Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Organizational Responses Canadian Centre for Policy […]
    Canadian Centre for Policy Alternatives
  • Boots Riley in Winnipeg May 11 February 22, 2019
    Founder of the political Hip-Hop group The Coup, Boots Riley is a musician, rapper, writer and activist, whose feature film directorial and screenwriting debut — 2018’s celebrated Sorry to Bother You — received the award for Best First Feature at the 2019 Independent Spirit Awards (amongst several other accolades and recognitions). "[A] reflection of the […]
    Canadian Centre for Policy Alternatives
  • CCPA-BC welcomes Emira Mears as new Associate Director February 11, 2019
    This week the Canadian Centre for Policy Alternatives – BC Office is pleased to welcome Emira Mears to our staff team as our newly appointed Associate Director. Emira is an accomplished communications professional, digital strategist and entrepreneur. Through her former company Raised Eyebrow, she has had the opportunity to work with many organizations in the […]
    Canadian Centre for Policy Alternatives
  • Study explores media coverage of pipeline controversies December 14, 2018
    Supporters of fossil fuel infrastructure projects position themselves as friends of working people, framing climate action as antithetical to the more immediately pressing need to protect oil and gas workers’ livelihoods. And as the latest report from the CCPA-BC and Corporate Mapping Project confirms, this framing has become dominant across the media landscape. Focusing on pipeline […]
    Canadian Centre for Policy Alternatives
  • Study highlights ‘uncomfortable truth’ about racism in the job market December 12, 2018
    "Racialized workers in Ontario are significantly more likely to be concentrated in low-wage jobs and face persistent unemployment and earnings gaps compared to white employees — pointing to the “uncomfortable truth” about racism in the job market, according to a new study." Read the Toronto Star's coverage of our updated colour-coded labour market report, released […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers

Meta

Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Deficit Caused by Tax Cuts

In my career of writing letters to my hometown newspaper, my favourite headline supplied by the Regina Leader-Post was “Deficit Caused by Tax Cuts,” for a letter arguing that Saskatchewan’s mild deficit a few years ago resulted from provincial tax cuts rather than from alleged overspending.

Today’s inane press release from Finance Canada, lauding the fact that “Tax Freedom Day” came three days earlier this year, prompts me to make the same point about the current federal deficit. To their credit, Linda McQuaig and Murray Dobbin have also recently made this point.

Budget 2009 projected that all tax cuts enacted by the Harper government would cost $34 billion in lost revenue this fiscal year (Table A2.2). Interestingly, that amount exactly equals the deficit which Budget 2009 projected for this fiscal year.

The fact that economic conditions are even worse than assumed by the Budget will reduce actual tax revenues and the cost of tax cuts by a small percentage relative to projections. By including around $10 billion for the auto bailout, Finance now anticipates a deficit of $50 billion this fiscal year. So, Harper’s tax cuts no longer account for the whole federal deficit (just two-thirds of it).

The auto bailout is a one-time outlay. The federal government may add to the $10 billion, but it may also get the money back if industry restructuring and a rebound in auto sales boosts the value of its GM and Chrysler equity. By contrast, Finance expects the annual cost of Harper’s tax cuts to rise to $44 billion as the corporate tax cuts are phased in and as the economy recovers.

The size of this year’s deficit (3% of GDP) should not be the issue. It would not make sense to raise taxes in the midst of recession to balance the budget. However, to avoid an ongoing structural deficit as the economy recovers, we should consider reversing Harper’s tax cuts . . . even if it delays “Tax Freedom” by three days.

Enjoy and share:

Comments

Comment from Quimby
Time: June 6, 2009, 8:09 pm

When is corporate tax freedom day?

Comment from Erin Weir
Time: June 6, 2009, 8:27 pm

Around April 1

Comment from Raphael
Time: June 6, 2009, 10:21 pm

As a conservative I always opposed the tax cuts to the GST. I support consumption taxes in order to tax at the last stage in the economic changing of hands. I support tax cuts, however, at the source of production, since it encourages the tenets of conservatism: savings, growth, reinvestment. The more money a person keeps at the source of production, the more money they have to spend in the economy. When the government expropriates income at the production stage, it never gets a chance to go into the economy and create stimulus.

The GST cuts should probably be reversed because they provided a good revenue source for the government, but tax cuts to the marginal rate would be encouraged. And let’s not forget that the Conservative government has been spending too much money while also cutting taxes. Simple fiscal budgeting tells you that you can’t reduce your income while increasing your expenditures without being forced to borrow against your future equity.

And now that’s what we’re being forced to do.

Comment from Robert McClelland
Time: June 7, 2009, 5:08 am

When the government expropriates income at the production stage, it never gets a chance to go into the economy and create stimulus.

Right, because as every conservative knows, when the government “expropriates” income it disappears into a black hole never to be seen again.

Comment from Paul Tulloch
Time: June 7, 2009, 4:09 pm

Yes and when a corporation receives a tax break it ends up in a black whole of dividends (if the shareholders are lucky who due to the skewness in stock ownership are so well off that it goes into savings), or insanely high executive bonuses. (in theory it is supposed to go to investment and other such worthy causes).

Comment from Peter Mackey
Time: June 9, 2009, 7:04 am

One puropse of taxations is to redistribute wealth. It has ben doicumented that employment income has remained staticwhile income at the highest x% has risen at the expense of the rest of us. Moreover all govermnent spending is treated as a current expense rather thanas asset creation and allowence for depreciation and other accounting pratices avilable to corpporations. There is no acknowledgement of the benefits of a truly progressive income tax.We often speak 0f the benefits of greater freedom; never is it said there are many benefits to greater equality which reduces the gap between rich and poor.

Write a comment





Related articles