Progressive taxes will get us out of recession

TheStar.com – opinion/letters
Published On Wed Dec 14 2011.  Hugh Thorburn

We all recognize that incomes in Canada have become obscenely unequal in recent times, and that we face large and growing unemployment, with not enough investment happening to create needed jobs.

Yet business is sitting on large and growing profits that it fears to commit to investment, because the prospects of good returns are poor. This seems to be a statement that we are in recession. So what should government be doing?

We have faced similar situations before. After the end of World War II, to meet the debt and consequent budgetary deficits, the government imposed steeply progressive rates of income tax, to give the government the resources to pay off the debt and invest in job-creating infrastructure. The result was 30 years of vigorous growth, debt reduction and general prosperity.

Since the private sector is unwilling to invest now in job-creating activity, surely it is up to the government to do so; but of course with a heavy burden of debt this is difficult. Surely then is the time to raise the taxes on the upper income levels and on corporations to obtain the capital for the needed investment.

The country cries out for investment in infrastructure: roads, bridges, public transit, high-speed railways, aboriginal problems. Our medical services are strapped, and working women lack affordable child care, etc.

As Keynes taught us, times of recession require the stimulation of effective demand for goods and services, to create jobs. Let’s try it, instead of fussing over high public debt, while we have growing unemployment.

Hugh Thorburn, Professor Emeritus, Political Science, Queen’s University

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