Quote:
Originally Posted by the_only_turek_fan
Are you denying that higher taxes impede economic growth?
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We fall into a range to taxation as a percentage of gdp that is in line with the rest of countries we like to be compared to.
But let’s also consider how taxation impedes growth.
If the government borrows to provide a service then increasing taxation to pay for that borrowing will reduce growth however if the government cuts said service to reduce the deficit then that also reduces growth.
Now for taxation to be a negative in means that what the government spends the money on generates less economic activity then what a private individual spends money on.
So if you lower corporate taxes and it results in a dividend to stock holders but the capital budget of the company remains the same and many of those owners are non-Albertan you are sending money out of the exonomy.
If you cut by taxes I’m saving it a broad based index fund so that’s shipping the money out of province or I’m spending it on out of province vacation. Now if you cut the lowest bracket of taxes exclusively for lower income that would likely drive consumption of necessities and be spend locally but given the consumption of goods and their place of origin you are still leaking dollars
If the government spends the money on a teachers Salary that money does work doing a service in the economy and only costs the amount of services that person uses. In that case the only waste is if the private sector could do that job more efficiently.
So the shot answer is in the context of our current tax rates non-deficit spending whether through cuts or increased taxation will reduce economic growth but revenue neutral redistribution of spending likely has limited affects.