In response to my rejection of Prime Minister Stephen Harper's disaster of a budget, certain bloggers on the right - the ones who have been persuaded that the private property of a country's citizenry is fair ammunition for the political games of its rulers - have requested that I include a few practical suggestions regarding the changes that the PM should have signed off on to accompany my criticism.
To aid me in this task, I will recruit the wonderful Diana Hsieh who is currently facing similarly short-sighted Keynes-inspired stimulus measures in the United States. Reacting to the proposed stimulus package, Diana has drafted a quick letter to Senator Udall outlining the road map to a healthier and freer economy.
Dear Senator Udall,
Please vote NO on the stimulus package. The economy doesn't need to be stimulated by government handouts and pork. Instead, congress and the president should:
* Cut the corporate tax rate. The US has one of the highest in the world; it damages our economy by enticing businesses to move overseas.
* Cut the personal income tax rate for everyone who actually pays taxes. Stop vilifying and punishing financial success. Stop discouraging people from using their own creativity, skills, and effort to succeed in business.
* Cut capital gains tax rate. It's unjust double taxation that distorts the market.
* Eliminate all tariffs and protectionism. Any barriers to trade hurt America.
* Massively cut government spending on welfare and health programs, eliminate corporate welfare, and eliminate the regulations that make doing business a mess of inane red tape.
Freedom -- not more government spending -- is the recipe for a speedy economic recovery.
Adapting these suggestions to the Canadian context did not take much imagination. The stumbling blocks that we are currently facing north of the border are quite similar to - and in many ways are directly tied to - the problems facing the US.
And, so, The Canadian Republic presents:
Five *Actually* Practical Steps That The Tories Should Have Taken In The Budget
(1) Corporate Tax: The American corporate tax rate is appallingly high at 40%. However, Canada is not too far behind with a rate of 36.1%, although this is a marked improvement over just one decade ago when it was as high as 44.6%. If Harper was truly interested in 'stimulating' the economy quickly, he would continue the last decade's trend of freeing up industry by focusing his efforts on reducing the burden of government. Majors cuts to the corporate tax rate is a great way to accomplish this.
(2) Personal Income Tax: Harper's offering to Canadian citizens regarding personal income tax cuts was a joke, especially coming from an allegedly free-market economist. The income tax in Canada was initially supposed to be 'temporary' (ha!) but, like all state programs that arrogate to the government more power than it ought to possess, the income tax regime was soon normalized and then expanded. Cutting personal income tax rates would have been the greatest and most profound change that Harper could have enacted with his recent budget. Instead, he insulted Canadians as well as his own integrity with half-way solutions and useless gestures.
(3) Capital Gains Tax: Diana's comment applies perfectly to Canada as well. Cut the tax rates on realized capital gains and we're beginning to make some progress.
(4) Tariffs & Protectionism: The only fair trade is free trade. Canada must maintain its support for liberalizing trade measures and pressure the United States to abandon its recent bout of protectionist fever. In times of economic contraction, the US tends to clam up and Canada tends to look outwards. The government must maintain its strong opposition to the current 'Buy American' pressure that is troubling Canadians and focus on eliminating any and all barriers to trade for our country.
(5) Welfare & Health Care: Yet another crucial area in which the budget could have made a difference. Substantial cuts to major programs like EI and the reintegration of the private sphere into the Canadian health industry would place more money in the pockets of productive Canadians while reducing government spending and the tax burden.