Harper's Best Fiscal Stimulus Package: Cut Taxes

[bush_cheney2004]

link

No dice for both sides. The Brits were still on the continent. However so were the Americans. Hence the draw.

Not a draw....America would continue to grow at an alarming rate...including pieces of Canada. Seems the Brits wanted American money and munitions in exchange for Canadian turf.

[Progressive Tory]

No problem....the Americans were not so timid about violence in exchange for liberty, unlike the "loyalists" who fled north. And to this day, it would appear that Canada's domestic arguments about taxes, stimulus, and deficit spending depend yet again on what the Americans are doing.

Some things never change!

The American Revolutionary War would not have been won without the military strength and expertise of the natives, who taught them a new (and revolutionary) form of warfare. The War of 1812 would not have been won for England if it was not for the military strength and expertise of the natives, who stood their ground against their old enemies. Many 'Loyalists' were Native Americans who got the shaft once the new colonies got on their feet.

Just telling it like it is.

And yet again what the Americans are doing? How did you come to that conclusion? Most American culture comes from somewhere else.

[bush_cheney2004]

....Just telling it like it is.

And yet again what the Americans are doing? How did you come to that conclusion? Most American culture comes from somewhere else.

We already know the definition of an American...Obama repeated it on Tuesday. That's the part that Canada has never figured out.

[Progressive Tory]

We already know the definition of an American...Obama repeated it on Tuesday. That's the part that Canada has never figured out.

I know that Obama embraces all Americans as Americans. Dr. King's dream come true. I thought that Canadians shared the same sentiment when it came to how we saw each other, but have been quite surprised to find that that's not always the case.

But in discussing history, Francis Parkman was probably the worst enemy of the indigenous people. He didn't kill any, to the best of my knowledge, but used pen and paper to erase and brush over their accomplishments, distorting our actual history (North America's). Most modern day history books evolve from his fabrication.

[Smallc]

That's the part that Canada has never figured out.

Every Canadian woman, every Canadian man prizes that freedom and would defy anyone who tried to take it away – of that I have no doubt. From Signal Hill to Vancouver Island, from Baffin Land to Thetford Mines, the freedom that is ours unites us all. Freedom has marked our history and our territory, it has marked our summer breezes and our howling winter winds. It has helped create the spirit of adventure that I love above all in this country, this country where each and every one of us is able to participate fully in the ongoing task of building it.

More than four centuries ago that spirit of adventure drove women and men to cross the ocean and discover a new world elsewhere. That spirit also led the First Nations to pass on to those new settlers the essence of this generous land. And it encourages people from all over the world to share in our prospects or to take refuge here and make a fresh start, safe from tyranny and violence. It inspires our artists, our scientists, our peacekeepers and our institutions as they work to spread our know-how and our message of hope. Today, we are the sum of those adventures.

Excerpt from speech by

Her Excellency

the Right Honourable Michaëlle Jean, C.C., C.M.M., C.O.M., C.D.

Governor General of Canada

On the eve of her swearing in

[bush_cheney2004]

Excerpt from speech by

Her Excellency

the Right Honourable Michaëlle Jean, C.C., C.M.M., C.O.M., C.D.

Governor General of Canada

On the eve of her swearing in

See...that is exactly what I was referring to. The Right Honourable Michaëlle Jean, C.C., C.M.M., C.O.M., C.D.,

Governor General of Canada left out the other defining parts of Canada....the part so often denied.

Figuring it out means understanding both sides of the equation.

[Smallc]

Figuring it out means understanding both sides of the equation.

There was a great deal more to her speech. I left it out because I didn't want to fill the page. You can read it if you like. I can't think of anything that describes Canada and its people much better.

http://www.gg.ca/media/doc.asp?lang=e&DocID=4574

Regardless, I don't really think its up to an American to define what Canada is.

[bush_cheney2004]

...Regardless, I don't really think its up to an American to define what Canada is.

I sure hope not, yet the comparisons are made all the time with such definitions. It appears that just my existence as an "American" furthers the cause.....Mexico just wouldn't do.

[jdobbin]

First of all, tax credits for home renovations and the like amount to protectionism by another name. It is precisely this kind of blinkered thinking that exacerbated the depression of the 1930s. When the government encourages local business, it implicitly creates a barrier to trade. This is no different from a tariff.

How so?

Not that I agree with the program. I just want to know why a program aimed at renovations is a tariff.

Secondly, it is wrong in many ways for the government to decide how I should spend my money. If it offers a tax credit, it skews my decision. But what of renters who don't have a home? What about people who just spent alot of money last year on a home renovation?

My view of tax credits is that it makes the code complicated and it is not as good as income tax cut.

Thirdly, for a tax cut to have any macroeconomic stimulus, it must be perceived as permanent. People must sense that the money in their pocket will stay there.

People should also have the sense that the deficit is not going to be structural.

I fundamentally disagree with this idea of the Paradox of Thrift or that savings are somehow a leakage or bad for the economy. This is particularly true in the current economic situation where unemployment is still below 7%.

Show me a study that supports your view. In a consumer economy, savings do not fuel growth, spending does.

Along with loose monetary policy, I think a broad-based, permanent tax cut is the best policy now. Its effects will be immediate. Many good economists (and Barack Obama) argue for the same.

Many economists argue a structural deficit is bad too. What happens when your permanent tax cut and loose monetary policy end in a debt crushing the country?

In political terms, if this upcoming federal budget does not offer tax cuts for middle income Canadians, Stephen Harper can count in months the time his family will be living in 24 Sussex. Canadians will not tolerate watching subsidies, contracts and bailouts given to specific industries, sectors or other levels of government while they get nothing.

I think Canadians will have a hard time accepting deficits and a sluggish economy with a plan that doesn't show some light at the end of the tunnel for both.

[Mr.Canada]

This deficit will be over next year with an upswing by the fall of 2009. Harper will look like a genius and will gain a massive majority after pointing out the colition doubted him and his economic prowess.

[Smallc]

This deficit will be over next year with an upswing by the fall of 2009.

Keep dreaming. We won't be out for at least 4 - 5 years.

[jdobbin]

This deficit will be over next year with an upswing by the fall of 2009. Harper will look like a genius and will gain a massive majority after pointing out the colition doubted him and his economic prowess.

And if the deficit is not over by next year, you will still think it is brilliant, simply brilliant work from Harper.

[Mr.Canada]

And if the deficit is not over by next year, you will still think it is brilliant, simply brilliant work from Harper.

Give the man a chance to rule would ya. Then you can vote him down.

[jdobbin]

Give the man a chance to rule would ya. Then you can vote him down.

Don't know if we can afford his rule. You should turn to Ignatieff now. He is so tall and noble and chock full of ideas. Unicorns bow to his nobility and orcs of the right run back to the shadows in the presence of his radiant light. God smiles down at him and looks to smite the anonymous who question his brilliance when listening to their toasters.

[Mr.Canada]

Don't know if we can afford his rule. You should turn to Ignatieff now. He is so tall and noble and chock full of ideas. Unicorns bow to his nobility and orcs of the right run back to the shadows in the presence of his radiant light. God smiles down at him and looks to smite the anonymous who question his brilliance when listening to their toasters.

Lol, dobbin, what the hell is this? Are you stoned this evening? Lol.

[msj]

The only way I see that this government is going to pay off this deficit is by increasing taxes and they already said that EI premiums are going to increase so they can use the surplus again, which will probably give then 90-100 Billion instead of the 45 Billion.

The only reason EI premiums are increasing is because of the way the system works - the EI maximum increases with inflation. As such, EI premiums (and CPP for that matter) go up for anyone who makes the maximum.

So yes, they go up a bit each year but the 2009 maximum EI premium is still less than the premium for 2005 (for both employers and employees).

EI premium rates and maximums

Unless you are the type of person who thinks it's a big deal when the government gives people a $75 tax savings when a person spends $2,000 on putting their kid into hockey then I think you shouldn't really complain when they increase EI premiums by $20 due to an increase to the maximum earnings.

Most people probably think that neither a $20 increase in EI premiums nor a $75 decrease in income taxes is a big deal.

As for the money going into general revenue - we've already had that discussion before too - the EI is separate and is to be balanced over a cycle of several years.

Arguably, EI premiums should increase since the risk of unemployment is obviously higher today than it was a year ago.

However, since it is not a true insurance system the government could, and probably should, set it up as a counter-cyclical policy whereby EI rates should go down during bad times (since this may encourage employers to hire people or to reduce how many they will lay off - employers pay 140% of what employees pay) and then go up during good times - ideally, this would balance over the course of a "business cycle."

[August1991]

Opposition parties are threatening to vote down this week's much-anticipated Conservative budget because it contains a potentially contentious proposal to permanently slash taxes for middle-class Canadians.

While the Conservatives say the tax cuts will help working families during a challenging economic era, the Liberals say the rollback is ill-advised and will do little to stimulate the economy.

"If the permanent tax cuts were very large, we would be very concerned, partly because it would saddle future generations with a big debt and a permanent deficit," Liberal finance critic John McCallum told CTV's Question Period Sunday.

CTV

I hope this report is true. The Conservatives should offer a sizeable, permanent income tax cut or payroll deduction (or increase in the basic exemption) so that middle-income earners can directly benefit from this fiscal stimulus package.

If the Liberals vote against such a measure, then Harper will win his majority in the subsequent election.

How so?

Not that I agree with the program. I just want to know why a program aimed at renovations is a tariff.

It amounts to a subsidy for local business and distorts the pattern of trade.

Show me a study that supports your view. In a consumer economy, savings do not fuel growth, spending does.

Dobbin, your thinking is typical of macroeconomic theory circa 1960.

I'll use this simple argument. Which is better? A household saving (so that another household can spend) or hiring someone to dig a ditch in the ground that no one wants? Even in a Keynesian sense, once you take away the zero-value ditch, the multiplier is higher with a tax cut.

Here's a short article that might make you think.

Unless you are the type of person who thinks it's a big deal when the government gives people a $75 tax savings when a person spends $2,000 on putting their kid into hockey then I think you shouldn't really complain when they increase EI premiums by $20 due to an increase to the maximum earnings.

Everything in life happens at the margin.

As for the money going into general revenue - we've already had that discussion before too - the EI is separate and is to be balanced over a cycle of several years.

Why? Edited January 26, 2009 by August1991

[Smallc]

If the Liberals vote against such a measure, then Harper will win his majority in the subsequent election.

Not according to the polls.

http://www.ottawasun.com/Money/2009/01/14/8021731.html

Edited January 26, 2009 by Smallc

[msj]

Why?

Because that is what the CPC put in the previous budget and they set up the EI Financing Board.

Edited January 26, 2009 by msj

[August1991]

Not according to the polls.

I guess that it's a question of poll and wording:

With a Federal Budget looming on January 27, Canadians are pondering their wish list to the government. According to a

recent poll conducted by Angus Reid Strategies for H&R Block Canada, nearly three quarters of Canadians would task the federal government to introduce

significant tax credits or tax cuts in the budget.

The poll by Angus Reid Strategies asked 1,010 Canadians what tax measures they would take if they were the Federal Finance Minister. Coast to coast, the

majority of Canadians supported new tax cuts or credits from 68 per cent in Atlantic Canada to 76 per cent in Quebec.

Link

But look, Obama is about to introduce tax changes that will reduce taxes for some 95% of Americans (assuming that he keeps his campaign promise). This discussion will spill over into English Canada.

Moreover, in pure political terms, tax cuts are always popular and many Canadians are fed up with seeing special interest groups get preferential treatment while most ordinary people get nothing. To win a majority, Harper just needs his core support (35% or so) and then another 5-10%. Harper defeated the Liberals in 2006 in part because he promised to cut the GST.

Let the Liberals force an election on a tax cut and then we'll see who is right.

Because that is what the CPC put in the previous budget.

No doubt the CPC put a standard statement about EI in their budget. So what? Reform of payroll taxes (and EI in particular) is for another day. Nevertheless, it is absurd to call EI an insurance scheme. It's an arbitrary transfer scheme that, to the extent that it has any coherence, is largely regressive. Edited January 26, 2009 by August1991

[Smallc]

Harper defeated the Liberals in 2006 in part because he promised to cut the GST.

This isn't 2006. Canadians do not want to see changes that will cause long term deficits.

[August1991]

This isn't 2006. Canadians do not want to see changes that will cause long term deficits.

Better a deficit due to lower taxes than a deficit caused by higher spending.

But as I say, let the Liberals defeat the government on a budget measure to cut taxes and then we'll have an election to decide democratically who is right.

[Smallc]

Better a deficit due to lower taxes than a deficit caused by higher spending.

Says who? You? Better we spend money on building for the future than giving it back to the people only to saddle the next generation with a large debt and nothing to show for it.

[jdobbin]

If the Liberals vote against such a measure, then Harper will win his majority in the subsequent election.

If Harper acts like a horse's ass, he'll not likely see a another election again. If the Opposition was asked to form the government, his own party would turf him first.

It amounts to a subsidy for local business and distorts the pattern of trade.

I don't see how it does. If you buy your supplies from Lowes, Home Depot and your machinery from Dewalt and GE, you are supporting international companies and international manufacturing.

The one major thing that would be local would be labour and that would be true in any case.

Dobbin, your thinking is typical of macroeconomic theory circa 1960.

Given that we have seen some massive tax cuts in North America, I would say the evidence isn't that we are seeing a big jump in consumer spending.

Your thinking needs some evidence, no?

I'll use this simple argument. Which is better? A household saving (so that another household can spend) or hiring someone to dig a ditch in the ground that no one wants? Even in a Keynesian sense, once you take away the zero-value ditch, the multiplier is higher with a tax cut.

If most people save, it hurts the consumer economy.

As for your contention that spending will be on projects that no one wants, I disagree.

If you think building roads, sewers and bridges that are falling apart, I'd say you are doing projects that people want. However, if you think that Quebec would get those things with a tax cut, I look forward to seeing no more flooding in downtown Montreal or Quebec bridges collapsing.

There is value in infrastructure. The multiplier effect of the investment in highways that United States has done since Eisenhower is a diversified economy that remains the largest in the world.

[August1991]

Says who? You? Better we spend money on building for the future than giving it back to the people only to saddle the next generation with a large debt and nothing to show for it.

Nothing to show for it? WTF?

Smallc, do you believe that only government spending results in anything good? If ordinary Canadians receive the money and spend it (or save it), is that not good?

I'm reminded of the "beer and popcorn" comment in the 2006 election. Big brother knows best.

----

All evidence suggests that when ordinary Canadians spend (or save) their money, they get value for their choices. When government spends the money, you get waste.