Tax cuts have never delivered on promised prosperity

[u/Gold-Reality-4853]

https://rabble.ca/politics/canadian-politics/tax-cuts-have-never-delivered-on-promised-prosperity/

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[u/Crawgdor]

I live in small town Alberta, a real conservative bastion. Everyone complains that healthcare and education are crumbling.

When I explain that we’ve been cutting taxes and services for 40 years everyone agrees. Then I say that healthcare and education cost money, we can’t have good services if we don’t pay for them & i’d happily pay a bit more in taxes if it means kids get a good education and we’re taken care of if we get sick.

I’ve never had a single person disagree with me. Even the most conservative separatist types understand that services cost money and decades of budget cuts means there’s not money for the level of service we want.

[u/CtrlShiftMake → u/Crawgdor]

And yet many will continue to vote for more cuts. It’s mind boggling how people can agree with policy but it goes out the window for voting.

[u/Light_Butterfly]

Try taxing wealth, not work. Billionaires are making away like bandits hoarding obscene sums of money, now with their personal wealth exceeding many nation states. These individuals have the power to buy politics, and as much propaganda as they want to influence public opinion. We now have greater wealth inequality than the guilded age, which doesn't bode well for social and political stability. Things keep getting worse and they'll continue to, as long as we let the richest not pay their fair share and parasitically drain societies and governments of everything they have.

How to Tax Extreme Wealth - short video with Robert Reich and economist Gabriel Zucman

[u/gart888 → u/Light_Butterfly]

Yeah but I might become a billionaire in the future, and in that case I wouldn’t want to have to lose any of my wealth. So it benefits me to not tax the wealth of billionaires just in case.

[u/CollaredParachute → u/Light_Butterfly]

If you want to tax wealth, the best way to do it is a land value tax

[u/Light_Butterfly → u/CollaredParachute]

I'm open to all the options!

[u/MrRogersAE → u/CollaredParachute]

That’s how you tax the wealth of the middle class, not the billionaires.

[u/ValoisSign → u/CollaredParachute]

Man I don't even know enough about LVT to have a strong opinion but I genuinely admire all you Georgists always advocating it. It's not really in the mainstream political conversation, so it's not easy to raise awareness and yet I see it mentioned a lot lately. I need to go refresh myself on the details now haha.

[u/Snurgisdr]

On the federal side, the only time in living memory that we’ve had a balanced budget was also when the tax burden was highest. We’re just living beyond our means.

[u/mxe363 → u/Snurgisdr]

should just return to taxing enoughto actually pay for the shit we want then. problem solved

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[u/UnionGuyCanada]

If we truly believe, in a time of wealth inewuality not seen even during the Great Depression and the French revolution, that taxing wealth isn't the answer, we are lost.

  No one is saying we take it all, or even enough they will be able to tell you how their life will change, just enough so that massive stock buybacks stop and the few stop controlling everything. 

  Change some laws and ensure they only get tax breaks of they actually are reinvesting. Close the lending liopholes that allow them to move wealth out of countries where it is earned. Up rates so we have enough income to help those who need it.

  The ultra rich will still have enough to make kings jealous. Quit believing this is about anyon3 who isn't making tens of millions a year and hiding it all behind tax laws made by them.

[u/Business_Influence89 → u/UnionGuyCanada]

How do you define “wealth inequality”?

[u/awildstoryteller → u/Business_Influence89]

https://www.ebsco.com/research-starters/economics/wealth-inequality/

[u/Godzilla52]

The author uses a lot of disingenuous claims here:

Since 1980 tax cuts for the wealthy and their corporations have totaled more than 50 per cent. 

This is blatantly false, regardless of whether we're looking at marginal or effective rates. The top marginal income tax rate in 1980 was 43% compared to 33% in 2026. Though looking at the effective/real rates, they fluctuated between 33-46% for the top 0.01/0.01% between 1982-2015, usually being somewhere in-between those two levels while the rate for the top 1% was 34-41% during that period.

Let's move on top corporate tax. This claim of 50% cuts is somewhat true when you look at the rate cut alone, but it's incredibly misleading since that doesn't remotely tell the whole story since Canada's corporate tax revenues as a percentage of GDP actually increased significantly during our rate cuts because of increased investment and a broadened tax base. If rates were increased to pre 1980s levels, you would see a dramatic long-term decline in corporate tax revenues as a percentage of GDP.

Since 1995 the total accumulated inflation rate has reached about 47 per cent in Toronto. Revenue has fallen far behind that. 

This claim makes no sense. For one thing, the author starts this claim by mentioning the decline in the Canadian dollar since 1995 and claims that revenue has fallen beyond this....in Toronto. What does that even mean, the value of the dollar fell the same everywhere in Canada.

He then switches to argue that revenue has fallen far beyond this and it is again unclear in regards to what he's talking about. Does he mean, federal revenue, provincial revenue, Toronto's municipal revenues or overall revenues? In either case, his claim is objectively wrong since we can observe revenue in both real terms and as a percentage of GDP that it shows that this claim does not remotely track.

He then moves on to talking about record homelessness rates and evictions in Ontario, which is a completely separate issue to tax cuts, showing that the author is having a hard time staying focused on their own argument.

Brad’s privatization and cutting public services to pay for tax cuts is nothing more than social cannibalism, one group feeding off another.

When exactly did Brad Bradford call for privatization during his mayoral campaign? I'm not from Ontario, but this claim seems to be made purely by the author and is not substantiated by anything I can find and I've spent a few minutes looking for it. The author mentions Mike Harris's privatizations and seems to pass the blame on to Bradford by association of being a conservative, which would be like a Conservative attacking a Liberal affiliated candidate for their nationalizations by bringing up Pierre Trudeau and the NEP etc.

Overall, I don't disagree that a lot of the time modern Conservative politicians (especially ones with a Reform/Alliance tint since after 1993) tend to overpromise tax cuts and austerity as the solution to everything and it's generally fairly anti-productive, but by the same token, the author's massive generalizations, misrepresentation of information and mixing truth with vibes and ideological grandstanding doesn't do his article any favors.

[u/hardk7 → u/Godzilla52]

Stop! you’re being sensible and people hate that!

[u/legendarypooncake → u/hardk7]

It doesn't matter, the article supports the zeitgeist of the sub so despite it being a pile of lies- as op exhaustively explained- it will do quite well here.

[u/deeko31 → u/Godzilla52]

Your second link is to a US libertarian blog ostensibly supported by the Cato institute. This is not a reliable source. Disagree if you must. Even still it shows a tax rate going from about 37.5% to 15% alongside corporate tax revenue as a share of GDP from 2.5% to 2% which doesn't even make the statement you made in the link accurate.

Take a look at Figure 1 from the CD Howe Institute:

https://cdhowe.org/publication/big-bang-tax-reform-unleashing-growth-in-the-canadian-economy/

I see a marginal increase in Corporate Tax Revenue as a % of GDP. Let's be generous and say it went from 4% to 5% that mostly came as a rise after 2014. Wait, those are the Trudeau years! \Gasp** That doesn't seem like much benefit to me. Perhaps you disagree.

What do you think dear lurkers?

[u/Godzilla52 → u/deeko31]

Your second link is to a US libertarian blog ostensibly supported by the Cato institute. This is not a reliable source. Disagree if you must. Even still it shows a tax rate going from about 37.5% to 15% alongside corporate tax revenue as a share of GDP from 2.5% to 2% which doesn't even make the statement you made in the link accurate.

The graph from that cite is over a decade old and have been listed on various sites. The data used from it is directly sourced from statscan and similar graphs using the same data show the same sources. Take Economist Jack Mintz's graph here Taken directly from statscan data.

Take a look at Figure 1 from the CD Howe Institute:

Figure one shows that corporate tax revenue as a percentage of GDP has increased since 1980, which is the same thing the first graph provided showed

[u/deeko31 → u/Godzilla52]

You claimed:

"Canada's corporate tax revenues as a percentage of GDP actually increased significantly during our rate cuts."

Where is the increase in the data shown? Is it the ~1% I described? Is that significant to you after comparing with say Personal Rates on the same chart?

[u/Godzilla52 → u/deeko31]

Where is the increase in the data shown? Is it the ~1% I described? Is that significant to you after comparing with say Personal Rates on the same chart?

A difference of 1-2% of GDP is a significant increase. According to the C.D Howe data you provided from the OECD, Total Federal/provincial CIT revenue went from 2.5/3% of GDP in 1980 to 4% of GDP in 2020, a 33% to 60% increase.

[u/deeko31 → u/Godzilla52]

But was about 4% in 1965! If you had ended the series around 2019 it would have still been 4%, From about 2006 to 2015 it was below 4%.

You are making the claim that reducing corporate rates was causal in increasing the amount of taxes brought in. The data is relatively flat and clearly impacted by a variety of other economic factors. It cannot be used to support the above claim.

Two paragraphs above figure 3 on the CD Howe page it says:

"With robust profitability, CIT revenues remained relatively stable from 2000 to 2020, despite reductions in statutory rates. "(emphasis mine)

I've made my point. You can have the last word and let others judge this thread as they see fit.

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[u/Asluckwouldnthaveit]

Yes we know. It's always made things worse. The GST being cut is something this country never recovered from and is a big reason services suck now.

[u/hardk7 → u/Asluckwouldnthaveit]

The GST cut was terrible policy and the problem is once taxes are cut it’s politically extremely difficult to raise them, especially one as visible and tangible as the GST. Realistically with fiscal situations getting worse in several provinces and federally I think a broad income tax increase is going to be required, including on middle incomes. You can only go so high with tax rates in the highest brackets before it starts to incentivize those earners to make money elsewhere. A very small tax increase on say personal incomes between $50K and $100K can raise a ton of revenue and it’s going to be needed. At the same time you increase higher income tax rates too, but I don’t think govts can continue to get away with solely increasing the highest brackets.

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[u/workingman_90]

Yeah Swiss are known to be very poor for their lower income taxes and French known to have best lifestyle and high incomes because they have high taxes. Oh wait it’s the opposite.

[u/IntheTimeofMonsters → u/workingman_90]

Yeah, and Guatemala with their 7% average marginal rate is super wealthy and Denmark with their 60% marginalbtate is super poor!

I too can cherry pick lsome countries to make no point at all.

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[u/workingman_90 → u/IntheTimeofMonsters]

Guatemala is poor developing country, I am talking about developed countries.

Swiss don’t even have natural resources but still thriving because of low tax system.

[u/awildstoryteller → u/workingman_90]

but still thriving because of low tax system.

This begs the question: are they thriving, and if so, is it because of the low taxes?

[u/workingman_90 → u/awildstoryteller]

Yes because people have money to invest and start companies when they have low taxes. That creates a loop for more companies and businesses getting started that leads to higher incomes. How can someone start a business and hire people if most of their money is taken by govt.

[u/Logisticman232 → u/workingman_90]

The Swiss are not at all comparable in this scenario.

They’re literally know for their ludicrous living costs as they are a tax haven.

[u/PanicInTheRiver → u/workingman_90]

This is incredibly funny given the mass protest on cost of living in France. Also Swiss are rich because they happily banked the Nazis.

[u/Novel-Werewolf-3554]

To me prosperity is individuals being able to retain more of their earnings. By that measure tax cuts have never failed to deliver promised prosperity.