finally, we agree on something.

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Mon, 2009-09-14 01:32

#72

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

That's nine.

Mon, 2009-09-14 01:37

#73

Sven

Lard Tunderin Jeezus wrote:

That's nine.

~ yawn ~

Mon, 2009-09-14 03:27

#74

George Victor

"How to talk about increasing government revenue" - but not to arrive at anything even remotely conclusive regarding increasing government revenue.

Mon, 2009-09-14 09:21

#75

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Yes, sorry for my part in the disruption. I shouldn't be helping Sven to sidetrack intelligent conversation with his misrepresentations.

Mon, 2009-09-14 09:51

#76

Sven

Lard Tunderin Jeezus wrote:

...his misrepresentations.

What "misrepresentations"?

All that I've said is that there is almost certainly a tax rate above which further increases to the tax rate will result in a reduction in tax revenue. If that was wrong, then a 100% tax rate would necessarily provide the maximum possibble tax revenue.

So, again, what am I "misrepresenting"??

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Mon, 2009-09-14 10:03

#77

ygtbk

Here's an empirical example on tax rates. During the Carter era the top marginal U.S. federal income tax rate was about 70%. During the Clinton era it was around 40%. It's clear that dropping the top marginal rate didn't lead to a collapse of the economy. I do know that people spent a lot of time and money on tax shelter-type investments at the end of the Carter era (I used to work in a financial services job), very likely more than during the Clinton era.

So it's clear that there are a large range of tax rates that people are willing to tolerate. It's especially easy to tolerate it if it doesn't apply to you personally. At some point raising taxes is counterproductive (remember rock stars leaving the U.K. as tax exiles when they realized exactly what a 95% top marginal rate meant to them, a la Beatles "Taxman") but it's not clear whether the scream point is 50%, 60%, or 70%. It's very likely below 95%.

Mon, 2009-09-14 10:37

#78

George Victor

Michael Caine surmised, in his autobiography, that some lacked the proper British spirit - but he did go into the restaurant business, and didn't complain about falling tax rates. He did think that too many were ready to sacrifice their fellow citizens in the time of the Iron Lady. It's all about what the haves are willing to do without, eh?

Mon, 2009-09-14 12:36

#79

UnionSupporter

Fidel wrote:

European and Nordic countries are home to the largest concentration of millionaires in the world, and taxes are highest in those countries. There are no obvious tax rebellions or tea parties in the works in those countries.

Actually, there has been consistent pressure to reduce top marginal rates in many of these countries, with the result that over the past five years France cut from 48.1% to 40%, Germany cut from 48.5% to 45% and even Sweden has cut from 57% to 55%.

Mon, 2009-09-14 12:50

#80

George Victor

The poor bastards could starve on that. But yes, they will take their little red wagonload of $ and play elsewhere unless this happens. Look forward to the renewal of postwar exchange controls, beginning with Tobin tax.

Mon, 2009-09-14 12:59

#81

Sven

UnionSupporter wrote:

Actually, there has been consistent pressure to reduce top marginal rates in many of these countries, with the result that over the past five years France cut from 48.1% to 40%, Germany cut from 48.5% to 45% and even Sweden has cut from 57% to 55%.

And the pressure is coming from low-tax countries (Ireland, Switzerland, eastern European countries, etc.). Businesses are moving from high-tax jurisdictions to low-tax jurisdictions and that puts enormous pressure on the high-tax countries to lower their taxes.

Competition is good.

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Mon, 2009-09-14 13:23

#82

madmax

mybabble wrote:

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.

Ignatieff and the LPC are for Corporate Tax Cuts. It has been embedded in their philosophy. The LPC want to cut corporate taxes and implement a broader HST across Canada. Its the same policy that the CPC are doing, but taking political cover for doing, by blaming the Provinces. The LPC also believe in raising the GST portion in order to bring larger income tax cuts to the wealthy. The CPC tries a populist approach of lowering the GST and then going for the broader catchment area of the HST. If implemented, the LPC would do nothing to change the tax structure.

Mon, 2009-09-14 14:19

#83

Fidel

UnionSupporter wrote:

Fidel wrote:

European and Nordic countries are home to the largest concentration of millionaires in the world, and taxes are highest in those countries. There are no obvious tax rebellions or tea parties in the works in those countries.

Actually, there has been consistent pressure to reduce top marginal rates in many of these countries, with the result that over the past five years France cut from 48.1% to 40%, Germany cut from 48.5% to 45% and even Sweden has cut from 57% to 55%.

[url=http://www.oecd.org/document/60/0,3343,en_2649_34897_1942460_1_1_1_1,00.... tax database[/url]

If the feds in Ottawa were to raise overall tax revenues as a percentage of GDP to just the OECD average, Ottawa would be raking in roughly $33 billion more in tax revenues every year.

And if Canada was to raise tax revs to the EU-15 average, again as a percentage of GDP, roughly $70 billion more.

As of 2005, Canada's economy reverted back to being one of hewer and drawer status. In this time of dangerous climate change, Canada has a responsibility to the rest of the world to help curb corporate America of its voraceous appetite for cheap Canadian fossil fuels at the root cause of global warming. And Canada is the number one supplier of cheap fossil fuels and total energy to the most wasteful and most fossil fuel dependent economy in the world. Now would be an excellent time to change the tax regime for Canada's massive, simply massive energy exports to the U.S. Iow's, the feds would have to grow spines and renegotiate the previous Liberals' NAFTA trade deal in the interests of Canadians as well as the rest of the world.

Mon, 2009-09-14 14:41

#84

UnionSupporter

You are absolutely right that increasing Canada's top marginal rate to be in line with OECD average would mean a dramatic increase in total government revenue, though the exact number might be up for dispute given the various diversions discussed above. KPMG's most recent report on individual income tax rates by country provides a good reference to where we fit globally.

I think it is a bit of a leap from having that knowledge to developing a message for a party that aspires to be government. Again, I recall the inheritance tax example. But there may be some thoughts here that could help the NDP position on this issue. Or there may be examples from other jurisdictions?

As I mentioned above, Stelmach did try to address the royalties paid for Alberta's oil but was evenutally beaten back, having since implemented several royalty reductions. And Stelmach did so from a position of overwhelming political dominance. Can the NDP campaign on increased royalties?

Mon, 2009-09-14 14:58

#85

Fidel

I think that if Nordic countries' tax regimes are considered the most efficient in the world, Canada's must be one of the least efficient among developed countries. We're paying supranationals to rob us blind of our natural wealth, and it's contributing to dangerous climate change. Our old line party crooks should be arraigned on charges of crimes against the environment and future humanity.

Mon, 2009-09-14 15:25

#86

ygtbk

UnionSupporter wrote:

You are absolutely right that increasing Canada's top marginal rate to be in line with OECD average would mean a dramatic increase in total government revenue, though the exact number might be up for dispute given the various diversions discussed above. KPMG's most recent report on individual income tax rates by country provides a good reference to where we fit globally.

I think it is a bit of a leap from having that knowledge to developing a message for a party that aspires to be government. Again, I recall the inheritance tax example. But there may be some thoughts here that could help the NDP position on this issue. Or there may be examples from other jurisdictions?

As I mentioned above, Stelmach did try to address the royalties paid for Alberta's oil but was evenutally beaten back, having since implemented several royalty reductions. And Stelmach did so from a position of overwhelming political dominance. Can the NDP campaign on increased royalties?

Thanks for the link. It's worth noting that the income tax figure quoted for Canada does not include provincial income tax, so it may be that there's not quite as much of a gap between us and Denmark (which appears to be out front at 59%) or Sweden (at 55%) as you might think. France and Germany show rates of 40% and 45% respectively - does anyone know whether they have regional income taxes corresponding to our provincial income tax?

Mon, 2009-09-14 15:44

#87

Fidel

Thanks for pointing out the inefficiency and duplication of government in Canada. We have more government per capita than the majority of rich countries including the USA. And if the tax gap is non-existent, which isnt true, then Canadians are rrreally being ripped off. Canadians don't have well-funded public services, like Norway, Sweden, Denmark or even France. In France, kids can afford to go to university and find a family doctor. Those countries are veritable workers paradises compared to the Northern Puerto Rico(Canada). They pay more in taxation, but they receive something in return for their higher taxes. Here in Canada we feed banks and corporations, and a few billionaire families and their companies who control most every aspect of our daily lives, from the grocery stores paying exorbitant rents in malls owned by the oligarchs to the price of gasoline and home heating fuel. Here in Canada, we have socialism for bankers, rich people and foreign-owned corporations.

Mon, 2009-09-14 17:17

#88

UnionSupporter

@ygtbk: Yes, it is always difficult to compare the variously complex national/sub-national rates as one. The KPMG report notes that they make no effort to include sub-national, "With the exception of Switzerland where the figure quoted includes the Zurich cantonal and communal rate. For Canada, the United States, and other countries with similar structures; the tax rates for provinces, cantons, states, etc. are not included." But the KPMG is a good snapshot of trends in national top marginal rates over last 6 years globally.

The OECD [Thanks to Fidel for posting above] report is more thorough, though doesn't make it any simpler, in exploring sub-national as well. Interestingly, the OECD appears to report the top marginal central rate in Denmark is 26.48 and the sub-central average rate is 25.55 - illustrating again how difficult it is to rely upon one analysis when it comes to complex tax structures.

Are we suggesting here that a winning campaign strategy is to compare Canada's tax rates to other countries and argue for higher rates on that basis?

Mon, 2009-09-14 18:45

#89

Sven

UnionSupporter wrote:

Are we suggesting here that a winning campaign strategy is to compare Canada's tax rates to other countries and argue for higher rates on that basis?

I can imagine the tax-increase publicity campaign now: You should pay more to the government than you are already paying because the people in Country X are paying more taxes than you are paying now!!

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Mon, 2009-09-14 19:23

#90

Sven

The way to get people to want to raise taxes is to be able to convince them that (1) the taxes that are currently being raised are being spent in the most efficient way possible (i.e., people are getting the maximum benefit -- or nearly so -- on the taxes already being raised and (2) the additional money being taken from taxpayers will result in an equal or greater benefit to themselves, to society generally, or some combination of both.

But, I think there is so much distrust among many in society (principally those actually paying taxes) regarding item (1) that it's difficult to even get to item (2).

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Mon, 2009-09-14 19:31

#91

Fidel

Our colonial administrators arent real good with spending money in general, so Sven's number one is already tainted as far as some phony majority of Canadians are concerned.

Mon, 2009-09-14 19:34

#92

George Victor

The U.S. is a particular case, Sven. Fortunately, we don't have to deal with such a rabid, libertarian mob (outside of Alberta), for whom taxation is an affront to personal liberty. And the level of political consciousness in Europe brings an understanding and appreciation of the benefits to be had for society as a whole. Although your political party machine people, imported here at election time, certainly know how to play social elements against each other. You live in a particularly nasty, grasping society.

Mon, 2009-09-14 19:40

#93

Sven

George Victor wrote:

The U.S. is a particular case, Sven. Fortunately, we don't have to deal with such a rabid, libertarian mob (outside of Alberta), for whom taxation is an affront to personal liberty.

All I can say to that is read my tag line!!

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Mon, 2009-09-14 19:44

#94

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Could we ignore the ugly american interloper and continue our conversation?

In terms of where to increase the tax base, I would start with natural resource companies, profiting by exploiting the heritage of all Canadians. Particularly those which are foreign controlled.

Mon, 2009-09-14 19:46

#95

Sven

Lard Tunderin Jeezus wrote:

Could we ignore the ugly american interloper and continue our conversation?

Usually, you're above name-calling, Lard. It doesn't become you.

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Mon, 2009-09-14 20:05

#96

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Normally, you're less than a good fit here, but lately you're no more than a persistent troll. I'm fed up with you dominating thread after thread simply to disrupt them.

ETA: However, I note that you started several of the other related threads. Why don't you stick to them for a while, and I'll avoid them like the plague.

Mon, 2009-09-14 20:10

#97

Sven

Lard Tunderin Jeezus wrote:

Normally, you're less than a good fit here, but lately you're no more than a persistent troll. I'm fed up with you dominating thread after thread simply to disrupt them.

That (dominating "thread after thread") is an interesting characterization.

Other than the two threads I started, of the 50 threads in the TAT, I think I've only participated in one of them.

Here's a valuable, but free, tip for you: If you don't like my ideas or what I post, how about if you do something incredibly novel and just...ignore them?

Yes, I know. That would no doubt require you to muster an almost herculean amount of self-control. But give 'er a try. Your blood pressure will probably drop a few healthy notches to boot. And that wouldn't be all bad, now would it?

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Mon, 2009-09-14 20:14

#98

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Quote:
If you don't like my ideas or what I post, how about if you do something incredibly novel and just...ignore them?

Because they hang in the air like a fart, waiting for someone to open the windows and blow them away.

Mon, 2009-09-14 20:18

#99

Sven

Lard Tunderin Jeezus wrote:

Because they hang in the air like a fart, waiting for someone to open the windows and blow them away.

And you're just the man to do it, right?

What a heavy burden for you to bear.

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Mon, 2009-09-14 20:23

#100

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

You've managed once again to disrupt an entire thread to its very end with your obnoxious behaviour. Congratulations.

Mon, 2009-09-14 20:32

#101

Sven

Lard Tunderin Jeezus wrote:

You've managed once again to disrupt an entire thread to its very end with your obnoxious behaviour. Congratulations.

You're not doing very well with the "ignore Sven" thing, are you?

You've got to dig down deeper. You've got to muster all that you've got. Just give 110%.

Seriously, you would do yourself a world of good if you just ignored my posts. There are a couple of babblers who I just ignore for that very reason. It's refreshing and I sleep better at night.

You would, too.

So, com'on, giver 'er a try, okay?

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How to talk about increasing government revenue?

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