As procrastinators buckle down for the fast-approaching June 1 extended federal tax deadline, it’s worth recalling that income taxes were an innovation in 1917 to deal with a previous fiscal crisis.
Last week, Canadian Finance Minister Bill Morneau insisted that despite the nation’s current financial pickle, he is not contemplating raising taxes just now, even as the Parliamentary Budget Office suggested public debt could this fiscal year for the first time reach $1 trillion at the federal level alone.
While now may not be the time, at some point soon governments around the world will have to face up to how they are going to pay for all their COVID-19 largesse.
It is well documented that voters love handouts and new spending from one finance minister but normally loathe the tax increases or austerity when a later finance minister decides spending is getting out of hand.
But historian Elsbeth Heaman, author of Tax, Order and Good Government, contends that while people generally dislike the idea of governments taking a bigger bite in taxation, there are many historical examples where a crisis of the kind we are experiencing now can dramatically shift opinions.
New attitude to taxes
“A catastrophe, a war, a famine, something like that creates a different kind of attitude toward taxation,” said Heaman, a McGill University professor whose specialties include social, medical and taxation history and who edited the Who Pays for Canada? volume.
And while in good times, people tend to accept the kind of market forces that offer greater rewards to the rich for their efforts in creating wealth, that attitude can change markedly once a crisis shines a light on the disproportionate suffering of the less fortunate.
(CBC)
The Irish potato famine that led to thousands of deaths in the fever sheds of Canada, including Montreal and Toronto, might be such an example. The Great Depression of the 1930s was another.
“Whenever you have these major events that have differential consequences for different kinds of people, where the rich don’t actually seem to be suffering very much and the poor seem to be suffering very, very acutely, then you do tend to get kind of a backlash against a tax system that seems to mimic the market,” said Heaman.
WATCH | Wartime publicity trailer focuses on wartime inflation, role of price control:
[embedded content]
She said the historical evidence is plentiful and the changes caused have been momentous.
The backlash against suffering during the Depression permanently remodelled the structure of Canadian taxation power, said Joe Martin, director of Canadian Business History at the University of Toronto’s Rotman School of Management.
Based on recommendations from the Depression-era Rowell–Sirois Commission to expand federal taxation for redistribution from wealthy Ontario and Quebec to the drought-battered Prairie provinces, the federal government used the crisis of the Second World War to expand personal and corporate income tax at the expense of the provinces.
From crisis to innovation
“[There was] strong opposition from both Ontario and Quebec, but it passed because of wartime conditions,” said Martin. That transformation formed the basis of Canada’s postwar welfare system and evolved into the current system of equalization payments that is still contested today.
Geoffrey Hale, the Lethbridge, Alta.-based academic and author of The Politics of Taxation in Canada, said that rather than taxing back the money the government is lavishing out now, Morneau would rather coax the economy into growth so that debt shrinks gradually over a period of years, not in absolute terms but as a percentage of GDP.
That’s why Hale doesn’t see governments boosting corporate taxes: for fear of chasing investment away. Similarly, he does not think there is a lot more opportunity for taxing the rich who would merely be driven toward tax shelters. Hale suggested a more politically palatable source of revenue would be to go after foreign digital sales, which for a large part escape Canadian taxation.
But everyone interviewed agreed that if finance ministers decide they need revenue, there are always places to find it.
Expanded consumption taxes or increased premiums for employment insurance are two examples. But more radical innovations might include wealth taxes, increased capital gains tax, death duties, financial transaction taxes (a Tobin tax), a flat tax or a poll tax, maybe aiming the revenue at a specific need, such as seniors’ care or better overall health care.
In a simulated economy, an AI came up with a counterintuitive tax policy that led to a smaller gap between the rich and the poor. <a href=”https://t.co/gavOrrBdLL”>https://t.co/gavOrrBdLL</a>
The experts said that projected borrowing so far is no danger to the country and has been higher before in relative terms. Some said we may be better placed than the United States just now.
‘We have the tools’
But as tax historian Shirley Tillotson from Halifax’s Dalhousie University said, evidence from the past shows that government confidence or even cockiness when a financial crisis begins can turn into alarm if the crisis worsens over a period of months or years. That is certainly what happened in 1917 and at the start of the Depression.
As both she and Morneau said last week — though each with a slightly different meaning — these are early days yet.
In the Canadian case, in particular, we have the fiscal capacity, both the scope for borrowing and if necessary, the scope for expanding some element of our tax system.– Shirley Tillotson, tax historian at Dalhousie University
Perhaps, as optimists say, the Canadian and global economy will bounce back soon. But if things do get worse, Tillotson said, Canada is luckier than most.
“We have the tools,” she said. “In the Canadian case, in particular, we have the fiscal capacity, both the scope for borrowing and if necessary, the scope for expanding some element of our tax system.”
Recovery may be around the corner. But early days or not, the time to begin exploring alternative tax options is before a financial crisis turns into something worse.
EDMONTON – Jake Allen made 31 saves for his second shutout of the season and 26th of his career as the New Jersey Devils closed out their Western Canadian road trip with a 3-0 victory over the Edmonton Oilers on Monday.
Jesper Bratt had a goal and an assist and Stefan Noesen and Timo Meier also scored for the Devils (8-5-2) who have won three of their last four on the heels on a four-game losing skid.
The Oilers (6-6-1) had their modest two-game winning streak snapped.
Calvin Pickard made 13 stops between the pipes for Edmonton.
TAKEAWAYS
Devils: In addition to his goal, Bratt picked up his 12th assist of the young season to give him nine points in his last eight games and now 15 points overall. Nico Hischier remains in the team lead, picking up an assist of his own to give him 16 points for the campaign. He has a point in all but four games this season.
Oilers: Forward Leon Draisaitl was held pointless after recording six points in his previous two games and nine points in his previous four. Draisaitl usually has strong showings against the Devils, coming into the contest with an eight-game point streak against New Jersey and 11 goals in 17 games.
KEY MOMENT
New Jersey took a 2-0 lead on the power play with 3:26 remaining in the second period as Hischier made a nice feed into the slot to Bratt, who wired his third of the season past Pickard.
KEY RETURN?
Oilers star forward and captain Connor McDavid took part in the optional morning skate for the Oilers, leading to hopes that he may be back sooner rather than later. McDavid has been expected to be out for two to three weeks with an ankle injury suffered during the first shift of last Monday’s loss in Columbus.
OILERS DEAL FOR D-MAN
The Oilers have acquired defenceman Ronnie Attard from the Philadelphia Flyers in exchange for defenceman Ben Gleason.
The 6-foot-3 Attard has spent the past three season in the Flyers organization seeing action in 29 career games. The 25-year-old right-shot defender and Western Michigan University grad was originally selected by Philadelphia in the third round of the 2019 NHL Entry Draft. Attard will report to the Oilers’ AHL affiliate in Bakersfield.
UP NEXT
Devils: Host the Montreal Canadiens on Thursday.
Oilers: Host the Vegas Golden Knights on Wednesday.
This report by The Canadian Press was first published Nov. 4, 2024.
KANSAS CITY, Mo. (AP) — Patrick Mahomes threw for 291 yards and three touchdowns, and Kareem Hunt pounded into the end zone from two yards out in overtime to give the unbeaten Kansas City Chiefs a 30-24 win over the Tampa Bay Buccaneers on Monday night.
DeAndre Hopkins had two touchdown receptions for the Chiefs (8-0), who drove through the rain for two fourth-quarter scores to take a 24-17 lead with 4:17 left. But then Kansas City watched as Baker Mayfield led the Bucs the other way in the final minute, hitting Ryan Miller in the end zone with 27 seconds to go in regulation time.
Tampa Bay (4-5) elected to kick the extra point and force overtime, rather than go for a two-point conversion and the win. And it cost the Buccaneers when Mayfield called tails and the coin flip was heads. Mahomes and the Chiefs took the ball, he was 5-for-5 passing on their drive in overtime, and Hunt finished his 106-yard rushing day with the deciding TD plunge.
Travis Kelce had 14 catches for 100 yards with girlfriend Taylor Swift watching from a suite, and Hopkins finished with eight catches for 86 yards as the Chiefs ran their winning streak to 14 dating to last season. They became the sixth Super Bowl champion to start 8-0 the following season.
Mayfield finished with 200 yards and two TDs passing for the Bucs, who have lost four of their last five.
It was a memorable first half for two players who had been waiting to play in Arrowhead Stadium.
The Bucs’ Rachaad White grew up about 10 minutes away in a tough part of Kansas City, but his family could never afford a ticket for him to see a game. He wound up on a circuitous path through Division II Nebraska-Kearney and a California junior college to Arizona State, where he eventually became of a third-round pick of Tampa Bay in the 2022 draft.
Two year later, White finally got into Arrowhead — and the end zone. He punctuated his seven-yard scoring run in the second quarter, which gave the Bucs a 7-3 lead, by nearly tossing the football into the second deck.
Then it was Hopkins’ turn in his first home game since arriving in Kansas City from a trade with the Titans.
The three-time All-Pro, who already had caught four passes, reeled in a third-down heave from Mahomes amid triple coverage for a 35-yard gain inside the Tampa Bay five-yard line. Three plays later, Mahomes found him in the back of the end zone, and Hopkins celebrated his first TD with the Chiefs with a dance from “Remember the Titans.”
Tampa Bay tried to seize control with consecutive scoring drives to start the second half. The first ended with a TD pass to Cade Otton, the latest tight end to shred the Chiefs, and Chase McLaughlin’s 47-yard field goal gave the Bucs a 17-10 lead.
The Chiefs answered in the fourth quarter. Mahomes marched them through the rain 70 yards for a tying touchdown pass, which he delivered to Samaje Perine while landing awkwardly and tweaking his left ankle, and then threw a laser to Hopkins on third-and-goal from the Buccaneers’ five-yard line to give Kansas City the lead.
Tampa Bay promptly went three-and-out, but its defence got the ball right back, and this time Mayfield calmly led his team down field. His capped the drive with a touchdown throw to Miller — his first career TD catch — with 27 seconds to go, and Tampa Bay elected to play for overtime.
UP NEXT
Buccaneers: Host the San Francisco 49ers on Sunday.
NASHVILLE, Tenn. (AP) — Darcy Kuemper made 16 saves for his first shutout of the season and 32nd overall, helping the Los Angeles Kings beat the Nashville Predators 3-0 on Monday night.
Adrian Kempe had a goal and an assist and Anze Kopitar and Kevin Fiala also scored. The Kings have won two of their last three.
Juuse Saros made 24 saves for the Predators. They are 1-2-1 in their last four.
Kopitar opened the scoring with 6:36 remaining in the opening period. Saros denied the Kings captain’s first shot, but Kopitar collected the rebound below the goal line and banked it off the netminder’s skate.
Fiala, a former Predator, made it 2-0 35 seconds into the third.
The Kings held Nashville to just three third-period shots on goal, the first coming with 3:55 remaining and Saros pulled for an extra attacker.
Elsewhere in the NHL on Monday:
—
DEVILS 3 OILERS 0
EDMONTON, Alta. (AP) — Jake Allen made 31 saves for his second shutout of the season and 26th of his NHL career, helping the New Jersey Devils close their western Canadian road trip with a 3-0 victory over the Edmonton Oilers.
Jesper Bratt had a goal and an assist and Stefan Noesen and Timo Meier also scored. The Devils improved to 8-5-2. They have won three of their last four after a four-game skid.
Calvin Pickard made 13 saves for Edmonton. The Oilers had won two straight.
