Tuesday, October 21, 2014

This is why I think nobody cares about the debt

Over in Canada, Frances Woolley takes on the question of should the elimination of the deficit lead to immediate tax cuts.  Seriously.  Read and marvel at these quick facts:

From 2008–09 through 2013–14, the Government has delivered tax reductions totalling more than $60 billion to job-creating businesses.

According to KPMG, total business tax costs in Canada are now the lowest in the Group of Seven (G-7) and 46% lower than those in the United States.

Personal income taxes are now 10% lower with the tax relief provided by the Government since 2006. For an average family of four, taxes have been cut by close to $3,400. 

Once the federal budget is balanced, the Government’s first priority will be to provide further tax relief to hard-working Canadian families
So, after a ton of tax cuts (look at points 2 and 3), the clear priority is more tax cuts.  Under this rubric the debt will never, ever be paid down.  After all, I am not a financial genius, but paying down debt requires at least some period of running a surplus.

Now there may be all sorts of reasons that running a long term debt is a sane and responsible thing to do.  After all, governments are not households and many of my household intuitions are incorrect (governments can print money, for example, so being unable to pay the debt at all is unlikely unless it is denominated in a foreign currency).  But if this is the strategy of the debt scolds -- cut services so we can run a surplus and then give out tax cuts -- then they don't care about the debt at all.  They just want to redistribute money in a different way across the economy. 

EDIT: Forgot to mention this is Joseph and not the regularly scheduled Mark content

1 comment:

  1. Puh-lease. Did you ever really believe otherwise?