$6.7 billion Surplus? Cut Taxes

[Hydraboss]

And us whiny Albertans too. Show us the door.

We've been looking for it, so if you know where it is please point it out.

[Wilber]

Most province have Ottawa collect all Income taxes and then decide how much will come back to that province in teh form of transfer payments. In the case of Quebec, Ottawa never gets their hands on Quebec's portion of income taxes because they run their own little tax bureaucracy, talk about duplication of services. Anyway Quebecois do not send the provincial income tax to Ottawa, and then want all of the federal portion, and then some sent to them as well. Time to turn off the faucet, until Quebec;

I believe the Federal Government just collects Provincial income tax for the provinces and returns it to them to avoid the expense of running two collection agencies. Transfer payments are a separate issue. For some reason Quebec has decided to do it on its own.

[Hydraboss]

If I understand the way the system works, and I believe that I do...

The federal government collects federal and provincial taxes from taxpayers.

The federal government sends the entire provincial collection amount to the provinces.

The provincial government sends a huge amount of these taxes to the federal government.

The federal government sends a portion of these taxes to the provinces as transfer payments.

The provincial government (of have provinces) sends a huge amount of these taxes to the federal government as equalization payments.

The federal government sends a huge amount of these taxes to the have-not provinces as equalization payments.

The federal government threatens the provinces (have and have-not) with withholding of these transfers if the they don't bow to the will of the federal government.

Taxpayers pay GST to retailers.

Retailers collect the GST and send it to the federal government

The federal government collects the GST and then sends a portion of it back to the taxpayers that paid it.

Gas stations collect Federal Excise tax at the pumps and send it to the provincial government.

The provinces collect the Federal Excise tax and send it to the federal government.

The federal government collects the Federal Excise tax and sends a portion of it back to the provinces.

The provinces collect the portion of the Federal Excise tax that was sent back to them and sends a portion of it to municipal governments.

And so on, and so on....

Sorry Wilber, but could you explain the whole "duplication is expensive" theme to me again? Maybe Kwebek has the right idea. Collect locally-spend locally.

[geoffrey]

My debt is at 5.5% on my car and 17.5% on my credit card. The government debt is at 4%. Who needs the money?

So the national debt shound never, ever be paid off? Or paying it off should just be postponed until you are gone?

Until we are all personally debt free it doesn't make sense to pay it off.

You and I pay way more on interest than the government. We are better off by paying off our debt than by tax cuts from low debt service by the government.

Way better off, immeasurably better off.

If it were logistically possible to return all that money against mortgages or something like that, then I'd be for that too. Personal debt is way bigger a deal then government debt.

[Hydraboss]

How about this? Take the entire accumulated debt (federal debt & CPP unfunded liability) and break it per capita.

(Someone with numbers please jump in and correct this rounded off mess)

$1,000,000,000,000 (1 trillion dollars debt) / 35,000,000 (35 million people) = $28,571.43 per person

Allow every man, woman and child living in the country to assume this debt as a mortgage. 50 year term at 0% interest. Monthly payment of $47.62 per person. Institute the same "debt mortgage" on every man, woman and child immigrant for the next 50 years that gets put aside for bad debts (unpaid by underhanded Canadians).

The country (proper) is debt free tomorrow, and the overall debt (taxpayers) is paid off in 50 years. More immigration = faster payoff. Now even the anti-immigration crowd likes newcomers! Don't want to pay? - Don't want to stay.

[Riverwind]

How about this? Take the entire accumulated debt (federal debt & CPP unfunded liability) and break it per capita.

Per capita before or after the massive influx of immigrants to Alberta? What assumptions are you making about a post break up of citizenship? Would someone born and raised in Alberta but living in BC be denied the right to return to Alberta at any time?

There are a million little details that will make it impossible to come to any agreement. Seperation is a simplistic but ultimately unworkable way to resolve the differences of opinion that exist today.

[Charles Anthony]

The country (proper) is debt free tomorrow, and the overall debt (taxpayers) is paid off in 50 years. More immigration = faster payoff.

I have a better idea.

Day 2: everybody declares bankruptcy.

Debt paid off in 1 day.

[blueblood]

How about this? Take the entire accumulated debt (federal debt & CPP unfunded liability) and break it per capita.

(Someone with numbers please jump in and correct this rounded off mess)

$1,000,000,000,000 (1 trillion dollars debt) / 35,000,000 (35 million people) = $28,571.43 per person

Allow every man, woman and child living in the country to assume this debt as a mortgage. 50 year term at 0% interest. Monthly payment of $47.62 per person. Institute the same "debt mortgage" on every man, woman and child immigrant for the next 50 years that gets put aside for bad debts (unpaid by underhanded Canadians).

The country (proper) is debt free tomorrow, and the overall debt (taxpayers) is paid off in 50 years. More immigration = faster payoff. Now even the anti-immigration crowd likes newcomers! Don't want to pay? - Don't want to stay.

I like that idea, it makes sense, and a person in my boat would not have a problem with it, hell i'd be trying to pay it off as fast as i could. Some lefty though is gonna have problems with it. There are some people who don't make any money such as a hobo, they're part of the 35 million and they can't pay their share, who pays it guys like us. then you have your refugees that plug up the welfare system, then there is the others on the welfare system, they'd be paying off the debt with their welfare cheques, may as well cut welfare. Then there is the status Indians, I'm not even going to open that can of worms. So in reality the average Canadian would have to pay 100 bucks a month according to your plan and your low income earners are gonna be raising hell that they get docked 100 bucks a month.

I'm just playing the devil's advocate here.

[Hydraboss]

CA,

Hey! Quit stealing my lines! (I was kind of thinkin' of hiding that part.)

Riverwind,

The per capita split of the debt would be pre-separation. As for provincial separation (proper), whoever is listed as having that province as their province of residence is free to come along for the ride. Don't like it? Move. Remember, this would only work after positive referendum of provincial constituents. There will always be people who do not like what the majority say, all you have to do is read the MLW to know that. As for moving back - talk to the new immigration minister.

[Hydraboss]

How about this? Take the entire accumulated debt (federal debt & CPP unfunded liability) and break it per capita.

(Someone with numbers please jump in and correct this rounded off mess)

$1,000,000,000,000 (1 trillion dollars debt) / 35,000,000 (35 million people) = $28,571.43 per person

Allow every man, woman and child living in the country to assume this debt as a mortgage. 50 year term at 0% interest. Monthly payment of $47.62 per person. Institute the same "debt mortgage" on every man, woman and child immigrant for the next 50 years that gets put aside for bad debts (unpaid by underhanded Canadians).

The country (proper) is debt free tomorrow, and the overall debt (taxpayers) is paid off in 50 years. More immigration = faster payoff. Now even the anti-immigration crowd likes newcomers! Don't want to pay? - Don't want to stay.

I like that idea, it makes sense, and a person in my boat would not have a problem with it, hell i'd be trying to pay it off as fast as i could. Some lefty though is gonna have problems with it. There are some people who don't make any money such as a hobo, they're part of the 35 million and they can't pay their share, who pays it guys like us. then you have your refugees that plug up the welfare system, then there is the others on the welfare system, they'd be paying off the debt with their welfare cheques, may as well cut welfare. Then there is the status Indians, I'm not even going to open that can of worms. So in reality the average Canadian would have to pay 100 bucks a month according to your plan and your low income earners are gonna be raising hell that they get docked 100 bucks a month.

I'm just playing the devil's advocate here.

Thanks for proving my point. No one is responsible for paying off anyone else's debt. If someone doesn't pay, then the Debt Reduction Immigration Fund is used. If the Fund is empty, get more immigrants.

As for people who don't pay, how is that any different than what happens in society now? You get an R9 on your credit bureau and you can't borrow money anymore. The welfare system will have to deal with it. Guess no more Canadian for those guys...just cheap beer from now on.

[Remiel]

Your assumption is that the debt belongs to everyone equally. And you have forgotten businesses. Businesses should be getting their share of those mortgages too. They use up infrastructure dollars, just like everyone else, so they should be paying as well. And how do you square your formula with children? Are you saying a family with five children should get a whopping extra mortgage of $210,000? They would be crippled.

[Wilber]

If I understand the way the system works, and I believe that I do...

The federal government collects federal and provincial taxes from taxpayers.

The federal government sends the entire provincial collection amount to the provinces.

The provincial government sends a huge amount of these taxes to the federal government.

The federal government sends a portion of these taxes to the provinces as transfer payments.

The provincial government (of have provinces) sends a huge amount of these taxes to the federal government as equalization payments.

The federal government sends a huge amount of these taxes to the have-not provinces as equalization payments.

The federal government threatens the provinces (have and have-not) with withholding of these transfers if the they don't bow to the will of the federal government.

Taxpayers pay GST to retailers.

Retailers collect the GST and send it to the federal government

The federal government collects the GST and then sends a portion of it back to the taxpayers that paid it.

Gas stations collect Federal Excise tax at the pumps and send it to the provincial government.

The provinces collect the Federal Excise tax and send it to the federal government.

The federal government collects the Federal Excise tax and sends a portion of it back to the provinces.

The provinces collect the portion of the Federal Excise tax that was sent back to them and sends a portion of it to municipal governments.

And so on, and so on....

Sorry Wilber, but could you explain the whole "duplication is expensive" theme to me again? Maybe Kwebek has the right idea. Collect locally-spend locally.

I was just refering to Provincial income tax but I never said the tax system is simple. You explain it quite well.

[Higgly]

Pay down the debt. Damned straight.

The day will come when debt free nations will call the shots and debtor nations will be screwed.

[Hydraboss]

Your assumption is that the debt belongs to everyone equally. And you have forgotten businesses. Businesses should be getting their share of those mortgages too. They use up infrastructure dollars, just like everyone else, so they should be paying as well. And how do you square your formula with children? Are you saying a family with five children should get a whopping extra mortgage of $210,000? They would be crippled.

Sure, add in the businesses if you wish.

As for the families, you're right. It's crippling. And? If they don't pay it, who will? Higher income earners? The people of Canada owe this money. The people of Canada are responsible to pay it back.

Maybe the five member family can apply for a twenty-five year mortgage extension. Would that be better? Remember, it's interest free. The debt is only changing hands of responsibility as the government still holds the books on it.

And I can guarantee you, the people of Canada would hold every government after that FULLY ACCOUNTABLE for spending.

[August1991]

Pay down the debt. Damned straight.

The day will come when debt free nations will call the shots and debtor nations will be screwed.

What is terribly frightening is that someone like you or Hydraboss could get into power and actually try to do what you are suggesting - pay off the debt. In the process, you would destroy the Canadian economy.

Why have debt? Young families with little cash can buy a house, live decently and slowly pay off the mortgage while at the same time adding to their net savings. At any given time in any economy, we are going to see people in debt. To abolish debt for society as a whole is crazy. To reduce debt for an individual makes perfect sense.

Higgly and Hydraboss are trying to apply a rule that makes sense for an individual to a society of millions of individuals. Life doesn't work that way. It makes sense to buy gasoline when your tank is empty. If everyone in the country tried to buy gasoline at the same time, we'd have a mess.

----

When the government borrows and goes into debt, it issues government bonds to the lenders. Those bonds form an important part of Canada's financial capital markets. Investors use the market interest rates on those bonds as benchmarks for other transactions.

If the government tried to pay off the entire debt and buy back all those bonds, the government would kill Canada's financial capital markets. Why would it want to do that?

To argue that the government should pay off the government debt makes about as much sense as arguing that the government should recall all Canadian dollars circulating in Canada.

----

The main task of the Canadian government is to foster an environment where Canadians can produce real wealth and leave more real things to the future than we have received from the past. Paying off the government's debt or even reducing the debt would not achieve that task and would rather jeopardize it.

The Canadian government would be wiser to roll over the debt or let the Bank of Canada decide the optimal size of the debt just as the Bank now decides how many dollars to issue.

[geoffrey]

What would the shrink be in the money supply if we paid off that much debt? Ugh. Massive inflation would be the first outcome.

I'd be moving south pretty quick. I'd hate to have a bankrupt government with access to my bank account.

[Wilber]

Allow every man, woman and child living in the country to assume this debt as a mortgage. 50 year term at 0% interest. Monthly payment of $47.62 per person. Institute the same "debt mortgage" on every man, woman and child immigrant for the next 50 years that gets put aside for bad debts (unpaid by underhanded Canadians).

Who is going to pay the interest? The country's debt is not interest free.

[geoffrey]

Who is going to pay the interest? The country's debt is not interest free.

Alot lower interest than any debt you may have. Hence why it's pointless to pay it off.

[Ricki Bobbi]

Alot lower interest than any debt you may have. Hence why it's pointless to pay it off.

You shouldn't pay off debt if it's at a low rate? wtf?

This isn't a corporation where you do Return on Investment calculations...

[geoffrey]

Alot lower interest than any debt you may have. Hence why it's pointless to pay it off.

You shouldn't pay off debt if it's at a low rate? wtf?

No you really shouldn't, in personal finance or public finance.

If I have $20,000 of debt at 4% and receive a windfall cheque for $20,000 tomorrow, I'm very unlikely to pay that debt off. An investment at 8% with that $20,000 makes more sense no? The cost of borrowing the previous money can sometimes be used against the capital gain if things are done certain ways.

And I'd likely pay off my 17.5% debt before the 4% if I were into paying off debt.

[Ricki Bobbi]

No you really shouldn't, in personal finance or public finance.

If I have $20,000 of debt at 4% and receive a windfall cheque for $20,000 tomorrow, I'm very unlikely to pay that debt off. An investment at 8% with that $20,000 makes more sense no? The cost of borrowing the previous money can sometimes be used against the capital gain if things are done certain ways.

And I'd likely pay off my 17.5% debt before the 4% if I were into paying off debt.

But you said that the Government should refund the surplus to taxpayers.

Are you saying you wouldn't mind if they invested the surplus, but they shouldn't use it to pay off the debt?

[geoffrey]

No you really shouldn't, in personal finance or public finance.

If I have $20,000 of debt at 4% and receive a windfall cheque for $20,000 tomorrow, I'm very unlikely to pay that debt off. An investment at 8% with that $20,000 makes more sense no? The cost of borrowing the previous money can sometimes be used against the capital gain if things are done certain ways.

And I'd likely pay off my 17.5% debt before the 4% if I were into paying off debt.

But you said that the Government should refund the surplus to taxpayers.

Are you saying you wouldn't mind if they invested the surplus, but they shouldn't use it to pay off the debt?

No, what the hell is the government investing for?? It's retirement?!

It's:

a ) not their money to spend out of budget, that's the point of a budget

b ) not to be spent on 4% debt when Canadians have 18+% debt

[August1991]

But you said that the Government should refund the surplus to taxpayers.

Are you saying you wouldn't mind if they invested the surplus, but they shouldn't use it to pay off the debt?

Ricki, if you want to see the question that way - go ahead.

If individual Canadians decide to use the tax refund to pay off their individual debts, so be it. Others may use it as a down payment on a house, creating greater debt in Canada. God knows.

The government issues money and bonds to help individual Canadians organize their personal affairs the best way they can as individuals.

Obsessively paying off the government debt doesn't achieve that goal. (OTOH, limiting government spending and making sure governments buy things we need are entirely different questions.)

[Wilber]

Who is going to pay the interest? The country's debt is not interest free.

Alot lower interest than any debt you may have. Hence why it's pointless to pay it off.

I don't have any debt, I always made a point of paying off what I did have as fast as I could.

[Wilber]

And I'd likely pay off my 17.5% debt before the 4% if I were into paying off debt.

Why are you paying 17.5% interest? Can't you get a line of credit at your bank to pay off your credit card debt?