Federal Government & Politics II

[Truenorth00]

Originally Posted by casper

The biggest issue on the west coast was how the previous conservative government were restricting cash flow causing delays on the project. That help have a balanced budget. This government is less into playing those types of games.

A classic complaint of contractors who don't deliver to spec. "Sure we missed a few items. You should pay us anyway." They tend to assume the government is always a sucker.

Originally Posted by casper

I do. That said, it is fairly spread out now. A good part of that industry is near the dry dock and port facilities.

We don't make radars, fire control systems, and missiles dockside. The bulk of a warship's value is not the ship part of the system. It's the sensors, weapons and integration.

Originally Posted by casper

I fear the 2% target may be irrelevant in our relationship with the US. The US under Trump may well pull out of NATO.

If the US leaves NATO, hitting 2% might become even more important. It may be implied or required for either the bilateral relationship or to remain in NATO.

[whatnext]

Originally Posted by YOWetal

Yes they will have to hire students again who are a lot less productive at $16 an hour or they'll have to pay $25 for efficient staff they are losing to tipped restaurants where everyone is migrating as food inflation has seen their compensation soar.

Knock on effects are also big for sure as will cutting benefits cause a return to the labour market.

And at the end of the day maybe we will lose a few marginal Subway locations and fast food profit margins might fall. We'll survive. They've already raised prices as if they are paying $30/hr Swiss wages so seems like there is a margin there. McDonalds Canada for example was one of the leaders in revenue growth up 30%+ since pre pandemic same store sales.

These things have a way of self-correcting. I worked late one day last week and decided to stop at Wendy’s for dinner and it came to over $20! As prices rise customers will cut back That leads to reduced demand for employees.

[YOWetal]

Originally Posted by Truenorth00

I wonder if there's a political case to tax capital gains as a winning housing policy. Everybody always assumes it's a losing issue. But maybe the politics have changed?

It would need some benefit for renters maybe ability write off rent or some substantial tax credit to actually create a voting bloc. This new benefit combined with some new tax on rental profits or even better maybe on gross revenue and/or eliminating the 50% deduction on investment properties capital gains but phased in Jan 1 2025 and 2026. Prices would drop but in theory only for people who have to sell this year and next so maybe the property owning class doesn't revolt.

The Liberals really need to swing for the fences at this point as it's quickly approaching game over. They don't even seem to care.

[Build.It]

Capital gains tax in Canada is very low, not just on housing (obviously it's zero for principal residence, but even for rentals it's very low), but also for businesses.

If you sell a business in Canada, that meets certain "Canadian" requirements, the first ~$800K of capital gains is tax-free.

And the capital gains tax after that only works out to 15% I believe.

Corporate tax rate in Ontario is also very low - also works out to 15%.

I'm actually quite surprised that these low rates have survived the current government.

[Truenorth00]

Originally Posted by whatnext

These things have a way of self-correcting. I worked late one day last week and decided to stop at Wendy’s for dinner and it came to over $20! As prices rise customers will cut back That leads to reduced demand for employees.

Honestly, it's a rare area where I think higher prices are probably good for society. $20 buys like 1500 cal at most fast food places. Shrinkflation might actually improve some health macros.

[Truenorth00]

Originally Posted by YOWetal

The Liberals really need to swing for the fences at this point as it's quickly approaching game over. They don't even seem to care.

This was basically Coletto's implied point. He suggested that the Liberals might be scared to announce a major policy plank like this because it would draw attention to their failures on the Housing file. But he also pointed out that there's no way they can win if they don't actually do something to win back younger voters. He pointed out that their voting base demographics are now inverted from 2015. It's nuts.

[YOWetal]

Originally Posted by Truenorth00

This was basically Coletto's implied point. He suggested that the Liberals might be scared to announce a major policy plank like this because it would draw attention to their failures on the Housing file. But he also pointed out that there's no way they can win if they don't actually do something to win back younger voters. He pointed out that their voting base demographics are now inverted from 2015. It's nuts.

They're caught in this do we go all in on the left and consolidate that vote or move to the center. The center believes they are thoroughly socialist and as hard as it is to believe the true dyed in the wool leftists think they are neo-liberals. But as you say they need the youth vote and probably most of them don't care about that left right game but want out of the box thinking that actually shakes things up. Surely some staffer or bureaucrat has proposed something crazy they could throw at the wall. I get they don't want to be irresponsible but surely a new Con government will make dramatic change on many fronts so if you believe they are a danger you should be ready to take a risk.

[lio45]

Originally Posted by Truenorth00

I was listening to a recent Gen Squeeze podcast on a long drive today. The guest was "Millennial pollster" David Coletto. He pointed out some huge generational differences on several issues. Younger voters are much more likely to support both carbon taxes and taxing capital gains on housing. He also pointed out that Trudeau wouldn't be Prime Minister of it wasn't for voters under 40 in 2015, which makes the current Liberal approach to housing and immigration particularly surprising because it virtually guarantees a loss.

I wonder if there's a political case to tax capital gains as a winning housing policy. Everybody always assumes it's a losing issue. But maybe the politics have changed?

It's pretty straightforward: if most voters are homeowners or people who believe they'll be someday, then no tax on capital gains should be a winning political policy, while if it's the opposite, i.e. the Renter-For-Life class constitutes a majority of the electorate, then it's taxing capital gains that will be the winning policy.

[lio45]

Originally Posted by Build.It

If you sell a business in Canada, that meets certain "Canadian" requirements, the first ~$800K of capital gains is tax-free.

That's the total lifetime exemption; if you've used part of it already (or all of it), then that's that.

You can flip primary residences once a year;
You can't regularly create businesses and sell them and have that be tax-free; only the first $800k will be.

It's a strong incentive to put one's $$$ into a well-located Toronto/Vancouver mansion, rather than use it to start a business...

[P'tit Renard]

Originally Posted by Truenorth00

This was basically Coletto's implied point. He suggested that the Liberals might be scared to announce a major policy plank like this because it would draw attention to their failures on the Housing file. But he also pointed out that there's no way they can win if they don't actually do something to win back younger voters. He pointed out that their voting base demographics are now inverted from 2015. It's nuts.

At this point, their policies are mainly to keep their partisan boomer base happy. Meanwhile, they're employing scorched earth tactics that'll make the situation as shitty as possible for the next government.

Team Justin also realizes what a catastrophic property bubble they have created especially after COVID, and they're trying to keep the bubble inflated as much as they can before they punt the balloon to the conservatives. When this mother of all bubbles does pop, all the Caspers and their boomer landlord pals will be storming the country with pitchforks that will make the convoy look tame in comparison, and the Liberals don't want to be blamed for the bubble popping.

[casper]

Originally Posted by P'tit Renard

At this point, their policies are mainly to keep their partisan boomer base happy. Meanwhile, they're employing scorched earth tactics that'll make the situation as shitty as possible for the next government.

Your looking at the wrong way. They need to spend the next year locking in the programs based on moderate liberal values so its hard for the conservatives to undo them. That involves getting shovels in the ground on housing. Getting public transit projects locked in as well as just transition to a new green economy.

On the social front, I think we are already there with the $10 daycare. It is going to be hard for the conservatives to undo that at this point.

Originally Posted by P'tit Renard

Team Justin also realizes what a catastrophic property bubble they have created especially after COVID, and they're trying to keep the bubble inflated as much as they can before they punt the balloon to the conservatives. When this mother of all bubbles does pop, all the Caspers and their boomer landlord pals will be storming the country with pitchforks that will make the convoy look tame in comparison, and the Liberals don't want to be blamed for the bubble popping.

I am actually supportive of letting some air out of the bubble. But it needs to be done very slowly and in a controlled way. Best way of doing that is on the supply side buy just getting more housing built.

By the way I am not a boomer, I am a Gen-X-er. But yes, if the conservatives do win everyone is going to be busy sharpening those pitchforks just in case the Conservatives step out of line.

I am starting to think PP may be a coward and will quickly cave on his principles if it is at all un-popular. I would be more worried about the rest of his team.

[P'tit Renard]

Originally Posted by casper

Your looking at the wrong way. They need to spend the next year locking in the programs based on moderate liberal values so its hard for the conservatives to undo them. That involves getting shovels in the ground on housing. Getting public transit projects locked in as well as just transition to a new green economy.

If that's true, why is HFR/HSR still a pipedream on the Windsor - Quebec corridor? It's one of the few public transit projects under federal jurisdiction, and nothing has been accomplished and there are no shovels in the ground (or in the foreseeable future) despite the Liberal's constant harping about supporting the green economy.

On the social front, I think we are already there with the $10 daycare. It is going to be hard for the conservatives to undo that at this point.

At the end of the day this is provincial jurisdiction and its existence will depend entirely on the grace of the provincial governments. The super long waiting lists (some ballooning up to 5-10 years) that we're seeing in Ontario, and many day cares quitting the subsidized program already signals that the Ontario government isn't going to throw substantial money and political capital to support it.

I am actually supportive of letting some air out of the bubble. But it needs to be done very slowly and in a controlled way. Best way of doing that is on the supply side buy just getting more housing built.

There's no such thing as a controlled way in deflating the RE bubble in a real market economy, when the bubble was artificially juiced up on the way up. Why wasn't RE appreciating in a controlled manner in the first place? What policies did the Trudeau government have in place to slow down the pace of appreciation?

This is merely code for lets keep the music going by flooding the country with indentured servants from the South Asian subcontinent or whether we can find suckers, and pray that the bubble lives another day.

[acottawa]

Originally Posted by casper

Your looking at the wrong way. They need to spend the next year locking in the programs based on moderate liberal values so its hard for the conservatives to undo them. That involves getting shovels in the ground on housing. Getting public transit projects locked in as well as just transition to a new green economy.

On the social front, I think we are already there with the $10 daycare. It is going to be hard for the conservatives to undo that at this point.

I don't know what $10 daycare is like in other provinces, in Ontario wait times have skyrocketed. In Ottawa half of kids are aging out of the waiting lists before their name comes up.

https://www.cbc.ca/news/canada/toron...ario-1.7130656

I am not sure there is much benefit to these Soviet style programs where technically a free or heavily subsidized service exists, but in practice few people can access it. Whether it exists or doesn't exist is basically the same outcome for most parents.

[shreddog]

Originally Posted by acottawa

I don't know what $10 daycare is like in other provinces, in Ontario wait times have skyrocketed. In Ottawa half of kids are aging out of the waiting lists before their name comes up.
...
I am not sure there is much benefit to these Soviet style programs where technically a free or heavily subsidized service exists, but in practice few people can access it. Whether it exists or doesn't exist is basically the same outcome for most parents.

Reagan once told this joke ...

In Soviet Russia a Man Goes to Buy a Car... He goes up to the dealership and asks for a car, to which the dealer responds: 'You know there is a 10 year waiting list?'
The man then answers, 'OK,' and pays for the car in advance.
Just before he leaves he asks the dealer, 'Can I pick the car up in the afternoon?'
The delaer then says 'It's 10 years away, what does it matter?'.
'Well I have the plumber coming in the morning'.

In JT's new Canada, parents may have to start reserving a day care spot right after the honeymoon!

[kool maudit]

Originally Posted by Truenorth00

I wonder if there's a political case to tax capital gains as a winning housing policy

Capital gains on the sale of one's primary or secondary residence (e.g. cottage) is 22% here, but this goes up to 90% for commercial real estate or rental properties.

If you make a loss on your residence, 50% of the loss is deductible towards other capital income.

Nobody in the world would call Sweden's housing market a success story, it is only a somewhat more restrained version of Canada's. But I would be interested how policy compares.

[Build.It]

Originally Posted by lio45

That's the total lifetime exemption; if you've used part of it already (or all of it), then that's that.

You can flip primary residences once a year;
You can't regularly create businesses and sell them and have that be tax-free; only the first $800k will be.

It's a strong incentive to put one's $$$ into a well-located Toronto/Vancouver mansion, rather than use it to start a business...

Yes thats correct, it's lifetime exemption that only business owners get. I'm fully supportive of this policy, just surprised that the government hasn't gone after this exemption yet, or made capital gains taxes and corporate taxes higher for that matter (given the ideology they display in public).

There should be capital gains on principal residences IMO, however this should be accompanied by the ability to write off one's mortgage principal payments on rental properties (as I believe is the case in the US, but you'd know better).

[suburbanite]

Originally Posted by kool maudit

Capital gains on the sale of one's primary or secondary residence (e.g. cottage) is 22% here, but this goes up to 90% for commercial real estate or rental properties.

If you make a loss on your residence, 50% of the loss is deductible towards other capital income.

Nobody in the world would call Sweden's housing market a success story, it is only a somewhat more restrained version of Canada's. But I would be interested how policy compares.

90% capital gains tax for commercial property? Is that only for private individuals? I don't know how institutional real estate investment would work under those parameters.

[Truenorth00]

Originally Posted by YOWetal

They're caught in this do we go all in on the left and consolidate that vote or move to the center. The center believes they are thoroughly socialist and as hard as it is to believe the true dyed in the wool leftists think they are neo-liberals. But as you say they need the youth vote and probably most of them don't care about that left right game but want out of the box thinking that actually shakes things up. Surely some staffer or bureaucrat has proposed something crazy they could throw at the wall. I get they don't want to be irresponsible but surely a new Con government will make dramatic change on many fronts so if you believe they are a danger you should be ready to take a risk.

Another discussion was interesting. Peter Mansbridge had a panel on over the weekend. They raised the point about the Liberals and NDP merging. They pointed at the Durham byelection and pointed out that it was a similar byelection in the early 2000s that convinced Harper and Mackay to merge.

[Truenorth00]

Originally Posted by P'tit Renard

At this point, their policies are mainly to keep their partisan boomer base happy. Meanwhile, they're employing scorched earth tactics that'll make the situation as shitty as possible for the next government.

Team Justin also realizes what a catastrophic property bubble they have created especially after COVID, and they're trying to keep the bubble inflated as much as they can before they punt the balloon to the conservatives. When this mother of all bubbles does pop, all the Caspers and their boomer landlord pals will be storming the country with pitchforks that will make the convoy look tame in comparison, and the Liberals don't want to be blamed for the bubble popping.

Will the bubble ever pop? We have massive shortages of housing. Even high interest rates haven't actually tanked prices enough to improve affordability.

[YOWetal]

Originally Posted by Truenorth00

Another discussion was interesting. Peter Mansbridge had a panel on over the weekend. They raised the point about the Liberals and NDP merging. They pointed at the Durham byelection and pointed out that it was a similar byelection in the early 2000s that convinced Harper and Mackay to merge.

I saw that as well. It's a good panel and really show Rosemary Barton is no Mansbridge. I am not sure I follow though. Durham wasn't really a case of vote splitting on the left. NDP were barely above 10% and Cons got 57%. Granted it's a very Conservative riding. More generally though Trudeau has taken the party so far left a merger seems to make more sense than ever. Problem is Singh seems unlikely to win joint leadership race so hard to see what he gains.

Con vote is above the combined NDP/LIberal vote and of course a lot of votes peel off in a merger. The remaing blue Liberals to the Cons and lots of more radical NDP might stay home or vote Green if the merged party elects someone like Mark Carney as leader or any leader for that matter short of Peter Julian.