The Progressive Economics Forum

In the last couple of years, Relentlessly Progressive Economics delivered detailed analysis the evening after the budget by bloggers who had been in the lock-up. Last week, those of us who were in Ottawa dropped the ball. However, Marc picked it up by assessing the budget remotely from Vancouver.
My main excuse is that, after drafting [...]

As if there weren’t already enough reasons to eliminate the egregious stock option tax loophole, a column by Eric Reguly in this month’s Report on Business magazine highlights yet another.  This reason helps to explain why we had such a booming stock market up to 2008, but little growth in real investment and productivity.
First of [...]

Thanks to Stephen Gordon, who made a link to a new unpublished study (fourth draft, 2009), The effect of corporate taxes on investment and entrepreneurship, by Djankov, Ganser, McLiesh, Ramalho and Shleifer. Stephen claims this study settles the matter that Canada should not reverse corporate tax cuts made in recent years. That discussion was happening [...]

We’ve been told for years that corporate tax cuts would work like viagra to boost private sector investment and productivity, and no doubt we’ll hear much more about it in next week’s budget. 
But it just ain’t working. 
Today’s release by Statscan of private and public investment intentions shows just how limp private sector investment is expected to be [...]

As the budget yak-fest approaches, the focus is on how we’re going to balance the books. People pointing out we have bigger fish to fry – like making a dent in the nation’s $125 billion infrastructure deficit, addressing growing poverty, or preparing for a massive wave of retirements – are viewed as off-topic. But simply [...]

I was out of town and away from the blogosphere during the recent controversy about TD Bank CEO Ed Clark’s “raise my taxes” comment.
As Terry Corcoran pointed out, CEOs are not actually proposing higher taxes on executive incomes or corporate profits. They are instead proposing to hike the GST, a tax that exempts all income in [...]

This morning federal finance minister Flaherty announced a number of measures ostensibly aimed at reining in speculation in the housing market. 
His announcement was typically well-timed to coincide with the Vanier Institute’s annual report on the state of Canadian family finances, which reports record high levels of household debt, growing inequality and housing prices increasingly out of [...]

Advocates of the Harmonized Sales Tax often suggest that it will support Ontario’s beleaguered manufacturing sector. They emphasize that the current Provincial Sales Tax applies not only to finished products purchased by consumers, but also to some inputs purchased by businesses. As one business sells components to another, sales tax could be paid repeatedly along [...]

The case for a Financial Transactions Tax or FTT has crept in from the margins remarkably quickly. One year ago, the proposal for an internationally co-ordinated “Tobin Tax” on foreign exchange transactions was a dim memory from the early part of the decade. Today, the idea of broadening such a tax to include a far [...]

I was surprised to see the IMF highlighting the potential virtues of a Financial Transactions Tax (FTT) on the front page of its website.  The Bloomberg news service earlier had a good story about on the background of this idea, tracing it back to Keynes.   This is a proposal that progressive economists and unions have advocated for [...]

There’s a great op ed in today’s Globe and Mail by Ed Broadbent, marking the twentieth anniversary of the unanimous passage by the House of Commons of his eve of retirement resolution to abolish child poverty by 2000. (Ed did, of ourse, later return to the House.)
http://www.theglobeandmail.com/news/opinions/how-to-end-child-poverty-tax-the-rich/article1374806/
As Ed argues:
“We thought an 11-year agenda to virtually [...]

What can be done to halt the damage to jobs and our economy being caused by the excessive appreciation of the Canadian dollar against the US dollar?  The Bank of Canada have noted the problem, but appear to think there is no solution.
Erin has argued here that the Bank can always sell Canadian dollars, and [...]

I blogged recently about the likely pending attack on public service workers.
http://www.progressive-economics.ca/2009/11/10/public-sector-workers-the-recessions-next-victims/
This battle will, of course, be fought by right wing (and perhaps not so right wing) governments in the name of “fiscal responsibility”, and justified with reference to the imperative need for “exit strategies” from Great Recession deficits and debt accumulation.
The International Monetary Fund [...]

Last week, the Minister of Finance announced his aspiration to unilaterally eliminate Canada’s few remaining tariffs on imported machinery and equipment. Saturday’s Globe and Mail quoted me doubting this proposal given the severity of Canada’s offshore trade deficit in that area. I elaborate my case in the following op-ed, which is printed in today’s Financial [...]

The September BC Budget is a new look at a budget most have come to see as a fake. February’s budget was not passed through the legislature due to the May election, and up to E-Day the government maintained the fiction that it had a small-ish deficit of just under half a billion dollars. Since [...]

A key justification for small-business tax breaks is that small enterprises are supposedly engines of job creation. The Canadian Federation of Independent Business’ (CFIB) oft-repeated claim that “small- and medium-size businesses employ more than half the workforce” (PDF) cites Statistics Canada’s Survey of Employment, Payrolls and Hours.
A closer examination of that Survey casts doubt on [...]

I had been fiddling with my last post in spare moments since the federal NDP convention. I fiddled long enough that Jack Mintz beat me to the punch in critiquing the proposal to eliminate corporate tax on small-business profits. His op-ed appeared in yesterday’s Financial Post.
His priority is to slash the general corporate tax rate [...]

Strangely, neither of the two most hyped issues at last weekend’s federal NDP convention reached the floor for debate. I have nothing to add to the discussion about changing the party’s name.
However, the proposal to not tax small-business profits compels me to elaborate the case I made when Nova Scotia Liberals promised to slash the [...]

Thank you, Jim Flaherty and Stephen Harper. I just finished the first leg of a long-contemplated kitchen renovation that got pushed over the top by February’s federal budget tax credit for home renovations. This year only! Act now before it is too late!
The credit is worth a maximum of $1,350 per family if you spent [...]

With the BC election campaign now officially on, the carbon tax debate is back. Since the fall’s federal election, when the Prime Minister dropped in to beat up the carbon tax to solidify his support in BC, the carbon tax has dropped off the public radar, replaced by stories about the economic and financial crisis. [...]

A year and a half ago I published an updated study on tax incidence in Canada. It found that the Canadian tax system is progressive up to the middle of the income distribution, then flattens out before becoming regressive at the very top. (Interestingly, a short piece on the US tax system by Citizens for [...]

From Lynne Fernandez and Errol Black, of CCPA’s Manitoba office:
Budget day always presents an opportunity to contemplate the state of society, and this year in particular has most of us pondering the current economic mess we are in. How did this crisis happen? How and when will we move back to more stable times? This [...]

No, the West is not Alberta as everyone in Ontario seems to think (I’m from Toronto so I can say that). I mean BC, where an election is on in two months. You would not really know it walking around Vancouver, probably because the writ has not yet dropped, so we are in the calm [...]

Liberals are proposing to slash Nova Scotia’s corporate income tax rate for small business from 5% to 1%.
We have seen this movie before. New Brunswick announced a 1% small business rate by 2007 only to instead restore a 5% rate that year. Nova Scotians might reasonably ask why their provincial neighbour abandoned the 1% plan.
Part [...]

It has to be the single most successful lobbying effort in a long time. And no one will notice or care.  In Budget 2007, the Conservatives did something courageous and which tax experts had long called for : they proposed measures that would have denied firms a tax deduction on money borrowed in Canada, invested [...]

A year ago, in the 2008 BC Budget, a new tax was born. There was a hush over the House as its mother, the Finance Minister, prepared for delivery. The proud papa, the Premier, stood glowingly beside the new mom Carole and her baby tax, and basked in the glow of praise from climate scientists, [...]

In today’s Vancouver Sun, Neils Veldhuis and Milagros Palacios act as yang to my yin on the oped page. Their pre-budget oped seems strangely distant from the day-to-day reality of a recession that is unfolding in BC and elsewhere. Their response could have been written two or five years ago: the solution is to cut [...]

The Parliamentary Budget Office (PBO) was established in response to the systematic underestimation of federal budget surpluses. Its job was to provide independent estimates of the available surplus to keep Finance Canada honest ( “truth in budgeting” as the Conservatives said at the time).
With the federal government headed into deficit, the PBO’s purpose is less [...]

Yesterday, the chief economists of the chartered banks called on the federal government to permanently cut taxes now and balance the budget after the economic crisis by cutting spending. An obvious but unstated implication is a smaller government when the economy recovers. While this outcome would undoubtedly suit the ideological preferences of bank economists, it would [...]

The conventional wisdom may be that political parties cannot successfully campaign against tax cuts. But the federal NDP recently achieved its second-best electoral result ever by running squarely against Harper’s corporate tax cuts. South of the border, the US Democrats just won a massive victory partly by campaigning against the Bush tax cuts. In public opinion [...]