PM Justin Trudeau's Canada

[Richard White]

Bring some sense back to the market? That people who have no business owning a home wouldn't?

AoD

You know how many people I know who bought during Covid when rates were low but are now stuck renegotiating their mortgage at 5% + Prime? It is not their fault that the Bank of Canada raised interest rates.

 

[AlvinofDiaspar]

You know how many people I know who bought during Covid when rates were low but are now stuck renegotiating their mortgage at 5% + Prime? It is not their fault that the Bank of Canada raised interest rates.

It's not my problem that they assumed wrongly, nor is it necessarily BoC's fault for raising interest rates. In other words, they are people that have no business in buying these property in the first place because they would have failed a stress test.

AoD

 

[Richard White]

It's not my problem that they assumed wrongly - in other words, they are people that have no business in buying thee property in the first place.

AoD

Again.. at the time they could afford it. They had down payments, they have good jobs. One works for TPS making over 100K annually.

 

[AlvinofDiaspar]

Again.. at the time they could afford it. They had down payments, they have good jobs. One works for TPS making over 100K annually.

You don't seem to understand what I am saying - that you cannot assume you can afford it without stress testing or that interest rates will stay low. Guess what, you can't. They might have options though - renting out part of the property, etc. But I definitely don't see why taxpayers at large should subsidize their errors.

AoD

 

[AlvinofDiaspar]

Do we need multiple domains or just some domains done really well? There's the Nordic model. It does kinda work.

• High personal taxes.
• Low corporate taxes.
• Substantial support to strategic sectors including their defence sector.

But this would entail some real sacrifices that I'm not sure most Canadians would support. It probably has to get really bad before the country changes course. We're probably a long ways out from that.

We couldn't even do multiple domain even if we want to; we can only do some domains really well - but I am not sure if we are doing that right now. I would put a giant proviso on the low corporate taxes part - I don't see why our oligopolies should enjoy that considering how little innovations they bring in - and you just know they'd wh*re themselves on the trough and deliver nothing in return.

AoD

 

[kEiThZ]

I'll give you an example of how different countries think. It'll be from the defence sector I know.

We need a new maritime patrol aircraft. Boeing has a fantastic product that is used by all our allies and is a proven product. Bombardier has a proposal for the government to fund the development of a new platform. But the very airplane they propose to use by definition can offer the same capabilities. Which means, even if it is funded, it will never get customers outside Canada.

Now let's compare to Sweden. They have a small population, a hostile neighbour and a lot of area to cover. What do they develop? Globally competitive, best in class kit. The CV-90 is arguably the best IFV in NATO. The Gripen is the most capable small fighter. And they even took a Canadian business jet and turned it into AEW platform:

Or there's Australia. Two thirds of our population. In a bit of a rougher neighbourhood. Small population and massive terrain to cover. They realized they needed substantial surveillance capabilities. They developed the Wedgetail and now they are selling it to the US. They also put expertise on automation and AI to work and developed this flying wingman that will be sold to the US too:

In all these examples, we see government supporting industry not as some kind of protection and favoritism racket but as part of an effort to develop best in class products that also fill a need at home. They aren't trying to jam a square peg into a round hole. They are trying to develop things that are competitive, that allies will want. Instead of telling Bombardier to develop a fantastic electronic warfare or ground surveillance or AEW aircraft (all roles that the Global has done), we're thinking about shoehorning torpedoes into a business jet. And the only reason Bombardier is lobbying so hard on this, is because our defence spending is so limited, they know those opportunities won't come. But as shown above, this is not how successful countries like Sweden and Australia think.

 

[kEiThZ]

We couldn't even do multiple domain even if we want to; we can only do some domains really well - but I am not sure if we are doing that right now. I would put a giant proviso on the low corporate taxes part - I don't see why our oligopolies should enjoy that considering how little innovations they bring in - and you just know they'd wh*re themselves on the trough and deliver nothing in return.

AoD

Part of the reason those oligopolies have so much profit to tax is that we protect them from competition. That's just a different tax on the consumer.

Ultimately though, if we want companies to domicile and invest in Canada, we're going to have accept the fact that consumers have to take more of the burden and corporations less. Just look at what the mix looks like in the Nordics. And they are clearly not low tax jurisdictions overall.

Fundamentally, it needs to be worth investing in Canada and that comes down to offering better return than other places. That's obviously a total package question, that includes infrastructure, level of education, etc. But corporate taxes probably are a barrier at certain scaling threshold that causes succesful businesses to migrate.

 

[Northern Light]

Part of the reason those oligopolies have so much profit to tax is that we protect them from competition. That's just a different tax on the consumer.

Ultimately though, if we want companies to domicile and invest in Canada, we're going to have accept the fact that consumers have to take more of the burden and corporations less. Just look at what the mix looks like in the Nordics. And they are clearly not low tax jurisdictions overall.

Fundamentally, it needs to be worth investing in Canada and that comes down to offering better return than other places. That's obviously a total package question, that includes infrastructure, level of education, etc. But corporate taxes probably are a barrier at certain scaling threshold that causes succesful businesses to migrate.

One useful stat, deserves another, by comparing the above to Canada via the OECD:

The OECD numbers show Nordic Country corporate taxes somewhat higher than the Tax Foundation, but, still notably below Canada's:

Finally, a look at the U.S.

****

To sum-up.

Canada takes ~9% of its tax revenue across all levels of gov't from corporate profits

Nordic countries take 6 or 7%

The U.S. 5%

****

Where the different countries make that loss us is widely varied with the U.S. have no national VAT; but having comparatively high personal taxes and property taxes; while the nordic countries
tend to lean heavily on VAT.

 

[kEiThZ]

To sum-up.

Canada takes ~9% of its tax revenue across all levels of gov't from corporate profits

Nordic countries take 6 or 7%

The U.S. 5%

****

Where the different countries make that loss us is widely varied with the U.S. have no national VAT; but having comparatively high personal taxes and property taxes; while the nordic countries
tend to lean heavily on VAT.

This would suggest to me that for Canada to be competitive, we would need to match the US on corporate taxes and fund our public services in a way that:

1) Can't be evaded easily;
2) Encourages saving; and,
3) Will still attract talent and investment.

If there's no cuts to services, this probably means much higher VAT and property taxes, since raising income taxes could also drive brain drain.

But.... It's easier to just import a million per year and avoid raising taxes. So.....

 

[Towered]

This cheap skilled labour thing is a mug's game though. If you can send work to Toronto or Vancouver, you can also send the work to Bangalore and Warsaw and Riga.

Poland seems to be upping its tech game, although I'm not sure how serious that is or if it's more government hype to attract investment.

 

[Northern Light]

This would suggest to me that for Canada to be competitive, we would need to match the US on corporate taxes

I'm not sure if we have to dead match; U.S. employers are burdened with health benefit costs which are considerably lower in Canada.

That said, I think there is a suggested need to rebalance.

and fund our public services in a way that:

1) Can't be evaded easily;
2) Encourages saving; and,
3) Will still attract talent and investment.

If there's no cuts to services, this probably means much higher VAT and property taxes, since raising income taxes could also drive brain drain.

I concur, I think VAT is the likely choice. Ontario's VAT is 2 points below that of Quebec and Atlantic Canada as is.

I think a uniform provincial VAT of 10% and Federal VAT of 7% would probably work.

This would allow most of that to facilitate the rebalance, but a single point could fund key service enhancement.

I expect it may also mean raising tax on small business which pays lower rates in Canada than just about anywhere. (this creates a steep penalty in Canada for growing your business to medium size)

There is probably room to do a bit more on the payroll tax side as well, but I wouldn't go too far w/that.

Toronto's property taxes are inordinately low, but outlying regions already have taxes more similar to those seen in the U.S.

But.... It's easier to just import a million per year and avoid raising taxes. So.....

Right, we've got to get gov't to change course.

 

[kEiThZ]

I'm not sure if we have to dead match; U.S. employers are burdened with health benefit costs which are considerably lower in Canada.

This is the typical Canadian mindset....

But to be competitive and overcome all kinds of American advantages you can't just match. You have to beat.

 

[Northern Light]

This is the typical Canadian mindset....

But to be competitive and overcome all kinds of American advantages you can't just match. You have to beat.

The typical Canadian mindset is surely the status quo.

I am not advocating for that.

If you can't come to an agreement w/me, you can't persuade anyone.

We're not particularly far apart, and you reach for an insult at any and every opportunity.

Try being kind, it does wonders. The world is full of shades of grey, and the need to sway public opinion rests w/those who would seek to do so.

If you want to run for office on slashing Corporate tax and raising the VAT to 20% good luck w/that, but I suspect your vote total may be less than the Rhinoceros Party.

I want to carefully look for sweet spots and a case that can be made to the broader public to shift; that's an uphill battle anyway you cut it; no need to poison the well prematurely.

***

I also didn't say we don't have to meet, I said we may not have to, in the context of other advantages.

Its a total package.

Figuring out the optimal package requires further study.

I have no desire to have the worst of the U.S. in order to gain the best of it.

That means understanding a tax model that will have to produce at least somewhat more revenue than its U.S. counterpart; in the same way as understanding that proportionately less of that will be on defense, even as we could agree
that spending on the latter will have to rise in Canada.

 

[afransen]

How about we win by having the highest standard of living? The best infrastructure? The best education and training system? A great VC marketplace? etc.

I don't see those as being mutually exclusive. We have to be a bit realistic about the size of our market. We are never going to match California's VC ecosystem. It is singular.

 

[Northern Light]

I don't see those as being mutually exclusive. We have to be a bit realistic about the size of our market.

Canada is a larger nation-state than more than 1/2 the OECD

At our current rate of population growth we will pass Spain 5 years. I'm not sure I want to entertain how small a market we are, I think this gets us into a narrow U.S. vs Canada world view.

Baring extraordinary calamity, we will almost certainly always be a smaller market than the U.S. So I think it more behooves us to look at whose out performing us in a similar population/GDP range and see how we can take from them to be more
competitive/productive; and how we can then spread the windfall from that to more people.

We are never going to match California's VC ecosystem. It is singular.

I concur; on this point, but our performance does have an unreasonable lag to it, to me.