Taxes and the deep blue sea

Remember back a few weeks when I wrote about corporations and taxes?  I read an interesting article in the SUN the other day.

According to a pay study in the US, 25 of the top 100 CEOs in the US were paid more by their companies than their companies paid in taxes.   And many of  those same companies paid more in lobbying fees than in taxes.

Stated another way... What?!!!

Book available at mysteriesofcanada.com

Two-thirds of the firms studied kept their taxes low by utilizing offshore subsidiaries in tax havens such as Bermuda, Singapore and Luxembourg. The remaining companies benefited from accelerated depreciation.

The LOOPHOLES are so big you could drive a Boeing aircraft with GE engines right through them.

Boeing paid CEO Jim McNerney $13.8 million, sent in $13 million in federal income taxes, and spent $20.8 million on lobbying and campaign spending while General Electric CEO Jeff Immelt earned $15.2 million in 2010, while the company got a $3.3 billion federal tax refund and invested $41.8 million in lobbying and political campaigns.

I wonder what a similar study in Canada would reveal?

Why is good policy toxic politics?

My good pal, Brian Crowley, leader of the Macdonald Laurier Institute, a supposed non-partisan think tank in Ottawa, recently gave a speech entitled, Why is good policy toxic politics?  He was referring to the issue of the HST in BC.  

Near the end of the speech he said, "The question of who made the mess is now secondary to the question of who is going to clean it up. In this regard it falls to all of us first to defend the HST on its merits and second to defend the decision to introduce it. But third, we must hold our politicians to a higher standard and ourselves as well, and reward those who speak frankly to us about hard choices before they have secured our votes."

I hope and expect that Brian has the integrity to tell that to the leader of the Ontario Conservatives!   Hudak has been all over the map on this issue.  He supported it - he hated it - he will cancel it - he will gut it - God knows what other position he can take.  Perhaps he can take the position that it is good for Ontario and Ontarians?  And pigs will fly.

Go get 'em, Brian.

It is time to take the politics OUT of politics

I have been watching very closely the lead up to the October election here in Ontario.  There is NO party that deserves to be elected.  They all stink!

Take the ruling Libs.  They have been in power for two terms now and are the people of Ontario better off?  I would say not.  Is it all their fault?  I would say not.  The world-wide financial mess certainly put a dent in things.  Could they have done better throughout the recession?  In my opinion, the answer is yes.

In business a recession is a time to get your house in order and pound the streets looking for opportunity; even if the opportunity is outside the next quarter.  After all, what else do you have to do with your time?

Did the government try to get their house in order during the recession?  Well Yes and No.  While they spent bags and bags of money they did not have to fix up old, and build new, infrastructure; thus creating work for pavers and builders; they really failed at the business of identifying new opportunities for the long term.  Oh sure, they will point to the Green Energy Act and I can agree that it will create some new employment, but what about the million other unemployed Ontarians.

But let's not just focus on the Libs.  The Cons and the Dippers are no better when it comes to having ideas.

The Cons, especially, are a party of whiners.  I always told my kids that it was easier to be a critic than an author.  What are the Cons promising to do for Ontario after October?  They tell us that they will kill the Green Energy Act, remove the HST on heating fuels, cancel the debt servicing charge on hydro bills, invest in healthcare, education and every other hot button that will get them elected - and not raise taxes.  Not raise taxes?  You have to be brain dead to believe that one... unless, no it is not possible... maybe they will just renege on all the promises once elected.  Wouldn't be the first time it was done.

The NDP?  On their web site the NDP leader is quoted with this, "You know the status quo isn’t working for you. You know it’s time for change. It’s your chance to demand the Ontario you want.  In this election, you can stick with the same tired ideas that you know aren’t working, that make your life more expensive, and your province less fair or you can pick change that puts people first."  Then the site goes on to lay out the platform.  End this fee, end that charge, freeze that charge, cut out consultants and get us on track to balance the budget.  How and by when?  No mention of that!  Did they mention holding down the wage increases of public servants?  What do you think.

Politics trumping politics?  It is a sad choice for Ontarians.

The Current Economic Morass - Could it be avoided? - Part 4

OK.  This is the last entry on this subject.  There is a lot more to say but we shall change the channel following this - Part 4.

Let's talk about the amount of government that we suffer under in Canada.  Back in 2002 I wrote a thesis examining the roles of our three main levels of government - federal, provincial and municipal.  As I developed the thesis it became more and more clear to me that Canadians were over-governed.  My analysis led to the conclusion that we had one level of government too many.  I then turned the thesis into a book entitled,"The Provinces Must Go!"

The logic in the book was simple.  Provinces were created at the time of confederation to do the work of the people while the feds looked after the country.  One read of the BNA confirms this hypothesis.  However, in 1867 people did not live to any great extent in cities.  In 2002 a full 70% of Canada's population were urban dwellers with many of our cities more populous than most of our provinces.  Cities by and large became responsible for the welfare of the people.  But cities, since confederation, have been surfs to the provinces.  The result is we have city infrastructure falling apart, homelessness and many other social problems laid at the feet of cities without the political or economic clout to address them.  Is that the way it should be?

The book showed how easy it would be to eliminate the national and provincial debts, improve both urban and rural situations and a host of other problems without raising a single cent of new tax.  The book is available on Mysteriesofcanada.com.

By the way, the book has caused me a fair amount of grief since being published.  The ultimate insult came at the hands of the geniuses at the headquarters of the Liberal Party of Canada Ontario - LPCO (not to be confused with the Liberal Party of Ontario).  The political experts at LPCO disqualified me from contesting a nomination for the last election based on their belief that my thesis and book were not in keeping with the policies of the party.  When challenged to show me the policy that my ideas were contravening, the conversation just stopped on their part.  I guess that the 2011 federal election kinda showed the folks at LPCO that maybe their policies were not so much the policies of mainstream Canadians or Ontarians.

Political parties stagnate with time.  They get so beefed up with their self-importance that they refuse to grow.  They refuse to challenge themselves to reach higher plateaus and debate new issues.  But do not think that this is a problem only of the Liberals.  It affects them all, including the Grande Orange party of (the late) Jack Layton.

Until our political class loses their snootiness and begins to really listen to Canadians, this country will never be a place for progress.

'Nuff said.

The Current Economic Morass - Could it be avoided? - Part 3

We have touched on subsidies and taxes; now let's talk about productivity.

I talked with a retired Canadian Ambassador the other night at a get together.  I asked him about an issue that recently came to my attention.  Apparently there are tens of diplomats at Foreign Affairs that are on the payroll while they sit at home.  The government calls it "waiting for reassignment".  I asked my colleague about it.  He told me that it was a rare occurrence during his time (he retired in 1992) but it did happen.   Seems that when a diplomat turns 60 he/she is told that their career is dead-ended (ie.  no more postings for you, chum).  The dips return to Ottawa and sit at an empty desk until they decide that they have had enough and retire voluntarily.  (Great way to end your career, eh?)

But he did not stop there.  He went on to tell me that, in his opinion, 30% of people who work at Foreign Affairs are working like they like their jobs while the remainder are coasting towards retirement (some 3-30 years from now).

If we could cull the civil service down towards that 30% who do all the work, we could save a bundle.

Just so you don't think I am singling out civil servants, the same can be said for private industry.  I used to tell people that you can always tell when a company becomes mature.  At that point you can shoot a cannon through the offices and not hit a sole.  Everyone goes home to try to forget their day.  Oh sure there is that core group working hard into the evening - they make up the 30%.

Productivity is not a bad word.

The Current Economic Morass - Could it be avoided? - Part 2

There is an interesting debate going on in North America.  In the US Gadzillionaire, Warren Buffet, says that he pays only 17.5% tax rate on his earnings while the average American Joe pays 30%.  Is that fair and equitable?   No says Buffet and yes says the Tea Party.  Buffet wants millionaires to pay more and Tea Party-ers says no way?

In Canada there was an exchange on the CBC TV that was worth watching.  On the Lang and O'Leary Exchange, featuring Amanda Lang and Kevin O'Leary,  O'Leary claimed he was paying over 50% in income taxes and demanded that he, as a job creator (prove it Kevin), should not be penalized for creating those jobs.  Lang, in one her best cool shots yet, commented that investors, such as O'Leary, had more ways to hide their income from taxes than anyone.  She wanted to talk to his accountants.  Caught by surprise, O'Leary tripped over his own tongue trying to change the channel on the discussion.

Canada's tax code contains over 2 million words.  How many of them are loopholes designed for Kevin O'Leary?  The code was written by tax lawyers and accountants for tax lawyers and accountants.  The average Canadian Joe has less knowledge about the tax code than he does about catalytic convertors.  Is that right?

The economic morass could have been avoided if there was equitable tax laws for all.  If you make $30,000 or $30,000,000 per year you should pay the same tax percentage to the government.   By flattening the tax rate and eliminating loopholes, you can also streamline Canada Revenue Agency, and thus save money.

Up next in Part 3 - Making the money Canadians pay; work for Canadians.

The Current Economic Morass - Could it be avoided? - Part 1

Yes and No is the easy answer.  Let's take the No first.

Taxes, as we know them, were first imposed in the early 20th century to fund the government during the First World War.  They were supposed to be a temporary measure but, as with most thing government touches, temporary become permanent.  Take for example the temporary building erected for National Defense in 1939 near the Parliament Building.  At the time, C.D Howe, stated that, "two years after the War nobody would know the temporary buildings had existed".  Take a walk up by the Supreme Court if you want to see the temporary building today.

Back to taxes.  When government gets money, they spend money.  Some would say it is their job while others say that it is their obsession.  Spending money is like a drug for some, not just government, so I lean towards obsession.  If government wanted to avoid this economic morass, one thing they could have done was spend less.  Do we really need to be dropping million dollar bombs in Libya?  Do we really need to subsidize the Oil Sands to the tune of $2 billion per year?

But there is another side to taxes and that is the collection of them to feed the obsession.  It is estimated that the Canadian tax code, with regulations, contains over 2 million words.  Compare that to the bible with just over 774,000 words.  It takes scholars a lifetime to memorize the bible.  What does that say for us mortal taxpayers?  Get rid of the loopholes and flatten the tax to a single rate, please.

In Part 2 we will explore other issues affecting the Current Economic Morass.

Welcome to the Mysteries of Canada Blog

The purpose of this blog is to allow authors on Mysteriesofcanada.com to comment on issue affecting Canadians and others.

"History is what happened two seconds ago" and "History is written by the victors."  I do not know who originally said these words but they were never more applicable than today.  Recently, I have been assailed by critics of my site and accused of being closed minded on issues.  Nothing can be further from the truth.  As a historian I seek facts that lead to truths.  Sometimes my research leads me to challenge popular conceptions of people and events.  Because I chose to support an issue from one side does not make me closed-minded.  If further research produces compelling facts that alter truths, then I assess them and many times change my mind on issues.  Many times, though, I do not change my mind but remain open to alternative truths.

A case in point was the recent brouhaha over Louis Riel.  While I still see Riel as less than a traitor to Canada, I, none-the-less, offered space to writers with conflicting views.

The second reason for this blog is to allow me to comment on issues of the day - because they are tomorrow's history.  I will try to maintain a level field of politics but sometimes that will be impossible.  If I chose to criticize the government of Canada, you may construe that I am anti-Conservative. But because the current government is Conservative criticizing the government does not mean that I am anti-Conservative.

That being said, this blog is not mine, it belongs to the people who participate in Mysteries of Canada.  ENJOY!

Bruce Ricketts
Mysteries of Canada