Nobody has a right to expect secure, long-term employment.Shorter Bill Morneau on benefits for workers affected by COVID-19, as his government eliminates direct income support while maintaining only a wage subsidy:
Nobody has a right to support in the midst of a pandemic unless they have secure, long-term employment.
As far as there are forces at play that push job losers to the right of the ideological spectrum, these forces appear trumped by other pressures that pull job losers to the left. Indeed, while we do observe many people who revise their ideology to the right during our study window, these rightward shifts do not seem directly driven by job loss experiences. This finding aligns well with other recent work suggesting that the success of right-wing populist parties is primarily fuelled by fears of economic hardship, as opposed to actual experiences of economic hardship. If anything, actual hardship seems to first and foremost trigger a leftward ideological shift.The Libs' position on the desirability of a perpetual fear of falling downwards:
Finance Minister Bill Morneau says Canadians should get used to so-called "job churn" — short-term employment and a number of career changes in a person's life.Canada's Libs: fuelling the rise of right-wing populism, one demand that we continually accept less at a time.
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And when asked about precarious employment the finance minister told delegates that high employee turnover and short-term contract work will continue in young people's lives, and the government has to focus on preparing for it.
"We also need to think about, 'How do we train and retrain people as they move from job to job to job?' Because it's going to happen. We have to accept that," Morneau said during a question-and-answer session.
Over $7 billion in infrastructure investment, the cornerstone of the Liberals 2015 election appeal, was cut and pushed past the next election — despite the sorry state of our social housing, transit, roads and schools.- Thomas Walkom calls out the Libs' immediate backtracking on the prospect of pharmacare, while Andy Blatchford reports on the justified call for Bill Morneau to avoid making decisions about the issue when the firm bearing his name makes substantial profits from a patchwork system of drug coverage. And Trevor Hancock offers an upstream look at the causes of - and solutions to - the opioid crisis.
And just two days after the Liberals implied they would support a national pharmacare plan, Finance Minister Bill Morneau ruled it out, saying the Liberals would only create a piecemeal drug scheme. The U-turn probably pleased Big Pharma. After all, pharmacare lowers drug prices by using its universal, single-buyer model to squeeze better prices from drug companies.
Across all fronts, the Liberals took timid steps, failing to use their power to help Canadians stretch their paycheques right when interest rates are about to take a bigger bite from the economy. And that timid approach makes it harder to keep growth going.
For NDP Leader Jagmeet Singh it’s a big opportunity. Singh’s NDP has consistently advocated childcare, pharmacare and public infrastructure — and the NDP governments in BC and Alberta are now getting the job done. That bolder approach will now contrast sharply with that of the Liberals — who continue to serve-up a watery gruel to voters who thought they’d ordered a hearty stew.
Here’s the blunt facts: the tax cut by Finance Minister Bill Morneau gives $0 to anyone earning under about $45,000. Then the benefit starts phasing in. At $90,000, the benefit is $670. And every person earning over $90,000—even people with million dollar paycheques—gets the $670.- But Parkin does briefly go off the rails somewhat by focusing needlessly on debt rather than social costs. On that front, Paul Krugman offers a reminder that the right only cares about deficits as an excuse to avoid or destroy social supports. And Corey Robin's takeaways from the Republicans' plan signal the danger of allowing deficit hysteria to dominate the opposition message.
University of Laval economist Stephen Gordon recently pointed out that a $90,000 income is in the top 10% in Canada.
And according to Statistics Canada’s most recent full report of tax filing data, the middle point of Canadian incomes was $33,920 in 2015. That means half of all income earners are above $33,920, half are below.
The facts don’t lie. Morneau is giving $670 a year to everyone with a top 10% income. He’s giving $0 to actual middle income earners. His words are deceptive. It’s a tax cut for the affluent.
Of course, nobody would vote for an upper class cut taxes. So the Liberals said it was a middle class tax cut and hoped you wouldn’t figure it out.
Morneau should be requiring companies to tell Canadians’ pension regulator about their dividend plans. He should be setting processes and rules that get healthy companies to fully fund pensions — before there’s another Sears-type pension fiasco.- And Alan Freeman echoes the view that Morneau can't be kept in a position which he's used mostly to enrich his own class of vulture capitalists.
Instead, Morneau is sponsoring Bill C-27. True, it does help eliminate pension liabilities — but not by funding them. Morneau’s bill would help employers permanently shift potential liabilities onto workers by replacing defined benefit plans with “target” plans.
On pensions, tax havens and private infrastructure finance, Bill Moreau has shown he’s a rich guy’s rich guy. That’s what he was as leader of a C.D. Howe Institute, which is little more than a CEO lobby group. That’s what he is as Finance Minister. He can’t be gone soon enough.
There’s lots of lamenting about the way the rich keep getting richer while ordinary folk struggle to keep their heads above water. Along with the lamenting, there’s usually some resigned muttering about how it’s all just part of today’s global economy.- And Cristobal Young points out that a look at actual evidence strongly challenges the claim that high-wealth individuals will leave jurisdictions with more progressive tax structures.
But there’s a much simpler explanation: our governments keep passing laws that make the rich richer and ordinary citizens poorer.
An example of this is currently being played out in Ottawa as the Trudeau government — ostensibly a “progressive” government that champions the middle class — is moving forward with legislation aimed at stripping away pension benefits from potentially hundreds of thousands of Canadian workers.
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The Trudeau government defends its proposed changes on the grounds that workers must “consent” to having their pensions converted to the new riskier format.
But this is like the “consent” given by women who get groped by a powerful boss; employers can get their unionized workers to “consent” by locking them out if they don’t agree to the pension change at the bargaining table.
Certainly, Trudeau and Morneau seem comfortable with today’s corporate mantra that workers can no longer count on things in the new economy. Learning to live with risk is the new black.
The corporate keenness to foist riskier pensions on their workers is not driven by necessity. Corporate profits have risen significantly in recent years, even as companies have switched to the stingier pensions that transfer all risk to employees.
Even fabulously rich corporations are adopting the new pensions — not because they can’t afford to pay workers fixed pension benefits like they used to, but because they’d rather not be obliged to do so.
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Risk may be good for those lower down the ladder, but for those at the top, guaranteed lifetime abundance still apparently has its place in the global economy.
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 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.
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.
As the dust settles on the Trudeau government’s private corporation tax reforms, Canada seems to be falling further behind in the quest for tax fairness.- Likewise, Tony Keller discusses the terrible policy behind the Libs' attempt to change the subject from closing loopholes. And with Bill Morneau in the middle of the mess, Althia Raj reports that the Libs' defence that the Ethics Commissioner hasn't specifically said he's doing anything wrong when it comes to how policy affects his own wealth depends on her not actually bothering to check.
While the government’s decision to proceed with income-sprinkling reforms is positive, we are disappointed the capital gains reforms were dropped and find the ‘tweaks’ to the proposals for passive income to be overly generous.
If the changes to the private corporation tax rules are assessed on their own, they move Canada a slight step forward. However, the appeasement of the vocal business lobby with a further cut in the small business tax rate to 9 per cent means the government likely will lose more revenue than it gains, which will contribute further to growing inequality.
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This is not the first time the government has backed off on tax fairness reforms. The closing of the stock options loophole suffered the same fate as the private corporation tax reforms. These are black eyes for Canada’s tax system. Even the IMF has raised the concern that capital income (including profits, interest, and capital gains) is distributed more unequally than labor income.
Capital income has been rising as a share of total income over recent decades, with a lower tax rate than labour income. The IMF states that adequate taxation of capital income is needed to protect the overall progressivity of the income tax system and that more equal treatment of income from capital, as well as different forms of capital income, is critical if we want to avoid offering incentives for tax avoidance. This means getting rid of the unfair tax treatment of capital gains and stock options.
The next time the government moves forward on an agenda for tax fairness, it needs to make it part of a larger package of reforms that looks at all the unfair tax expenditures.
The dimpled face of Conservative leader Andrew Scheer in TV ads repeating the outright falsehoods contributed to a win-win-lose-lose outcome: The rich won by not having to play the game, small biz got a tax cut they didn’t deserve, the notion of tax fairness took a hit, as did any real increase in government revenue. The loss in revenue from decreasing the small business tax to 9.5 per cent will likely cancel out any increased revenue from what remains of the tax changes.- But while Dobbin is unduly credulous about the prospect of the Libs actually living up to their promises, Luke Savage points out how their politics of spectacle are designed to distract from the type of elite-driven choices we'd expect from small-c and large-C conservatives. And the Globe and Mail has come around to the reality that Justin Trudeau is nothing but Stephen Harper with a sunnier brand, while Martin Patriquin reminds us that top-down control and contempt for the public are the historical norm for the Libs.
As the dust settles, we are left to puzzle over why Morneau and Trudeau chose this particular set of tax loopholes to close when there are so many others that would have been politically popular, would have forced the wealthy to defend their indefensible privileges, and would have brought in far more revenue.
One of the most outrageous giveaways which exclusively benefits the very wealthy is stock options. We lose a billion a year to this scam, which allows corporations to pay their executives with options to buy their company’s shares at a set, low, price. This loophole — the beneficiaries pay tax on just half the gains — also leads to CEOs driving up share prices in the short term to increase the value of their options, while discounting the long-term growth of the company.
The most costly loophole enjoyed by the wealthy is the capital gains exemption. The rationale for this break is laughable as it suggests that investing in the stock market is actually investing in new productive activity. In fact, it is nothing more than a tax break for gambling, which is exactly what anyone who invests in the stock market is doing.
There are other features of the tax system that basically reward people for already being rich — the benefits of RRSPs and Tax Free Savings Accounts accrue disproportionately to the wealthiest 10 per cent. The vast majority of Canadians — for whom these programs were supposedly established — come nowhere near the maximum contribution allowed. Capping the benefits could save billions.
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The wealthy in this country can easily afford at least two new tax brackets targeting extremely high income. The myth so firmly rooted in the public consciousness and promoted by the media — that wealthy people create economic growth — needs to be challenged. It is useful to remember that in the late ’50s and early ’60s the highest marginal tax rate was over 80 per cent, and economic growth was nearly double that experienced over the past 25 years.
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Trudeau in the election campaign talked a lot about the scourge of inequality. The IMF report stated that, “between 1985 and 1995, redistribution through the tax system had offset 60 per cent of the increase in inequality caused by market forces.” Since that time, inequality in Canada has skyrocketed at the same time that the tax system failed completely to respond.
The three measures now being floated all aim to limit the ability of high earners to use the small-business tax system to dodge paying their share on income. The most far-reaching of these would constrain the practice of so-called “income sprinkling,” which allows individuals to significantly reduce their tax burden by transferring large portions of their income, through a corporation, to family members. Taken together, the package could save Ottawa hundreds of millions of dollars annually.- Meanwhile, Ashley Renders reports on the new (if limited) disclosure required of Canadian resource companies to document what they've paid to governments.
This is a start, but it likely won’t get Morneau even a tenth of the way toward his stated aim of saving $3 billion annually through a review of so-called tax expenditures.
The promised review is crucial. Over the last century, Canada’s tax code has grown into an unwieldy mess. The code is now roughly 200 times longer than it was in its original form, a result not mainly of thoughtful economic design, but of the slow accretion of politically micro-targeted tax breaks. The Harper Tories were particularly fond of such boutique tax credits, which allowed them to appeal to certain politically important constituencies while essentially shrinking government.
Tax expenditures now account for upwards of $100 billion of forgone revenue annually, about a quarter of all government spending. Yet, unlike other government outlays, they are not subject to significant parliamentary scrutiny or even government study. No one seems to know exactly how much is lost through these loopholes, or whether they achieve their stated objectives. As Auditor General Michael Ferguson warned in 2015, even the finance department seems to be in the dark.
What we do know, however, suggests that these tax breaks, like the ones Morneau is now seeking to tackle, too often benefit most those who need help least, deepening rather than mitigating economic inequality.
A UBI would be pointless in the absence of existing supports. In the Ontario pilot projects, the payout for a single person will be $1,689 per month. That’s still short of living costs. Average Toronto rent for a two-bedroom apartment ($1,450 per month) and a Metropass ($134 per month) leaves just $116 per month for food, clothing, prescriptions and other costs.- Meanwhile, Emily Mathieu notes that rising rents and other costs are driving the working poor away from Toronto. And Dennis Raphael discusses the importance of political choices in ensuring physical and mental health.
The model devised by Segal, a longtime advocate of UBI, is a sound and cautious one. Its payout is not that much higher than current welfare support under Ontario Works, whose payouts equal about 45 per cent of the Low Income Measure.
But the Segal payout, combined with existing welfare, is enough to lift recipients above the poverty line, ensuring substantial income for workers in precarious jobs and for those in the unpaid workforce. The latter includes tens of thousands of volunteers, whose social contribution is of immense value but doesn’t show up in GDP stats.
A well-designed UBI equates to freedom. Freedom from exploitative employers. Freedom to launch a small business or develop an invention despite a lack of employment income. Liberation from the “poverty trap,” where taking a paying job means surrendering welfare and other benefits. And freedom to escape an abusive partner relied upon for room and board.
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We’re coming back to UBI now because the “social contract” between employers and workers lies in ruins. The decline of unions has consigned powerless workers to exploitative workplaces. And the tax system has been perverted to liberate the wealthiest 1 per cent from paying their fair share.
Income inequality is a widespread crisis. How we handle it will be a defining factor in shaping the 21st century.
It is now abundantly clear that the Saskatchewan government’s “transformational change” agenda is in reality a not-so-subtle euphemism for provincewide austerity in response to the current economic downturn. Premier Wall’s recent comments suggesting “very deep cuts” to education, health care, municipal revenue sharing and civil service salaries make it clear that the government’s plan for the economy is to “cut its way to growth.”- Meanwhile, Jeff Labine reports on some of the effect of the Sask Party's cuts - including limiting the ability of school divisions to work on ensuring higher graduation rates.
The problem with this plan is that it is exactly the worst possible course of action to take while the province is still mired in economic stagnation.
As a latecomer to economic downturn, Saskatchewan has the advantage of being able to assess the efficacy of policy responses by those who have gone before us, as national and state-level governments across North America and Europe have sought to effectively respond to the economic downturn inaugurated by the 2008 financial crisis. What this wealth of examples clearly demonstrates is that austerity measures undertaken during an economic downturn have the perverse effect of prolonging economic stagnation, increasing unemployment, exacerbating deficits and hindering economic recovery.
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In addition to the economic argument against austerity, there is also a moral one that governments must consider. Austerity assumes that everyone shares in the pain of cuts equally. This is simply not true. Given that austerity measures primarily target public spending for programs and services, the effect will be to punish those who rely on these programs and services far more than those who do not — in particular the poorest and most vulnerable in the province. It seems particularly cruel to put the burden of cuts on those at the bottom of the income distribution who were least likely to have shared in the province’s prosperity during the boom period, and may have even been negatively impacted by the rising living costs associated with the boom years.
The sad truth is that the government relied far too much on inflated resource prices as a major source of revenue during the boom period. These resource revenues were effectively used to subsidize tax cuts that with the end of the commodity boom now appear unwise and unsustainable. The decline of revenues now has the government contemplating certain tax increases. As the government considers new sources of revenue, we would ask the government to consider the moral argument of austerity — ensuring that those least able to absorb tax increases are not asked to bear the majority of the burden for the rest of us.
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The Saskatchewan government is in its current fiscal position because it made certain choices during the economic boom that have now come back to haunt us. The government needs to seriously consider the available evidence on austerity and recognize that the path it has set upon — while perhaps politically the easiest — is not necessarily the wisest.
Capitalists routinely exert leverage over governments by withholding the resources — jobs, credit, goods, and services — upon which society depends. The “capital strike” might take the form of layoffs, offshoring jobs and money, denying loans, or just a credible threat to do those things, along with a promise to relent once government delivers the desired policy changes.- Speaking of which, Bill Curry and Sean Silcoff report that Bill Morneau's hand-picked economic advisers are pushing the Libs to delay retirement for working Canadians.
Government officials know this power well, and invest great energy and public resources in staving off fits by malcontent capitalists. The profoundly rotten campaign finance system is just one manifestation of business’s domination over government policy. The real power resides in the corporate world’s monopoly over the flow of capital.
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Dewey’s analysis calls for the elimination of concentrated economic power — that is, the elimination of capital’s capacity to disrupt a nation by withdrawing investment. Only by targeting the “substance” of corporate power — rather than its shadow, the government — can major progressive change be achieved and sustained.
Expanding on this insight, we believe that progressive social movements should directly target business elites. They are the main enemies of change, but they also have the power to facilitate reforms if they face sufficient pressure. If movements can alter capitalists’ cost-benefit calculations, government action favorable to popular interests becomes much more likely.
Workers’ rights movements in the 1930s and civil rights struggles in the 1960s succeeded largely by exerting pressure on business owners, who eventually supported progressive policy reforms as a way of cutting their own losses. Business elites’ structural power was greatly mitigated — and in fact harnessed to movement goals — when activists imposed high enough costs.
Ultimately, the capital strike teaches us that reform is not enough. Power over investment brings power over the political process.
