Tuesday, May 27, 2014

On poor choices

Unfortunately, the CP's coverage of the Parliamentary Budget Office's assessment (PDF) of Canadian tax policy over the past few years seems to largely miss the point - and the initial lack of attention to a major issue has been spun by the Cons into something even worse.

So let's highlight what should be the most remarkable piece of news:
The financial gains from cumulative PIT and GST/HST changes since 2005 skew toward households with larger incomes when measured in absolute dollar terms. Reductions to the personal income tax rate on the lowest tax bracket, and increases to the basic exemption and PIT income bracket thresholds skew absolute dollar gains to higher income earners.
The lowest 10 per cent and the top 5 per cent income earners gain least, in relative terms. Each group will accrue after-tax and transfer improvements of 0.5 per cent.
It's possible to look at the progressivity of the tax system based on either raw dollars or percentages of income. And the Cons - with the help of the initial reporting on the numbers - are trying to highlight the latter rather than the former.

But while the difference matters in assessing relative benefits around the middle of the income scale, they're of no consequence for the bottom 10%. Amazingly enough, the Cons have managed to enforce such a consistent beggar-the-poor approach that the lowest tier has nonetheless managed to gain less than any other group even as a percentage of its already-meager income.

(And to be clear, the top 5 per cent have been plenty privileged in ways not captured by the relative-to-income metric. Not only did members of that group enjoy benefits near the top of the pack in absolute dollar terms, but they're also disproportionately reaping the fruits of corporate tax slashing which was excluded from the PBO's calculation.)

In sum, the PBO has confirmed what's seemed all too obvious from the beginning: the Harper Cons are firmly dedicated to avoiding doing any good for the Canadians who need it most.

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