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Wednesday, October 26, 2005

Ten Principles of Sound Tax Policy

From the Tax Foundation's Tax Policy Blog:
  1. Transparency is a must.
  2. Be neutral.
  3. Maintain a broad base.
  4. Keep it simple.
  5. Stability matters.
  6. No retroactivity.
  7. Keep tax burdens low.
  8. Don't inhibit trade.
  9. Ensure an open process.
  10. State [provincial] and local taxes matter.

Each point is explained in their posting. The points make sense

Posted by EclectEcon on October 26, 2005 | Permalink


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Considering the remarkable amount of excess money that has been kicking around this country since the early 90's. I've seen #'s as high as 500 billion. One would think that paying debt would be paramount.

Canada pays about 40 billion a year in interest payments. (Over half leaves the country.) What remarkable cash surpluses the government would be having today. Say Martin had paid debt to point where he recaptured 30 billion a year in interest payments. Tax cuts would certainly be the order of the day not to mention that the Feds would have as Martin became PM more money than they know what to do with.

Why wouldn't such a brilliant finance minister with asperations of being PM not forsee this and work to its end.

At the end of the day high taxes mean control. It limits mobility, information choices and ultimately contributes to isolation. Canadians are very isolated and have a remarkably provincial world view or view of just about everything.

No I don't think you can expect any where in Canada's future significantly lower taxes.
After all this government brought you a constitution that says the government comes before the people. And it's people do not have the right to own property.

Posted by: Jeff Cosford | 2005-10-27 12:04:29 AM

I'm sure they're all very good suggestions. But to me, discussing tax policy is addressing the symptom, not the problem. The problem is that the growth of government is out of control. Every day the news is filled with headlines intended to incite people to want a bigger and bigger government - health care is underfunded; the military is underfunded; farmers are underfunded; Indians are neglected; schools are underfunded; nurses are underpaid; doctors are underpaid; government labs are underfunded; R&D is underfunded; infrastructure is underfunded; foreign aid is underfunded; the police are underfunded; and so on.

No jiggery-pokery of tax policy will provide relief from the growing shambles that is the Canadian Welfare State. The heart of the problem is, and I make no apologies for repeating myself, that most people think that the government is their Daddy, and that money grows on trees. Which is to say, they think that every problem that arises has a government solution, and that there is an endless supply of rich individuals and rich companies out there who have far more money than is good for them.

Nothing in the world could be more obvious than the refutation of the premise that government is any kind of solution to problems of a personal nature (like health care), family problems (like education) or local problems (like infrastructure). The glaring proof is on Indian reserves: these people are the victims of the very same big-government largesse, in nearly every part of their lives, which the average Canadian wholeheartedly wishes for himself or herself. Yet there is no group of people more debauched, sick, criminal, addicted or suidical than these people. Every attempt to fix the problem with more government money and intervention makes it worse. But the evidence is everywhere - your local cancer treatment waiting list, mob rule by the BCTF, the gun registry, and the child welfare scandal in Quebec (now a hit movie!) are examples that pop into mind.

The second premise, that money grows on trees, is harder to refute, because people seem to think that the money deducted from their paycheque was never theirs in the first place; most Canadians pay no income tax in the first place or are net tax money recipients; they think that corporate tax is a tax on shareholders when really it's a tax on themselves as consumers; they have no idea that tax-wise, "rich" Canadians are defined as making only $60k per year; the "rich" Canadians borrow large amounts of money to buy expensive homes and have no idea that owning an expensive home during a real estate boom (or bubble) is not the same as having money in the bank; and in any case they have on average no money in the bank or savings of any kind for which to be concerned. So while tax revenues based on natural resources are very high, and while there is a fake boom in real estate underway (caused by government policies), it will be hard to convince the average non-income-tax-paying, non-money-saving, mortgage-poor, house-rich Canadian that money doesn't grow on trees.

If you can figure out how to convince the average Canadian that government sucks, and that the only way to get wealth is to earn it, then go ahead and try to figure out the best way to fund that very small number of services which government might provide better than private individuals and their private organizations can do on their own. You would probably find a receptive audience at that time, because people would actually know the value of every dollar that comes into their hands.

Posted by: Justzumgai | 2005-10-27 11:47:02 AM

Jeff Cosford, the Federal Liberals have no interest in paying down the National Debt.
The National Debt is the ONLY excuse the Federal government has for collecting revenues through taxation at all.

This power to tax was 'temporarily' ceded to the Federal government by the Provinces to pay for national debt incurred by participation in World War I.

According to the 1867 Constitution Act the Federal government must raise it's revenues from Duties and Tariffs.(customs)

This is why the Federal tax department is called Canada CUSTOMS and Revenues.

Taxation is the sole jurisdiction of the Provinces.

It is by NEVER paying off the National debt that the Federal government retains the power to tax and to dictate policy to the Provinces in areas where the Federal government has NO jurisdiction whatsoever.

Posted by: Speller | 2005-10-27 12:32:05 PM

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