Jack Mintz wrote an article for the Financial Post last week that left me frustrated.
It begins with a call to arms: “With revenues pouring into federal and provincial coffers, it’s time for Canadians to tell their governments they’ve had enough with high taxes.”
If governments – federal and provincial – collected the same 38.5% of GDP in taxes and non-tax revenues in 2022 as they did in 2015 (rather than the 41.2% they plan to collect this year), individual Canadians would pay $2000 less in taxes.
“To help beleaguered Canadians,” Mintz concludes, governments “should put tax relief on the front burner.”
Typically, it’s progressives who reject this sort of argument most vehemently.
Governments, however imperfect, fund the public goods that liberal-democratic societies need to flourish.
Moreover, a degree of wealth redistribution is necessary in societies that recognize that there are real differences between equality, equity, and justice.
I can sympathize with that view, but my primary concern with Mintz’s argument comes from a different place.
Ottawa alone ran deficits of over $300 billion in 2020-21 and nearly $150 billion this past year.
My family benefited directly from some of that money (we took, and continue to take, ‘free’ rapid tests; we got vaccinated ‘for free’; we ordered take-out from restaurants that used government subsidies to pay their workers; etc.), and I suspect that most readers’ families did, too.
I think that much of that spending was necessary given the challenges brought on by the pandemic.
But now that the economy is growing again, and unemployment is down, it seems to me it would be prudent to try to start paying back some of what we collectively borrowed.
That’s why I find Mintz’s calls for balanced budgets to enable new tax cuts so frustrating.
Balanced budgets don’t reduce the national debt, and tax cuts reduce revenue, which limits a government’s ability to pay back what it has borrowed.
(Sure, some tax cuts spur economic growth – and might therefore increase government revenue in the medium-to-long term - but the immediate result is less money for the state. Given the size of the national debt, we should be saving our tax cuts for when the economy is struggling.)
In sum, Mintz is right to identify a lack of fiscal discipline among today’s governments. But his solution – to replace them with others that promise to balance the budget and cut taxes – won’t solve the problem, and might even make it worse.
Surely, there is space in our political system for a party, ‘conservative’ or ‘progressive,’ that has the courage to ask us collectively – and not just the “ultra rich” – to pay more when times are relatively good so that future generations have a genuine opportunity to enjoy the same privileges of liberal democracy that we have.
A party that called on me to sacrifice so that my kids could have a better life would have my vote in a minute.
***
When it comes to economic issues, I always find Trevor Tombe’s work helpful.
***
To be notified of my next post, follow me on Twitter @achapnick.
You can subscribe to my newsletter at https://buttondown.email/achapnick.
It begins with a call to arms: “With revenues pouring into federal and provincial coffers, it’s time for Canadians to tell their governments they’ve had enough with high taxes.”
If governments – federal and provincial – collected the same 38.5% of GDP in taxes and non-tax revenues in 2022 as they did in 2015 (rather than the 41.2% they plan to collect this year), individual Canadians would pay $2000 less in taxes.
“To help beleaguered Canadians,” Mintz concludes, governments “should put tax relief on the front burner.”
Typically, it’s progressives who reject this sort of argument most vehemently.
Governments, however imperfect, fund the public goods that liberal-democratic societies need to flourish.
Moreover, a degree of wealth redistribution is necessary in societies that recognize that there are real differences between equality, equity, and justice.
I can sympathize with that view, but my primary concern with Mintz’s argument comes from a different place.
Ottawa alone ran deficits of over $300 billion in 2020-21 and nearly $150 billion this past year.
My family benefited directly from some of that money (we took, and continue to take, ‘free’ rapid tests; we got vaccinated ‘for free’; we ordered take-out from restaurants that used government subsidies to pay their workers; etc.), and I suspect that most readers’ families did, too.
I think that much of that spending was necessary given the challenges brought on by the pandemic.
But now that the economy is growing again, and unemployment is down, it seems to me it would be prudent to try to start paying back some of what we collectively borrowed.
That’s why I find Mintz’s calls for balanced budgets to enable new tax cuts so frustrating.
Balanced budgets don’t reduce the national debt, and tax cuts reduce revenue, which limits a government’s ability to pay back what it has borrowed.
(Sure, some tax cuts spur economic growth – and might therefore increase government revenue in the medium-to-long term - but the immediate result is less money for the state. Given the size of the national debt, we should be saving our tax cuts for when the economy is struggling.)
In sum, Mintz is right to identify a lack of fiscal discipline among today’s governments. But his solution – to replace them with others that promise to balance the budget and cut taxes – won’t solve the problem, and might even make it worse.
Surely, there is space in our political system for a party, ‘conservative’ or ‘progressive,’ that has the courage to ask us collectively – and not just the “ultra rich” – to pay more when times are relatively good so that future generations have a genuine opportunity to enjoy the same privileges of liberal democracy that we have.
A party that called on me to sacrifice so that my kids could have a better life would have my vote in a minute.
***
When it comes to economic issues, I always find Trevor Tombe’s work helpful.
***
To be notified of my next post, follow me on Twitter @achapnick.
You can subscribe to my newsletter at https://buttondown.email/achapnick.
RSS Feed