Posted by Tim Stobbs on October 25, 2013
I think I may lose it here. If I read just one more article about someone saying expanding the CPP (Canada Pension Plan) will kill jobs because it is like a tax hike…. I think I might throw up. Let’s ignore the fact, it won’t be a tax at all and really a savings plan, and go right for the heart of this insane defense: raising taxes will kill jobs.
In effect people arguing that a tax hike will reduce GDP(Gross Domestic Product) and thus reduce the number of jobs, but of course this really doesn’t hold any water. Money that goes into the federal government doesn’t just turn into mud and be utter useless. The government spends the money…shocking I know. With all the services they provide and the infrastructure they have to keep up the government really does have to spend money.
For example, the federal government pays their employees to do work and guess what those employees spend their money on housing, utilities and even beer and popcorn. Is government money magically different and doesn’t get added to the GDP? No of course not. So when the government gives a grant to build a water treatment plant, does that not help the GDP? Of course it does. Or if the government starts a new program and hires staff does that not create jobs? Of course it does.
It really doesn’t matter who spends the money: business or government. As long as it goes out the door it will help the GDP and create some jobs as well. It’s like arguing that leaving by the door on the right if different then the door on the left…both get you outside so there really isn’t any difference.
Yet, if it goes into a savings it won’t be spent, so won’t that kill jobs? Um, do you know where all that excess money that the CPP gets right now goes? Oh right, the CPPIB invests the money into businesses, which will usually take the money to grow their operations and grow the GDP…of course if the company is outside Canada it won’t directly help our GDP, but if our trading partners are doing better that also helps us.
Long story short: raising a tax won’t kill jobs…it will likely shift some around, but not remove them from the total. So don’t hide behind that as an excuse to avoid changing a program that will help the majority of people save for retirement. It’s not like the boomers did a great job saving for their retirements, so I think we have enough evidence that the current set of programs aren’t working well for the majority of people.
So what are you thoughts on PEI’s proposal to expand the CPP?