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Federal budget’s scale of spending and debt reveal a government lacking self-control

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From the Fraser Institute

By Jake Fuss and Grady Munro

Had the government simply limited the growth in annual program spending to 0.3 per cent for two years, it could have balanced the budget by 2026/27 and avoided significant debt accumulation.

Instead, the government chose to increase annual program spending by an average of 4.4 per cent over the next two years and kick the debt problem down the road for another government to solve.

Time and time again, Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland have emphasized the importance of being fiscally responsible with federal finances. Unfortunately, this year’s federal budget ensures once again their rhetoric rings hollow due to their ongoing mismanagement of federal finances.

This mismanagement is rooted in the government’s insatiable appetite for new and expanded programs or services, which has endured for nine years and will continue for the foreseeable future. The budget introduces billions of dollars in additional spending for a national school food program, housing initiatives and artificial intelligence. As such, program spending (total spending minus debt interest costs) is now expected to be $77.2 billion higher over the next four years than the government forecasted last spring.

In 2024/25 alone, federal program spending will reach a projected $483.6 billion—an increase of $16.1 billion compared to the previous budget’s estimates. On a per-person inflation-adjusted basis, federal program spending is forecasted to reach $11,901, which is approximately 28.0 per cent higher than during the final full year of Stephen Harper’s tenure as prime minister (2014/15). The Trudeau government has already recorded the five (2018 to 2022) highest levels of federal program spending per person in Canadian history (inflation-adjusted), and budget projections suggest it’s now on track to possess the eight highest levels of per-person spending by the end of its term next autumn.

This is despite recent polling data that shows the majority of Canadians (59 per cent) think the Trudeau government is spending too much. Nearly two-thirds (64 per cent) of Canadians are also concerned about the size of the federal deficit.

As it has done nine times before, the Trudeau government will borrow to fund some of its spending spree, resulting in a projected budget deficit of $39.8 billion this year, which is $4.8 billion higher than previously forecasted. And it doesn’t intend to stop borrowing, with annual deficits exceeding $20 billion planned for the subsequent four years. This represents a notable increase in deficits compared to what was expected in the last year’s budget. Simply put, there’s no plan for a return to balanced budgets any time soon. As a result, federal debt (net debt minus non-financial assets) is expected to climb $156.2 billion from now until April 2029.

To make matters worse, the government is also increasing the capital gains inclusion tax rate from 50.0 per cent to 66.6 per cent for capital gains realized above $250,000. This will act as a huge disincentive for individuals and businesses to invest in Canada at a time when the country already struggles to attract the very investment we need to improve productivity, economic growth and living standards. Businesses and individuals will now simply invest their capital elsewhere.

There’s a large body of research that finds low or no capital gains taxes increase the supply and lower the cost of capital for new and growing firms, leading to higher levels of entrepreneurship, economic growth and job creation—precisely what Canada needs more of today and in the future.

While the government did boast about its ability to hold the 2023/24 deficit at $40.0 billion, this had little to do with responsible fiscal management. Instead, the government enjoyed higher-than-anticipated revenues of $8.3 billion, but repeated its all too frequent and ill-advised approach of spending that money and wiping out any chance to reduce the deficit.

Growing federal debt leads to higher debt interest costs, all else equal, which eat up taxpayer dollars that could otherwise have provided services or tax relief for Canadians. For context, the government now spends more ($54.1 billion) on debt interest as on health-care transfers to the provinces ($52.1 billion). Accumulating debt today also increases the tax burden on future generations of Canadians who are ultimately responsible for paying off this debt. Research suggests this effect could be disproportionate, with future generations needing to pay back a dollar borrowed today with more than one dollar in future taxes.

But again, it didn’t have to be this way. As we pointed out before the budget, had the government simply limited the growth in annual program spending to 0.3 per cent for two years, it could have balanced the budget by 2026/27 and avoided significant debt accumulation.

Instead, the government chose to increase annual program spending by an average of 4.4 per cent over the next two years and kick the debt problem down the road for another government to solve. Simply put, the government’s fiscal strategy is not all that different from an overzealous child that eats all their Halloween candy in one night even though they fully understand it won’t end well.

Yet for all this spending and debt, living standards have not improved for Canadians. In fact, inflation-adjusted GDP per person was actually lower at the end of 2023 than it was nine years prior in 2014. And going forward, the OECD predicts Canada will record the lowest growth rates in per-person GDP up to 2060 of any industrialized country—meaning countries such as New Zealand, Italy, Korea, Turkey and Estonia would all surpass Canada with higher living standards.

The combination of tax hikes and scale of spending and debt in this year’s federal budget demonstrate the Trudeau government has no interest in being fiscally responsible or improving living standards for Canadians. Instead of showing restraint, the government chose to repeat its mistakes and lead federal finances down an increasingly perilous path.

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“Trade-Based Money Laundering IS THE FENTANYL CRISIS”: Sources expose Chinese-Mexican-Canadian Crime Convergence

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Prime Minister Justin Trudeau attends a dinner at the home of a United Front Work Department leader in Vancouver.

‘That famous picture of Trudeau at a Vancouver dinner with all those Chinese guys—They’re all in there’: Source on United Front money laundering suspects surveilled by US Agency

VANCOUVER and TORONTO — As debate rages over President Donald Trump’s disruptive tariffs on Canada, Mexico, and China—whether they represent a genuine war on fentanyl deaths tied to each nation’s role in the deadly supply chain, or merely a pretext for U.S. trade dominance—multiple Canadian and U.S. government sources have stepped forward to highlight a factor they believe North American citizens aren’t grasping amid Trump’s political rhetoric.

They point to the staggering scale and sophistication of trade-based money laundering orchestrated by Chinese Triads in Canada and Mexican cartels. This is a predominant concern in Canada, alongside revelations of so-called fentanyl superlabs hidden in rural areas, yet easily supplied by Canadian transportation hubs—shipping, rail, and trucking networks saturated with organized crime. These sources insist this little-understood form of criminal money laundering not only fuels fentanyl trafficking—ultimately linked to a complicit Beijing—but directly finances drug shipments initiated by Chinese networks in Toronto and Vancouver, sending fentanyl, methamphetamine, and cocaine across the Mexican border into California, specifically to trucking hubs around Los Angeles.

According to the primary source—a Canadian expert familiar with what they classify as an intricate trilateral partnership between Chinese Triads, the Chinese Communist Party’s United Front foreign influence networks, and Latin American cartels—these economic networks have effectively infiltrated multiple industries and commodities markets on Canada’s and Mexico’s west coasts, using them to conceal and amplify proceeds from fentanyl transactions.

In 2023, Canada’s financial watchdog, Fintrac, reported that Chinese networks had evolved beyond traditional casino-based laundering methods in Vancouver and Toronto, now mastering laundering through Canadian banks, law offices, real estate, and diaspora-based fraud networks. Yet according to The Bureau’s criminal intelligence source, these same networks—operating alongside the Sinaloa Cartel—also traffic in a range of commodities, from poached wildlife and agricultural staples like avocados and limes to rare Chinese delicacies such as geoduck, a phallic-shaped clam prized in hot pot and believed to have aphrodisiac properties.

The same source contends that while Canadian government agencies—including the RCMP, Fintrac, CBSA, and CSIS—understand the key players in the fentanyl trade, systemic issues within Canadian policing and prosecution allow these networks to operate with near impunity:

“The RCMP knows they have no framework within the Criminal Code, no resources, and no support from prosecution services. They just have no ability. And this whole thing with Trudeau saying that only 43 kilos of fentanyl—less than one percent—is coming from Canada is such a joke. It’s the interweaving of trade-based money laundering—if the public knew, it would blow their minds. I believe the U.S. government and Trump know it, and that’s why he’s doing what he’s doing.”

Put another way, what this expert and others argue is that the drug and trade wars engulfing the United States and China are not polarities—they are a single, intertwined conflict, with trade-based money laundering as the critical convergence. And the growing concern—that Canadian and Mexican governments might be benefiting from this illicit trade, perhaps even to the point of complicity—cannot be entirely dismissed.

The exposure of Canada’s prime minister to money laundering networks presents a layer of intrigue and troubling optics, likely recognized in Washington, according to four sources across Canada.

The primary source for this story—reinforcing explosive claims by other Canadian police experts in a recent investigation by The Bureau—provided specific new details, identifying major money laundering networks in Vancouver of concern to U.S. authorities. Among them were high-profile suspects openly acknowledged at a fundraising event attended by Prime Minister Justin Trudeau.

Specifically, the source identified Chinese individuals who had entered Canada on a private jet flagged by a U.S. government agency, which asked the RCMP to surveil them in Vancouver. These suspects were linked to a commercial real estate investor in Vancouver with direct ties to Beijing, and to organized crime figures connected to Beijing’s United Front in Canada.

The gates of an RCMP targeted property in Richmond, British Columbia.

The same individuals, notorious in elite Canadian enforcement circles, appeared in suspicious transaction reports and were central to a sweeping police intelligence investigation into vulnerabilities in Canada’s banking system. This investigation, known as Project Athena, was a major anti-gang initiative examining reports from Canada’s financial intelligence agency, Fintrac. Project Athena emerged after the collapse of its predecessor case, E-Pirate—reportedly Canada’s largest-ever drug money laundering probe—which targeted Chinese underground bankers in Vancouver and Toronto linked to the Sam Gor network, a Chinese syndicate dominated by the 14K, Big Circle, and Sun Yee On Triads.

As part of Project Athena, investigators uncovered a single money service bureau in Hong Kong that moved CAD $973 million over three years, primarily through Canadian banks. Several United Front and Triad-linked suspects from earlier investigations were tied to these transactions.

“That famous picture of Trudeau at a Vancouver dinner with all those Chinese guys—the ones we all know from various media reports? They’re all in there. They’re all in there moving money around,” the source said. “And this was just one money service bureau. Nearly a billion dollars in three years. So how many others are there?”

Paul King Jin and a number of Toronto and Vancouver-based Sam Gor associates targeted in the E-Pirate probe survived a 2020 gang execution in a Richmond sushi diner; Jin’s alleged underground banking partner Jian Jun Zhu was shot to death.

Buttressing their case, the source pointed to a remarkable cache of technical evidence seized from an underground casino in Richmond, just south of Vancouver, detailing the complexity of trade-based money laundering.

The evidence came from a mid-level Chinese Triad operative working for one of the underground banking bosses exposed in the RCMP’s E-Pirate probe of Sam Gor’s casino money-laundry networks.

In this subsequent investigation into Richmond-based underground casinos, investigators uncovered over 1,000 messages—texts, videos, and calls—confirming what Canadian authorities had long suspected and what American intelligence had warned about: the convergence of Triads and Mexican cartels.

In a microcosm, a mid-level Sam Gor agent in Vancouver and their Mexican cartel counterpart, coordinating major transborder narcotics and money laundering schemes, exemplified how Chinese and Mexican transnational networks dominate North American fentanyl trafficking.

Beyond coded drug negotiations, the messages revealed a broad trafficking scheme involving food and various commodities. As the law enforcement source explained, Triads and cartels exploit these commodities to launder illicit profits, amass market share, and tighten their grip on global supply chains.

The conversations demonstrated how narcotics could be smuggled across the border into California as easily as fresh produce or seafood was funneled into international markets.

“It was stunning, absolutely stunning to see coded drug talk, of course, all of that, the usual stuff that we expected to see—how they were going to get it shipped over the border in Mexico, that they had the ability to deliver into the Los Angeles area just north of Los Angeles,” the Canadian expert recalled. “And they would pick it up at these huge truck stops and they would specify in detail which vehicle. But what was equally stunning, was the fact that these two guys were also involved in a wide array of other items, consumer goods, everything from avocados to limes to geoduck clams to lobster, to anything that made a buck and allowed them to launder funds and to move capital through the system. They were trade-based money laundering experts.”

It was similar to the phenomenon seen domestically with Hells Angels in Vancouver infiltrating trucking and construction—but now expanded internationally via cartels and Triads, triangulating trade between China, Mexico, and Canada, the source argued.

The Triads and cartels use false invoicing and front companies, trade-money laundering experts say, securing meth and fentanyl shipments into the United States in exchange for sending legal commodities to Mexico or China. Drug shipments are often concealed within legitimate and counterfeit goods manufactured in China.

“And so they start taking over industries. That’s why your price of limes is what it is today—because the cartels have cornered the market, trying to put those drug proceeds somewhere. So let’s start buying up commodities and controlling sectors. And that’s what this case was. It confirmed everything we had received and heard from the FBI and DEA in bulletins for many years.”

The source added that while this particular cache of communications involved methamphetamine and cocaine—referred to as “glass” and “girls” in coded narco communications—it did not directly pertain to fentanyl. However, the Triad operator and the Mexican cartel associate appeared to broach the subject, at which point the cartel operative redirected the Canada-based Triad to another handler in Mexico.

“The cartel guy he was speaking with on this particular phone was the one handling coke and meth,” the source said. “So it’s like, ‘Hey, I’m interested in this.’ ‘Oh, I don’t deal with that. That’s my associate. You’ll have to go through someone else.’ They segment it. It’s just such a tapestry—but we’re still asleep at the wheel here.”

Prime Minister Justin Trudeau attends a dinner at the home of a United Front Work Department leader in Vancouver.

Disclosing the stunning connections and scale of Triad influence on Canada’s West Coast, the source said the “underling” whose device was seized—revealing hundreds of money laundering and drug transaction deals between the Triad and a Mexican cartel—was working for one of the targets in the E-Pirate investigation, a Vancouver underground banking boss.

That same boss was tracked by the RCMP in another shocking and illustrative incident involving two Chinese airline pilots passing through Vancouver who were caught smuggling bear-paw parts. Like any other travelers, the Chinese pilots underwent standard security checks and were found carrying contraband poached in Canada. Parts from bears—and even massive polar bear mounts harvested from northern Canada—are sold for significant profits to Chinese buyers, the expert explained.

In this case, when the Chinese pilots were released from jail, the individual who arrived to collect them was an underling of the E-Pirate underground banking boss—a major figure in Chinese organized crime in North America. This individual is also said to be responsible for the large-scale export of luxury vehicles from Vancouver to China, the Canadian expert said.

“We found out that a hundred-thousand-dollar Mercedes here in Vancouver is worth between three and five times that overseas. So there’s your money laundering right there.”

The process operates much like the drug-cash laundering schemes identified by U.S. experts, including former Trump administration senior investigator David Asher. Asher contends that the Department of Justice’s $3 billion USD TD Bank money laundering prosecution exposed how Chinese international students—under the direction of China’s United Front Work Department cells—were tasked with collecting and depositing drug cash into bank accounts, transforming illicit funds into real estate mortgages for powerful Chinese criminals operating behind the scenes.

A similar system using Chinese students operates in Vancouver’s luxury vehicle market and drug cash collection networks, a Canadian expert said, describing it as a “diversification” of narco-laundering.

“So imagine moving a hundred thousand dollars’ worth of capital here and walking away with a $400,000 net profit overseas,” the expert explained. “It’s perfect. Then you buy the chemicals, ship them to Mexico, make the meth, make the fentanyl, and move the product north through the States or by other routes. But that’s the part people are just not connecting and are not willing to contemplate.

“We’ve got to embrace the complexity of it all. Every conceivable way you can think of to move product—that’s what they’re doing. Land, sea, air. Because just like a good corporation or investor diversifies their financial portfolio to limit risk, the same logic applies to fentanyl trafficking.”

Meanwhile, Eastern Canadian counterparts agreed. One source—who could not be identified but has expertise in Canadian mortgage regulations and private due diligence on mortgage lending fraud—provided industry-based insight into the players involved in the RCMP’s Project Athena investigation and related Fintrac reports. These reports examined 48,000 pandemic-era banking transactions within the Chinese diaspora, involving Canadian banks and ‘money mule’ accounts—often fronted by Chinese students—used to fund fraudulent mortgages with funds wired from Hong Kong and China.

The industry source estimated that systemic fraud plagues the Greater Toronto real estate market. According to this source, up to 20 percent of home purchases involve fraudulent mortgage applications.

“I am the street-level witness of how banks finance criminal activity. Extrapolating my findings, the amount of money embedded in Canadian housing is enough to make one weep,” they said, estimating that more than CAD $1 trillion may have been laundered through Toronto real estate in this manner over the past 12 years.

This Greater Toronto mansion was associated with the same Sam Gor Triad networks and United Front operatives active in Vancouver, police and intelligence sources say.

The source affirmed that their knowledge aligns with Fintrac’s findings on underground banking and diaspora lending, noting that beyond the Chinese migrant community, industry experts have identified similar investment and lending schemes within the Indian diaspora. Meanwhile, several Eastern Canadian police sources familiar with Fintrac’s findings on Chinese diaspora money flows—as well as large-scale vehicle theft and trade-based money laundering investigations—said they also believe Greater Toronto is a key money laundering and drug transport hub for the Triad-Cartel nexus, a concern Washington has expressed deep alarm over.

“One thing that isn’t being talked about on this side of the border in this recent activity is the pervasiveness of money laundering and its links to all of the criminality,” one police source said.

Another expert suggested that Greater Toronto could be the largest drug-trafficking market by volume in North America, adding that diaspora-based crime groups exert significant influence over all modes of transportation across Ontario, including air traffic. “So you have a few hundred more officers driving up and down the border routes now?” they said, chuckling derisively.

A U.S. government expert criticized Canada’s government and media—particularly reporting from The Globe and Mail that echoes Prime Minister Trudeau’s seizure data arguments—for failing to grasp the scale of fentanyl and illicit trade, calling the country’s focus on relatively small seizure data misleading.

This expert aligned with Canadian federal law enforcement officials who point to highly sophisticated, trade-based money laundering schemes linking Mexican cartels and Chinese Triad networks operating in Vancouver and Toronto. These networks, the U.S. expert explained, facilitate the cross-border flow of methamphetamine, cocaine, and fentanyl, using multi-commodity trade-based money laundering transactions to disguise their profits.

They suggested that Canada either lacks a full understanding of the issue or is failing to take U.S. concerns seriously. By not adopting a more forthright stance—particularly in assessing the scale of money laundering linked to illicit drugs and organized crime—they believe Canada is ultimately undermining its own interests. Meanwhile, U.S. authorities, they asserted, have a clearer and more comprehensive picture of the problem.

This could explain why, following his unexpected victory in the November 2024 election, President Donald Trump swiftly threatened tariffs on Canada and Mexico—a move that puzzled and stunned most observers.

Two Canadian sources suggested the decision was influenced, at least in part, by a bipartisan congressional report on fentanyl released in December.

“It’s certainly one of the most pressing and high-profile developments in the crisis,” one source said.

The congressional working group behind the report spent months expanding on the Select Committee’s bipartisan investigation, which, for the first time, documented how the Chinese Communist Party directly subsidizes the production of fentanyl precursors and analogues.

Lawmakers are now advancing three bipartisan bills aimed at bolstering law enforcement, expanding sanctions against Chinese-backed entities involved in drug trafficking, and imposing financial penalties on organizations that fail to enforce transparency measures to curb illicit drug flows.

“For too long, China has profited from the destruction of American lives, and the fentanyl crisis they are fueling knows no borders,” said Representative Dan Newhouse, chairman of the congressional working group. “As we continue fighting the immediate threat this drug poses, we are also going after the CCP and its central role in subsidizing, producing, and exporting the precursors that drive this epidemic.”

In response to Trump’s formal imposition of tariffs on Tuesday, Canada’s Finance Ministry issued a statement emphasizing the country’s efforts to combat fentanyl smuggling. “Less than 1 percent of fentanyl and illegal crossings into the United States come from Canada, yet the government launched a $1.3 billion border plan with new choppers, boots on the ground, more coordination, and increased resources to stop the flow of fentanyl,” the statement read.

That same day, U.S. Senator Jeanne Shaheen, ranking member of the Senate Foreign Relations Committee, issued a sharp rebuke of Trump’s economic policies following his joint address to Congress.

“President Trump’s address this evening laid bare a cynical and profoundly dangerous approach to America’s global leadership,” Shaheen said. “His 25 percent tariffs on Mexico and Canada—our closest trading partners—threaten to unravel decades of economic cooperation and will inevitably result in economic consequences for American workers and businesses.”

But a Canadian expert dismissed Canada’s efforts as insufficient.

“If you really want to do something lasting here—I mean, I don’t want to sound like I’m pro-Trump in that sense—but you’d have to have a leader in this country willing to crack open the Charter and the criminal code and make radical changes,” the expert said. “This is stuff Canada should have addressed 25 years ago. But through successive liberal governments, we’ve allowed it to continue, and now we’re caught with our pants down.

“If we think we can just start throwing numbers at this and that’ll fix it, that’s a mistake,” the expert continued. “The problem is the framework in Canada—it has made this attractive. The police know what’s going on, but they don’t have the tools to prosecute and disincentivize this. Trump knows this. Imagine it from his perspective: He’s surrounded by weaklings exploiting and killing Americans. He’s not wrong.”

Underscoring the paralysis of Canada’s federal police under the current legal framework, the source reiterated that a broken prosecutorial system not only fails to secure charges against entrenched Chinese and Mexican criminal networks but refuses to even consider cases.

“This is what happens when you’ve got such a decayed system—whether it’s the Charter of Rights, the Criminal Code, the prosecution services, or just the broader demoralization of policing, compounded by chronic resourcing issues for years,” the primary source for this story said. “They just go for the easy stuff. Anything complex—they don’t touch it. I don’t think they’ve tackled a serious file since the E-Pirate case collapsed. The prosecution service basically said, ‘Look, we’re dealing with the same resourcing issues. Don’t send us these complex files. We can’t handle anything with more than three names listed in your report.’”

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What if Canada’s Income Tax Rate Was Zero?

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  By David Clinton

It won’t happening. And perhaps it shouldn’t happen. But we can talk.

By reputation, income tax is an immutable fact of life. But perhaps we can push back against that popular assumption. Or, to put it a different way, thinking about how different things can be is actually loads of fun.

That’s not to suggest that accurately anticipating the full impact of blowing up central economic pillars is simple. But it’s worth a conversation.

First off, because they’ve been around so long, we can easily lose sight of the fact that income taxes cause real economic pain. The median Canadian household earns around $85,000 in a year. Of that, some 13 percent ($11,000) is lost to federal income tax. Provincial income tax and sales taxes, of course, drive that number a lot higher. If owning a house is out of reach for so many Canadians, that’s one of the biggest reasons why.

Having said that, the $200 billion or so in personal income taxes that Canada collects each year represents around 40 percent of federal spending. In fact, in the absence of other policy changes, eliminating federal personal income tax would probably lead to significant drops in business tax revenues too. (I could see many small businesses choosing to maximize employee salaries to reduce their corporate tax liability.)

So if we wanted to cut taxes without piling on even more debt, we’d need to replace that amount either by finding alternate revenue sources or by cutting spending. If you’ve been keeping up with The Audit, you’ve already seen where and how we might find some serious budget savings in previous posts.

But for fascinating reasons, some of that $200 billion (or, including corporate taxes, $300 billion) shortfall could be made up by wiping out income tax itself. How’s that?

For one thing, many government entitlements and payouts essentially exist to make up for income lost through taxes. For example, the federal government will spend around $26 billion on child tax credits (CCB) in 2025. Since those payments are indexed to income, eliminating federal income tax would, de facto, raise everyone’s income. That increase would drop CCB spending by as much as $15 billion. Naturally, we’d want to reset the program eligibility thresholds to ensure that low-income working families aren’t being hurt by the change, but the savings would still be significant.

There are more payment programs of that sort than you might imagine. Without income taxes to worry about:

  • The $6.2 billion GST/HST credit would cost us around $3 billion less each year.
  • The Canada Workers Benefit (CWB) could cost $1.5 billion dollars less.
  • The Old Age Security (OAS) Clawback would likely generate an extra billion dollars each year in taxes.
  • The Guaranteed Income Supplement for low-income OAS recipients could save $4 billion a year.

Even when factoring in for threshold recalculations to protect vulnerable families from unintended consequences, all those indirect consequences of a tax cut could easily add up to $20 billion in federal spending cuts. And don’t forget how the cost of administering and enforcing the income tax system would disappear. That’ll save us most of the $11 billion CRA costs us each year.

Nevertheless, last I heard, $30 billion (in savings) was a long, long way from $300 billion (in tax revenue shortfalls). No matter how hard we look, we’re not going to find $270 billion in government waste, fraud, and marginal programs to eliminate. And adding more government debt will benefit exactly no one (besides bond holders).

Ok then, let’s say we can find $100 billion in reasonable cuts (see The Audit for details). That would get us close to half way there. But it would also generate some serious economic turbulence.

On the one hand, such cuts would require dropping hundreds of thousands of workers off the federal payroll¹. It would also exert powerful downward pressure on our gross domestic product (GDP).

On the plus side however, a drop in government borrowing of this scale would likely reduce interest rates. That, in turn, could spark private investment activities that partially offset the GDP hit. If you add the personal wealth freed up by our income tax cuts to that mix, you’d likely see another nice GDP bump from sharp increases in household spending and investments.

Precisely predicting how a proposed change might affect all these moving parts is hard. Perhaps the ideal scenario would involve 20 percent or 50 percent cuts to taxes rather than 100 percent. Or maybe we’d be better off by playing around with sales tax rates. But I’m not convinced that anyone is even seriously and objectively thinking about our options right now.

One way or the other, the impact of such radical economic changes would be historic. I think it would be fascinating to develop data models to calculate and rank the macro economic consequences of applying various combinations of variables to the problem.

But taxation is a problem. And it’d be an important first step to recognize it as such.

Although on the bright side, as least they wouldn’t have to worry about delayed or incorrect Phoenix payments anymore.

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