Ottawa's tax hike on the one per cent ended up lowering government revenues

[canada-man]

Perhaps it was my grade ten Introductory Economics high school course that first piqued my interest in taxation policy, eventually leading to a career dedicated to helping Canadians navigate the complexities of our tax system while trying to understand the policy rationale behind our myriad tax rules and regulations.

One of the economics lessons I learned early on is that governments essentially have two choices when it comes to managing a budget: cutting spending or raising taxes. But what if raising taxes actually leads to lower tax revenues? That possibility was not covered in our Grade Ten class but seems to be playing out right here in Canada.

According to a new study out this week from the C.D. Howe Institute, the federal government’s decision to raise taxes on the top one per cent of income-earners likely only yielded about a third of the tax revenues that would have been raised without what’s known as the “behavioural response.” In turn, this also resulted in provincial budgets suffering fiscal losses greater than the federal revenues raised.

https://business.financialpost.com/...Social&utm_source=Facebook#Echobox=1538152408

 

[onthebottom]

https://terb.cc/vbulletin/showthrea...itute-Misleading-Canadians-on-Taxing-The-Rich

 

[oldjones]

Perhaps it was my grade ten Introductory Economics high school course that first piqued my interest in taxation policy, eventually leading to a career dedicated to helping Canadians navigate the complexities of our tax system while trying to understand the policy rationale behind our myriad tax rules and regulations.

One of the economics lessons I learned early on is that governments essentially have two choices when it comes to managing a budget: cutting spending or raising taxes. But what if raising taxes actually leads to lower tax revenues? That possibility was not covered in our Grade Ten class but seems to be playing out right here in Canada.

According to a new study out this week from the C.D. Howe Institute, the federal government’s decision to raise taxes on the top one per cent of income-earners likely only yielded about a third of the tax revenues that would have been raised without what’s known as the “behavioural response.” In turn, this also resulted in provincial budgets suffering fiscal losses greater than the federal revenues raised.

https://business.financialpost.com/...Social&utm_source=Facebook#Echobox=1538152408

I fixed your post, so it no longer reads like your own personal reminiscences about high school. I'll leave it to you to add something that actually justifies the misleading headline. I couldn't find it in the article.

It really doesn't say we're taking in less tax-money than before, it says the Federal government over estimated what this tax hike would bring in. Their estimate was pessimistic, but but not pessimistic enough. Still, a billion's a billion, and Ottawa did collect more than before.

Although Golombeck quotes no details from the study he's relying on (which might have been a better source for you viewpoint) he does say the Provinces lost a little more than the Feds gained because of the Federal tax-hike — an average of $10,000,000, a piddling amount, less than half the amount Ontario promises cutting a few Councillors in a single city will surely save taxpayers between elections. However he fails to say just how. Since all but Quebec piggyback their taxes onto the Feds, that Provincial failing would seem to be the obvious story to pursue.

A more accurate headline might speak to that miscalculation by the Provinces, the inefficient mechanics of the federal-provincial tax system, or at least their effect. And a more useful post might have been about the C.D Howe study itself, where we could hope to find it.

It's definitely not in Golombeck's bit o' fluff about currently faddish behavioural economics, even if you read the whole thing. Perhaps because he saw that on any political level, this is only about some minor tweaking and tinkering the bureaucrats missed, and likely too dull to discuss.

 

[Frankfooter]

As onthebottom noted, this study was already discussed. It used cherry picking by basing their numbers on a year with a tax change that skewed the results.
Its nonsense.

 

[oldjones]

As onthebottom noted, this study was already discussed. It used cherry picking by basing their numbers on a year with a tax change that skewed the results.
Its nonsense.

Although the source in the thread otb notes is about that same tax-hike, it is actually an opinion piece, from the Fraser Institute, which has a somewhat more right-wing reputation then the C.D. Howe Institute who did the actual study Golombeck's talking about in c-m's post.

In both, the findings are that affected taxpayers predictably did what they could to evade/avoid/minimize the effect. Thus revenues failed to meet optimistic estimates, also predictably, although they did rise. Apparently Provincial taxation people were among the optimists. However these are short-term results, and can be corrected. What matters on both sides of any tax line are the ongoing revenue streams.

 

[Frankfooter]

Although the source in the thread otb notes is about that same tax-hike, it is actually an opinion piece, from the Fraser Institute, which has a somewhat more right-wing reputation then the C.D. Howe Institute who did the actual study Golombeck's talking about in c-m's post.

My mistake, though this report is similarly useless.

“The report uses a refined approach to estimate the underlying behavioral response of taxpayers to the rate hike,”

https://www.cdhowe.org/public-polic...xpayers-responsiveness-2016-top-tax-rate-hike

 

[oldjones]

My mistake, though this report is similarly useless.

https://www.cdhowe.org/public-polic...xpayers-responsiveness-2016-top-tax-rate-hike

A whole lot of social science reports are. Interesting and insightful though they may be, they seldom can be used to make reliable predictions — the essence of any science.

That's when we invite prejudices and ideologies to step in and give us the certainty we crave.

 

[JohnLarue]

My mistake, though this report is similarly useless.

https://www.cdhowe.org/public-polic...xpayers-responsiveness-2016-top-tax-rate-hike

You are unable to do simple math, yet you label two separate reports from well regarded institute as "useless" ??

Time to face the facts stupid
Taxation is not the bottomless pit you want it to be

The problem with socialists is eventually they run out of other peoples money

 

[Orion1027]

There are plenty of vehicles one can employ when it comes to lessening your overall tax burden. Oddly enough, these were not touched by Morneau for the simple reason that people like himself use them. The liberals went after low hanging fruit, small business owners, sole proprietor etc. People in business who don’t have the means to employ tax lawyers and accountants to set up shell companies here and abroad.

 

[oldjones]

You are unable to do simple math, yet you label two separate reports from well regarded institute as "useless" ??

Time to face the facts stupid
Taxation is not the bottomless pit you want it to be

The problem with socialists is eventually they run out of other peoples money

The problem with capitalists is eventually there's no money but theirs left to take.

No one wishes more passionately that the taxation pit is bottomless than the 1% who enjoy most of the income and wealth. As long as everyone else is ponying up while they ship their loonies to the Caymans they're doing fine. "Deficits? We don't need more revenue; we need less government. That's how to eliminate deficits. Less regulation protecting the marks we fleece, means more desperate day-rate contract workers in our call centres fleecing the folks who can't afford the tax accountants who know a guy who knows a guy. Let them pay for their do-nothing penniless government, if there's still a deficit. AS long as we can call the cops if there's trouble."

Just because we've got most of the money, does NOT mean we should pay MOST of the taxes!

 

[Frankfooter]

You are unable to do simple math

Its not worth reading the rest of your post when you start with such a whopper.

 

[JohnLarue]

Its not worth reading the rest of your post when you start with such a whopper.

Tell us how you calculated that marginal tax rate for the average Canadian?
You are unable to do simple math yet you label two separate reports from highly regarded institutes as "useless" ??

Time to face the facts, you are a joke

 

[Frankfooter]

Tell us how you calculated that marginal tax rate for the average Canadian?
You are unable to do simple math yet you label two separate reports from highly regarded institutes as "useless" ??

You can't tell legit scientific work from opinion pieces, larue.
Your total failure in the basics and your refusal to accept the opinions of the IPCC, NASA and AAAS show that your judge of what is solid scientific work and what is partisan bullshit is non-existent.
Read this and tell us whether you think this is good science or politics.
Should make it very clear.
https://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_FINAL_full_wcover.pdf

 

[JohnLarue]

You can't tell legit scientific work from opinion pieces, larue.
Your total failure in the basics and your refusal to accept the opinions of the IPCC, NASA and AAAS show that your judge of what is solid scientific work and what is partisan bullshit is non-existent.
Read this and tell us whether you think this is good science or politics.
Should make it very clear.
https://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_FINAL_full_wcover.pdf

You do not even understand the climate science
No more than you understand economics

Tell us how you calculated that marginal tax rate for the average Canadian?
You are unable to do simple math yet you label two separate reports from highly regarded institutes as "useless" ??

What an ignorant clown

 

[Frankfooter]

You do not even understand the climate science
No more than you understand economics

Care to tell us when the last ice age happened?

 

[JohnLarue]

Care to tell us when the last ice age happened?

2.6 MM year to approx 11,000 years ago
I know you got this wrong too, however it is hardly relevant to the taxation issue, other than proving you know not what you speak of

Tell us how you calculated that marginal tax rate for the average Canadian?
You are unable to do simple math yet you label two separate reports from highly regarded institutes as "useless" ??

What an ignorant clown

 

[Frankfooter]

2.6 MM year to approx 11,000 years ago
I know you got this wrong too, however it is hardly relevant to the taxation issue, other than proving you know not what you speak of

So you admit that you were wrong when you claimed the chart I posted didn't include the last ice age?