It seems that every 20 years or so social democrats have to relearn the same lessons. Laid out by three american presidents over the last 40-odd years, the lesson is that lower taxes increase government revenue. Voodoo economics? No, it's proven to have worked three different times and each time the results have been the same.
The latest evidence that low taxes are good for the economy is the announcement by the U.S. Treasury Department that U.S. government revenues will be $274 billion higher than anticipated this year and are expected to be $243 billion higher the next year. Despite all the nay saying and hand wringing on the part of american Democrats, the Bush tax cuts have stimulated the economy to the extent that new jobs have been created through increased investment resulting in a corresponding increase in government revenues.
The Dems, of course, see the glass as half full, protesting that only "the rich" are benefiting from the tax cuts. Be that as it may, the increase in government revenues is in large part due to "the rich" paying a lot more in taxes because of their increased investments. But it isn't only "the rich" who benefit. Those with more moderate means are also benefiting in terms of new jobs being more readily available. and, while the poor may not be reaping the rewards of investment income, they also pay the least in taxes.
This phenomenon occurred both in 1962, when John F. Kennedy (Senator Edward Kennedy's smarter brother) instituted the biggest tax cut in american history and again in 1986 when Ronald Reagan cut income and investment taxes to the bone. It's now reoccurring under Bush 43.
Unlike the bold initiatives undertaken by the american president, Canada's Prime Minister has taken a relatively limp-wristed approach to tax relief. This despite the government currently running a $9 billion surplus in tax revenue. The 1% cut in the GST will do little to stimulate economic activity because the savings to each taxpayer are modest in the extreme, while government revenue will decline by about $2.5 billion.
a much more beneficial form of tax relief would have been an across the board income tax cut, particularly since the Fraser institute has established that the average Canadian pays fully 50% of total income in the various taxes imposed by all levels of government. But I suppose that would be going too far for Canadian politicians, no matter what their party affiliations, as Canadians have become so addicted to sucking at the government teat that any politician who suggested massive tax cuts would quickly find himself out of office, if not in the sights of an assassin's weapon.
Canadian values preclude financial success and attach some sort of warped nobility to failure. Just ask Gwyn Morgan, the distinguished Canadian businessman, whose character was assassinated by parliamentary socialists when the Prime Minister proposed that Morgan chair the Public appointments Commission. The reasons cited by those who indicted Morgan were that he had said some disagreeable things about immigration. I think the real reason was that Morgan is a successful businessperson who would be difficult to fool when it comes to getting plum appointments for politicians' friends and those to whom favors are owed.
We like to think of Canada as being Different from the U.S., the un-america, if you will. But I think we are paying one hell of a price in our feeble efforts at maintaining our uniqueness. as a nation we would be much better off if we could learn from Kennedy, Reagan and Bush and rediscover prosperity and self-reliance in the process.
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