If Stephen Harper’s goal was to design a tax policy to make income inequality in this country even worse, he can pat himself on the back. That’s exactly what the Conservatives’ family income-splitting tax scheme will do.
Research from various organizations across the political spectrum has demonstrated already that this tax policy, projected to cost the federal treasury $3 billion in 2015, would be an expensive and inequitable tax giveaway.
Employment Minister Jason Kenney says the Harper government has no intention of backing away from its income splitting pledge, despite a new report concluding the plan would exacerbate income inequality and bestow the most benefits to the West.
During the ordinary working of capitalism – absent the extraordinary Great Wars and Great Depression of the first half of the twentieth century – inequality, as manifested in the distribution of wealth, rose over time and promises to continue to do so.
A widely-reported study by the New York Times shows that middle-class Canadians now have higher after-tax incomes than middle-class Americans, and that Canadian middle-class incomes, adjusted for inflation, have been rising significantly over the past decade.
The facts cited in the original article are not in dispute. The median per-person income in the United States (half earn more and half earn less) has stagnated for the past decade, and the income share of the top 1% in that country has continued to rise to record-high levels.
But this does not mean, as the Harper Conservatives and right-wing pundits have been quick to claim, that all is well with the Canadian middle class.
The Canadian Council of Chief Executives (CCCE) have published a major report undertaken by PwC Canada to assess the contribution to Canadian public finances of their members. The report is based on data provided by sixty three participating member companies representing 40% of Council members.
Not to put too fine a point on it, the report is clearly intended to leave the impression that corporate Canada is heavily taxed and a major funder of government programs and services. It has been released in the wider context of studies questioning the effectiveness of deep cuts to corporate tax rates which have resulted in mounting piles of “dead money” accumulating on corporate balance sheets.
Posted by NationBuilder Support · October 31, 2013 7:27 AM
The Conservative Party will kick off its biennial convention Thursday. With the media microscope focused squarely on the Senate scandal and the frayed integrity of the Prime Minister’s Office, Canadians aren’t likely to pay much attention to what transpires on the convention floor.
They ought to. The policy resolutions that pass provide as good an indication as any of how Prime Minister Stephen Harper will go about deflecting the heat and shoring up support for his government among the party’s base.
There is a persistent view that Mr. Harper has pragmatically governed in the centre, in a way that, if anything, has alienated the hard-right of the party. Under this interpretation, Mr. Harper has moderated his Reform ways and largely kept his “base” in check. Wacky resolutions at Conservative conventions are therefore so much meaningless hot air.
The Conservative's record, however, tells a different story.
Though the list of right-wing “accomplishments” is long, several demonstrate how out of touch Mr. Harper is with mainstream Canadian values: brazen attacks on labour groups and collective bargaining rights; tax cuts that benefit the wealthy; the erosion of public programs and cuts to services; the dismantling of environmental regulations for resource extraction; evidence-averse “tough on crime” policies such as building more prisons and instituting mandatory minimum sentences.
Mr. Harper has incrementally but methodically shifted Canada’s politics towards the hard-right of his party, breaking with Canada’s strong and cross-partisan tradition of progressivism in the process.
For clues about Harper’s next steps, let’s look at some of the policy proposals and amendments up for debate at the convention:
One resolution calls on the government to “resist any domestic or international pressure” that threatens the “legitimacy of private ownership of firearms.”
History suggests we ought to take this resolution seriously. During the 2005 convention, the Tories voted to repeal the long-gun registry should they ever be able to do so. Seven years later, the program is dead. Meanwhile, the government has still yet to sign a UN Arms Trade Treaty even the gun-loving Americans have endorsed. All of this reflects the disturbing and growing influence of the gun lobby on party policy.
Another resolution calls for the “elimination of all public funding” from the CBC. Full stop.
We’ve already seen this government impose substantial cuts to the public broadcaster and introduce new and unprecedented policies to directly control its internal management. It’s not a trend that inspires trust for those worried about further cuts and censorship, let alone the end of the CBC.
A third resolution calls for a commitment to “bring public sector pensions in-line with Canadian norms by switching to a defined contribution pension model.” Defined contribution models, preferred by the private sector, tend to yield less for retirees than do defined benefit plans. It seems it wasn’t enough for the government to cut public pensions by stealth in the 2012 budget — party activists now want to further erode Canadians’ retirement income security.
Incredibly, one proposal states explicitly that the Conservative party should advocate for a “less progressive tax system.” The rich, in other words, should pay less of their share. This is precisely what the Conservatives’ proposed income-splitting tax scheme will do: transfer more of the tax burden onto single-parent, and lower- and middle-income families.
Further eroding the tax base would mean less money for new federal programs or for critical investments in infrastructure, health care, jobs training or clean energy research and development. Should the government make the tax system less progressive, one wonders what current programs Harper will put on the chopping block to cover for the lost revenue.
The notion that Mr. Harper has governed in the centre simply doesn’t hold up. Instead, his government has steadily dismantled the progressive state Canadians of diverse political leanings proudly built.
You only need look at the Conservative record to date, combined with the party’s current political need to fire up its most ardent supporters, to be concerned with where Harper might take Canada from now until 2015.
A version of this article was published in the Toronto Star.
During the last federal election, Stephen Harper promised that his Conservative government would introduce a new way to tax families with children after balancing the federal budget.
We are likely to hear a lot more about the merits of Harper's 'income-splitting' proposal before the 2015 election. The Conservatives continue to slash spending and erode public services precisely in order to create the fiscal room for this promised tax cut. Never mind that Mr. Harper’s aggressive agenda of tax cuts has already helped turn a $16 billion surplus in 2006 into annual deficits.
Concrete is poured into the foundation of the Trois-Rivieres Regional Hospital.
The Fraser Institute has declared yesterday “Tax Freedom Day”: the day, they claim, that Canadians stop earning wages that go towards income taxes and begin making money that they can spend at their discretion. Fraser's goal is to paint a picture of Canada as an overtaxed country suffering under the weight of big government.