National Economy

[Build.It]

In other news, municipalities have been getting back extremely quickly on building permit applications the last little while. Way faster than usual. I'm told it's because they're slow - not as many applications as in the past.

[acottawa]

Originally Posted by Build.It

Well something needs to change. We can't just keep running deficits into perpetuity.

I have a suspicion we will be moving away from fiat money in the near future, which would solve the problem (even if it's by force), but not sure what that'll look like.

The good news is that we now have numerous countries trying new drastic measures in all directions (far left, far right) so we can see which models actually work and apply that to Canada. We can let Argentina etc be the guinea pigs and we can just adopt what has been proven to work.

I am not sure some catastrophic change is necessary. The government is over spending by about 10%. Cutting 10% should not be particularly challenging.

[kwoldtimer]

Originally Posted by Build.It

Well something needs to change. We can't just keep running deficits into perpetuity.

I have a suspicion we will be moving away from fiat money in the near future, which would solve the problem (even if it's by force), but not sure what that'll look like.

The good news is that we now have numerous countries trying new drastic measures in all directions (far left, far right) so we can see which models actually work and apply that to Canada. We can let Argentina etc be the guinea pigs and we can just adopt what has been proven to work.

Indentured service? Serfdom?

[1overcosc]

Originally Posted by Architype

Like it or not, online media is now more influential than legacy media. Joe Rogan's audience is reportedly 28X that of CNN's. It's an unbridled and volatile force, and those who can tame or manipulate it are ultimately the winners.

I don't really see this as a negative like other classical-liberal types do. There's advantages to the Rogan-style of interview: sure it's not confrontational and the interviewee is rarely challenged, but this allows the interviewee to relax, be honest, and let their true self come through. You learn a lot more about a politician from watching them on a podcast for an hour than you do watching them do a traditional CNN interview.

Information always get disrupted. The current moral panic over the rise of the internet and the legacy media losing its role as a gatekeeper of information is reminiscent of the moral panic 500 years ago over the monks losing their monopoly on information from the invention of the printing press. The world didn't end then, it won't end now.

[1overcosc]

Originally Posted by WarrenC12

Yeah, slash everyone's benefits and throw a bunch of the military out of work. They'll have plenty of time to sharpen their guillotines.

They'd react even worse to a big increase in taxes.

One of the two has to happen. The deficit spending can't continue indefinitely like this. The USD being the reserve currency has arguably made things worse in the long run for them on this front, because by insulating the US from the risk of balance of payments crises, it's meant their deficit/debt can grow to monstrous levels before the consequences are felt. By contrast, if you look at Canada, we hit a fiscal crisis point in the 1990s where had no choice but to balance the budget on a short time scale - a policy that would have been a lot more painful if the deficit had been allowed to grow to three times bigger than it was.

[Acajack]

Originally Posted by 1overcosc

I don't really see this as a negative like other classical-liberal types do. There's advantages to the Rogan-style of interview: sure it's not confrontational and the interviewee is rarely challenged, but this allows the interviewee to relax, be honest, and let their true self come through. You learn a lot more about a politician from watching them on a podcast for an hour than you do watching them do a traditional CNN interview.

Information always get disrupted. The current moral panic over the rise of the internet and the legacy media losing its role as a gatekeeper of information is reminiscent of the moral panic 500 years ago over the monks losing their monopoly on information from the invention of the printing press. The world didn't end then, it won't end now.

It actually led to the Renaissance. (Not saying that our current situation will lead to that BTW.)

But a lot of the panic about non-traditional media's decline in influence is in fact driven by mercantile concerns behind the scenes.

[1overcosc]

Originally Posted by Loco101

The US won't be balancing its budget anytime soon. The biggest problem is that wealthier people don't pay their fair share which would go a long way to reducing their deficit. Cutting services there is absolutely an option but there are consequences in doing that as economic growth will be hurt in the short term and some people may fall through the cracks which leads to longer-term problems. My opinion is that cutting taxes has been done at the expense of much higher debt and Trump's plans seem to be only doing more of that.

Hiking taxes will also hurt economic growth. There's no free lunch. "The rich" aren't an infinite money cheat code for governments. There's consequences to things like capital gains tax increases or wealth taxes.

One possible way out of the quagmire is deregulation. In most industries, regulatory compliance costs are actually higher than business taxes, so regulatory streamlining can be paired with increases to business taxes and it'll cancel out. Obviously some regulations are necessary (Walkerton, anyone?) but the progressive mantra that all regulations are inherently good is a problem. There's a lot of streamlining that can happen. (What's interesting is that for all the fuss about neoliberal deregulation, it never actually happened in most industries).

[1overcosc]

Originally Posted by YOWetal

Ignoring your proposal to cut all social assistance and social security (OAS?). would literally kill people and in the social assistance category make a lot of people try and kill you.

As for your tax proposals. These kind of ridiculous "we should" statements are silly. You should be able to build me a 3000 sq dt house for $100,000. Why? Because I say so.

If we only tax income above $250k and only 10% we will lose probably close to $200 Billion a year in tax revenue. There is literally no way to cut that much from the budget. Even if we cut all payments to individuals as you suggest starting with above and all healthcare money we'd still be short.

I think you're reading build.it the wrong way. His tax reform idea is more of a long-term vision for what we should be moving towards, not an idea to be implemented tomorrow morning. And I'm inclined to agree with him. Income taxes are bad for the economy and we should have more consumption taxes and more property taxes instead.

[1overcosc]

Originally Posted by niwell

The Laffer Curve is one of those Economics 101 theories that provides an interesting theoretical model, but when you start looking at higher level economics mostly falls apart. And yes, I have looked at it in Real World settings.
While they have a place, consumption based taxes tend to be more inefficient, administratively complex
and don't always scale in ways that are easy to predict.

That's actually not true. Income taxes are much more administratively complex. At least the way we implement in North America.

[Build.It]

Originally Posted by kwoldtimer

Indentured service? Serfdom?

What are your ideas/solutions?

[1overcosc]

Originally Posted by MolsonExport

consumption taxes are regressive; income taxes are progressive.

Depends how they're structured. In Canada, it's arguably the reverse. High-wealth low-income people who live off their assets pay a lot less in taxes than people with a similar standard of living who rely on income instead (despite the fact that the latter generally work harder). Sales taxes, meanwhile, exclude essential items like groceries & rent which make up a much higher percentage of spending for poorer people.

The most regressive taxes we have are arguably our "sin taxes" on alcohol and cigarettes, given that the poor disproportionately spend on those things. But there's an economic logic behind those taxes. It's a good example of how an efficient, pro-growth tax policy is not necessarily just what's most "progressive".

[lio45]

Originally Posted by 1overcosc

I think you're reading build.it the wrong way. His tax reform idea is more of a long-term vision for what we should be moving towards, not an idea to be implemented tomorrow morning. And I'm inclined to agree with him. Income taxes are bad for the economy and we should have more consumption taxes and more property taxes instead.

It would be an annoyance for me as part of my business model kinda hinges on sitting long-term on strategic urban land as surface parking, but a high land value tax makes a lot of sense. (My behavior would actually adjust for the Greater Good, with a LVT.)

[WarrenC12]

Originally Posted by Loco101

Yet PP supporters here make it sound as though Canada has serious spending problems and that the US is doing much better yet it's actually deficit-fuelled.

Yep, it's easy to argue their economic strength is a result of government (over)spending.

[WarrenC12]

Originally Posted by Build.It

I'd be okay with paying current tax rates if it was accompanied by cuts in social assistance, social security, corporate welfare, and the money was instead invested into debt repayment, infrastructure and education.

Ok, we are talking about Canada right? Where would you make cuts?

Originally Posted by Build.It

Once the debt has been repaid I would expect taxes to gradually come down as well.

Fully repaying the national debt is a foolish use of money. We should aim for a flat to declining Debt:GDP ratio. We should invest in infrastructure over further debt repayment.

Originally Posted by Build.It

Income tax below $250K should be zero. The government should be able to fund itself from consumption taxes, and 10% on anything above $250K earned. Capital gains tax should be zero. Corporate tax should be 15%.

Didn't you just say you'd be ok with current tax rates? Do you want a 25% GST?

Originally Posted by Build.It

People shouldn't be punished for being successful and making positive contributions to society. Similarly people shouldn't be trained to believe they will be supported by the government their entire life. We need 90% of citizens to be able to carry their own weight without any government assistance. Forcing them to pay shelve out 50% of their earnings to the government (when you add up income tax, sales tax, property tax, capital gains, etc) makes it more difficult for them to do this so they end becoming dependent on the social programs their taxes are funding.

Such a tired libertarian argument that never works in the real world.

[Acajack]

Originally Posted by 1overcosc

Depends how they're structured. In Canada, it's arguably the reverse. High-wealth low-income people who live off their assets pay a lot less in taxes than people with a similar standard of living who rely on income instead (despite the fact that the latter generally work harder). Sales taxes, meanwhile, exclude essential items like groceries & rent which make up a much higher percentage of spending for poorer people.

The most regressive taxes we have are arguably our "sin taxes" on alcohol and cigarettes, given that the poor disproportionately spend on those things. But there's an economic logic behind those taxes. It's a good example of how an efficient, pro-growth tax policy is not necessarily just what's most "progressive".

I am also not sure about income tax being less regressive than consumption tax.

A lot of passive wealth escapes real or at least fair taxation or is taxed very lightly (13-15% in Canada in general) when that money is actually used.

Think of all the huge mansions (quite common in Greater Vancouver) where the residents have zero dollars in reported income for tax purposes.

[WarrenC12]

Originally Posted by Innsertnamehere

Social Security is killing the US far more than OAS is killing Canada. Which is saying something.

The US desperately needs Social Security reform, but it's political suicide to touch it.

I'm not too familiar with the SS system, other than I've heard what you're saying before. Is it paying big money to people who already have big incomes (like OAS) or is it a lifeline for those who'd be homeless otherwise?

Overall I think the US has more of a revenue problem than a spending problem. Although I'm sure the military could take a few cuts.

[WarrenC12]

Originally Posted by MolsonExport

consumption taxes are regressive; income taxes are progressive.

The former hurts the less well off, as consumption accounts for a larger share of their net earnings, compared to the better off.

Consumption taxes are far more efficient though. They encourage people to work more and save more. Those are generally good for the economy.

Canada's mechanism to refund GST to low income people helps a ton with the regressive nature, just like carbon tax rebates (RIP).

[WarrenC12]

Originally Posted by Build.It

Well something needs to change. We can't just keep running deficits into perpetuity.

Of course we can.

Originally Posted by Build.It

I have a suspicion we will be moving away from fiat money in the near future, which would solve the problem (even if it's by force), but not sure what that'll look like.

Mass suffering and WW3 probably.

Originally Posted by Build.It

The good news is that we now have numerous countries trying new drastic measures in all directions (far left, far right) so we can see which models actually work and apply that to Canada. We can let Argentina etc be the guinea pigs and we can just adopt what has been proven to work.

Far too simplified to take seriously.

[P'tit Renard]

Originally Posted by WarrenC12

I'm not too familiar with the SS system, other than I've heard what you're saying before. Is it paying big money to people who already have big incomes (like OAS) or is it a lifeline for those who'd be homeless otherwise?

Overall I think the US has more of a revenue problem than a spending problem. Although I'm sure the military could take a few cuts.

It's more like CPP in that it's a payroll deduction. The problem is that by law the Social Security administration must invest in US debt, and they can't function independently like CPPIB. The low interest environment since GFC has absolutely devastated social security's balance sheet.

They're one of the biggest causalities of this low interest mania.

[WarrenC12]

Originally Posted by 1overcosc

They'd react even worse to a big increase in taxes.

Not on the rich. Just reverse Trump 1.0 cuts for starters.