Deficit spending is no free lunch; it’s a bill to future taxpayers
currently $26.3 billion for the federal government. Of course, the debt’s principal eventually must be repaid - a cost that will be borne by future taxpayers.
To get a better sense of the magnitude of the federal deficit, consider what it would take for the government to finance all its current spending with higher taxes today rather than kicking the tax bill down the road. What would tax rates have to be to cover the government’s expected $18.1-billion deficit for 2018-19?
Let’s start with personal income taxes, the largest single source of federal revenue. According to the Parliamentary Budget Office’s (PBO) tool for calculating the revenue impact of tax changes, to cover the current federal deficit, the government would need to raise all five personal income tax rates by two percentage points - at a