On targeting

The Globe's web comment discusses the reality of the proposed Goodale tax cuts:

Realistically, the government had little choice but to offer this $500 increase to avoid a sudden devaluation of the basic personal credit all taxpayers are entitled to deduct from their tax payable. The amount of this credit is determined by multiplying the basic personal amount (currently $8,148), by the lowest tax rate (16 per cent), for a credit of $1,304 in 2005.

If the mini-budget is enacted, the dollar amount will be $500 higher, but it will be multiplied by only 15 per cent, for a tax credit of (wait for it) $1,297. In other words, this part of the mini-budget would decrease the net value of the basic personal credit by $7 in 2005...

(T)he rate reduction from 16 per cent to 15 per cent is not targeted to lower-.or middle-income earners at all, but applies broadly to all income tax payers, including the affluent and wealthy. This is why it is so expensive for the government, despite its modest value to individuals.

The mini-budget promises further cuts in 2010 for those in the higher brackets. It would be more accurate to describe these as the "targeted" tax cuts, since they will be received only by those earning more than $35,595.

Not that anybody should be surprised to have the Liberals trumpet their dedication to lower-income Canadians as the basis for policy targeted toward higher income-levels. But the proposed tax cuts may be a particularly brazen example. It's good to see Goodale called on it; the question now is whether Canadians will pay attention to the critique.