Our prime minister believes that "no taxes are good taxes." He simply parrots what has been the conventional wisdom for the last forty-five years. But, Alex and Jordan Himelfarb write, the conventional wisdom is failing:
According to the government’s own figures, federal revenue as a share of the overall economy is hitting lows not seen for 70 years. Cash-strapped governments behave as we all do when money is tight, cutting corners and focusing on getting through the day rather than investing in the future — even when this short-termism ends up costing far more down the line. We see this, for example, in crumbling infrastructure as governments put off necessary investments, increasing risks to health and safety, undermining competitiveness and passing on even higher costs to future generations.
We see this as well in the increasing concentration of income and wealth and persistent poverty as tax cuts weaken the programs that reduce inequality and mitigate its consequences — from child care to medicare. Today, fewer unemployed Canadians than ever have access to EI, this at a time when our labour market performance has been particularly shabby. Twenty-five years after our Parliament committed to ending child poverty, shamefully, things are actually worse. And perhaps most worrisome, we start to believe this is all normal and inevitable. Little wonder that trust in government continues to decline and more Canadians are asking whose interests government serves.
Now organizations like the IMF and the OECD are arguing that inequality impedes economic growth:
Over this past year, however, some unexpected voices have started to talk about taxes not as a burden, part of the problem, but as a key part of the solution to our challenges. Even some organizations that have always embraced and promoted the low-tax austerity agenda have started to wonder out loud whether this has all gone too far. The IMF, the OECD, bond rating agency Standard and Poor’s — past champions of austerity — have all published reports this year making the case that the costs of tax cuts now outweigh whatever benefits they were supposed to deliver.
For an economist, Stephen Harper remains breathtakingly ignorant of the latest work in his field. He will run in the next election on a platform of family friendly tax cuts. The myth that he is a smart fellow -- like the conventional wisdom -- is failing.