American Financial Woes.... and the GST

[Icebound]

..


Now THIS would be hilarious...

http://business.financialpost.com/2011/ ... s-own-gst/

"Eventually, we expect the United States will have to do what Canada and other rich countries have done — implement a value-added sales tax. ...

...

...the merits of a sales tax are unmistakeable: It provides stable revenues, it affects almost all of the population, and it has the least impact on business investment. And as Canada found out in the 1990s, a value-added tax is a prolific generator of revenue, which the United States desperately needs."


...

[Siddley Hawker]

Which is why Harper should have gotten a swift kick in the ass for reducing the GST by 2% instead of a reduction in income tax. Reducing the GST was a great political move but a piss-poor financial one. In my opinion, of course.

[JakeYYZ]

Higher taxes will not translate into an improved economy.

[System Message]

And greater government revenue will not lower deficit spending.

[iflyforpie]

The problem isn't the lower taxes, it is what the government does with them.

Give me a few weeks and I'll have the budget balanced. But I won't be too popular with welfare recipients, natives, the arts, big business, and the chronically--but not deathly--sick...

[Beefitarian]

Planning to "Albertasize" BC health care pie?

[azimuthaviation]

The problem isn't the lower taxes, it is what the government does with them.

Give me a few weeks and I'll have the budget balanced. But I won't be too popular with welfare recipients, natives, the arts, big business, and the chronically--but not deathly--sick...

scratch big business from that list and youre talking about 1% of the Fed's expenditures. And welfare recipients cheques pay rents for landlords, groceries from grocers, cigarettes from the tobacco companies, and more than a couple bottles of beer from the beer makers.

[. ._]

In the end, all of this dog and pony show will end up with, "Aw screw it. Let's just print more and deal with it later."

I must admit though, as an admirer of the political game, they're pullin' out the stops to get the votes. Evil and stupid, yes. But what an opportunity to grandstand! Pump that rhetoric, boys!

[Canuck223]

The GST worked because it replaced an even higher hidden tax on manufactured good, with a lower tax payable (ultimately) only by the Canadian end user. It made our exports cheaper, and ultimately only taxed willing consumers.

Regretably, I agree that Harper should have left the rate alone and instead lowered income taxes.

In the US, I suspect they will ultimately do something like this, only it will be a pure and simple additional tax.

When you have more people voting for a living than you have working for a living, your system needs a re-boot.

[Dex]

January 2008 GST reduced to 5%


"I know economists will say that we can run a small deficit, but the problem is once you cross that line, as we see in the United States, nothing stops deficits from getting larger and larger and spiralling out of control, and we want to avoid the kind of government, household and trade deficits we see in the United States" Stephen Harper - October 2008


"Our deficits will be large...." Stephen Harper - May 2009

[North Shore]

And welfare recipients cheques pay rents for landlords, groceries from grocers, cigarettes from the tobacco companies, and more than a couple bottles of beer from the beer makers

Ahh, the old, tired, right-wing canard about drunken welfare bums. Any stats to back that up, hotshot, or is it just self-righteousness forming your opinion?

[v6g]

Higher taxes will not translate into an improved economy.

Oh yeah?

http://www.economist.com/node/18989175 - although I guess you're right in respect of that carbon tax in that it isn't actually a higher tax.

[AEROBAT]

We are witnessing the death throes of the fractional reserve banking system. The economy in the US has gone from a manufacturing/exporting base to a financial market base, SIV's, ABCP, morgtgage backed securities, credit default swaps ect. Most of that crap is traded internationaly and away from any oversight.

It is an economy based on debt and debt derivatives. Since WW2 the greenback was the worlds reserve currency and this shielded the US from internal inflation, instead it spread it through out the globe. Now jig is up.

They can tax all they want but eventually all the debt comes due. If they had let the banks collapse in 2008 instead of throwing the burden on the US taxpayer we would probably be pulling out of the hole right now.

Historicaly fiat money has allways reverted to its intrinsic value, which is zero.

[Rockie]

Higher taxes will not translate into an improved economy.

Or so the Republicans would have everybody believe. But is that really the case? This is just one of several unbiased articles written recently in response to the American situation that simply examine the facts from recent history. I say unbiased because you will see he doesn't spare the Democrats either.

http://benirwin.wordpress.com/2011/07/2 ... kill-jobs/

[azimuthaviation]

And welfare recipients cheques pay rents for landlords, groceries from grocers, cigarettes from the tobacco companies, and more than a couple bottles of beer from the beer makers

Ahh, the old, tired, right-wing canard about drunken welfare bums. Any stats to back that up, hotshot, or is it just self-righteousness forming your opinion?

Point I was making was welfare money doesnt go down the drain, its mostly used for consumer spending and goes right back into the economy immediately benefitting landlords and merchants.

[System Message]

Landlords and merchants are middlemen and not producers of wealth.

[North Shore]

Point I was making was welfare money doesnt go down the drain, its mostly used for consumer spending and goes right back into the economy immediately benefitting landlords and merchants.

Ah. Sorry. Misunderstood your tone.

[Rockie]

In the 90's those hated Liberals chose to keep the GST that the much beloved right wing PC's instituted because they realized they needed the revenue to help Canada pull out of the debt death spiral we were in. Very soon after they not only balanced the budget but started paying down the monstrous debt we had accumulated, and continued to do so for the term of their government. More than anything doing that positioned Canada to weather the financial storm that was to hit in 2008 better than almost any other country. Since then of course the much beloved right wing Conservatives have placed us firmly back into deficit finance territory with the largest deficit in Canadian history.

So much for fiscal stereotypes between left and right.

In the United States the Republicans are courting disaster by refusing to agree to increased federal revenue (yes...taxes) in the belief that driving the nation into default is preferable to easing up on ideology. What they are failing to consider is that the US not only has to balance their budget, they also have to start retiring the $14 TRILLION debt. That isn't going to happen all by itself.

[2R]

The only question at the white house is "How can they blame Bush for this mess ?
The mess that golden boy was gonna fix right after he closed gitmo,maybe that is the problem maybe gitmo is dragging down the economy.Maybe if they closed gitmo the world economy will restore itself

Or as Niall Ferguson likes to point out the US economy is in the same sticky situation that the Ottomans where in in 1870.

The dreded VAT was introduced in europe to make sure that the government gets revenue to function.As factories,jobs and pollution where exported to other countries in the seventies in Europe.The government still needed to collect taxes from somewhere to function.If they could not get them from factories or out of the workers pockets they would get them when people spend.
The only flaw to this scheme was the creation of the largest cash only ecomony that does not pay taxes
That is how Greece got so far behind as a lot of stuff is sold on what is one of the worlds largest black markets.That the official government does not get a share in.
The men in grey suits will tell the US government what it will have to do to save itself and VAT will be part of that solution.
They can do it now to help soften the fall or after the next dip.Either way it is coming.

[JakeYYZ]

Higher taxes will not translate into an improved economy.

Or so the Republicans would have everybody believe. But is that really the case? This is just one of several unbiased articles written recently in response to the American situation that simply examine the facts from recent history. I say unbiased because you will see he doesn't spare the Democrats either.

http://benirwin.wordpress.com/2011/07/2 ... kill-jobs/

As they say Rockie: “that was then and this is now”. Taxes added in the recovery phase as opposed to taxes add, while the economy is still contracting. Look at the(revised) GDP #’s that came out Friday (29/07/11). Spending has collapsed. You are looking at the tax base folding. You still think that a further reduction of real income is a solution?
http://www.bea.gov/newsreleases/nationa ... elease.htm

[robertsailor1]

Actually while I have to give credit to the Liberals for lying to all Canadians when during the election they promised to scrap the dreaded GST and following up with reducing transfer payments to the Provinces. The Provinces did the same thing and downloaded the cuts to the Cities and Municipalities. Liberals got credit for making the tough calls which they didn't actually make BUT at least they started the ball rolling after their big lie. Politics is indeed interesting and history is always written by the winners.

[Rockie]

You still think that a further reduction of real income is a solution?

Correctly targeted tax increases are not only a good idea now, but they are essential for the long term. Admit it Jake, for the current Tea Party driven Republicans there is never a right time to raise taxes.

[Canuck223]

In the 90's those hated Liberals chose to keep the GST that the much beloved right wing PC's instituted because they realized they needed the revenue to help Canada pull out of the debt death spiral we were in. Very soon after they not only balanced the budget but started paying down the monstrous debt we had accumulated, and continued to do so for the term of their government. More than anything doing that positioned Canada to weather the financial storm that was to hit in 2008 better than almost any other country. Since then of course the much beloved right wing Conservatives have placed us firmly back into deficit finance territory with the largest deficit in Canadian history.

So much for fiscal stereotypes between left and right.

You can keep repeating things out of context, but it doesn't change the reality.

Liberal policies of the late 60's and 70's created a systemic deficit.

The PC's set the groundwork by negotiating NAFTA and eliminating the 13% manufacturers sales tax and replacing it with the GST. By cutting the cost of doing business, and making it cheaper to export, our net tax revenues shot up.

Martin took the revenue and wisely did start paying down the debt. He also slashed transfer payments to the provinces, stole the RCMP pension surplus, and otherwise cooked the books to Ottawa's favour. I don't despise him for his work, but I do criticism him for accepting credit for other peoples work.

Harper has run a deficit, but only on short term stimulous, not systemic programs that will bleed cash forever. He's also cut taxes to keep money in the economy, and force future governments to raise taxes if they wish to fund such programs.

[JakeYYZ]

You still think that a further reduction of real income is a solution?

Correctly targeted tax increases are not only a good idea now, but they are essential for the long term. Admit it Jake, for the current Tea Party driven Republicans there is never a right time to raise taxes.

IMHO, the T-Republican’s are not dogmatic, in regards to taxes. The debt, government spending and the personal freedoms are the prime motivators for the movement. Taxes are a component to re-setting the economy. My understanding of the main platform is that what must go are worthless departments, regulatory agencies and foreign aid, all things the public can live without. Does it make sense to allow mortgage interest deductability on a second, third+ house? Should those on welfare, who have more than three children, still qualify for increased assistance for each additional offspring? Should U.S. troops subsidize the defense of an allied and rich Germany or Japan 66 years after World War II? No. Should the government get out of playing retirement planner too? Yes

It’s not about dropping safety nets. It’s about personal responsibility, the elimination of Corporate welfare, farm subsidies..and the like . I’ve only nicked the surface...I hope you get the idea.

[Rockie]

It’s not about dropping safety nets. It’s about personal responsibility, the elimination of Corporate welfare, farm subsidies..and the like . I’ve only nicked the surface...I hope you get the idea.

Of course. There are trillions in spending cuts, but it sounds like you recognize that can't be all there is. No more millionaires paying less tax than a bus driver because he has better deductions and a smarter accountant.

Liberal policies of the late 60's and 70's created a systemic deficit.

No argument from me. They also fixed it in the 90's. However you like to spin it was the Liberals who turned the ship around, and you must give credit where credit is due. If it makes you feel any better I didn't vote for them either.