Monday, November 26, 2007

Following in the footsteps of failure.

It's bad enough that we have Canadian Defence Minister Peter MacKay channeling disgraced former US Secretary of Defense Donald Rumsfeld right down to using the same approach of intentionally insulting anyone who questions a dubious war. It's worse, however, that the Conservatives keep aping the words and policy ambitions of one of the worst US presidential administrations in history.

BCer in TO picked this one out the swill and it's not only disgusting, but even a banker disagrees with the premise put forward by Canadian Finance Minister Jim Flaherty. (Emphasis mine)
Finance Minister Jim Flaherty raised the prospect yesterday of cutting income taxes for high-paid workers to keep them in Canada.

The man who has often been described as the populist Finance Minister suggested that it would not be an easy thing for politicians to do. But he said banks and other companies are being lobbied by foreign governments to move chunks of their operations to jurisdictions with better income-tax rates.

"We need to do more on the personal income-tax side because we still have marginal rates that are disproportionately high when I look at our competition," Mr. Flaherty told reporters in Oshawa. "And one of the things that politically is more difficult to do but it still needs to be done and that is in the higher earning categories between $100,000 and $200,000 a year in income."

Well, isn't that special. His concern is a category that pays federal tax at a rate of either 26% or 29%.

"Our competition"? Who's that? Flaherty didn't bother to provide an example which suggests it is a statement he intentionally pulled right out of his ass.

The most obvious "competition" would be the United States. So, making that obvious assumption let's look at the US federal tax rates for that general income category.

Hmmm... the US has six tax brackets as opposed to Canada's four. For the category of someone earning $100,000 annually the federal tax rate is 28% - 2 percent higher than that same wage earner in Canada.

For someone earning $200,000 annually in the US the federal tax rate is 33% - 4 percent higher than the equivalent Canadian. Keep in mind that in all categories, Canadians receive universal health care from taxes. Americans must either negotiate it as an "employer-pay" benefit or pay for it out of their income.

So, which jurisdiction precisely is it that Flaherty considers "competition"? France? I think not. Germany? Hardly. Maybe, Britain? Well, no, since British income tax is higher at the wage level described by Flaherty but much lower at the low and middle income brackets. It would appear that Canadian federal tax rates at the wage levels described by Flaherty are already some of the lowest in the developed world.

That would mean Flaherty is tossing out a deliberate falsehood since he neither identified nor described the "competition". Not that I'm calling Flaherty a liar, although I'm fairly certain he would have serious difficulty defending himself against such a charge, but he is being highly deceptive.

It seems the US Republican advisors hired by the Harperites are feeding the Canadian Conservative Party the same line of crap they feed the Bush administration. And Flaherty is more than happy to regurgitate the Bush administration line that top-end tax cuts will fuel the economy and provide jobs. Given the state of the US economy, that doesn't seem to have worked quite the way Bush, Greenspan and Paulson had hoped.

Even a leading banker doesn't believe that cutting taxes for top wage earners is as important as cutting taxes at the lower end of the wage scale.

Don Drummond, chief economist of Toronto-Dominion Bank, joked that he "would never want to dissuade anyone from providing tax relief to bankers. That is a great idea that should be supported by all Canadians."

But, he said, "if it's marginal personal income tax rates one is concerned about, the gaze should fall at lower income levels. There we truly have impaired the incentives to work, save and invest, because once various benefits are clawed back, individuals and particularly families keep very little from that last dollar earned."

Chief economist of a Canadian chartered bank. Believes Flaherty has it wrong. Disagrees with major think tank.

William Robson, president of the C. D. Howe Institute, believes tax cuts at the top end of the income scale are a good thing. "We are a high-tax jurisdiction for the people in the $150,000 range," he said.
And the reason Drummond can make a statement which flies in the face of Flaherty's assessment and the repetitive whine of the C.D. Howe Institute is because both Flaherty and the C.D. Howe Institute are full of shit.

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