Note to the NDP (and everyone else): the popular tax hikes don’t increase tax revenues
By Stephen Gordon - Wednesday, April 24, 2013 - 0 Comments
“Don’t tax you, don’t tax me, tax that fellow behind the tree” – Russell B. Long
Anti-tax populism is a powerful force in politics: the Conservatives owe much of their electoral success to their staunch anti-tax rhetoric. And the lesson of three election victories in a row — and of three consecutive elections in which the Conservatives increased their seat totals — do not appear to have been lost on the opposition parties. While they may sometimes denounce the Conservatives’ signature tax cut — two percentage points off the GST, worth about $12-15 billion a year in revenues — neither of the major opposition parties dares suggest that they would reverse this measure if elected.
Anti-tax sentiment has sunk in deep enough that political parties who would like to get elected on a platform of increasing tax revenues seem to feel they have little choice but to promise to only increase taxes that no one has to pay. Magical thinking might be smart politics, but it’s not very good economics. Here are the two most popular themes:
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The Conservatives don’t mind big government if it’s cheap
By Stephen Gordon - Thursday, April 4, 2013 at 11:37 AM - 0 Comments
Adrian Wyld/CP
If asked, the Conservatives will tell you that they favour a smaller government that intervenes sparingly in the functioning of the market, and it’s been pretty well-established that a medium- and long-term goal of the Conservative government has been to reduce the share of Canadian GDP that is taxed and spent by the federal government. But lower taxes and lower levels of spending are not the same thing as a smaller government.
Here are the highlights (sic) of the “Strengthening the Competitiveness of the Manufacturing Sector” section of Chapter 3.2 of the budget plan: Continue…
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Starving the beast: What Canadian Conservatives can teach Republicans
By Stephen Gordon - Wednesday, November 7, 2012 at 4:20 PM - 0 Comments
The “starve the beast” strategy works like this:
- Cut taxes.
- Wait until the resulting budgetary deficit becomes a problem important enough to solve.
- Cut spending in order to deal with the budget crisis.
- Go to 1.
The goal of this exercise is to steadily reduce the size of government. The idea has its origins in the US conservative movement, but US conservatives haven’t had much success in implementing it. Steps 1 and 2 work as advertised, but politicians can never get the hang of the third part.
