Beyond The Commons

Aaron Wherry covers all the goings-on in and around Parliament Hill. Follow Aaron on Twitter: @aaronwherry

Categories: Beyond The Commons, Capital Read

The $6-billion conundrum

by Aaron Wherry on Monday, April 4, 2011 9:30am - 58 Comments

The Liberals say the Conservative plan to reduce the corporate tax rate amounts to a $6-billion tax cut.

But economist Stephen Gordon says they’re wrong.

But the Conservatives say the Liberal plan to raise the corporate tax rate amounts to a $6-billion tax hike.

But in a new attack ad, the Conservatives use a quote from this debunking the $6-billion figure to suggest the Liberals are mistaken.

But the Liberals say the Conservatives’ own words substantiate their projections.

Tags: attack ad, corporate tax, corporate taxes, Michael Ignatieff, Stephen Gordon, Stephen Harper, tax, taxation, taxes

More by Aaron Wherry

noob_goldberg

I can't believe we're quibbling over a measly $6 billion when the USA is running a $1.5 trillion deficit. This $6 billlion is for families. *Families*. Doesn't family mean anything anymore?

Besides, wasn't anyone listening when Dick Cheney told us that deficits don't matter?

http://secondthots.blogspot.com Dennis_F

For the record, all the parties say that they're platforms are for "families." The Liberals certainly don't hold a monopoly in that regard.

I'm also not sure if your argument will hold sway with Canadians: Who cares about $6 billion? Dick Cheney certainly didn't.

noob_goldberg

I doubt my argument *would* hold sway with Canadians, Dennis_F.

Blue

I can never tell when you guys are kidding anymore.

http://secondthots.blogspot.com Dennis_F

I think the costing of the Liberal platform will be a major issue in this campaign, in part because most independent experts seem to be saying that it just doesn't add up.

A lot of fun has been made of post-dated Tory election promises. But, put everything together, and the Conservative narrative starts to be in play, doesn't it? That it's steady as she goes, changes only when we can afford them, versus a risky new tax and spend Liberal program, which will only get costlier if propped up by the NDP and the Bloc, of course.

Andrew (not PorC)

The Libs seem to claim that their number comes form Conservative numbers. So they're both wrong? It's probably true, but I don't see how it benefits one or the other.

I'm curious why Stephen Harper is releasing his platform for the 2015 election. Anyone else wondering what he plans to do for the next four years, given that the only thing that remains to be settles is the size of his majority victory?

http://secondthots.blogspot.com Dennis_F

The Conservatives will not suffer from major doubts about the Liberal platform. This is what the Liberals have to explain, isn't it, especially since they're the one who forced this fourth $300 million election in seven years? They have to justify why, don't they?

I'm curious why Stephen Harper is releasing his platform for the 2015 election.

It's a cute line, but it's false, isn't it? He's introduced measures that are to be implemented if they have balanced the books during their mandate. So, if the opposition can't even tell the truth about these kinds of things, how can they be believed regarding the reasons for this election, or even about coalition forming?

Gayle

Except by his own law, you know, the fixed election dates (I live in hope that he might eventually obey that law), we will have an election in 2015, which just happens to be the same year he says he will implement all these policies.

So Andrew is right.

http://secondthots.blogspot.com Dennis_F

Look, you people can't justify your knee-jerk anger towards Harper and political opponents. The idea that he never abides by the law, or that these measures aren't meant for a current mandate, is just nonsense. We're having our fourth $300 million election in seven years over this nonsense? Wow.
Mike T.

yes, there could be MORE than one election by the distant time Harper's plans could take effect. But according to current law – one Harper wrote – there will be AT LEAST one.
http://secondthots.blogspot.com Dennis_F

The plan is to balance the budget in a majority mandate, right? That's when these measures will be implemented. If you can't even stick to the facts on this, just what is this election about anyway?
http://dougsamu.wordpress.com dougrogers

"just what is this election about anyway?"

Contempt of Parliament.
tobyornotoby

Here's an idea. Maybe the government that controls the budget and makes the economic forecasts and projections can share that information routinely.

Perhaps that government could provide the information to some sort of independent budget officer for analysis so we could have an impartial understanding of what politicians are discussing, rather than playing a giant game of He Said She Said.

Andrew (not PorC)

They have to explain how they got their number from the Conservatives? I'm sure they do.

Has Stephen Harper actually said much of anything he'll do in the next few years? Seeing as that's the period he's seeking a mandate for, I think I have a right to know what he intends to do.

http://secondthots.blogspot.com Dennis_F

Amazing how people who desperately say we need a change don't even pay attention to what's actually going on, and what it is that needs changing.

Harper's basic argument in this election: Why rock the boat? He'll implement the budget that the opposition just killed and it'll be stead-as-she-goes with a Harper majority versus an unstable Liberal minority configuration/coalition.
Andrew (not PorC)

Will he commit to not doing anything? Or do we get to live in suspend of what crazy BS he'll invent the day after the election?
http://secondthots.blogspot.com Dennis_F

Yeah, his record, and the budget that the opposition just killed to justify a fourth $300 million election in seven years. And corporate tax cuts the Liberals once supported. And F-35 jets the Liberals would probably buy anyway. Aren't you paying attention, especially since you seem to think that this election was necessary in the first place?
burlivespipe

"Yeah, his record, and the budget that the opposition just killed to justify a fourth $300 million election in seven years."
Immediately after the third costly election [the one Harper broke his own fixed election date law to foist on us] he flip-flopped on his adamant stand that there'd be no deficit under his watch — likely because he was caught having spent us there before the economic downturn. He then trotted out an austerity budget that bucked the trend of government stimulus from every other G20 country… and was promptly slapped on the wrist by the opposition. Back in his lair with proroguement his lone friend, Harper devised another plan — the bigger the deficit the better.
You're trying to pitch that as steady-as-she-goes?

noob_goldberg

I think the costing of the Liberal platform will probably be an issue as well, Dennis_F.

However, people are right to make fun of the post-dated Tory promise, not because it's economically sound, but because it has no political benefit whatsoever. Who are they targeting with that promise? Today's young families are going to be angered by that promise, because it won't come into effect until their kids are in school and their spouse is already back at work. Young people who do not yet have children won't care because they have no idea who this might benefit. Plus, it does nothing for those families without a huge income disparity, so it alienates that voting group.

All around, a terrible policy platform for an election, even if it's a reasonable policy for fundamental reasons. Certainly, I'd love it if it was implemented tomorrow, and I'd seriously consider voting for the CPC if it was a part of their election platform. Alas, an implementation date four or five years in the future is simply too far out to influence my vote decision.

http://secondthots.blogspot.com Dennis_F

Well, you'll have to excuse me if I don't have your angry take on the Conservatives or any reaction to their platform. In fact, the post-dated component of these promises don't get included in the headlines I'm seeing. So, the politics might be the opposite of what you claim – they get the credit for the promises but don't have to take responsibility for paying for them until afterwards.

I agree that the tactic is a bit gimmicky, but these tax credits in general tend to be gimmicky items that voters generally like.

In addition, the basic Conservative narrative is this: steady-as-she-goes with us versus uncosted promises from the coalition. Post-dating promises might add to the fiscal safety component of the Tory justification to continue governing.

noob_goldberg

You're absolutely right, Dennis_F, that it's not in any headlines. But I've personally seen the faces of a few people rise and fall as they read through an article on that 'promise'. First, excited because it's something that could tangibly benefit them, and then irritated and annoyed when reading about the implementation date and seeing that it won't. And I encourage you to find one single article that discusses that policy proposal without including a reference to the implementation date. It's in all of them that I've seen.

The steady-as-she-goes mantra is resonating, at least from a few discussions I've had with very non-political types outside the Ottawa bubble. It'll probably work for the CPC.
Andrew (not PorC)

I think people might still be pissed if they thought they were going to implement these policies soon. What are they going to do, twiddle their thumbs for four years?

lgarvin

It also ignores the history and practice of the Harper government. You can take this as gospel, as long as the Conservatives are in power, Canada will never have a balanced budget. They don't want one and they don't intend to have one. Not even by accident. If they have to buy 200 jets to maintain a deficit, that's what they'll do.

FVerhoeven

Well, why not look at the Liberal track record? You really think the provinces would want to be dumped on by a Martin-like genius were the Liberals put us deeper in the red?

I think for the Liberals to off load onto the provinces cannot happen a second time. Canadians won't stand for it.

You conveniently neglect to mention the Liberal track record. I wonder why?

lgarvin

You conveniently neglect to mention the Liberal track record. I wonder why?

Because I think you are already losing so badly that it feels like I'm kicking you while you're down. The Liberals eliminated the deficit and paid off Billions in debt under Chretien/Martin. Harper Conservatives hate surpluses – "overtaxation" sound familiar? So Harper promptly lopped 28.5% off of GST resulting in structural deficit which he intends to maintain as long as he remains in gov't. A deficit is a handy tool for beating back demands on government.

jonatwitan

I guess they are trying to demonstrate that they take this deficit seriously, and the elimination of the deficit seriously. I know people think they are clever when they mock it by promising kittens for everyone in 2020 and blah blah blah, but I think think a lot of people simply see it as a government that is serious about balancing the books.

Mike T.

Kittens was last week. They had to upgrade to ponys.

auntie-em-m

As to adding up , a Liberal government would have money saved by stopping mega prisons and creating a tendering process for selecting a new jet.

Funny,Dennis F., I never saw accurate expensing of those changes to criminal sentencing that necessitate more prison spaces and we all know how the Lockheed jet prices keep soaring..

http://secondthots.blogspot.com Dennis_F

You can repeat these Liberal talking points all you want. It doesn't make them true. The Liberals would still spend countless billions on Jets, probably the same ones, and they voted for the Tory crime agenda. In fact, they voted for the very corporate tax cuts that they now oppose as the biggest plank in their fiscal agenda.

In a campaign filled with doubts, voters will generally go with the devil they know. Judging by the polls, that dynamic might well be playing itself out in this campaign.

Andrew (not PorC)

It is true that the new hang-'em-high legislation is uncosted.

http://halooverride.blogspot.com/ Halo_Override

How sad for us all that the testimony and opinions of independent experts only apply to Liberal claims, as opposed to Conservative actions.

Sally

I think the gist of the article is that the Liberals are using the Conservative's own number which the Conservatives now say is mistaken. Talk about have your cake and eat it too.
If 6 billion isn't the right number perhaps the Conservatives can let us know what the number really is and why it is now different.
It highlights the whole problem. You can't trust the Conservative numbers.

lgarvin

It highlights the whole problem. You can't trust the Conservative numbers.

Unless you're listening to the Liberals. Their position is that you can't trust the Conservatives on anything but their numbers. God, what a depressing Monday morning this is turning out to be!

Sally

Actually I should have said you can't trust the Conservatives on anything including their numbers.

Mike T.

And that's when they give you the numbers!
P_Maitland

But, if we assume that the Conservative numbers are too high (since economists are saying the Liberal numbers are too high), then it means that the cost of the tax cut is less, so it's making the bottom line better than the Conservatives are claiming.

In our current financial situation, I would rather a policy that collects more than was promised instead of promising many new social programs that cannot be afforded.

If the Liberals would at least rank their new expenditures vs. overall government finances so that we could figure out which of them is plausible to happen, and then at figure out what exactly are they promising. Is it: raise whatever taxes are required to fund these things, allow the deficit to grow, choose from the list as revenue allows, or raise revenue and not deliver on the promises (or deliver something significantly different from what was proposed).

Until then, I'd probably side with the status quo of corp tax cuts.

Dot

Look, SG is a right leaning economist (yes there are different types of economists – let's admit that) and he thinks that lower CIT rates are the panacea for everything – the only apparent arrow in his quiver.

So, if a 3% cut in CIT (from 18% to 15%) costs the treasury only $1 billion, why not go the whole way – for another $5 billion you could have no CIT whatsoever. End of debate. Is ity that simple?

SG has been using the same talking points for quite sometime now, and it's getting tiring. I've addressed many of them here in a Wells blog- and since he repeats the same arguments with the same cherrypicked facts – I'll just link: http://www2.macleans.ca/2011/04/01/fighting-back-…

Now, if Gordon had taken than his double major in undergrad in PoliSci and Economics, perhaps thrown in a little business training/experience, he might have a broader view of how the world really functions/how business investments are made. Look at some of the studies identifying/trying to address lower productivity – many focus on improved management training /becoming less risk averse – the opposite of making life easier for execs by lowering CIT ad infinitum.

Clearly, CIT is one but a number of factors – if not ALL of the businesses in the world would locate to the jurisdiction with the lowest tax rates.

No SG, it's not so black and white. Especially when you engage in politics.

noob_goldberg

The fact we have universal healthcare, for example, is definitely worth a few percentage points of CIT, as that's a huge cost for companies operating in the United States. And yet, it's a benefit I rarely hear raised when we talk about marginal corporate tax rates.

Mike T.

commie.

gottabesaid

So… each party says the others' numbers are bullsh*t… then proceed to use those supposed bullsh*t numbers to buttress their OWN positions?

Beware, Macleans, this little policy debate might bust your 'Bull Meter' thingy but good.

Mike T.

It's already broken – it can't go lower than one!

gottabesaid

In this case, they might have to score it an 'eight', and that can't be good for the machine.

gottabesaid

Unless, of course, two bullsh*ts cancel each other out, resulting in truth. I believe it was Einstein's Bullsh*t Theory:

BS + BS = Singularity

OK, it will result in truth or a black hole, one or the other.
John.K

The Canadian dollar is volatile for the same reason the Aussie dollar is – they're both commodity currencies, and commodities are volatile. So to resolve that, we need to diversify our economy away from oil, gas and minerals.

We could start by not subsidizing these industries, perhaps?

noob_goldberg

Indeed, but that's a much more complicated policy question.

And we all know that elections are not an appropriate venue for complicated policy discussions.

jonatwitan

I think there is a bigger picture. Remember, we are playing chess. I think Harper knew the Liberals would come out with a big spending platform. Perhaps they even guessed that they would not make eliminating the deficit a priority. So far, with their announcements, it seems to me the Cons are setting up a clear contrast between a party that is interested in spending more and taxing more even though there is a deficit, and a party that makes eliminating the deficit the priority, and will only introduce new spending once that is accomplished. I don't think that message only targets a small group.
bergkamp

'The $6-billion conundrum"

I think it's fun when everyone starts pulling numbers out of the arse and act like they mean something. It just goes to show what a voodoo field of study economics is.
BCer in Mtl

Any Hogan's Heroes reference gets a thumbs up from me!

Diiiiss . . . miiiiissed!
http://secondthots.blogspot.com Dennis_F

Even on that you're wrong. All three opposition parties were opposed to the budget. So the government would have fallen on that. Instead, the opposition trumped up these "contempt" charges to preempt the budget vote so that they could say that's what this election is about. How's that worked out so far?

http://dougsamu.wordpress.com dougrogers

Would have. But didn't. They fell on Contempt. There was no vote on the budget, so there is no election caused by the budget.

'Would have' is a fantasy.

http://secondthots.blogspot.com Dennis_F

You made the claim that if it wasn't for these trumped-up "contempt" charges we wouldn't be having an election. Now that was fantasy, wasn't it?

http://secondthots.blogspot.com Dennis_F

I never said it was your claim. I suggest YOU read more carefully, and use more precise logic next time, too. Obviously we still would have had an election even without the trumped-up charges.
http://dougsamu.wordpress.com dougrogers

A quote from your previous post:

"You made the claim that if it wasn't for these trumped-up "contempt" charges"

You, a pronoun in the context of that sentence meaning me. And then you sa, "I never said it was your claim."

"I" meaning yourself, now says you didn't say what you said in that previous post.

And speaking of "and us[ing] more precise logic next time," I quote:

"Obviously we still would have had an election even without the trumped-up charges"

This is a Logical Fallacy called "Moving the goalposts".
http://secondthots.blogspot.com Dennis_F

Tell me where I said that you said it was trumped-up? I used the term. Not you.

So, you want to try again? lol
http://dougsamu.wordpress.com dougrogers

You are blind deaf and dumb.
http://secondthots.blogspot.com Dennis_F

In other words, when confronted with logic you can't deal with, you lash out with this nonsense. Thanks.
http://dougsamu.wordpress.com dougrogers

I feel like I'm in a cartoon where you are playing both Bugs Bunny and Daffy Duck arguing with each other.
http://secondthots.blogspot.com Dennis_F

Does Daffy Duck falsely accuse Bugs Bunny of using the term "trumped-up?" lol