In CIT Cuts: The Waiting Until We Can Afford It Argument I characterise the Liberal position on the corporate income tax as incoherent at best and advocating counter-cyclical tax policy at worst.
My very good friend and dodgeball teammate Jesse Helmer has an excellent defense of the Liberal position. In the interest of fairness, I thought you all should see it. It would see to me not to be so much of a "wait until will have a surplus" argument as a "we'll never be able to afford it, but we don't want to rule it out entirely because we don't want to sound like the NDP" approach. But I'll let you be the judge.
Worthwhile Canadian Initiative 
Kevin Page has repeatedly claimed Canada has a structural deficit. Further tax cuts without an offset exasperate the problem.
“Kevin Page has repeatedly claimed Canada has a structural deficit. Further tax cuts without an offset exasperate the problem.”
Which is fair enough. Then the argument shouldn’t be ‘let’s wait’, rather than ‘we can’t do it in the foreseeable future’. Of course, since the Liberals are also advocating new spending programs, the argument isn’t so much ‘we don’t have the money’ but ‘we’d rather spend it on other things’. Which is fair enough as well. But it’s really an argument about not doing it at all, rather than doing it later, so I find the Liberal side somewhat disingenuous here. If you took them literally (which is a bad idea to do with any politician), they seem to be advocated counter-cyclical tax policy.
Take away the political platforms. Simply – Should one cut ANY taxes w/o offsets today while Canada is in a structural deficit?
The argument that “if one needs tax revenue – raise GST” that I’ve seen articulated is just as disingenuous in this context and muddies the issue.
Dodgeball teammate? I went to Queen’s with him, but I think we only played dodgeball once.
It’s a small country, even for those of us who do not currently live in it. Tell Jesse to blog more frequently.
I think he had only played once before he joined us, but he’s a heck of a player. Good arm, really good instincts. I played a couple of inter-squad games against him tonight and now more than ever I’m glad he’s on our side.
I’ll let him know when I see him next Sunday.
“The argument that “if one needs tax revenue – raise GST” that I’ve seen articulated is just as disingenuous in this context and muddies the issue.”
I don’t see why, but I could make a list of other taxes, such as a carbon tax (or a carbon tax proxy such as the gas tax).
It seems to me that his argument against Tory tax cuts applies equally to Liberal spending promises. If the argument is that we shouldn’t be cutting the CIT while there’s a structural deficit (which is fair enough), that argument equally suggests that we shouldn’t be funding the equally expensive, if not more so (particularly in light, as Helmer points out, an aging population), entitlement programs proposed by the Liberals (which programs would be politically far more difficult to get rid of down the road than it would be to reverse a corporate tax cut). For example, Helmer’s concluding statement that “with the reversal of the CIT from 15% to 18%, we will reach this point a bit sooner (five years?)” only holds true given his assumption that the Liberals would otherwise maintain the status quo. But, of course, the Liberal plan isn’t premised on maintaining the status quo, it is premised on reversing CIT cuts and spending the additional revenue, so that, all else being equal, the long-term effect on the structural deficit is no different from the Tory plan.
I suppose, Helmer might be making the implict (and, based on prior Liberal practice, quite reasonable) assumption that the Liberals have no intention of honouring their spending promises, though I’m not sure that that makes for a particularly compelling defense of the Liberal position.
Mike: thanks for the link.
Erin: it is a small world indeed.
Bob Smith: I believe the idea is to use $1 billion to fund the family care policy (http://cdn.liberal.ca/files/2010/10/lpc-family-care-en.pdf) ($250 million for EI component, $750 million for tax benefit), X billion to fund as of yet unannounced programs and Y billion to reduce the deficit, where Y = $6 billion – $1 billion – X. Now, if Stephen Gordon’s estimates of the net revenue from a corporate tax increase ($2-$3 billion) is a better estimate than $6 billion, the Y is going to be very small indeed. Even smaller, if Jack Mintz is right in his most recent op-ed in the National Post.
I think it’s encouraging that the LPC is advocating for a tax increase to fund a new program. Of course it won’t be sufficient to slay the deficit, as we’d likely need both increased tax revenue and spending cuts to make a meaningful difference.
Anyone in favouring of increasing the GST back to 7% is welcome to join my (somewhat dormant) Facebook group!
http://www.facebook.com/group.php?gid=330615416222