Trump 2.0 means Canada must put income tax cuts on the table

From the Canadian Taxpayers Federation

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.

Related Topics:#CanadianTaxpayersFederation #JayGoldberg CanadaUSIncomeLevels CanadaUSIncomeTaxPolicies Trump2.0IncomeTaxCuts

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Alberta government must do more to avoid red ink

Business

Trump Tells Supreme Court He Wants To Resolve Tik-Tok Controversy

Published on December 28, 2024

Todayville

From the Daily Caller News Foundation

By Hailey Gomez

President-elect Donald Trump filed a brief Friday with the U.S. Supreme Court, asking the justices to block a law requiring that the social media platform TikTok either be sold or shut down by Jan. 19.

In April, President Joe Biden signed legislation allowing the ban of the Chinese-owned social media platform unless it is sold to a non-Chinese company within the year. Despite the company’s attempts to challenge the legislation as the shutdown date approaches, a panel of three judges on the U.S. Court of Appeals for the D.C. Circuit ruled unanimously on Dec. 6 that the ban would be upheld, citing TikTok as a potential national security risk due to the Chinese government’s involvement with the app.

In his new filing, Trump argued against the ban, seeking to resolve the issue “through political means once he takes office.”

“President Trump alone possesses the consummate deal-making expertise, the electoral mandate and the political will to negotiate a resolution to save the platform while addressing the national security concerns expressed by the government — concerns which President Trump himself has acknowledged,” the brief said.

The Supreme Court on Dec. 18 agreed to hear TikTok’s challenge against the ban, with oral arguments set to begin Jan. 10. In its emergency application to the high court, the social media platform argued that the Protecting Americans from Foreign Adversary Controlled Applications Act, which is the basis for the ban, will not only “shutter” the U.S.’s “most popular speech platform the day before a presidential inauguration,” but will also “silence the speech of Applicants and the many Americans who use the platform to communicate about politics, commerce, arts, and other matters of public concern.”

Despite attempts to ban the app through executive orders, Trump publicly opposed legislation targeting TikTok, stating that the move to ban the social media platform could potentially benefit Meta CEO Mark Zuckerberg’s Facebook.

“If you get rid of TikTok, Facebook and Zuckerschmuck will double their business. I don’t want Facebook, who cheated in the last Election, doing better. They are a true Enemy of the People!” Trump posted to Truth Social in March.

In addition to his request to handle the issue once in office on Jan. 20, the brief noted Trump’s large following on TikTok, arguing that it allows him to “actively” communicate with supporters.

“President Trump is one of the most powerful, prolific and influential users of social media in history,” the brief said. “Consistent with his commanding presence in this area, President Trump currently has 14.7 million followers on TikTok with whom he actively communicates, allowing him to evaluate TikTok’s importance as a unique medium for freedom of expression, including core political speech.”

TikTok additionally filed a brief Friday to the Supreme Court claiming the law being used to aid the ban was a violation of the First Amendment.

“The government has banned an extraordinary amount of speech; demands deference to unsubstantiated predictions a future risk will materialize; and gets facts wrong when it bothers to provide them,” the brief said.

“Congress’s unprecedented attempt to single out petitioners and bar them from operating one of the nation’s most significant speech venues is profoundly unconstitutional,” the brief continued.

Alberta

Alberta government must do more to avoid red ink

Published on December 27, 2024

Todayville

From the Fraser Institute

By Tegan Hill

As Albertans look toward a new year, it’s worth reviewing the state of provincial finances. When delivering news last month of a projected $4.6 billion budget surplus for fiscal year 2024/25, the Smith government simultaneously warned Albertans that a budget deficit could be looming. Confused? A $4.6 billion budget surplus sounds like good news—but not when its on the back of historically high (and incredibly volatile) resource revenue.

In just the last 10 years, resource revenue, which includes oil and gas royalties, has ranged from a low of $3.4 billion in 2015/16 (inflation-adjusted) to a high of $26.1 billion in 2022/23. Inflation-adjusted resource revenue is projected to be relatively high in historical terms this fiscal year at $19.8 billion.

Resource revenue volatility is not in and of itself a problem. The problem is that provincial governments tend to increase spending when resource revenue is high, but do not similarly reduce spending when resource revenue declines.

Overall, in Alberta, a $1 increase in inflation-adjusted per-person resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year, but a decline in resource revenue is not similarly associated with a reduction in program spending. Over time, this pattern has contributed to historically high levels of government spending that exceed ongoing stable levels of government revenue.

And while the Smith government has shown some restraint, spending levels remain significantly higher than reliable ongoing levels of government revenue. Put simply, unpredictable resource revenue continues to help fund Alberta’s spending—and when resource revenues inevitably fall, Alberta is at high risk of plummeting into a deficit.

Indeed, Finance Minister Nate Horner continues to emphasize that we are “living in extremely volatile times” and warning that if oil prices fall below $70.00 per barrel a budget deficit is “very likely.” According to recent forecasts, the price of oil may hit $66.00 per barrel in 2025.

To avoid this fate, the Alberta government must do more to rein in spending. Fortunately, there’s plenty of options.

For example, the government spends billions in subsidies (a.k.a. corporate welfare) to select industries and businesses every year. A significant body of research shows these subsidies fail to generate widespread economic benefits. Eliminating this corporate welfare, which would generate significant savings in the budget, is a good place to start.

If the Smith government fails to rein in spending, and Alberta incurs a budget deficit, it will only mean more government debt on the backs of Albertans. And with Albertans already paying approximately $650 each in provincial government debt interest each year, that’s something Albertans simply can’t afford.

With a new year set to begin, the Smith government continues to warn of a budget deficit. But rather than simply prepare Albertans for more debt accumulation—financed by their tax dollars—the government should do more to avoid red ink. That means cutting wasteful government spending.