In short, to address the large deficits that emerged from the recession and stimulus efforts of 2008/09, the McGuinty/Wynne approach to deficit reduction was to exercise modest spending restraint with the hope that, over time, revenue growth would eliminate the deficit. [...] In fact, Laurin shows that the resulting reductions to the size of the tax base from the rate increase substantially undermined the revenue-generating effect of the tax. [...] In 2007/08, on the eve of the recession, Ontario’s debt stood at 26 per- cent of GDP.1 During and in the years following the recession, the debt burden climbed to a peak of 40.6 percent of GDP in 2014/15. [...] The decision to introduce the current top rate (along with a decision not to proceed with planned reductions to the corpor- ate income tax rate) was taken in the wake of the 2008/09 recession in an effort to combat the deficit, despite the aforementioned evidence that defi- cit reduction initiatives focused on tax increases are economically harmful (Alesina et al., 2017). [...] The authors of that study estimated the cost (making the conservative assumption of no behavioural changes) at $11 billion if enacted in the current fiscal year.3 3. This includes the cost of supplemental tax policy changes to ensure no low- or middle- income Ontarians experienced a net income tax increase because of the changes.
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