Thursday Morning Links

This and that for your Thursday reading.

- Ed Broadbent takes a look at how our tax system can combat inequality in more ways than one:

The Broadbent Institute is presenting proposals Tuesday to the Finance Committee of the House of Commons. Our primary recommendation is that Canada establish as a goal the provision of a basic income-tested guarantee to all citizens through a fairer personal income tax system.

The tax/transfer system equalizes income in two important ways. First, progressive income taxes mean that the affluent pay a higher percentage of income than middle and low income earners. Second, these taxes help finance social programs that benefit those who have middle and low incomes more than the affluent.

Our tax/transfer system is modestly re-distributive, but we still have a very unequal distribution of income after the impact of taxes and transfers has been taken into account. And the re-distributive impact of has been declining since the mid-1990s. It’s now 20% below the advanced industrial country average.
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(A)s a long-term goal, we should abolish welfare as it currently exists. Our current system, paid for by the provinces, provides meagre and stigmatizing benefits that leave recipients well below the poverty line. It also creates a “welfare wall” since recipients lose their benefits almost entirely if they take a low paid and insecure job. A negative income tax has been broadly championed across the political spectrum, including by Senator Hugh Segal and the late Tom Kent, the prime architect of Canada’s social reforms of the 1960s. It should be given serious consideration.

Fourth, improvements to income support programs should be financed by making our income tax system fairer. Even as the income share of the top 1% has risen, their effective income tax rate has fallen, from 39.4% to 33.3% since 2000. We should consider changes to address this, scale back special tax breaks that deliver huge benefits primarily to the very well off, e.g. on capital gains, and crack down on tax cheaters. Corporations should be required to pay to clean up their own pollution. Making these changes would help stabilize government finances and restore public trust in the fairness of the tax system.

- Meanwhile, Matt McClure points out that Alberta's "low tax" branding only applies to the wealthy - as low- and middle-class families actually pay more there than in other provinces.

- Trish Hennessy documents the costs of the Cons' austerity. But Kenneth Thomas notes that the disastrous results of austerity haven't stopped the Republicans from pushing it in the U.S. And lest we think Canada is lacking for Very Serious People eager to inflict economic pain in the name of appeasing the bond vigilantes regardless of the human costs, Neil Macdonald argues for exactly that.

- Finally, it should come as no surprise that the type of irresponsible Con government which can lose track of $3.1 billion without blinking an eye is focusing its efforts on...muzzling in the watchdogs and media outlets which might otherwise be able to hold it to account.