U.S. tax cuts good for Canada says Flaherty

Fri Dec 10, 2010 9:37am EST
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NEW YORK (Reuters) - A deal to extend U.S. tax cuts should be positive for Canada, though the simulative effect of cuts for the highest earners is "questionable," Canadian Finance Minister Jim Flaherty said on Friday.

"I believe tax reductions create stimulus but the higher one goes up the income ladder, the less simulative it is," Flaherty told Reuters Insider, adding that low income earners are more likely to spend tax savings than wealthy ones.

But he said the impact would probably help boost U.S. growth, which is good news for Canada.

"We realize our economy won't have substantial recovery without recovery in the United States," he said.

(Reporting by Steven C. Johnson; Editing by James Dalgleish)

<p>Canada's Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa November 15, 2010. REUTERS/Chris Wattie</p>