FACE TO FACE: Are tax cuts for business and the wealthy good for the economy?
My colleague opposite is singing from the socialist hymn book this week: "Corporations and the rich are bad, raise their taxes," he chants.
If my colleague really believes raising taxes on corporations would have no adverse effect on the economy, he's living in a dream world. Study after study shows, in the long run, higher corporate tax rates will reduce capital investment, impair technological adaptation and hurt productivity.
In other words, raise corporate taxes now, suffer with distressed industries and higher unemployment levels in the future.
And let's not forget that, in the real world, there is only one taxpayer. If corporate taxes go up, we all know that the companies will pass those increased taxes on to you and me.
So, what about raising taxes on the rich?
In British Columbia the highest marginal income tax rate of 43.7% starts at only $132,406. Does a yearly income in Metro Vancouver of $132k make you rich?
Most people I know who make that kind of money have invested in their education, work long hours, sacrifice their leisure time and have made good career decisions. And my colleague wants to punish them for that?
Tax burdens are already too high in this country.
Last month, the Fraser Institute released its Canadian Consumer Tax Index, which calculates that over the past 50 years, our tax bills have grown more rapidly than any other major item in an average family's annual budget.
In 1961, for example, the average family spent 56.5% of its income to pay for shelter, food and clothing; in the same year, 33.5% of a family's income went to government taxes.
The situation has now reversed: The average family now spends 33.6% of its income on the necessities of life while 41.5% of its income goes to taxes.
Governments across the country should be working towards cutting costs and ultimately reducing taxes - for all income levels.
As the adage goes, we do a much better job spending our money than the government does.
(See: fast ferries, gun registry, MP pensions, Canada's senate and $16 glasses of orange juice.)
Andy Radia is a Coquitlam resident and political columnist who writes for Yahoo! Canada News and Vancouver View Magazine. He has been politically active in the Tri-Cities, having been involved with election campaigns at all three levels of government, including running for Coquitlam city council in 2005.
