Saturday, January 24, 2015

Saturday Morning Links

Assorted content for your weekend reading.

- Lana Payne writes that by finally recognizing the unfairness and ineffectiveness of Alberta's regressive tax system, Jim Prentice may be starting a needed national debate:
Alberta Premier Jim Prentice talks up taxes for individuals including a sales tax (Alberta is the only province not to have one) and adjusting income taxes. But what about those oil companies? This might also be an ideal time to consider how the province can receive a bigger piece of the oil revenue when prices do bounce back. The prep work should start now.

When oil prices boom, provincial economies dependent on those boom times have to be able to take advantage of skyrocketing prices. This is one way to build a rainy-day fund that can help through the tough times.

Newfoundland and Labrador Premier Paul Davis has hinted that everything needs to be considered - both revenues and expenditures - in confronting this province's ballooning deficit. The key here is not to panic. Panic results in poor decisions.

Canadians should demand a tax conversation at the federal level, including a hard look at how tax cuts to the wealthiest in Canada are now being paid for through deficit-financing.
Taxes are all about values. They are how we build a better society. Let's have a conversation about that.
- David Sirota comments on the disastrous effect of the U.S.' regressive tax system. And Szu Ping Chan reports on Mark Carney's observation that the tech companies who are rendering substantial classes of workers obsolete should be paying a larger share.

- Andrew Jackson compares the respective merits of meaningful industrial policy as opposed to indiscriminate corporate tax slashing:
The Harper government has proudly put corporate tax cuts at the very heart of its so-called growth and jobs agenda. Since taking power in 2006, they have cut the general federal corporate tax rate from 22.1% to 15%. According to the Parliamentary Budget Office, each one point reduction costs $1.85 Billion in lost annual revenues, so the total annual cost is some $12 billion.

Corporate tax cuts certainly boost after tax corporate profits, but have had a negligible impact to date on actual business investment in machinery and equipment and in intellectual property which are the key building blocks of our future prosperity. The latest national accounts data show that real business spending in these vital areas has been flat for the past three years, and remains below the pre-recession level, both in dollar terms and as a share of the economy.
(G)overnment funds are (shock) being invested as equity in specific areas of the economy such as high tech, IT and health care where start-up capital is much more scarce than in the United States.

Progressive economists see these interventions as broadly justified and cost effective given market failures which limit the willingness of the private sector to undertake or finance risky but potentially highly productive investments. The federal government's own advisory panel on the funding of innovation led by Tom Jenkins recommended more targeted and strategic interventions.

This begs the question of how much money should be funnelled to the private sector through costly across the board tax cuts as opposed to more targeted programs. The fact that even the Harper government has retained and even expanded some strategic interventions strongly suggests that they are needed.
- Meanwhile, David Parkinson, Richard Blackwell and Iain Marlow write that no matter how low interest rates are pushed, we can't expect the global economy to begin any sustained recovery until governments get out of austerity mode. And Nadia Alexan discusses some of the more productive options we could be pursuing to turn concentrated wealth into social and economic development.

- Finally, Bruce Anderson observes that the Cons' choice to fund self-promotion rather than anything which could actually benefit Canada's people serves as a compelling indicator of a government that's completely lost its way.

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