Canada, the Land of Fiscal Sanity and Tax Reform

While Europe and America have spent the last thirty years adding untold trillions to their respective debts, Canada has done the exact opposite. (h/t: Instapundit) Witness this graph:

How did they manage this?

  1. Across-the-board spending cuts: In the 1990’s, “The Canadian government cut defense, unemployment insurance, transportation, business subsidies, aid to provincial governments, and many other items….Aside from budget cuts, Canada improved its fiscal outlook by fixing the Canada Pension Plan, which is like our Social Security system. In 1998 Canada began moving the CPP from a pay-as-you-go structure to a partially funded system. Today the CPP is solvent over the foreseeable future…”
  2. Balanced Budget: “The spending reforms of the 1990s allowed the Canadian federal government to balance its budget every year between 1998 and 2008. The government’s debt plunged from 68 percent of GDP in 1995 to just 34 percent today.”/
  3. Tax cuts: “During the 2000s the top capital gains tax rate was cut to 14.5 percent, special “capital taxes” on businesses were mainly abolished, income taxes were trimmed, and income tax brackets were fully indexed for inflation. Another reform was the creation of Tax-Free Savings Accounts, which are like Roth IRAs in the United States, except more flexible. The most dramatic cuts were to corporate taxes. The federal corporate tax rate was cut from 29 percent in 2000 to 15 percent in 2012. Most provinces also trimmed their corporate taxes, so that the overall average rate in Canada is just 27 percent today.”

These Tea Party dream reforms, which had bipartisan support (the initial spending cuts were put forward by the Liberal Party), Canada’s dollar, which was jeered at as the “northern peso” in the 1980’s, has acheived parity with the U.S. Dollar, despite the fact that Canada’s GDP is less than a tenth the size of ours. Imagine what our dollar would be worth if our political class had the fiscal sense of Canadian Liberals.

6 thoughts on “Canada, the Land of Fiscal Sanity and Tax Reform

  • That’s funny, because the Tea Party is constantly derided here in Canada. Americans (especially Republicans) are backwards rednecks just because they are, and therefore they are always wrong about everything. Us sophisticated Canadians are smugly superior because we are a progressive nation, even though we have benefited from conservative policies while the US is suffering because of progressive policies, and most of the problems we do have are caused by progressive policies. Therefore, progressive policies are good, or something. I guess that’s how liberals think.

    I just wish the current Conservative government was as conservative as the Liberal party was in the 90’s. Unfortunately, the current Liberals are even less conservative than that, and they are politically irrelevant at the moment anyway (the left-wing NDP is scarily now the second largest party; we can say goodbye to Canada’s “fiscal sanity” if they ever get into power, and their form of tax reform would be to add more of them (more taxes)).

  • Middle-class families are loinokg for more than empty promises. They want to go back to work. And they want the Democrats who run Washington to stop pursuing a big government, big spending agenda that includes a government takeover of health care, stimulus bills, a new national energy tax and taxpayer-funded bailouts. The recent elections in Massachusetts, Virginia, and New Jersey have shown that voters aren’t buying this rhetoric, and in November well see voters aren’t buying it either.

  • The spending frezee is a joke. The Obama administration has been increasing spending for the things that they are going to frezee. If they really wanted to get serious cutting spending they would have done it now. You should not expect them to get serious about the budget. We had about a 1.4 trillion dollar deficit in 2009. I know a lot of our economic problems are due to the Bush administration, but President Obama has made our problems worse.


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