Bring Income Tax Repeal To Canada

Dave Killion — February 5, 2013

The Frontier Centre for Public Policy brings to our attention a recent Wall Street Journal article concerning state income taxes in the U.S., and the governors who are looking to eliminate them

“Washington may be a tax reform wasteland, but out in the states the action is hot and heavy. Nine states—including such fast-growing places as Florida, Tennessee and Texas—currently have no income tax, and the race is on to see which will be the tenth, and perhaps the 11th and 12th.”….”Income taxes generally do more economic harm (than sales taxes) because they are a direct penalty on saving, investment and labor that create new wealth. Sales taxes, by contrast, hit consumption, which is the result of that wealth creation. Governors Jindal, McCrory and Heineman cite the growing evidence that states with low or no income taxes have done better economically in recent decades compared to states with income-tax rates of 10% or more.”

Replacing lost income tax revenue with sales tax revenue is frowned on in some circles as regressive, since families who don’t currently pay income taxes will become subject to sales taxes. There are ways to correct this, such as declining to tax certain items such as food and clothing, or issuing tax rebates. But the optimal solution? Cut spending. Government is too big, does too much, and does it all poorly. Roll it back, and enjoy your increased prosperity.

The benefits of eliminating the income tax are well-established. The only questions are these: why is there NO Canadian province or territory without an income tax, and why is there no one in Canada campaigning for repeal? I wish I knew. But if the Free Province Project gets some legs, don’t be surprised if this is one of the first issues they take on.

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