Chretien begins forming his fascist dictatorship

[Asher]

The real question is -- where is the real data for where this money comes from?

Nobody has answered that yet. You've said it comes from everybody -- which is only true in the strictly technical sense. When someone gives you the money right back -- plus some, you're not actually giving the money out.

And since Alberta and Ontario are the only two "have" provinces, all the extra money for the other provinces are coming from these two. And I'm seeing figures like 70 cents out of every dollar in energy revenue being cyphoned off for equilization payments, but I'm not seeing any raw totals aside from those theoretical numbers which you insist are incorrect.

[Asher]

You're driving me up the wall on this one Asher. What is the problem. Normally you display a fair amount of intelligence, but on this topic you¡¦re being as thick as a brick.

It may be a fundamental misunderstanding on the mispolitics of Canada's screwed up economic scheme.

I'm actually quite a dense, arrogant, conceited, rude, little boy. The "fair amount of intelligence" you may have seen was probably because you didn't care enough to look into a matter to see how wrong I am.

If it did then why do the Alberta, BC and Ontario numbers add up to $14 billion when equalization payments are only $9 billion.

I wonder how large Chretien's personal bank account is now.

Or maybe this has to do with the extra billions that Chretien "accidentally" sent to BC and Quebec in transfer payments in the last decade.

[Tingkai]

Originally posted by Asher
The real question is -- where is the real data for where this money comes from?

The money comes from federal government revenues. To find the provincial breakdown of this revenue you would have to determine how much people in each province contribute to the federal coffers.

The government budget is about $160 billion. About $80 billion comes from income taxes. Of this amount, about 44 per cent comes from Ontario taxpayers. So about 20 per cent of the federal government's revenue comes directly from income tax paid by Ontarians. Therefore, about 20 per cent of transfer payments are paid by Ontario income tax payers.

The remaining 80 per cent of transfer payments are financed through corporate taxes, return on investments, the GST, resource royalties, etc.

If you want the answer, you'll have to dig up a provincial breakdown of income for the federal government.

[RedFred]

Originally posted by Tingkai ...So about 20 per cent of the federal government's revenue comes directly from income tax paid by Ontarians. Therefore, about 20 per cent of transfer payments are paid by Ontario income tax payers.

Well, I like your logic up to the 'therefore'.

...but I don't like it after the 'therefore'.

Perhaps an error, perhaps I am misunderstanding, but I don't see you you can draw that conclusion. Please clarify.

[Asher]

I don't see how he can draw that conclusion either.

By that logic, Quebec also "contributes" probably 10-15% of all transfer fund payments even though they receive it all back, plus some.

As you well know from math: -6 + 10 = 4, so Quebec's effectively not giving any money away.

And you once again only seem to be basing this off of income tax -- why?

[David James]

Bah!!!! I hate equalization! Bah!!!!!!!!!!!

Tingkai is correct in saying that the yellow portion of the graph represents the fiscal capacity of each province, which is based on some arcane formula representing numerous real and potential revenue sources. Anyway, so this is calculated for each province. Then the weighted average of the fiscal capacities of the 5 "middle" provinces is taken (how Ontario is considered middle I do not know). This average defines the $5,800 or whatever line (and because it is a weighted average that includes Ontario and BC the line is actually quite high). The blue areas then represent the actual transfer from the federal government to each of those provinces per person.

As to where this money is coming from is a different question. I'm not entirely sure myself. I can see why Tingkai thinks it comes in the ratio as the tax contribution of each province, which would see Ontario paying for a significant chunk (~44%) and Alberta paying for about 11% of it. The problem I have with this is that equalization is supposed to be a transfer from have to have-not provinces through the federal tax-and-transfer system. There is another reason I don't like this way of looking at it but I can't clearly explain what it is but it has something to do with the transfers being per capita in nature.

[David James]

One of the reasons (I think) that Asher and I don't like the idea that equalization comes out of general federal revenues is because it is not an expenditure that can be argued to benefit all Canadians equally. Ontario and Alberta get nothing, everyone else gets something. This is unlike defense for example, where it is arguable that everyone benefits equally (we still don't pay equally of course, but in the ratio of tax contributions).

One way of resolving this might be to take the per capita tax contribution by each province and deduct the per capita equalization payment to that province from this amount. With the possible exception of Nfld, you'll probably still have a positive number. Then what you do is find the national per capita (average) amount that the Federal government spends on all other things (including debt servicing). Compare this number to the tax contribution per capita by province and you'll be able to find out a truer picture of who is "paying" into the system and who is "taking" from it. I am certain you'll find that Ontario is footing the bill for almost 50% and Alberta for something like 15%, despite being 35% and 10% of the population, respectively. You could even separate the calculation to include direct programme spending in each province (CHST transfers, non-administrative Public Works*, regional development, etc.) and nation-wide spending (defense, justice, environment, foreign ministry, debt servicing, etc) - the results would skew still further to Ontario, Alberta and BC paying the lion's share.

I think this way of looking at things is reasonable because equalization is constitutionally mandated. In other words, if the feds do absolutely nothing else, they have to equalize. This means that equalization is at the top of the list and so the feds would "rebate" (sort of) the amount to each province that the formula dictated from the revenue it got from that province's taxpayers. This done, the tax contribution mix by province would be altered for all other expenditure items.



* office space in Ottawa and elsewhere kind of has to be excluded - you might not like it, but it doesn't make sense any other way. It's part of the cost of running a government, as opposed to things that the government actually chooses to spend money on.

[RedFred]

A different criticism from me, but the transfers reward provinces who chronically underperform, penalize those that overperform, and (along with the regional unemployment calculation of EI) inhibit migration to job rich provinces from job poor provinces.

[Asher]

This thread is starting to make too much sense.

Where are the socialists?

[DinoDoc]

You confused them with facts and scared them away.

[KrazyHorse]

Originally posted by Asher
This thread is starting to make too much sense.

Where are the socialists?

I got bored of it somewhere around page 5 or 6...

[DanS]

Geez, it must be like a spasm of eroticism after years in a convent. Don't you guys ever talk politics up North?

[KrazyHorse]

We're too busy sniping at Americans to bother with domestic squabbles...

[Asher]

Originally posted by DanS
Geez, it must be like a spasm of eroticism after years in a convent. Don't you guys ever talk politics up North?

It happens a lot in Alberta.

I'm not sure politics are too popular in other provinces. If they actually paid attention to what their elected government is up to I'm pretty sure they would stop electing them.

[Tingkai]

Originally posted by David James
The problem I have with this is that equalization is supposed to be a transfer from have to have-not provinces through the federal tax-and-transfer system.

I never said I agreed with the current system. I was just trying to explain how it works.

Does the current system make sense? Well, it was created by negotiations between Ottawa and the provinces so of course it doesn't make sense.