The latest from the Fraser Institute concludes that BC’s 2001 tax cuts spurred economic growth, investment and all other good things. To their credit, this is a far more sophisticated analysis than one usually sees from the Fraser. Rather than relying on the in-house talent, they farmed the work out to University of Alberta economist Bev Dahlby, known for advocating […]
Read moreThe Globe has chosen Don Johnson “Nation Builder of the Year†for his long campaign to waive capital gains tax on charitable contributions of shares. http://www.theglobeandmail.com/servlet/story/RTGAM.20071220.wnationwattcloutier28/BNStory/National/home This has, reportedly, resulted in a flood of donations by Canada’s most wealthy families to deserving, and not so deserving, charities. Many of us would count gifts to business schools and conservative […]
Read moreCanWest ran a good summary of my study for the CCPA, “Why Charity Isn’t Enough: The Case for Raising Taxes on Canada’s Rich” released today. (pasted in below) Adding to Marc Lee’s recent work on tax incidence, my piece documents the fact that recent changes to personal income taxes in Canada have compounded rather than offset increased ‘top tail’ driven […]
Read moreDuring the sixteen years that the NDP governed Saskatchewan, provincial expenditures fell from just over 30% to just over 20% of Gross Domestic Product (GDP). This accomplishment is dubious for a political party committed to using government as a vehicle to redistribute wealth and finance important public programs. Why did the proportion of Saskatchewan’s economy available for these purposes decline […]
Read moreDiane Francis has written many unsubstantiated columns. On July 6, for example, she claimed that “Canada has the highest corporate taxes in the world.” However, based on the following quotes, Tuesday’s column probably takes the cake. If last week’s election upset is any indication, Saskatchewan is going to be on a roll for a few years. I have no idea […]
Read moreThe Saskatchewan Party won 37 seats with 51% of the popular vote and the NDP won 21 seats with 37% of the vote. Obviously, the Saskatchewan Party’s victory is bad news for progressives. The provincewide figures mask significant regional variations. Outside of the main cities, the Saskatchewan Party won 27 seats with 62% of the rural vote. Two of the […]
Read moreSome of the knee-jerk commentary in response to my paper has been about what an ideal, or fair, tax system should really look like. These people question progressive taxation. To them, I quote Adam Smith from The Wealth of Nations (from Wikipedia): The necessaries of life occasion the great expense of the poor. They find it difficult to get food, […]
Read moreThe CCPA today released my paper, Eroding Tax Fairness: Tax Incidence in Canada, 1990-2005. The Toronto Star ran a front-page story on it that is quite good. This paper was a long time in the making – while it might seem fairly straightforward to calculate the share of taxes in income for different groups, there are many tricky data and […]
Read moreAs Andrew, Bruce, Marc, Ish and others have correctly argued, last week’s Economic Statement wastes money that could otherwise have financed vital public programs. Two tables in the Statement are critical to this case. Table 2.2 (page 45) estimates the costs of newly-announced tax cuts. Table 3.1 (page 73) estimates the costs of all tax cuts adopted since the Conservatives came to power. The […]
Read moreAlthough I generally disagree with Andrew Coyne’s take on economic issues, I enjoy his commentary because it is almost always articulate and well-informed. Last Saturday’s column, which may be his second-last at the National Post before moving to Maclean’s, was a glaring exception. In particular, it contradicted Coyne’s own previous contentions. When the Government of Newfoundland and Labrador took an equity […]
Read moreThe Globe and Mail’s mini-budget coverage was such that, even after Marc’s thoughtful and thorough critique, a couple of important criticisms remain to be made. It identified Bruce Campbell as “executive director of the left-wing Canadian Centre for Policy Alternatives” (page A5). In addition to several economists from banks and finance companies, it quoted representatives of the C. D. Howe Institute, […]
Read moreA group of BC-based academic economists have joined together to call for a carbon tax in a letter to BC Finance Minister Carole Taylor. BC is taking suggestions towards a climate change action budget this February. I’m not holding my breath that a carbon tax is likely; from what I’m hearing out of Victoria this stage of the game is […]
Read moreNotwithstanding the usual doom and gloom from the oil industry and its cheerleaders, Premier Stelmach’s decision to increase oil and gas royalties by $1.4 billion in 2009 is an unduly timid move in the right direction. The provincial NDP leader summed it up as follows: “The premier has compromised yet again a report that represented a compromise in the first […]
Read moreCanadian Press reports that tomorrow’s throne speech will include more tax cuts and some effort to eliminate supposed inter-provincial barriers. Since the Liberals agree with the Conservatives on both issues, they should not have much trouble letting the throne speech pass. More tax cuts, fewer trade barriers to come in throne speech: Finance Minister TORONTO – Canadians can expect to […]
Read moreSince becoming Liberal leader, Dion has consistently made noises about cutting corporate taxes. On Friday, he clearly and specifically committed to slash corporate taxes “deeper than the Conservatives.†A Liberal strategist quoted in the Financial Post indicated that the plan is to outflank the Conservatives on the right regarding tax policy. Also on Friday, the NDP’s new finance critic, Thomas […]
Read moreThere have been suggestions that the Conservative government’s forthcoming Throne Speech will surrender the federal spending power. Through an op-ed in today’s Globe and Mail, Bob Rae tries to position himself, and presumably the Liberal Party, as defenders of the power. This posturing will help the Conservatives woo Quebec nationalists and help the Liberals appeal to Canadians who believe in […]
Read moreAs usual, the federal surplus has come in far larger than forecast: $14 billion for 2006/07. As legislated through the Tax Back Guarantee, all of the interest savings from this debt repayment will finance personal income tax cuts. Therefore, the 2006/07 surplus will reduce income taxes by $0.7 billion annually. This tax cut will barely put a dent in federal income […]
Read moreLast week, the Royalty Review Panel recommended that Alberta raise its oil and gas royalties. Its 100-page final report, Our Fair Share, has generated healthy debate on a critically important subject. The basic message follows: Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for quite some time. […]
Read moreOn Friday, the Finance Minister and the Treasury Secretary signed the Fifth Protocol of the Canada-US Income Tax Convention. The Canadian government lined up several business organizations in advance to provide endorsements, which have dominated the media coverage. One of these organizations, the C. D. Howe Institute, made the case for the amended treaty through an op-ed in Saturday’s Financial […]
Read moreThe Financial Post has picked up on my response to the C. D. Howe Institute’s Tax Competitiveness Report and corporate-tax brief to the House of Commons Finance Committee. The Canadian Labour Congress submitted this brief, and one by Andrew on personal income taxes, in August before the prorogation of Parliament delayed the committee process.
Read moreIn successfully seeking the 1980 Republican nomination for President, Ronald Reagan embraced the Laffer Curve theory that tax cuts would increase tax revenues. At the time, rival candidate George Bush Sr. derided this notion as “Voodoo economics” and it has been since been discredited many times. Jack Mintz struggles to revive the theory in today’s 2007 Tax Competitiveness Report, declaring […]
Read more“Dion Would Wield Tax Axe to Spur Growth” was the headline in Tuesday’s Financial Post. The story reported that “Mr. Dion said his party would look to cut taxes across the board” but that “He would not elaborate on which taxes he would cut.” However, Monday’s Liberal press release seemed quite clear about which taxes would be on the chopping […]
Read moreOn Monday, Ontario’s Institute for Competitiveness and Prosperity released a paper entitled, Prosperity, Inequality, and Poverty. As Andrew Sharpe pointed out in a review of Jack Mintz’s book, free-market “policy entrepreneurs” often completely ignore the distributional consequences of their recommendations. The Institute deserves credit for trying to grapple with distributional issues (and also for quoting Sharpe extensively). The Institute observes […]
Read moreThere’s no question that the Financial Post, as the National Post’s business section, tilts heavily to the right. However, today’s letters section (FP15) could almost have been copied and pasted from this blog. In the first letter, Shalom Schachter responds to the whiny Labour Day op-ed from John Mortimer of LabourWatch. In the second letter, Kris Larson notes that continued […]
Read moreIn April 2006, Newfoundland Premier Danny Williams walked away from proposed Hebron development because the multinational oil companies were not offering sufficient benefits for his province. The national media and federal government heaped scorn on this decision. A couple of days ago, Williams secured a new deal that gives the province a 4.9% equity stake in Hebron, a 6.5% “super […]
Read moreTo put some figures on yesterday’s commentary about the social-service download to municipalities and low provincial-income taxes, I checked the latest Equalization tables (which are publicly available from Finance Canada). In 2005/06, Ontario collected $22 billion of personal-income taxes. At national-average rates – an average dragged down by low-tax Alberta and by Ontario itself – Ontario’s income-tax base would have […]
Read morePremier McGuinty has pledged to relieve Ontario municipalities of $1 billion in disability-support payments and prescription-drug benefits if his government is re-elected. Municipalities will continue to pay for a further $3 billion of provincial social-service programs. During the Great Depression, Canada’s patchwork system of municipal relief proved totally inadequate. Subsequently, provincial governments established social-welfare programs and uploaded unemployment insurance to the federal […]
Read moreFor years, Don Drummond of TD Bank has publicly observed that business investment in Canada is lagging far behind soaring profits and called for further corporate-tax cuts to spur investment. He never seemed to perceive a contradiction between the fact that corporations are not reinvesting their record-high after-tax profits and the claim that even higher after-tax profits would boost investment. In a […]
Read moreThe following passage is from “Why England is Rotting” in the June 11 issue of Maclean’s: London’s role as a financial centre on its way to eclipsing New York City has provided a vision of prosperity which, it is assumed, trickles down to the population at large. But it is a city in which increasingly only those on welfare, or the […]
Read moreAs noted yesterday, Canadian advocates of corporate-tax cuts have proliferated alternative measures of corporate taxes. The C. D. Howe Institute’s “Tax Competitiveness Program,” which largely consists of papers by Jack Mintz and Duanjie Chen, has focused almost exclusively on marginal effective tax rates (METRs) on capital, expressed as percentages of pre-tax rates of return. There have been a couple of […]
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