Comment 65585

By A Smith (anonymous) | Posted July 05, 2011 at 20:51:58 in reply to Comment 65555

>> the Spectator that suggest I give more of my money to taxes because it creates an economy

Nobody said anything about raising your taxes, just increasing welfare.

The Ontario 3 year bond is currently yielding only 2.15%, which indicates that the market is almost begging the provincial government to borrow MORE, in order to create some economic activity.

In 2001-02, interest payments were 2.28% of Ontario's GDP. As of the latest budget, they were down to 1.68%.

On a total government level, we used to pay between 8-9.5% (of GDP) on interest payments (1985-98). This is now down to about 3.75%.

Even in the 8 years prior to Paul Martin making his war on the deficit, in 1993, debt charges had ranged from 8.28% to 9.45% of GDP. In the years 1993-1998, after Martin had slowed spending dramatically, debt charges still ranged from 8.25% to 9.57%. For all of his austerity, not much happened to our debt charges.

This changed after 2000. Since then, federal corporate tax rates have fallen from 28% to the current 16.5%, even while welfare payments have also fallen in real terms.

In fact, prior to 2000, it was a rare year that corporations were net lenders to Canada's economy. Since that time, as average Canadians have taken on larger debts, they have accumulated around $400 billion in cash on their balance sheets.

All of this points to why it's a good idea to increase welfare (without raising your taxes). It will give corporations something to do with the money they are currently sitting on.

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