Business
Growing the government won’t help Canada’s economy
From the Fraser Institute
By Jake Fuss and Grady Munro and Alex Whalen
Empirical research suggests that economic growth is maximized when the size of government falls between 24 and 32 per cent of GDP. In other words, when governments spend in excess of this range, the economy will not grow as much as it would if government operated within that threshold
Canada is suffering from an economic growth crisis, and governments across the country should reassess their policies. Governments (particularly the federal government) have recently taken a more active role in the economy through increased spending and bureaucracy. However, policymakers must take a step back and recognize that growing government doesn’t lead to growth in the economy.
Canada’s economy has been stagnant for the last decade. From 2013 to 2022, per-person GDP (a broad measure of living standards) grew at its slowest pace since the 1930s, after accounting for inflation. And more recent data shows that in the fourth quarter of 2023, per-person GDP (inflation-adjusted) stood at $58,111—which is $51 per person lower than it was at the end of 2014. Simply put, Canadians have experienced a decade of dismal growth, and are now actually worse off than they were a decade ago.
During this time, many governments in Canada have adopted an approach of greater involvement in the economy and significantly higher spending. Take the federal government, for example.
Since 2014/15, the government has increased annual program spending (total spending minus debt interest) by roughly 75 per cent, from $256.3 billion to $448.2 billion in 2022/23. Moreover, the Trudeau government has recorded the five-highest years of federal spending in Canadian history, after accounting for population growth and inflation. Much of this spending has gone towards expanding Ottawa’s role in the economy through increased transfers, business subsidies or new programs such as $10-a-day daycare and national dental care.
Provincial governments in Quebec, Nova Scotia and British Columbia (to name a few) have also recently reached historical highs in per-person program spending (even after excluding COVID-related spending). Simply put, governments across the country have been increasing spending and becoming more involved in the economy.
One way to measure the size of government, that allows for the comparison of jurisdictions over time, is known as total consolidated government spending as a share of GDP. This measure includes all spending at the local, provincial and federal levels in a jurisdiction and compares that level to the size of the economy.
According to a recent study, in 2022 (the latest year of available data) the size of government in Canada was 40.5 per cent of GDP compared to 38.2 per cent in 2014.
Among the provinces, total government spending ranged from 26.8 per cent of GDP in Alberta to 63.0 per cent of GDP in Nova Scotia. Compared to 2014, the size of government grew in eight of 10 provinces—only Prince Edward Island and B.C. experienced declines in government spending as a share of the economy. It’s also important to note that this is simply government spending. The true size of government, when accounting for things like regulation, is even larger.
Growing government matters because it influences economic growth. When the size of government is below a certain level, it lacks the resources to deliver services such as policing, courts or national defence—which are essential to a functioning economy. On the other hand, when government is too big it engages in activities best left to the free market and effectively crowds-out private-sector activity that contributes to economic growth. Therefore, when a government is too small or too big, economic growth (and consequently living standards) suffer.
Empirical research suggests that economic growth is maximized when the size of government falls between 24 and 32 per cent of GDP. In other words, when governments spend in excess of this range, the economy will not grow as much as it would if government operated within that threshold—all else equal. Based on the numbers presented above, it’s clear the vast majority of governments in Canada are too big. For nine of 10 provinces and the federal government, their spending exceeded 32 per cent of GDP in 2022.
As Canadians look for solutions to address a stagnating economy and falling living standards, governments should recognize that taking a more active role in the economy won’t solve the problem—and will likely make it worse.
Authors:
Business
Report: Federal agencies spent millions of taxpayer money torturing cats
U.S. Sen. Rand Paul, R-Kentucky
From The Center Square
By
A new report published by U.S. Sen. Rand Paul, R-KY, highlights more than $1 trillion worth of taxpayer money spent on projects that he argues wastes and abuses taxpayer money.
Tucked in the report are three programs funded by federal agencies using millions of taxpayer dollars to experiment on cats.
The details are explicit and gruesome.
$11 million on Department of Defense “Orwellian cat experiments”
The US Department of Defense spent nearly $11 million on “Orwellian cat experiments” that have nothing to do with training the U.S. military or national defense.
“When George Orwell wrote 1984, he couldn’t have imagined the bizarre, dystopian reality we find ourselves in today where tax dollars are being spent to shock cats into having erections and defecating marbles. Yes, you read that correctly,” the report states.
Through the DOD’s, Defense Advanced Research Projects Agency (DARPA), $10,851,439 of taxpayer dollars were allocated to the University of Pittsburgh to conduct “grotesque and extremely invasive experiments on cats.”
This involved slicing open the backs of male cats to expose their spinal cords and inserting electrodes to send electric shocks “to make cats have an erection.”
The cats were then subjected to “even more electric shocks, sometimes for up to 10 minutes at a time, before having their spinal cords severed to paralyze their lower bodies,” the report states. “And just for good measure, the shocks continued for another 10 minutes. All this, in the name of ‘science.’”
In another DARPA-funded experiment, balloons were inserted into the cats’ colons and marbles into their rectums “to force these poor animals to defecate the marbles via electric shock.”
“Nothing says ‘national defense’ quite like torturing cats to poop marbles,” the report notes. “If we can’t stop the government from shocking cats into defecating marbles, then what can we stop?”
$2.24 million on feline COVID experiments
The report also notes that under the direction of Dr. Anthony Fauci, since 2022, the National Institute of Allergy and Infectious Diseases and the U.S. Department of Agriculture allocated $2.24 million in grants to Cornell University to conduct feline COVID experiments.
Through a University of Illinois NIAID subgrant, Cornell received $1.59 million over the past two years in addition to a $650,000 USDA grant, bringing the total to $2.24 million, the report notes.
The experiments led to the suffering and death of 30 cats, according to the records of the experiments, the report notes.
The experiments involved injecting healthy cats with COVID-19, observing them suffer and then killing them in groups of four. The cats were not given any type of vaccine or treatment but killed as early as two days after being injected and left isolated in cages.
NIAID funding for the program is slated to continue through 2025; the USDA’s through May 2026, the report notes.
“It’s a mystery as to why the U.S. government continues to fund these barbaric types of studies, especially when the knowledge gained is either useless to society or could be learned without torturing an animal,” the report states.
$1.5 million to torture primarily female kittens
The National Institutes of Health spent more than $1.5 million to torture primarily female kittens in an extreme example “of waste and cruelty,” the report found.
“If you learned that your money is being used to electro-shock young kittens, torturing them for hours on end, and to the point that they vomit, would you believe it?” the report asks. “Since 2019, $1,513,299 worth of taxpayer money has been going to these medieval-type experiments. This is not some distant, dystopian future; it’s happening right now at the University of Pittsburgh, courtesy of a grant from the NIH.”
According to the report, primarily female kittens between four and six months old were strapped to a hydraulic table, spun 360 degrees, flashed with bright lights, injected with copper sulfate, had holes drilled into their skulls, to be “shocked, and abused without resistance.”
According to NIH, the purpose of the experiments is to study how different species, like cats and monkeys, respond to motion sickness. Understanding responses to the test “could have implications for human health, potentially aiding in the treatment of conditions like vertigo or helping us understand the effects of space travel on the human body,” the report states.
The report cites primary sources and includes photographs of the animals and diagrams of the machines used.
Business
Trump 2.0 means Canada must put income tax cuts on the table
From the Canadian Taxpayers Federation
By Jay Goldberg
The topic on everyone’s mind is tariffs: Will Trump act on his threat to impose 25 per cent across-the-board tariffs on the Canadian economy?
But there’s something else Canadians should worry about: income taxes.
During President-Elect Donald Trump’s first term, he lowered income taxes for Americans at virtually at all income levels. And Trump pledged during the presidential election campaign to cut taxes further.
Here in Canada, our tax rates are already uncompetitive. With a possible tax cut south of the border, it’s time to re-examine Canada’s income tax policies.
Let’s take a gander at how Canadians who earn $75,000 a year are taxed compared to Americans.
A taxpayer in Ontario earning $75,000 a year pays an income tax rate of about 30 per cent.
Compare that to the two states bordering Ontario: Michigan and New York. In Michigan, a taxpayer earning $75,000 a year pays a 26.3 per cent income tax rate. And in New York, one of the highest-taxed states in the U.S., that taxpayer would face a 27.5 per cent income tax bill.
Considering that sales taxes and hydro rates are lower south of the border, Canada is clearly at a disadvantage. Add to that the fact that Canadians pay a punishing carbon tax while Americans don’t.
The situation is even more stark for those with higher incomes.
A taxpayer earning $150,000 in Ontario sends roughly 41.7 per cent of their income to Queen’s Park and Ottawa in income taxes.
Compare that once again to Michigan and New York. A Michigander making $150,000 a year pays a 28.3 per cent income tax rate. And a New Yorker pays 30 per cent.
These numbers are glaring. Canadians pay dramatically higher income taxes than our neighbours to the south. And Michigan and New York are some of the higher-tax states.
In Texas, a taxpayer earning $150,000 pays a 24 per cent income tax rate. That’s lower than the income tax rate for an Ontarian who earns half that much.
The cross-border tax gap will likely grow further in the new year. Trump says he plans to further lower income taxes while the Trudeau and Ford governments show little appetite for providing taxpayers up north with a similar break.
For the sake of Canada’s economic competitiveness, income tax cuts need to be placed firmly back on the public policy agenda.
Premier Doug Ford promised to cut income taxes for middle-class Ontarians by nearly $800 a year when he was first became premier six years ago. He pledged to do so by lowering Ontario’s second income tax bracket by 20 per cent.
If there was ever a time for Ford to follow through on his election promise, that time is now.
The feds need to look at cutting income taxes too. Most of the income tax burden in Canada is caused by high tax rates at the federal level.
To insulate Canada from the magnetic pull that will be triggered by a second round of Trump tax cuts, Prime Minister Justin Trudeau must look at lowering personal income tax rates.
Trudeau can cut income taxes substantially without hiking the deficit because there’s plenty of opportunities for savings.
Here’s where to start: The Trudeau government spent $47 billion on corporate welfare in 2021.
If Trudeau eliminated corporate welfare, the feds could cut personal income taxes by 20 per cent across the board without hiking the deficit.
Canada’s politicians can’t be complacent. We can’t control what Trump chooses to do when he gets back into the White House, but Canada’s politicians can control public policy north of the border to make the Canadian economy more competitive.
That starts with cutting income taxes.
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