Benefit of Tax Cuts in General

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ghariton
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Post by ghariton »

brucecohen wrote:people who press for tax cuts should cite the govt services that they personally use which they're willing to reduce or kill.
I like your thinking. Problem is that there are lots of government activities with no users or beneficiaries outside of government.

How about government programs that we find oppressive? Let me volunteer a few:

-- enforcement of criminal laws against victimless crimes, e.g. using marijuana, prostitution, censorship of "demeaning" pornography

-- censorship boards, including the CRTC

-- Human Rights Commissions

-- bylaw enforcement officers

-- Privacy Commissioners

As to stuff I use because it's there, but would willingly give up to save the money and redirect it to tax cuts:

-- the National Gallery and the National Arts Centre in Ottawa

-- VIA Rail

-- CBC

-- LCBO
The juice is worth the squeeze
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Post by brucecohen »

saylavbda wrote: Yes, daycare has educational elements, but is that why people use them, or is it so they can work? I know some people use limited daycare solely for the education aspects, but I'm sure this would be a very small group.
So how does that differ from the vast number of people who go to "educational" libraries to borrow mysteries and DVDs of popular movies? Logically, if the public library is to be kept alive because it is potentially educational, proponents of public daycare have grounds on which to cite the same justification.
So let me get this straight, we're in agreement that govt doesn't necessarily spend wisely, but they would be able to target the stimulus spending to the where it is most desired/needed? You would be okay with govt spending money on crap as long as it was in the right town? The logic doesn't follow.
I'd prefer that govt does not spend the money on crap. You've made the common assumption that govt cannot spend wisely but individuals can. If that was true, there'd be a lot less junk food on store shelves, far fewer fast food chains and not many big SUVs and pickup trucks in urban and suburban neighborhoods. The key difference is that the crap which govt buys keeps most or even all of the money in the national/provincial/regional/local economy where the stimulus is desired. We have no way of knowing the extent to which that holds for the crap individuals buy.
Why is the cut in govt spending a requirement for a tax cut and but not a condition of spending. In both cases deficit financing is used which will impact future govt spending.
I and, I believe most others, have suggested that infrastructure spending be the main driver of the stimulus. Borrowing to build/repair infrastructure is not only justifiable but the all-weather norm for both govt and business as the cost of the structure is then amortized over its life. By advocating a tax cut without reducing spending, you're demanding a loan from future generations of taxpayers who get no say in granting it and likely little or no benefit from the total personal spending of that money. I could see a tax cut-versus-direct spending debate if govt was going to fund the stimulus from surplus, but that's not the case.
For how long and at what cost? The current economic slump is not the cause of the problems at the big 3. Why put taxpayer money into continuing to support it, when a fundamental change is required.
I'm talking about the taxpayer money required to support the community, not the industry. This happens with every big shutdown in a single-industry town. Assembly line workers who are layed off will not quickly and easily find new jobs. There will be pressure on govt to fund retraining programs and govt will give in, but retraining for what? There are few new factories being built here. How many assembly line workers have the education and skills required to operate or program computers, assuming there's still demand for such people and I'm not sure there is. I don't know how long EI runs but it's finite. Once it runs out, what does a no-/low-skilled worker do? Especially when all of the local businesses have cut back because their customer base was primarily autoworker families? Welfare costs rise -- a public expense. Social ills, whether crime or substance abuse, rise -- a public expense. Property values decline -- reducing local/regional govt tax revenues. If GM, the largest property tax payer, closes half its factory complex, the town and region lose a big chunk of taxable assessment until the factory buildings are purchased and put to use -- assuming that ever happens. All of this is not a reason to bail out poorly run companies that don't deserve to be bailed out. It is a reason for govts at every level to keep money or borrowing capacity on hand.
I'm no auto expert, but from what I understand, wages have to go down, the number of dealers need to be addressed, quality has to improve.
That's my understanding too.
By having govt continue to support the current status quo, they are simply fooling themselves that the auto industry will fix themselves as long as they can get the handouts.
I don't know that govt is willing to support the status quo. The US Congress told the Big-3 to return in March with restructuring plans. Ontario, and I believe Ottawa, said the same.
Do you thing the CAW or UAW will agree to the wage cuts needed? They haven't yet.
They will accept wage cuts if govts make clear that the alternative is restructuring under bankruptcy laws that allow contracts to be reopened. They've had no reason yet to volunteer for wage cuts; unions are bargaining agents and there can't be any bargaining until management tables a plan. Expecting union leaders to voluntarily call on their members for sacrifice is particularly problematic given the refusal by the GM and Ford CEOs to demonstrate leadership when US congressmen asked if they would reduce their own compensation. (Chrysler's CEO was already working for $1/year.) Heck, as you'll recall, the three CEOs wouldn't even make the sacrifice of bearing the indignity and discomfort of flying 1st class commercial.

If what you're asking is whether there should be a tax cut or an automaker bailout, I say neither. I feel the automakers should have to restructure like any large company. As for tax cuts, there's no spare money in the piggybank and few people seem interested in cutting or eliminating the govt services they use.
As for me being a cold hearted bastard, please note that both myself, my wife and family members have been laid off. Guess what, it sucked at the time, but worked out in the end.
I haven't suggested that you're a cold-hearted bastard. All I've done is ask what govt services you personally use that you'd be willing to give up to fund a tax cut. I question the fairness, if not the morality, of burdening future generations with debt to fund our current consumption. Do you?
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Post by brucecohen »

ghariton wrote: I like your thinking. Problem is that there are lots of government activities with no users or beneficiaries outside of government.
And I like your thinking.:D

I agree with everything on your list except for bylaw enforcement officers. I've had firsthand experience with them in regard to violent dogs and a squatter whose grossly irresponsible, anti-social behavior made his neighbors' lives miserable.

I'd reserve judgment on the LCBO. I like their new stores and staff seem quite knowledgeable, helpful and professional. By contrast, it's been years since I've had a good experience at commercial outlets in the US. But I'm neither a big nor a knowledgeable drinker. When checking the same Australian wines, I was surprised to find little or no difference between the LCBO price and the price at an unplesasantly shabby liquor store in Newport, RI. (As the son of a good shopkeeper, I have a thing about unkempt stores. :wink:)

Your inclusion of the CBC is interesting. Those who support it -- mainly people who work there and members of the very small but very vocal Friends of the CBC -- cite the same justification that saylavbda cited for maintaining the public library: that it's potentially educational for the few who watch and listen. Plus, of course, the specious claim that the CBC ties the country together and is thus vital to national unity. I would add to your list TV Ontario, although it does at least try to raise some money from viewers.
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Post by Jo Anne »

brucecohen wrote:I'd reserve judgment on the LCBO. I like their new stores and staff seem quite knowledgeable, helpful and professional.
Thank you.
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Post by saylavbda »

brucecohen wrote:I'd prefer that govt does not spend the money on crap. You've made the common assumption that govt cannot spend wisely but individuals can.
No such assumption made. We already agreed that gov't doesn't have the best record of spending wisely, and there are lots of examples to support that position. As for individuals doing the same, never said they would spend wisely, but at least they would enjoy the benefits of the crap they buy. If it is spent on fast food, SUVs and junk food, and last I looked these products are made locally, then the money would be spent locally. Also, other posters have already shown that tax cuts have a better multiplier effect than govt spending.
I and, I believe most others, have suggested that infrastructure spending be the main driver of the stimulus. Borrowing to build/repair infrastructure is not only justifiable but the all-weather norm for both govt and business as the cost of the structure is then amortized over its life.
Sounds great, but if the infrastructure spending is needed, then it would already in the works. If these projects are sped up, all we're doing is moving the timing of the spending up. Fine with that. But the worry of some is that addition projects undertaken, over an above the needed projects, to stimulate the economy will be 'bridges to nowhere' with little lasting benefit. History provides support for these concerns.
I'm talking about the taxpayer money required to support the community, not the industry. This happens with every big shutdown in a single-industry town. Assembly line workers who are layed off will not quickly and easily find new jobs. There will be pressure on govt to fund retraining programs and govt will give in, but retraining for what? There are few new factories being built here. How many assembly line workers have the education and skills required to operate or program computers, assuming there's still demand for such people and I'm not sure there is. I don't know how long EI runs but it's finite. Once it runs out, what does a no-/low-skilled worker do?
Sorry, I have more confidence that the workers are not so useless and only able to do simple manual labour. It's not like cars are no longer going to be built, Toyota just opened a new plant in Woodstock.
All I've done is ask what govt services you personally use that you'd be willing to give up to fund a tax cut. I question the fairness, if not the morality, of burdening future generations with debt to fund our current consumption. Do you?
Not a huge user of govt service, but if limiting myself to educational material from the library will make you happy, then so be it. I'll also gladly give up....
APTN (I have watch it, some good movies every now and then)
CBC (except for Hockey Night in Canada, of course TSN would just pick it up, so the whole lot can go).
Lots of govt employees I could do without, but am force to deal with.
An unelect senate.
Govt funding of political parties.
etc etc etc.
If the goal is to remove the burden of debt from the future generation, then we're talking about more then just the current situation.
Best way to do that is to control spending (govt doesn't have the best track record in that field) and increasing revenue. IMHO, best way to do that is to increase the tax base, not tax rates. Now what would help do that more, lower taxes or higher govt spending? Actual evidence as noted by other posters above is lower taxes.
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Post by saylavbda »

brucecohen wrote: I'd reserve judgment on the LCBO. I like their new stores and staff seem quite knowledgeable, helpful and professional. By contrast, it's been years since I've had a good experience at commercial outlets in the US.
You can LCBO to my list. What business does govt have in dealing with a retail business like selling liquor? What benefit is there to society in having govt own it over private industry?
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Post by ghariton »

brucecohen wrote:I've had firsthand experience with them in regard to violent dogs and a squatter whose grossly irresponsible, anti-social behavior made his neighbors' lives miserable.
Fair enough.
I'd reserve judgment on the LCBO. By contrast, it's been years since I've had a good experience at commercial outlets in the US.
Actually, my point of comparison was France, where the variety, prices, and service was superlative -- not everywhere, of course, but if you care to look for it. As for the U.S., my experiences vary tremendously.

And I guess that's my point. In the U.S., if you care about wine or scotch, you will find great variety and advice. If not, then there are stores for you, too. By comparison, the LCBO is pretty well "one size fits all" - yes, I know there are specialty stores, but I shouldn't have to drive for miles to get to one, and anyway their variety is limited too.

I write this as one who has to place special orders with the LCBO to get what I want.

Nothing personal, Jo Anne. I'm sure that you and the team you're part of, are top notch. After all, you're one of us. :wink: But you don't make the selections.
I would add to your list TV Ontario, although it does at least try to raise some money from viewers.
Ah, but I can't add it. I don't watch it, so I wouldn't be giving anything up.

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Post by kcowan »

How about universal health care? I am willing to do a copay whenever I use the service. Even if this is neutral for me through tax reductions, I think it is a good idea.

I wonder why the LCBO offers Air Miles. This adds to their retail cost.
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Post by saylavbda »

parvus wrote: I've articulated my position before, so there's no surprise in what I'm going to say next. For a a good third of children, and perhaps more, some form of accessible/universal childcare with a heavy learning component is needful.
Agreed that early childhood education is important, but that does not mean daycare. There are lots of universally accessible education programs available for those younger than school age (at least in Ontario). Libraries, community centres and Early Years Centres all provide this service at little or no cost direct cost to the user (e.g. publicly funded).
Keep in mind that the powers that be have deemed that formal schooling is not required until 4, and even then for only half a day. How does it follow that education needs of children younger require childcare for a full day? To me it appears to be that people are using a valid point on education to further their demand for public daycare.
If the education need is that great, then formal public schooling for all should be started earlier.
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Post by Bylo Selhi »

kcowan wrote:How about universal health care? I am willing to do a copay whenever I use the service.
It's claimed that low-income people can't afford even the copay, hence they'd avoid getting medical attention even when they needed it.
I wonder why the LCBO offers Air Miles. This adds to their retail cost.
I've wondered the same thing. They're a monopoly so they have no competition to attract business from nor do they need to promote customer "loyalty."
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Post by brucecohen »

Bylo Selhi wrote:
kcowan wrote:How about universal health care? I am willing to do a copay whenever I use the service.
It's claimed that low-income people can't afford even the copay, hence they'd avoid getting medical attention even when they needed it.
More than low-income people. Years ago Manitoba did an experiment in which a group of doctors' offices charged a modest user fee. Usage fell across all income groups. Significantly, it was ultimately found that the cost of delayed treatment for several problems more than offset the combined value of the savings from reduced visits and fee revenue. Even with the waste created by unnecessary visits, prevention and early detection/treatment are cost-effective.

Also remember that copays require administration, which costs money. If the copay is levied and collected in the doctor's office, you create a huge amount of overhead across the system. I suppose you could centralize the administration and have a computer bill users quarterly or annually, but that still creates overhead. With both approaches, you also have to deal with inability to pay. I've read that it's not uncommon for physicians in the US to write off as much as 40% of their billings.
I wonder why the LCBO offers Air Miles. This adds to their retail cost.
I've wondered the same thing. They're a monopoly so they have no competition to attract business from nor do they need to promote customer "loyalty."[/quote]
I too am puzzled every time I give the LCBO clerk my Air Miles card. As I'm neither a big nor a discerning drinker, it doesn't matter to me whether the LCBO is public or private. Note though that, unlike most govt activities, it puts money into the treasury -- $1.3 billion last year, according to its annual report. So, in terms of funding a tax cut, its privatization would be counter-productive unless new owners increase business enough to pay the same amount in tax.
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Post by saylavbda »

brucecohen wrote: Note though that, unlike most govt activities, it puts money into the treasury -- $1.3 billion last year, according to its annual report. So, in terms of funding a tax cut, its privatization would be counter-productive unless new owners increase business enough to pay the same amount in tax.
I knew the profit thing would come up and it's a red herring. If LCBO is sold, it would be done for a cash payment of some sort. How much and would it offset the future revenue, don't know, depends on what price the govt gets.
But if putting money into the treasury is a valid reason for govt to get involved in providing a service, then shouldn't they consider opening a retail banking chain, that highly profitable, especially if they created a monopoly.
Isn't govt role to provide services for the public good and not based on profit? What's the role of LCBO in terms of public good that won't be met by the profit sector?
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Post by Dennis »

IF the LLBO is returning a NET profit to the taxpayer (as compared to a private corp.) then is it not in the public interest to keep it?

And IF a NATIONAL bank met the same criteria, would it not also be in the public interest?

Why should ideology trump the public interest?
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Post by ghariton »

Dennis wrote:IF the LLBO is returning a NET profit to the taxpayer (as compared to a private corp.) then is it not in the public interest to keep it?
Should maximizing profits be the government's objective with respect to sales of alcohol? In other sectors of the economy, we try to encourage competition, hoping that it will result in competitive prices, i.e. cost plus a reasonable profit, and better choice or quality. That makes the population better off than collecting monopoly profits -- government or private enterprise.

The old justification was that alcohol was sinful, and we wanted to restrain its consumption by making its availability difficult and by pricing it exorbitantly. We have moved some way away from that, but apparently not far enough.

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Post by Dennis »

I underlined NET to indicate that ALL financial implications were to be considered. I also was assuming comparable service (rightly or wrongly).

Other societal considerations may be a factor but I suspect most here don't want the government pricing booze (and it's availablility) based on this.

I stand by my words. 8)
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Post by brucecohen »

saylavbda wrote:As for individuals doing the same, never said they would spend wisely, but at least they would enjoy the benefits of the crap they buy.
Which is fine if they're buying this crap with their money. That doesn't bother me if the money comes from a tax cut because govt has spare surplus. But when they buy it with money from a tax cut financed through borrowing, they're buying it with money from future generations who have no say and will derive no benefit.
If it is spent on fast food, SUVs and junk food, and last I looked these products are made locally, then the money would be spent locally.
The pretzels in my cupboard, my only junk food, were made and packaged in Hanover, Pennsylvania. The Subaru Outback I'm thinking about buying is assembled in Indiana. Though big employers, albeit at min wage, fast food franchisees have to buy all of their supplies from head office. I have no idea how much stuff McDonald's produces in Canada, but suspect that most of it comes from the US.
Also, other posters have already shown that tax cuts have a better multiplier effect than govt spending.
At least one linked to a study that said the opposite. I don't know how such things are determined so I checked Wikipedia. My eyes quickly glazed over, but it seems to be theoretical and there are at least six ways in which multipliers are calculated. So I don't know that they're particularly relevant. If I understood it -- a huge if -- one of the studies linked in this thread based its conclusion that tax cuts win on the premise that the absence of tax cuts creates expectation that tax rates will rise and taxpayers respond by setting aside money to pay higher taxes at some unknown point in the future. That's absurd. Aside from estate planning, nobody -- individual or business -- sets aside money to cover tax hikes that are not even rumored, let alone announced. Indeed, accountants and debt counsellors will tell you that a substantial number of sole proprietor self-employed people don't even set aside money for the tax bills they know will come due in three months.

In any event, the non-partisan Congressional Budget Office did a huge study and concluded that the enormous Bush tax cuts of 2001 and 2003 have not paid for themselves. And, last night on NPR I heard an economist say that the blizzard of "rebate" cheques distributed by the IRS last year did not work in stimulating the economy. In fairness, I don't know how that can really be determined, let alone in less than a year, and every economist seems to have a political orientation. The bottom line, I suggest, is that outside of localized taxation and spending -- where you can actually see the money move -- a multiplier effect can't be objectively quantified.
Sounds great, but if the infrastructure spending is needed, then it would already in the works.
Projects are in the works -- the term is "shovel-ready" -- but they've been frozen for various reasons, mainly budgetary. Few people recognize and appreciate the value of maintenance. Politicians and public administrators in particular find it easy to benefit from the short-term gain of low-balling and stalling maintenance in the expectation that they won't be around when the breakdown or structural failure occurs. This is particularly true in areas like Ontario where municipalities have to balance their budgets annually and in the US where quite a few state and local govts operate under arbitrary property tax caps.

Also, ongoing research and development creates valid uses for money that were not previously anticipated. For example, the cost of road salt has skyrocketed in recent years. Additionally, there is growing awareness that salting roads in winter damages the environment. There is a new system in which a wheel is installed on salt trucks that feeds road condition data to an onboard computer, which tells the driver when to spread salt and how much to spread. Some trucks can even dynamically mix sand and salt to optimally address the condition of a particular section of highway. It's obviously a wonderful innovation that can yield financial, environmental and road safety benefits for years to come. Yet NPR found that few state and local govts had purchased it because it's costly and there's no room in existing budgets.
But the worry of some is that addition projects undertaken, over an above the needed projects, to stimulate the economy will be 'bridges to nowhere' with little lasting benefit. History provides support for these concerns.
Sure, that is a worry and there's a 100% certainty that stupid projects will be funded when govt moves to spend a large amount of money in a short time. But what's the certainty that individuals would productively spend all, of even most, of their stimulus cheques or tax cuts?

Let's focus on the stimulus cheque since, unless rates are really slashed, a tax cut would increase income by only a few bucks a week. Joe Canadian receives a cheque for $500 and goes to spend it. Great, that's what it's for -- to be spent. He buys a big screen TV. Now, there are no TVs made in Canada. And, my understanding is that markups on electronics are razor-thin. If so, the retailer gets some money with which to pay its employees, landlord and domestic suppliers but not a whole lot. Most of the benefit goes to the TV manufacturer and its wholesaler as the dealer orders a new one to replace the unit sold. And, if Joe gets the TV at BestBuy, the profit on that sale goes to the corporate parent in the US. So I don't think govt's borrowing of $500 has produced a whole lot of benefit for the national, provincial, regional or local economy.

To what extent has govt's borrowing of $500 produced tangible benefit for Joe? Does doubling the size of Joe's TV screen increase his knowledge, productivity and earning power? No. Will it save him money? Well, maybe if he goes to the movies less often. But that will hurt the economy because the movie theatre owner will lose business though this economic loss would be partially offset tby the rental fee Joe pays for the DVD -- assuming he doesn't borrow it for free from the public library.:wink: Will there be any environmental gain from Joe buying a big screen TV? Just the opposite. The new TV will likely consumer more power than the old one. If he throws out his current TV, its toxic components will have to be dealt with. And the new, larger TV will have even more toxicity to be dealt with when its days end.
Sorry, I have more confidence that the workers are not so useless and only able to do simple manual labour. It's not like cars are no longer going to be built, Toyota just opened a new plant in Woodstock.
And it's been staffed. If Detroit vehicles haven't been selling in recent years, how would substantially reducing the supply of them going forward create such tremendous demand for Toyotas that Toyota would build a lot of new plants? Toyota -- or more likely a newer entrant like KIA -- might well buy an idle GM factory in Oshawa or Windsor, but without restrictive work rules would need less staff and would likely be loath to hire those over 40. We don't have to speculate about this, since it has already occurred -- years ago -- in places like Flint, Michigan. Whether in Canada or the US, there aren't many new factories being built. And those that are being built don't require a whole lot of workers. If govt banks money to meet economic hardship needs that don't materialize, it can then dividend out the overage. If it doesn't bank money on the assumption that all the affected will quickly find new livelihoods and they don't, it will have to scramble to fund support on an ad hoc basis.
Not a huge user of govt service, but if limiting myself to educational material from the library will make you happy, then so be it. I'll also gladly give up....
Actually, you are huge user of govt service but don't realize it. For example, this morning you woke up in a house that was fully or partially heated with electricity. Hydro is subsidized in Ontario and I believe all the other provinces. Are you prepared to pay the full cost of producing/importing the power you consume? If you live in an Ontario city or suburb, there's a subsidy for delivering the water you drink and disposing of the urine you pee. I suspect water and sewage rates are subsidized all across Canada. How about paying full cost on a metered basis?

Let's pause and consider sewage. As a rural resident, I pay the full cost of maintaining a septic system. If any part of the system needs repair, I have to foot the bill. This week it was reported that cracks have been found in one of Toronto's main sewer tunnels. Repairs are expected to cost $30 million. This should be levied on the home and property owners whose buildings are tied into that line. More likely, it'll be levied across Toronto's entire tax base. Most likely, Toronto will go crying to the province, which will end up footing much or most of the cost -- and I, as a provincial taxpayer, will have to cover part, albeit a minuscule amount.

The list you cited contained only one govt activity that you personally use -- CBC. Ending public funding for CBC is a slam-dunk; I personally don't know anyone -- including friends who work there -- who wouldn't kill MotherCorp's $1 billion annual allowance. APTN is a commercial network that's funded by cable/satellite subscriber fees and advertising.

I don't know if you have school-aged children. If you do, would you be willing to see much higher college and university fees? Canada subsidizes post-secondary education to a much greater extent than the US, our primary competitor in intellectual capital. How about reducing these subsidies to the average US level? It would mean some combination of higher fees, program elimination and even school closure, but would free up a lot of money that individuals could spend on their own.

If I, as a rural resident, have a fire and call 911, I'll be billed for the cost of each truck that responds -- so much per hour spent on the scene. This enables rural townships to keep fire service affordable. AFAIK, urban/suburban residents face no such charge. Would you be willing to accept such a system of self-insurance?
If the goal is to remove the burden of debt from the future generation, then we're talking about more then just the current situation.
Best way to do that is to control spending (govt doesn't have the best track record in that field) and increasing revenue. IMHO, best way to do that is to increase the tax base, not tax rates.
Who has suggested increasing tax rates? No one in Canada. And in the US, even Obama has said he might delay his plan to roll back the Bush tax cut for those earning $250,000+.
Now what would help do that more, lower taxes or higher govt spending? Actual evidence as noted by other posters above is lower taxes.
What actual evidence? There is actual evidence to the contrary. The Harper govt entered office with a budget surplus and proceeded to implement both broad based and targetted tax cuts, a whole slew of them. The surplus it inherited is now a deficit and we're only in the early days of what might well be the worst recession in decades.
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Post by ghariton »

Dennis wrote:I underlined NET to indicate that ALL financial implications were to be considered. I also was assuming comparable service (rightly or wrongly).
Yes, I saw that. That's why I didn't get into scenarios where the private operator might be more efficient than the government, and as a result both the government and the private operator could get a share of the extra profits.
Other societal considerations may be a factor but I suspect most here don't want the government pricing booze (and it's availablility) based on this.
That sounds as if you share the opinion that alcohol is somehow harmful, if not sinful, and that therefore its prices should be set high. That's certainly a defensible position, although I wonder if high prices are the best tool for encouraging moderation. (Perhaps we need encourage moderation only in the poor.)

But it does not help me with private/public operation of liquor outlets. If high prices are indeed the goal, just tax the damn stuff until society cuts back to the desired level of consumption.

Something like a carbon tax :wink:

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Post by Dennis »

That sounds as if you share the opinion that alcohol is somehow harmful, if not sinful, and that therefore its prices should be set high.
On the contrary, I agree with you that taxation should be used if this is a problem requiring intervention by government. Prohibition was tried and didn't work.
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I would also like to see a THC control board :wink:

However, I'm not ready for for the Heroin control board at this time :?
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Post by brucecohen »

saylavbda wrote: I knew the profit thing would come up and it's a red herring. If LCBO is sold, it would be done for a cash payment of some sort. How much and would it offset the future revenue, don't know, depends on what price the govt gets.
That's true, there would be lump sum proceeds that could be invested. But operating businesses normally have ROIs that exceed the income available from investment. Plus, if you believe govt is inherently incapable of wisely managing money, the logical assumption is that the windfall proceeds would be immediately blown on bridges to nowhere, leaving nothing to replace the lost income stream.
But if putting money into the treasury is a valid reason for govt to get involved in providing a service, then shouldn't they consider opening a retail banking chain, that highly profitable, especially if they created a monopoly.
First, you're right -- govt should not start providing services that the private sector is willing and able to provide effectively.* If the LCBO did not exist, it should not be created. But it does exist, having been created long ago as a compromise to meet the public's desire for booze and the Orange establishment's desire to minimize sin and sloth. (I remember when the products weren't even displayed. You consulted a thick catalog, filled out an order form and waited at a counter for your purchase to arrive in a brown -- unmarked -- paper bag.)

The Province of Ontario did operate a bank until five years ago. It was called the Province of Ontario Savings Office.
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Post by saylavbda »

brucecohen wrote:Which is fine if they're buying this crap with their money. When they buy it with money from a tax cut financed through borrowing, they're buying it with money from future generations who have no say and will derive no benefit.
They are spending their money, it doesn't belong to the govt or the future generation yet. Again, if you want to remove the debt of the country, then we're talking about a whole different ball game.
As for the benefit of the spending to future generations, it all depends on how the tax cuts are used verses how govt uses the money. You keep going back to people basically wasting the tax cuts, but what if people/businesses used the tax cuts wisely, invested and creating new jobs and companies that grow and later employeed the future generation, or spent it on some training to improve themselves. Would that not benefit future generations.
Don't forget that the whole reason we have a debt is that govt continually spends more than it has, not a wise move. And that most of the wealth is created, not from the govt but from individuals.
If you want to remove the debt, give the money to those who generally create more wealth not to those who overspend.

I have no idea how much stuff McDonald's produces in Canada, but suspect that most of it comes from the US. IIRC, its beef is from Argentina.
Article in NP the other day, McCain's largest customer is McDonald's. I do love their fries.
At least one linked to a study that said the opposite. I don't know how such things are determined so I checked Wikipedia. My eyes quickly glazed over, but it seems to be theoretical and there are at least six ways in which multipliers are calculated.
The studies cited in the article were not theoretical, but based on actual results. They concluded that there's more bang to the buck in a tax cut verses gov't spending. It one of those results were reality screws up a good theory.
If Detroit vehicles haven't been selling in recent years, how would substantially reducing the supply of them going forward create such tremendous demand for Toyotas that Toyota would build a lot of new plants? Toyota -- or more likely a newer entrant like KIA -- might well buy an idle GM factory in Oshawa or Windsor, but without restrictive work rules would need less staff and would likely be loath to hire those over 40. We don't have to speculate about this, since it has already occurred -- years ago -- in places like Flint, Michigan. Whether in Canada or the US, there aren't many new factories being built. And those that are being built don't require a whole lot of workers.
I would rather have half the workers working productively for KIA in Oshawa than 100% of them working, but being subsidized by tax dollars. Again I have faith that the remaining workers would find productive employment.
Actually, you are huge user of govt service but don't realize it. This morning you woke up in a house that was fully or partially heated with electricity. Hydro is subsidized in Ontario and I believe all the other provinces. Are you prepared to pay the full cost of producing/importing the power you consume? If you live in an Ontario city or suburb, there's a subsidy for delivering the water you drink and disposing of the urine you pee. I suspect water and sewage rates are subsidized all across Canada. How about paying full cost on a metered basis?

Let's pause and consider sewage. As a rural resident, I pay the full cost of maintaining a septic system. If any part of the system needs repair, I have to foot the bill. This week it was reported that cracks have been found in one of Toronto's main sewer tunnels. Repairs are expected to cost $30 million. This should be levied on all of the home and property owners whose buildings are tied into that line. More likely, it'll be levied across Toronto's entire tax base. Most likely, Toronto will go crying to the province, which will end up footing much or most of the cost -- and I, as a provincial taxpayer, will have to cover part, albeit a minuscule amount.
Yes to paying the full bill on both accounts, it would drive home the actual cost and help reduce the waste that the subsidized rates allow. Of course I'm also on septic, so I know what you mean, but having a properly functioning sewer system if for the general public good. Just look at happened in London before they have a functioning sewer system.
APTN is a commercial network that's funded by cable/satellite subscriber fees and advertising.
Hardly, I'm forced by govt to have the channel. Its simply a different form of taxation.
Of APTN's revenue, 30M of the 36M is from the mandatory subscriber fees, 2M is from the govt of Canada.
I don't know if you have school-aged children. If you do, would you be willing to see much higher college and university fees? Canada subsidizes post-secondary education to a much greater extent than the US, our primary competitor in intellectual capital. How about reducing these subsidies to the average US level? It would mean some combination of higher fees, program elimination and even school closure, but would free up a lot of money that individuals could spend on their own.
Back to education and the public good argument.
Who has suggested increasing tax rates?
To decrease the debt, one needs to either lower spending or increase revenue. How would govt increase revenue? Either through an increase in the tax base or through higher taxes. How do you increase the tax base? Lower taxes is one way, gives people incentive to work/invest/create wealth.
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saylavbda wrote:
parvus wrote: I've articulated my position before, so there's no surprise in what I'm going to say next. For a a good third of children, and perhaps more, some form of accessible/universal childcare with a heavy learning component is needful.
Agreed that early childhood education is important, but that does not mean daycare. There are lots of universally accessible education programs available for those younger than school age (at least in Ontario). Libraries, community centres and Early Years Centres all provide this service at little or no cost direct cost to the user (e.g. publicly funded).
Keep in mind that the powers that be have deemed that formal schooling is not required until 4, and even then for only half a day. How does it follow that education needs of children younger require childcare for a full day? To me it appears to be that people are using a valid point on education to further their demand for public daycare.
If the education need is that great, then formal public schooling for all should be started earlier.
Actually, the province has appointed a special advisor to integrate childcare and education for 4 and 5-year-olds into a full-day programme. Also remember that junior kindergarten and kindergarten are optional programmes, just like public childcare. Provision of optional public programmes for childcare before those ages might also include parenting centres, which are attached to some Toronto schools. (You've probably guessed that I've had some involvement with all of this in the past.) :wink:
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saylavbda wrote: They are spending their money
They're spending their money only if the tax cut is taken from surplus. There is no surplus now. If Steve or Dalton wants to give me $500, they have to borrow it.
As for the benefit of the spending to future generations, it all depends on how the tax cuts are used verses how govt uses the money. You keep going back to people basically wasting the tax cuts, but what if people/businesses used the tax cuts wisely, invested and creating new jobs and companies that grow and later employeed the future generation, or spent it on some training to improve themselves. Would that not benefit future generations.
Yes, it would. But there's no way to tell in advance the extent to which that will occur. Just as there's no way to tell in advance how much direct govt spending would be productive and how much would be wasteful. All we know for sure is that direct spending by govt can be, and generally is, concentrated in the national/provincial/regional/local economy -- the areas whose economies we now want to stimulate.
Don't forget that the whole reason we have a debt is that govt continually spends more than it has, not a wise move.
Is that really the whole reason? I'm hard pressed to think of any time when there was a public outcry against building a new hospital or school, increasing old age pensions, providing special care for mentally handicapped kids, etc, etc.

Actually, in Canada almost all of the federal debt is attributable to the Trudeau govts which were wildly popular at the time. I find it ironic that today's 60-year-olds, who paid less than 10% of the cost of their university educations, whine about effective income tax rates in the 20% range.
Most of the wealth is created, not from the govt but from individuals.
All wealth is created by individuals. Govt performs three functions:
1. Imposes and maintains order
2. Pools purchasing so that individuals can, on a cost- and time-effective basis, obtain needed services, many/most of which they never even think about.
3. Redistributes income to a certain extent because we don't want our streets too cluttered with beggars and don't want any more petty criminals than we already have.
If you want to remove the debt, give the money to those who generally create more wealth not to those who overspend.
That's why govt at all levels offer tax abatements and waive servicing costs in competing for new factories and other business operations. It's also why govts like Ontario give companies money to save jobs, typically with lousy results.

If you're suggesting the eliminate of corporate income tax, there's a good case that can be made for that. But small business already enjoys substantial tax concessions, primarily through the small business tax rate and $750,000 lifetime capital gains exemption.

The studies cited in the article were not theoretical, but based on actual results.
Then please explain how they obtained those results. As I said, what I read in Wiki baffled my mind.
I would rather have half the workers working productively for KIA in Oshawa than 100% of them working, but being subsidized by tax dollars.
So would I.
Again I have faith that the remaining workers would find productive employment.
And if they don't? In the US, there was massive migration from factory jobs in the rust belt to service jobs in the sunbelt, which was then booming. Canada's auto plants are located in regions that people already migrate to. Joe Canadian is a 42-year-old line worker at GM in Oshawa. He's an ordinary guy. In the current environment, what productive employment does he find in the GTA? A year ago he could have moved to Alberta's oil patch, but with oil below $50 it's hard to believe there are many opportunities there for the unskilled.
Of course I'm also on septic, so I know what you mean, but having a properly functioning sewer system if for the general public good. Just look at happened in London before they have a functioning sewer system.
A sewage system with full pricing would still be safe and functional -- users would simply have to pay more. The system would probably be even more safe and functional since it would self-fund maintenance.
Hardly, I'm forced by govt to have the channel. Its simply a different form of taxation.
Of APTN's revenue, 30M of the 36M is from the mandatory subscriber fees, 2M is from the govt of Canada.
Yes, I previously read the quick hit on APTN's website and on re-reading see that the statement was nuanced so it dealt only with programming. The $2M govt "contribution" covers the physical cost of delivering their signal by satellite across northern Canada. As for the subscriber fee, yeah, I'm forced to pay for lots of channels I don't want.
(RE the level of subsidy for post-secondary education) Back to education and the public good argument.
But there's no evidence that Canada's higher level of post-secondary subsidization has produced more educated and productive graduates than those in the US. Indeed, talented, highly educated Canadians often seem to wind up in the US. So, to an extent -- probably large -- Canadian taxpayers are subsidizing US intellectual capital. You're confident that laid-off autoworkers will find productive employment. I'm confident that students who are truly able and motivated can and would pay more.
To decrease the debt, one needs to either lower spending or increase revenue.
Canada now has a deficit problem, not a debt problem. Debt is well under control and, measured against GDP, is the lowest in the G8 if not the OECD.

There is a deficit problem because the federal and provincial govts are again spending more than they're taking in -- and this gap will grow as the recession deepens. Lower tax rates -- matched by cuts in spending -- would increase the economy and thus the tax base over time, but spending cuts are counter-productive during a recession and, assuming the stimulative effect can really be measured, non-partisan analysis of the Bush 2001-2003 tax cuts found they didn't really work.

As for incenting people to work and invest, that was certainly true years ago when marginal rates were confiscatory. Now, they're not. And govt, mainly the Harperites, has implemented a whole slew of tax-reduction programs from the lower GST to the TFSA to a credit for transit passes. With effective tax rates for middle-income Canadians in the 20-25%, I'm not convinced that there's no need for major structural change in tax rates though govt spending can always be better deployed.
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Post by parvus »

brucecohen wrote:
saylavbda wrote:Most of the wealth is created, not from the govt but from individuals.
All wealth is created by individuals. Govt performs three functions:
1. Imposes and maintains order
2. Pools purchasing so that individuals can, on a cost- and time-effective basis, obtain needed services, many/most of which they never even think about.
3. Redistributes income to a certain extent because we don't want our streets too cluttered with beggars and don't want any more petty criminals than we already have.
I would add (off the top of my head):

4. Universal provision of certain capital goods not easily or equitably provided on the market.

Category One goods would be such things as physical infrastructure (public transit, railroads, regulated utilities) whose costs are beyond the capacity of the private sector to bear.

Category Two goods would include human capital development (primarily education), the universal provision of which eliminates the free-rider problem of some companies training apprentices only to see them move to companies that do not invest in training apprentices.

Category Three goods (accessible health care, public heatlh), the universal provision of which also eliminates a free-rider problem, but also provides a social good, like law and order. Call it freedom from plague and contagious disease.

Arguably, none of these is directly productive of wealth on its own, yet on them rests the basis for future productivity improvements, which is why I refer to them as capital goods (endowments, George?) rather than services.
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Post by saylavbda »

brucecohen wrote: If you're suggesting the eliminate of corporate income tax, there's a good case that can be made for that. But small business already enjoys substantial tax concessions, primarily through the small business tax rate and $750,000 lifetime capital gains exemption.
I'm for tax cuts, be it personal or corporate, which ever works best. I maintain that corporations never pay taxes, only expenses, it might be classifed as a tax but to a corporation is still an expense. The more profitable a business is, the more business will do here.
And if they don't? In the US, there was massive migration from factory jobs in the rust belt to service jobs in the sunbelt, which was then booming. Canada's auto plants are located in regions that people already migrate to. Joe Canadian is a 42-year-old line worker at GM in Oshawa. He's an ordinary guy. In the current environment, what productive employment does he find in the GTA?
Haven't checked the job ads recently, but surely somewhere in Canada where there are jobs, or maybe they could start up their on company or consult. They could also retrain for a new job, at 42 Joe Canadian line worker is far from limited to only doing line work. It might take a while but again I restate my faith that they would find something productive.
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