Harper's Best Fiscal Stimulus Package: Cut Taxes

[msj]

Please, let's not.

But if it really has to, the government could bury money in the ground and then businesses cooperations could hire people to go looking for it.

Please stop this childishness.

For a guy who "purposely" misspells an economist's name simply because you disagree with him (despite Roubini being more right about the recession that you denied for so long) you should have the decency to forgive Smallc's mistake.

[Jerry J. Fortin]

Infrastructure programs that are designed to turn a profit on the public dime is a very wise concept. At least by design the project would have the potential to pay for itself. Public transit expenditures would make sense if the cities would restrict traffic in downtown areas to public transit, but otherwise, the return on the fed dollar is nil. High speed rail makes sense if you impose tolls on the hiways, otherwise not.

Perhaps more importantly, given that our economy is energy dependent public infrastructure investment makes good sense as well. We could tap tidal power in the Bay of Fundy, wind power around all our coastlines, hydro power and canals/irrigation on the interior waterways, geothermal on all of the hot springs, solar across the norther latitudes where sunlight is intensive in the summer. Should the government get get real smart we would start a massive crown corporation effort to start mining methane ice all through the arctic and at least be able to lay claim to the lands now in dispute. The reality of the event is that it is time to get off our collective asses and get to work. Especially now with global economic conditions being what they are. We can choose to lead or to follow, the choice is ours. If we lead we control the direction of movement, if we follow we do not.

A vast majority of the suggestions that I propose are technologically advanced and will support maximum effort of universities and engineering folks at the design stages. During the construction phase, less skilled folks from around the country will find employment. During the implementation process many inside office type jobs will be created. All to produce energy, and provide energy self sufficiency. Going this way you can power up mass transit and high speed transit working toward a greener environment.

Meanwhile, using existing waterways in the interior we can grade and create irrigation systems and control water levels while producing power. The irrigation efforts will provide higher production for agricultural products. At the same time water treatment could be included and recycled into the irrigation system.

Wind power production on coastal lands also provides defensive positions and aqua-cultural opportunities as well.

Solar in the arctic seems foolish at first glance, however it can provide massive power during summer months. As well it provides technological advancements and employment opportunities for northern citizens.

We have the choices to make, which ones will we make is the question.

[ReeferMadness]

This crisis was caused mainly by excess personal debt (mostly on the part of Americans) and I find it a bit bizarre that the way to fix it is to create larger government debt. Of course, in our crazy economic system, debt is necessary. Without it, we'd have no money supply. However , what seems to have happened over the past few decades is a mass wealth transfer from western countries to developing countries (China mostly) where the money is being saved.

So, now we are like heroin addicts, dependent on debt for money supply, dependent on eternal economic growth without which the whole ponzi scheme will come crashing down.

At this point, it seems inevitable that the government is going to start to run massive deficits - again. (Anybody remember what was happening the last time the Conservatives were in power? That's right, we were running massive deficits). The worst possible thing the government could do would be to cut taxes. The benefits will overwhelmingly go to the rich who will either save it or spend it on luxury goods and vacations which mainly benefit people outside of Canada.

Edited December 23, 2008 by ReeferMadness

[Smallc]

IOW, it taxes people who own the business, people who work for the business or people who buy products or services from the business.

Business and personal finances must be kept separate by law. Yes, the costs are passed on most of the time, but its not the same thing as taxing a person.

[Jerry J. Fortin]

Perhaps that is the key, the reality of business and personal financing, and taxing their separate identities. Perhaps the flaw is income taxes period. Perhaps the answer is to eliminate income taxes both personal and business and convert to a straight away consumption taxation system where everyone pays the same. The more you spend the more tax you pay.

[August1991]

Business and personal finances must be kept separate by law. Yes, the costs are passed on most of the time, but its not the same thing as taxing a person.

Business and personal finances cannot be kept separate. The costs are passed on all of the time

A person somewhere pays: the only question is incidence.

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Between corporate tax cuts, income tax cuts, an increase in the basic personal exemption, subsidies to car manufacturers or subsidies to car purchases, we are always talking about giving money to people.

The government can give you money (Option A) to dig holes in the ground or it can simply give you money (Option B ). I think Option B makes a lot more sense.

By subsidizing car manufacturers (Option A), the government is wasting everyone's time. Countries do not succeed by wasting resources.

Edited December 24, 2008 by August1991

[msj]

Business and personal finances cannot be kept separate. The costs are passed on all of the time

A person somewhere pays: the only question is incidence.

You know, I have a professional corporation for my accounting partnership.

When I'm billing people I don't sit down and think - well, I'm indirectly paying property taxes on the two offices, oh, and my corporate tax rate is 13.5%, and we did just spend $1,400 in PST on the new computers this year etc....

It is not as clear cut as this.

Are the costs passed on to the client? Yes, my travel costs, the chocolates I bought for some clients, and some other direct costs certainly are.

Do I get full billing for my clients? Some, yes, others I get a mark up and for others a mark down.

No way any business person could tell you what costs are getting "passed on" and what aren't (and keep in mind that in accounting firms we track and bill out our staff pretty accurately).

I work in a competitive market where billable rates are set by factors more complicated than simply passing on costs.

Business people know this while pretenders don't.

Between corporate tax cuts, income tax cuts, an increase in the basic personal exemption, subsidies to car manufacturers or subsidies to car purchases, we are always talking about giving money to people.

The government can give you money (Option A) to dig holes in the ground or it can simply give you money (Option B ). I think Option B makes a lot more sense.

By subsidizing car manufacturers (Option A), the government is wasting everyone's time. Countries do not succeed by wasting resources.

If Canada needs stimulus then infrastructure would be a better use of resources for reasons already stated.

To simply assume that anything but tax cuts is a waste of resources is divorced from reality.

[August1991]

If Canada needs stimulus then infrastructure would be a better use of resources for reasons already stated.

If the government hires people to dig holes in the ground, and if we call the holes "ìnfrastructure", then this is a wise policy?

I think the government should simply give money to people - and skip the "infrastructure" idea. "Give money to people"? I think Harper should cut taxes by raising the basic personal exemption to $15,000.

This would be the best fiscal stimulus policy. It gives money to people without bureaucrats/politicians arbitrarily deciding who gets it.

Edited December 24, 2008 by August1991

[Smallc]

If the government hires people to dig holes in the ground, and if we call the holes "ìnfrastructure", then this is a wise policy?

You live in Quebec, so I'm sure you must realize that there is much that needs doing. We don't need people to dig holes. We need them to fix roads, bridges, buildings, sewers, etc.

[msj]

If the government hires people to dig holes in the ground, and if we call the holes "ìnfrastructure", then this is a wise policy?

I think the government should simply give money to people - and skip the "infrastructure" idea.

I said infrastructure. This is not digging holes; it is investing in projects that would have a positive net present value.

You know, like the article that I have already linked to (and, I'm sure, you haven't bothered to read).

[msj]

You live in Quebec, so I'm sure you must realize that there is much that needs doing. We don't need people to dig holes. We need them to fix roads, bridges, buildings, sewers, etc.

Better yet, if Canada wants to stimulate, then the government should spend the money on energy transmission (creation and/or modernizing).

Let the private sector decide on wind/solar/natural gas/nuclear etc... to hook into the transmission lines.

[Smallc]

Better yet, if Canada wants to stimulate, then the government should spend the money on energy transmission (creation and/or modernizing).

Let the private sector decide on wind/solar/natural gas/nuclear etc... to hook into the transmission lines.

Yes, the east west power grid is needed. Also, a better transportation corridor through Northwestern Ontario and the BC Rockies would be very good. I would really like to see an oil and gas pipeline from east to west someday too.

[August1991]

You live in Quebec, so I'm sure you must realize that there is much that needs doing. We don't need people to dig holes. We need them to fix roads, bridges, buildings, sewers, etc.

Cute but smallc, do you know what the Montreal city budget is? Harper and McGuinty just spent $4 billion (of Canadian taxpayer money).

If this money were spent on fixing bridges and roads, I might agree with you. But this is not "infrastructure". This is a bailout, free cash. It's a political bribe.

It is likely that I will not vote Conservative in the next federal election because Harper agreed to this cash subsidy.

[Smallc]

Cute but smallc, do you know what the Montreal city budget is? Harper and McGuinty just spent $4 billion (of Canadian taxpayer money).

If this money were spent on fixing bridges and roads, I might agree with you. But this is not "infrastructure". This is a bailout, free cash. It's a political bribe.

No the auto bailout isn't infrastructure. Its about trying to keep people from losing their jobs in the middle of what seems to be a meltdown. Th infrastructure is a separate issue. Also, I'm sure Montreal will be happy to have more money to do more with. I'm also quite sure that there are places outside of Montreal (you know, the rest of Quebec) that need certain projects done that they couldn't afford and now will be able to. What do I know though? I'm only from the provincial equivalent of after all.

[Smallc]

It is likely that I will not vote Conservative in the next federal election

I won't either, but mostly because Harper breaks just as many promises as he keeps.

[August1991]

No the auto bailout isn't infrastructure. Its about trying to keep people from losing their jobs in the middle of what seems to be a meltdown.

Some people lose their jobs - it happens. These auto people happen to be in Ontario, and they have a good PR system in place.

Moral of the story? Hire a good PR organization (union) just in case.

I said infrastructure. This is not digging holes; it is investing in projects that would have a positive net present value.

Then let the CPPIB buy GM shares.

----

How depressing this whole story is, and how much more depressing it will become. I fear the collapse of 2014.

Edited December 24, 2008 by August1991

[Smallc]

Some people lose their jobs - it happens.

Yeah, but it doesn't mean that we should sit back and watch 600 000 people lose their jobs.

[Jerry J. Fortin]

I don't want to burst any bubbles here folks but, we just spend 4 billion and will likely cough up another 17 to 30 billion for the auto sector. Harper committed us to that tab, 20 % of the total cost as spent by the USA. Here is the rub, I am willing to bet we lose at least 75000 jobs anyway, perhaps as many as 150000.

Discussing what to do after the horse left the barn is good hindsight yet not very productive. Harper did this and we simply let him be accountable for it. Perhaps we will learn, or should I say our government will learn a little lesson in capitalist economies.

Welcome to the "New World Order" the rise of corporatism, expect more taxes and reduced services as we create a corporate welfare revenue stream.

[Smallc]

I don't want to burst any bubbles here folks but, we just spend 4 billion and will likely cough up another 17 to 30 billion for the auto sector. Harper committed us to that tab, 20 % of the total cost as spent by the USA. Here is the rub, I am willing to bet we lose at least 75000 jobs anyway, perhaps as many as 150000.

But it won't be 600K. Assuming those people pay about $10K in income tax every year (probably a low number for most of them) that is $6B in taxes each year. I have heard that the number is closer to $10B. Even if we end up paying $30B, that's only 3 - 4 years in income taxes that those people pay.

Edited December 24, 2008 by Smallc

[msj]

Then let the CPPIB buy GM shares.

The reason the CPP investment board is not buying shares in GM is because they, like most rational investors, believe that GM shares will be worthless when the prepackaged bankruptcy happens next year.

Strange that you would suggest such action.

Perhaps it's just another one of your childish little jokes or perhaps you really are lacking in any understanding on just what the CPPIB does.

The CPPIB is not a slush fund for any politician to use for his/her socialistic purposes. That's why they have a mandate and rules to reduce/prevent such meddling in the first place.

That's also why comrade Harper and comrade Mcguinty are bailing out the auto "industry" with regular tax dollars instead of trying to politicize the CPPIB.

[msj]

I mentioned savings in my first post and thought this would be of interest:

Savings Rate Starting to Recover

While this is US based I don't think Canada is that much different.

It is important, as people are starting to realize, to know the difference between "net wealth" and the "savings rate."

[Jerry J. Fortin]

The net transfer of wealth from the public treasury to corporate accounts is a travesty of justice. It simply is not the function of government to support business. I understand the human tragedy of employment loss, but that is not the fault of tax paying citizens and it is not the fault of government. Giving that it is not our fault it should not be our responsibility, nor our burden to address. All of the blame, the fault, and the responsibility lays with the industry.

We have let the cat out of the bag and the demise of what was once our way of life will be very clear and it will very soon. This nation cannot sustain its own social policies without going into deficit, let alone creating a corporate welfare system. We are about to add insult to injury, watch what the next budget has in store for us. There will be nothing for the tax paying private citizen.

[Smallc]

I understand the human tragedy of employment loss, but that is not the fault of tax paying citizens and it is not the fault of government. Giving that it is not our fault it should not be our responsibility, nor our burden to address.

As I have already shown, the burden of doing nothing may in fact be bigger.

[jdobbin]

Some people lose their jobs - it happens.

And people suffer and the right wing view is that this is good. Shrug. A good die off is good for the economy.

[Jerry J. Fortin]

Please make no mistake in what I am saying. The failing corporations are their own problem, inside our capitalistic system this is the basic economic law. What has happened is that our government as well as the American government have made the failure of the industry our problem. That is simply wrong.

A forward thinking government and Prime Minister would support the citizens, not the corporations. The government is fully capable of providing unemployment insurance and retraining programs for citizens who have lost their jobs. We have an entire social infrastructure designed to do this. We also have student loans, which are repaid by students on graduation. Our entire system of governance is based upon a capitalistic structure, and what governments have now done is abandon this course of action. This was our way of life and we are going to change this to support corporate efforts at creating profits.

The citizen is what matters, not the corporation. I would have no problem funding citizens to find other work.