American Financial Woes.... and the GST

[AEROBAT]

One thing about what is going on with the economy, it is no longer an esoterical debate between Keneysian economists and the Austrian school of economists. Now the results are being played out in real time and we will witness just how well Keynesian economics perform.

[Canuck223]

The debt got out of hand because a government job is offered to anyone who wants one. It's time to say you're fired.

While that's not entirely true, it's clear there are too many civil servants doing work of little value to the taxpaying public.

I won't go full Ayn Rand and suggest firing the entire gov't workforce, clearly there needs to be a cold blooded review.

1) What services do the public truly need that are not well served by the private sector?
2) What oversight do the public really need that is not best served by the courts?
3) What interventions do the public require by public officials, that are not better served by familys?

You get the idea. Sometimes the public at large need to keep an interest. When the issue is largely dealt with, do we need the bloated infrastructure forever??

[North Shore]

Certainly a balancing act. Government has to cut spending because taxes can't be raised enough to make up for the amount of deficit. It really is a tough road to hoe because the big part of government spending is health care and other entitlements. After that comes the military, a sacred cow for the Americans. Its between those 2 areas that cuts have to come from. I can see them privatizing a large part of what is now Government, probably not a lot of choice.

Here on the local front we have to see some major cuts in Government spending as well because there is no more room to tax so the deficit is going to have to paid from cuts to Government services. It will be interesting to see if the C will make the tough choices in a timely fashion.

Robert, I think that Canadian personal income tax rates are the lowest they've been for years, and corporate tax rates are certainly the lowest they've been since the 50's. There's plenty more room to tax - it's just that there's an incessant drumbeat of 'low taxes' coming from the media and certain commentators. I'd be quite happy to pay an extra 2% on the GST, and a few more on my income tax, as well as see higher corporate tax rates, as long as the Government came to me/us with a credible plan to balance the budget, and pay off/down the debt over a reasonable amount of time. (I don't expect to see a $0.00 debt in 5 years, but it'd be nice if we had a 50 year (pretty much the same period of time it took to accumulate) plan to retire the majority of our national debt.)
My personal pet peeve is that over the course of the last boom (say 2003-2008), the Canadian government kept reducing tax rates to stimulate the (already overheating) economy. They should have held the line on both the GST and corporate/personal taxes and started to take even larger chunks out of the accumulated debt. That way, when the inevitable bust came again, they could have lowered tax rates as a form of stimulus. Instead, they cut taxes, increased spending and paid off a tiny amount of debt. Now they're between a rock and a hard place - can't reduce taxes any more, and we're used to the increased level of spending, so up goes the debt - and to a level higher than it was before all of the MArtin/Chretien slashing to get the debt under control.

It's infuriating. They/we are stealing the future from our children.

[robertsailor1]

Northshore..I completely agree that our income taxes are lower and the taxes on business are lower to but business taxes are still above the average for the major economies of the world.
Its all the other hidden taxes/service fees/gas taxes etc. etc. not withstanding the HST/GST. When you add up all these taxes our personal tax rates, everything in, are no longer low, in fact they are very high. Did you know that when you buy a new house that there is over $80,000 dollars in taxes and service charges, DCC's etc. What has happened is that there was a move to reduce income taxes and increase consumption taxes, it seems more palatable and fairer I guess but we all have to live and a tax is a tax no matter how you dress it up. Quite frankly it hurts lower income folks the most because like everyone else they have to consume to live as well. And finally I agree that it was pure politics to reduce the GST.

[Rockie]

In the early 90's Canada's debt servicing charges were in excess of $50 billion per year. In 2009 it was around $31 billion.

How much could we lower taxes if we weren't paying that amount of money each year in interest?

[robertsailor1]

We should be getting much tighter on Government spending but every time the Government attempts to cut back the Unions and Special Interest Groups lobby like hell and our media puts a twist on how much this is going to hurt the little people and because of our system Governments are only able to take a tougher line in a severe crisis.
Maybe if we limited Government to a specified time it might allow them to make some of the tougher decisions??

[System Message]

Who would have thought the Chinese communists would ever be telling the Americans the welfare state will have to end.

Reuters) - China bluntly criticized the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.

http://www.reuters.com/article/2011/08/ ... HB20110806

[JakeYYZ]

Apparently Tea Party activists have taken over China.

[TG]

Interesting comment from Warren buffett.
http://www.bbc.co.uk/news/business-14533987

Warren Buffett has called for Congress to make him and his "mega-rich friends" pay more income tax.

There is also a study somewhere saying that contrary to public belief, raising taxes actively contribute to job creation.

[North Shore]

^Dang! Beat me to it.

On another tack, here is a great rant from Felonious Monk (not to be confused with the Jazz Monk) (Caution, may contain some words that rhyme with 'Truck')

[robertsailor1]

There is also a study somewhere saying that contrary to public belief, raising taxes actively contribute to job creation


Boy that does it! Must have been God himself who wrote that study. Taxing your way to prosperity is quite the concept and pigs can fly.

[. ._]

That was AWESOME, North Shore!

[TG]

There is also a study somewhere saying that contrary to public belief, raising taxes actively contribute to job creation


Boy that does it! Must have been God himself who wrote that study. Taxing your way to prosperity is quite the concept and pigs can fly.

A bit like pulling a study saying that smoking is good for your health after all.


Quote of the day:"You're a black president, stop acting like a black!" (from the video)