Open Ontario: Kinsella vs. Hudak

Yesterday afternoon, I caught the subway down to Queen’s Park to find out whether the throne speech would shed any light on the provincial government’s privatization plans. As it turned out, the speech included only a couple of lines on Crown corporations.

But I ran into blogger extraordinaire Warren Kinsella at the legislature and note that he has reprimanded Tim Hudak for heckling the Lieutenant Governor. I did not have a good view of Hudak, but did hear some noise from Conservative benches. The most audible chuckles were in response to the following bit:

Your government is also cutting corporate income taxes and eliminating the capital tax this year.

And in lockstep with the federal government, Ontario is introducing a harmonized sales tax.

Independent economists say these changes will create nearly 600,000 more Ontario jobs . . .

As I pointed out exactly a month ago in The Toronto Star, this claim is indeed laughable (see below). Of course, Kinsella is right that it is inappropriate to make noise while the Lieutenant Governor reads the throne speech. However, I suggest that it is also inappropriate to stick a Liberal talking point in the throne speech for the Lieutenant Governor to read.

At least HST has created one job (Feb. 9, 2010, page A18)

Premier Dalton McGuinty says, “Economists have told us that our package of tax reforms will lead to 600,000 more jobs.” He appears to be using a projection from the University of Calgary’s Jack Mintz. But is this projection reasonable?

Mintz claims that business tax cuts will greatly increase investment. He then assumes a fixed ratio of labour to capital, so that employment income automatically increases by the same proportion as investment. Finally, he assumes fixed wage rates, so that all growth in employment income must represent additional jobs.

It is nice that the tax package has created at least one job: using dubious assumptions to manufacture inflated employment projections.

Erin Weir, Economist, United Steelworkers, Toronto

One comment

  • Erin
    Congratulations on challenging the shibboleth about investment creating jobs. Where can we find a rebuttal to the statements that reduced taxes create greater investment and thus create jobs? The Obama administration is as guilty of the propagation as McGuinty. It appears that Jack Mintz has amplified a hoary myth. We need to shoot this down by exposing the facts of a ‘jobless recovery’

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