Connect with us
[the_ad id="89560"]

Business

Does Income Inequality Matter?

Published

6 minute read

The Audit

 

 David Clinton

Super-high income taxes don’t increase government revenues. But can taxes be “smart”?

Reducing poverty and its harms is among the most urgent responsibilities of any modern government. But despite the claims of some activists, this particular problem has no obvious and easy solution. I’m going to suggest that targeting income inequality in particular is a waste of time.

First of all, income in Canada is actually not all that unequal. Income inequality is often measured by the Gini Coefficient. A Gini score of zero would represent total income equality, where everyone earns exactly the same amount. A score of one (or, sometimes, 100) represents perfect inequality, meaning one person has all the income, and everyone else has none.

The Audit is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Subscribe to The Audit

Statistics Canada data shows changes to the Gini Coefficient in Canada between 1976 and 2022:

Relatively speaking, those numbers are quite low and – when you ignore the weird COVID years – they also haven’t changed much since 1976. For comparison, the U.S. Gini coefficient in 2023 was 0.47, while (Communist!) China’s was 0.465 – both significantly higher than ours. The worst and best scores are, respectively, claimed by South Africa (.63) and Norway (.23).

But the real reason that talking about income inequality is an unnecessary distraction, is because there’s nothing you can do about it.

As I pointed out in a recent article, the 2 percent of Canadians whose assessed taxable incomes are above $250,000 contribute nearly 30 percent of all personal income tax revenue. They’re already clearly – and for the most part willingly – carrying far more than their share.

Ok. But why not slap the super-rich with a 90 percent marginal income tax? Well that’s been tried. The Beatles even recorded an angry song about it. But as far as I can tell, such taxes have always led to decreasing tax revenues. That’s because the people you’re targeting will either decide to earn less or simply move their businesses and assets to more tax-friendly countries – that often come with the added bonus of good weather.

If you’d ask me for my opinion, I’d say that the federal government could easily free up billions of dollars to address poverty by cutting waste. And a good first step in that direction would involve sharply decreasing the size of our bloated civil service.

How those extra funds could be better spent in a way that actually helps the poor isn’t a simple question. And it’s something you’d definitely want to get right on the first shot. Not to mention that some problems just can be solved with more money.

But in the unlikely event that you did find an expensive solution AND money freed up by new government efficiencies wasn’t enough, one might consider an intelligently designed wealth tax. Wealth taxes – which can take the form of property and estate taxes – have been used for centuries. The catch is that, if they’re poorly designed, they can be destructive. Just imagine a tax on real estate worth more than a million dollars that ends up wiping out seniors counting on the value of their homes to fund their retirements.

An OECD report from a few years back identifies a long list of developed countries whose wealth taxes largely failed to deliver significant revenue boosts. Those included Spain, Austria, Denmark, and Germany.

Norway, with a wealth tax worth as much as 1.5 percent of net wealth, was one of the report’s few success stories. But even they now seem to be having serious problems with compliance. Apparently, rich and industrious Norwegians are leaving the country in such high numbers that the government has imposed a punitive exit tax. I’m sure that’ll work out just great. (The Free Press recently published a piece on Norway’s problem.)

Nevertheless, if there is a universe where the words “smart” and “tax” can happily co-exist in a single sentence, then it’s more likely to work when you also find a way to include “wealth”, “balanced”, and “focused”.

The Audit is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Subscribe to The Audit

Give a gift subscription

Invite your friends and earn rewards

If you enjoy The Audit, share it with your friends and earn rewards when they subscribe.

Invite Friends

Business

Trump says ‘nicer,’ ‘kinder’ tariffs will generate federal revenue

Published on

From The Center Square

By 

President Donald Trump says the slate of tariffs he plans to announce Wednesday will be “nicer,” “kinder” and “more generous” than other countries have treated the U.S.

Trump plans to unveil reciprocal tariffs on all nations that put duties on U.S. imports Wednesday, which the president has been calling “Liberation Day” for American trade.

Trump’s latest comments on tariffs come as he aims to reshape the global economy to reduce U.S. trade deficits and generate billions in federal revenue through higher taxes on imported products.

Trump’s trade policies have upended U.S. and global markets, but the president has yet to get into specifics ahead of Wednesday’s planned announcement.

At the start of March, Trump told a joint session of Congress that he planned to put reciprocal tariffs in place starting April 2.

“Whatever they tariff us, we tariff them. Whatever they tax us, we tax them,” Trump said. “If they do non-monetary tariffs to keep us out of their market, then we do non-monetary barriers to keep them out of our market. We will take in trillions of dollars and create jobs like we have never seen before.”

On Sunday night, Trump said on Air Force One that U.S. tariffs would be “nicer,” “kinder” and “more generous” than how other countries have treated the U.S.

Last week, Trump announced a 25% tariff on imported automobiles, duties that he said would be “permanent.” The White House said it expects the auto tariffs on cars and light-duty trucks will generate up to $100 billion in federal revenue. Trump said eventually he hopes to bring in $600 billion to $1 trillion in tariff revenue in the next year or two. Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

Trump predicts his protectionist trade policies will create jobs, make the nation rich and help reduce both trade deficits and the federal government’s persistent deficits.

The “Liberation Day” tariffs come after months of talk since Trump took office in January. On the campaign trail, Trump frequently called “tariff” the most beautiful word in the English language.

James Dorn, senior fellow emeritus at the Cato Institute, said Trump’s rhetoric on tariffs doesn’t match the economic reality of Americans.

“Tariffs expand the scope of government, politicize economic life, increase uncertainty, and reduce individual freedom,” he wrote. “Government officials gain arbitrary power while market participants face fewer opportunities for mutually beneficial exchanges and greater uncertainty as the rules of the game change.”

Dorn said consumers would pay the price.

“Tariffs are levied on U.S. importers as goods – both final and intermediate –subject to the tariff enter the country,” he wrote. “Importers and consumers typically end up paying the tariffs, as they cut into profit margins and drive consumer prices up.”

Business groups, including the U.S. Chamber of Commerce and American Farm Bureau Federation, have urged Trump to back off tariff threats.

Trump has promised that his tariffs would shift the tax burden away from Americans and onto foreign countries, but tariffs are generally paid by the people who import the foreign products. Those importers then have a choice: absorb the loss or pass it on to consumers through higher prices. The president also promised tariffs would make America “rich as hell.”

Continue Reading

Business

Biden’s Greenhouse Gas ‘Greendoggle’ Slush Fund Is Unraveling

Published on

 

From the Daily Caller News Foundation

By Michael Chamberlain

We warned you: this gas didn’t smell right from the beginning.

The Greendoggle has made the big time! Not every shady government giveaway to special interests gets its own Wall Street Journal editorial.

But how often does the new EPA administrator announce that his staff has discovered that $20 billion that had been appropriated for the Greenhouse Gas Reduction Fund (GGRF or “Greendoggle”) had been “parked” in a bank by the Biden EPA until it could be ladled out as grants to climate industry cronies? That’s what Administrator Lee Zeldin announced back in February, referencing a Biden appointee who was infamously caught on tape explaining that the agency was “throwing gold bars off the Titanic” – trying to get the unspent money out of the reach of the Trump administration. Zeldin’s “clawing back” that money, and the lawsuit by “public-private investment fund” Climate United to get the $7 billion it was awarded, has got the media paying attention. Finally.

Administrator Zeldin’s announcement that EPA is taking back the $2 billion awarded to an organization tied to prominent political figures marks another auspicious turn in the GGRF saga, which Protect the Public’s Trust (PPT) has followed and warned about since the beginning. Passed as part of the Inflation Reduction Act (Mr. Orwell, please call your office …), the GGRF was a massive spending program that would provide funds to environmentalist groups to finance green technology projects. The sheer amount of money Congress shoveled at the EPA was unprecedented. Unfortunately, it didn’t come with commensurate oversight resources – Mr. Zeldin says this was by design. The result was the Greendoggle, an environmentalist slush fund administered by insiders for insiders.

According to emails PPT obtained via FOIA request, the EPA invited a group of green activist organizations and thinktanks to a highly irregular November 2022 meeting to “provide early feedback on the RFI and ask clarifying questions.” And, as PPT foresaw, several groups with ties to EPA officials are on the invitation list. EPA’s “revolving door” with radical environmental groups spun fast in the Biden years.

PPT dug in and researched the green banks, finding multiple insider connections to the Biden administration. “With $27 billion dollars sloshing around, the American public should be on high alert for waste, fraud and abuse,” we warned in October 2023.

The next month, when the “short list” of coalitions vying to become GGRF distributors was announced, the Daily Caller News Foundation’s Nick Pope, whose reporting on the GGRF since early on has been essential in exposing the Greendoggle, revealed it featured “several organizations with considerable connections to the Biden administration, as well as the Democratic Party and its allies.” To put it mildly.

As the Greendoggle came together, the legacy media remained incurious, but for anyone paying attention, it smelled bad. There seemed to be no accountability, and given the Biden EPA’s ethical track record, that was concerning, to say the least.

One of the eight entities eventually chosen was the Coalition for Green Capital (CGC), a green bank whose mission is to “accelerate the deployment of clean energy technology throughout the US while maintaining a targeted focus on underserved markets.” CGC board member David Hayes left the organization for nearly two years to join the Biden White House Climate Policy Office as a special assistant to the president. He then went back to the CGC board. As PPT put it in a complaint it filed in June 2024 with the U.S. Office of Government Ethics and the EPA’s inspector general (and which the Zeldin EPA cited in its legal defense of the clawback), while at the White House Hayes “presumably worked at the highest level on the very GGRF program from which CGC sought funding upon his return. This timing is suspect considering CGC itself publicly announced his return to its board as part of its effort to obtain GGRF funding.” Not very subtle, but it worked. CGC got a $5 billion windfall out of the Greendoggle.

It just so happened that, while Mr. Hayes was in the administration, so was another CGC veteran, Jahi Wise. Like Hayes, Wise was a special climate assistant to the president, until he joined the EPA in December 2022 as … founding director of GGRF. Subtlety doesn’t seem to be among the skill sets CGC looks for in its people. Wise at least didn’t return to CGC after that. He joined a George Soros foundation.

The GGRF should become a metaphor for congressional shortsightedness, bureaucratic arrogance and the venality of special interests at the government trough. The “green” industry is an industry like any other, green special interests are special interests and the color of a taxpayer dollar doesn’t change because it’s being wasted in a nominally noble cause.

The Greendoggle stank, gas and all.

Michael Chamberlain is Director of Protect the Public’s Trust.

Continue Reading

Trending

X