Monday, October 30, 2017

Monday Morning Links

Assorted content to start your week.

- Tom Parkin writes that the Trudeau Libs have proven themselves to be far more interested in protecting Bill Morneau and his wealthy friends than the Canadian public. And Christo Aivalis discusses Jagmeet Singh's opportunity to own the issue of tax fairness:
This is Singh’s opportunity to make a big splash on the tax debate, which hasn’t been so open for discourse since perhaps the late 1960s, when the Carter Report made sweeping recommendations to reform the tax system with a view to limiting the privileges of the wealthy and powerful. Further, Singh won’t have to start with a blank slate here, because one of the more developed portions of his policy suite during the leadership race surrounded tax reform. Indeed, Singh’s proposals would do more than the Trudeau/Morneau plan to address various forms of income. First, Singh would raise income taxes by 2% for income above 350,000, and by 4% for income above 500,000. In addition, Singh will bump the corporate tax rate to 19.5% from 15%, and would implement taxation for corporate perks that effectively increase someone’s income. But in addition to giving the Canada Revenue Agency more tools to root out tax evaders, and promising to implement a commission to review “all existing tax credits, deductions, and the TFSA,” perhaps the most important proposals from Singh deal with wealth taxation, something the Liberal reforms don’t in any way address.

The problem with a tax plan that fixates on income or corporate profits is that it fails to address larger issues around entrenched inequality, and disparities in how different income sources are taxed. As it stands, Canada has no real policy to address massive intergenerational transfers of wealth, and Canada gives a massive tax break to those who earn income through investment as opposed to labour. With a capital gains inclusion rate at only 50%, a person who flips 100,000 dollars of stock profits will pay significantly lower taxes than a person who worked a 9-5 job for the same amount. This system flies in the face of the 1968 Carter Report recommendations, which argued that all income should be taxed equally regardless of source.

But Singh has a couple plans here. First, he pledged to implement a rather bold estate tax plan which would, after excluding the primary residence, tax 40% of all assets in excess of four million dollars. This will ensure that the family home isn’t affected, but does address the reality that insufficient estate taxation is a barrier to equality of opportunity. Put another way, if we want a society where everyone has something approaching an equal shot at success, you have to challenge the ability to entrench wealth across generations. And while Singh would only increase the capital gains inclusion rate to 75%, meaning that there would still be tax benefits for earning income as investment versus labour, this would get us on the path toward a just system.

If Singh and the rest of the caucus can put this plan into the public discourse, it could not only generate interest, but demonstrate the ideological limits of Liberal tax reform. It would also be a unifying effort to reach out to the party’s left, many of whom backed Niki Ashton on similar, though more strident, efforts to improve the tax system. Finally, it is likely a bridge the Liberals wouldn’t cross in 2019, making it the sort of policy they won’t poach to entice progressive voters.
- The OECD points out how the combination of an ageing population and increasing inequality will affect younger generations. Conor Gaffey notes that even the wealthiest few are realizing that their level of privilege is unsustainable. And the Equality Trust offers its recommendations to more fairly distribute wealth and ownership rights.

- Andrew Hosken exposes five major UK businesses which are managing to shift the profits from large P3s to avoid paying tax. And Bill Curry reports on the hundreds of millions of dollars the Libs have earmarked for buying into a Chinese development bank while planning to sell off infrastructure in Canada. 

- Finally, Miya Tokomutsu writes about the importance of renewing the fight to reclaim more personal time for workers.

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