The Green Grift

The Canadian Taxpayers Federation asks which came first, the SHIFT or the SHAFT? If Stéphane Dion gets away with this little confidence game, we'll be calling it the GRIFT.

A “carbon tax” in the style of Mr. Dion’s, which shields many people altogether from the price impact by various mechanisms, has nothing whatsoever to do with the Pigovian taxes economists favour as a response to negative externalities. It’s simply another way of picking and choosing.

What is more truly dear to Liberal hearts, we suspect, is the redistributive fashion in which the returned revenue from the carbon pricing will be used to re-jig the income tax system.

[...]

But the Liberals, in cutting the lowest tax bracket the most, and the highest not at all, are actually proposing to raise the already high marginal tax rates on upper-middle-class Canadians. And they’re not only writing cheques to rural dwellers to make sure they don’t belong to the carbon-priced class with us city folk; they’ll also be increasing the Northern exemption, creating another group that has non-negotiable “higher requirements” for pollution.

Will Canadians play willing marks to Stéphane's redistributive grift? Let's hope not.

Dion: Playing God with the Market

The ultimate conceit of the modern liberal is that he knows better than the market. Thus it is little surprise that a recent fundraising letter for Stéphane Dion would make a statement like this:

Liberal Party leader Stephane Dion recently asked Canadians to take part in an open and honest debate about shifting taxes from things we want more of, to things we want less of.

Really? And all this time I thought the market was doing that. If I want something, I spend my money on it. If I don't want it, I leave it on the shelf.

But Stéphane Dion has a better idea. He wants us to spend our money on what he wants, not what we want. And he'll raise taxes until we get it right.

Nine out of 10 economists...

Mr. Flaherty believes Ontario is failing to adapt to a changing world because its business taxes are the highest in Canada. In a speech in Toronto yesterday, he offered as evidence Ontario's declining share of national GDP; its weaker than average economic growth; and, an unemployment rate higher than the national average. He said the federal government has cut corporate income tax rates from to 15% from 22.1%, while Ontario's rate is only half a percentage point lower than in 2000, "with no plans in place for further reductions."

Mr. McGuinty's response is that tax cuts are not enough on their own and that governments have to make targeted investments in troubled industries to stimulate growth.

Let's see:The manufacturing sector is not doing too well in Ontario, although the rest of the country seems to be doing okay.But isn't the auto sector the problem? Well, if we strip out transportation equipment, which includes autos....

Hey, look at that: Ontario still lags.

Doug Porter, deputy chief economist at BMO Capital Markets, says, nine out of 10 economists would side with Mr. Flaherty and advocate creating as favourable an economic environment as possible and then allowing the market to pick the winners and losers.

What does he know? Ontario's "targeted investments" are working out so well.


Update: Flaherty takes another kick at McGuinty in a speech yesterday:

In fact, a combination of the strong Canadian dollar, a slowing U.S. economy, higher energy prices and increased competition from emerging markets has left several sectors struggling. Here in the manufacturing heartland of Canada the impact has been acute. But the economic impact is in direct contrast to national economic trends generally.

For instance, we are experiencing the second-longest period of economic expansion in Canadian history. Yet Ontario's share of the national nominal GDP has gone from 41.4% in 2002 to 38.6% in 2006.

Ontarians are seeing a lack of leadership, a lack of vision and a lack of economic stewardship.

A lesson for tax and spend liberals

Hell, the Conservative Party might learn something too.

Dan Mitchell of the Cato Institute explains the relationship between tax rates, government revenues and economic growth:



via Café Hayek