July 20, 2024
Canada needs to compete — here's how we can win
The long-term consequences of Canada having higher tax rates in almost every bracket than the United States are easily predicted and potentially very damaging to this country.
The long-term consequences of Canada having higher tax rates in almost every bracket than the United States are easily predicted and potentially very damaging to this country.

It is a well-known and almost uncontested economic aphorism that you will get more of whatever you officially incentivize. Welfare dependency, if made more attractive, becomes more popular, and as Nigel Lawson, then British chancellor of the exchequer in the Thatcher government said as he slashed income taxes in 1988: “The economics are simple. If you reward enterprise, you get more of it.” One of the great economic booms of British history was in progress.

The wisdom of this principle leads directly to the vexed discussion of social priorities. No one now disputes that the private sector creates more jobs with investment than the public sector and its so-called multiplier effect — the expansive consequential spending is higher in the private sector than the public sector. The issue becomes whether it is better public policy to reduce taxes, stimulate economic growth and place all bets on President Ronald Reagan’s famous assertion that “The only welfare system we ever had that worked is a job,” or whether, inefficient though it is in generating economic growth, we should vary the application of these economic lessons by increasing inefficient varieties of public welfare spending to alleviate the condition of comparatively disadvantaged people. In practice, almost all sophisticated democracies oscillate between the two poles.

In extreme terms, the pure capitalist model would reduce all taxes to the bare fiscal bones necessary to pay for essential state functions, such as constabulary and justice, national defence, education and basic services, and a safety net that is comparatively threadbare. At the other end of the policy spectrum, the democratic left (that is confiscatory socialists who support free elections and other freedoms and civil rights that authoritarian Marxists do not accept), want high taxes, and a massive government-directed reallocation of resources between people and activities. Doctors, for example, become effectively government employees, and in the peppier and more traditional circles, ”the commanding heights of the economy” are nationalized in state-owned companies. And private education is severely discouraged as inegalitarian. This can also lead to controversial issues such as the recent flare-up in the United States about the desirability or otherwise of compulsorily busing large numbers of schoolchildren out of their neighbourhoods and all around metropolitan areas in pursuit of racial balance in classes and equal standards in all schools.

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See Also:

(1) Federal labour board upholds public servant’s firing over social media posts glorifying terrorism

(2) Lavscam was months ago — will it matter this election?

(3) Are MPs more delicate than their provincial counterparts?

(4) Butts returns – and Trudeau’s putting the band back together for October

(5) Media spreads misinformation about Trudeau government’s “economic rebound”

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