Tuesday, March 22, 2011

An idealist Canadian Political and Economic Platform

This proposed political platform is meant to be embraceable and embraced by all Canadians, though realistically it is addressed to influence the political leadership of the NDP and Green parties who by embracing idealist principles can achieve additional political prominence.

Full Employment and higher incomes
The first principle that societies should embrace is that full employment and wage inflation are not simply the best problem they can have, but rather a goal in itself.  If finding higher wage employment is easy, and finding employment easier, it benefits the vast majority of Canadians.  As obvious a policy as this seems, there are powerful forces against full employment, namely the banking, corporate, and investor classes who see wage inflation as a threat to profits.  Opposing these classes seems close to an NDP platform, but it is not the current one.

Pro union and minimum wage polices are against full employment policies.  They lead to fewer (though better) jobs to the detriment of those left unemployed.  Collective bargaining has typically lead to lower competitiveness and sustainability to industries such as auto manufacturing and airlines.  I'm not suggesting any curtailment to collective bargaining rights, but rather that the aims of collective bargaining be directed to profit sharing and ownership stakes such that labour can share in the risks and rewards in their organizations.

basic income - making life easier for Canadians.
The philosophy of giving every Canadian an equal share of tax revenue targeting basic survival income for all is fundamentally fairer than catering to political lobby groups for targeted handouts.  It guarantees fiscal discipline at all government levels by making every expenditure come equally from every Canadian's pocket.

Survival level basic income can easily be financed by replacing existing social services.  The most important benefit of all is the elimination of desperation and oppression.  Instead of the Harper Government's plan to increase income inequality belied by its military and prisons based economic vision, basic income addresses the root causes of crime (oppression and desperation), lessening the need for government protection services.

Basic income further promotes full employment.  There is no disincentive for EI or welfare recipients to continue qualifying for benefits by not working.  If people choose not to work as a result of basic income, then the remaining labour pool gains better a competitive position for wages.  The income support further allows for training or venture startups thereby creating more and better jobs, and safety nets that extend to investment class means lower risk in investing, and therefore, greater likelihood of funding those startups.

Equalizing taxation on work and investment income
Advocating for taxation policy always involves taxing someone else more.  The corporate and investment classes have and will continue to dominate discussion on tax policy, and use a genuine argument of double taxation of corporate and investment income, but also disingenuously use the argument that taxes on investment discourage investment.  The latter is disingenuous because if there are appropriate tax credits for investment losses, then as a simplified example of an investment that either doubles or loses all of its value based on a coin flip, investing $1M under a 90% tax rate, brings after tax returns or loses of 100k.  The exact same risk/return profile as investing 100k under a 0% investment tax rate.  High corporate tax rates thus encourage greater investment, though this ignores another genuine corporate argument of international tax arbitrage.

One of the 2 central components of natural tax policy is the tax equalization of work and investment income.  This is accomplished quite simply by allowing businesses to deduct dividend payments from their taxable income, and making investors pay income taxes at their marginal rate (same as work income) on dividend income and capital gains.  The effect would be to eliminate any double taxation and investment disincentive arguments,  because virtually all businesses would pay 0 tax with this new deduction alternative.  Money would be distributed back into the economy instead of hoarded, thereby substantially improving the economy.

If this is combined with basic income security for Canadians, then since investors also benefit from the basic income social safety net, they can pay the same increase on tax rates that are designed to replace social security premiums.  A fairer share of taxes paid by the investment class means lower overall tax rates will be possible.  Corporations receiving an effective 0 tax rate, will make Canada a leading foreign investment destination, and win (or at least lead)  the tax arbitrage war that has raged for at least 40 years.  Since money flows determine economic growth, the combination of foreign investment and substantial redistribution of profits back into the economy means superlative economic growth prospects for Canadian society.

These principles transcend liberal and conservative values.  Providing for economic growth, and freedom,  and socialized safety nets, with less government control.  While I am willing to work with every political party to implement these practical and idealist policies, I encourage the Green Party and NDP to disassociate from the usual games of political constituencies (wouldn't same platform lead to same results as last time?), and embrace this progressive idealist platform.

No comments:

Post a Comment