On false tax freedoms

The past few Canadian election cycles have seen plenty of discussion of the realities of tax-free savings accounts. And for the most part, their critics have been proven right: a scheme pitched at enabling savings by lower-income individuals has instead served mostly as a means of redirecting more free money to the already-rich. And in 2015, the Cons' doubling of existing TFSAs was rejected by voters. 

Which makes it striking that the Libs are now the ones pushing a TFSA scheme as part of their housing platform.

As Nick Falvo notes in his brief comment, there's an obvious danger that the Libs' plan - like other TFSA systems - will merely allow the wealthy to drain money from federal coffers, while accomplishing little for the people who are supposed to benefit (but who don't have spare money to stash away in the first place). And the Libs' throwaway line about including "integrity measures to deter tax avoidance" rings entirely hollow coming from the same party trying to criticize the NDP's plan for a more progressive tax system based on the claim that better tax enforcement isn't possible. 

As is the case in so many policy areas, voters will need to choose between policies which actually address the right to housing, and ones which serve only to inflate the wealth of existing homeowners and people with money to burn. And it's especially damning that the Libs are so bereft of ideas as to be copying from the Harper playbook toward the latter end.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- George Monbiot contrasts the message of neoliberalism as freedom against the reality that it imposes severe corporate control on anybody short of the billionaire class:

(N)eoliberal theology, as well as seeking to roll back the state, insists that collective bargaining and other forms of worker power be eliminated (in the name of freedom, of course). So the marketisation and semi-privatisation of public services became not so much a means of pursuing efficiency as an instrument of control. Public-service workers are now subjected to a panoptical regime of monitoring and assessment, using the benchmarks von Mises rightly warned were inapplicable and absurd. The bureaucratic quantification of public administration goes far beyond an attempt at discerning efficacy. It has become an end in itself.

Its perversities afflict all public services. Schools teach to the test, depriving children of a rounded and useful education. Hospitals manipulate waiting times, shuffling patients from one list to another. Police forces ignore some crimes, reclassify others, and persuade suspects to admit to extra offences to improve their statistics. Universities urge their researchers to write quick and superficial papers, instead of deep monographs, to maximise their scores under the research excellence framework.
...
New extremes in the surveillance and control of workers are not, of course, confined to the public sector. Amazon has patented a wristband that can track workers’ movements and detect the slightest deviation from protocol. Technologies are used to monitor peoples’ keystrokes, language, moods and tone of voice. Some companies have begun to experiment with the micro-chipping of their staff. As the philosopher Byung-Chul Han points out, neoliberal work practices, epitomised by the gig economy, that reclassifies workers as independent contractors, internalise exploitation. “Everyone is a self-exploiting worker in their own enterprise.”

The freedom we were promised turns out to be freedom for capital, gained at the expense of human liberty. The system neoliberalism has created is a bureaucracy that tends towards absolutism, produced in the public services by managers mimicking corporate executives, imposing inappropriate and self-defeating efficiency measures, and in the private sector by subjection to faceless technologies that can brook no argument or complaint.

- Meanwhile, Kate Aronoff points out that a Green New Deal would enhance general well-being and foster genuine freedom while also protecting our planet.

- Damian Carrington points out that whatever choices we make, future generations will need to make do with far smaller carbon footprints than we've come to expect.  And Daphne Bramham highlights the influence millennial voters can have on this fall's federal election if they elect to participate.

- Nora Loreto calls out the Trudeau Libs for a federal budget whose treatment of refugees - including dismissing their claims in bulk, and playing up claims of nonexistent security risks. And Teresa Wright reports on the resulting outrage on the part of refugees and their advocates.

- Finally, Sally Bakewell and Lisa Lee report on the increasing level of risk being taken in the funding of corporate debt. And Richard Shillington studies how tax-free savings accounts have predictably favoured the wealthy over the lower-income people they were supposed to assist - with higher-income people taking advantage to a greater extent even as a percentage of income.

Thursday Evening Links

This and that for your Thursday reading.

- Olivia Loveridge-Greene comments on new research showing how many workers may be forced to keep working into their 70s or beyond in order to be able to stay afloat. And Don Pittis explains why tax-free savings accounts and other giveaways to the wealthy won't do anything to help the people who most need an opportunity to save for retirement:

(S)ince the late Conservative finance minister Jim Flaherty adopted Kesselman's idea and introduced the tax-free savings account in 2009, research shows that neither it nor RRSPs are doing what economists had hoped and expected.

"Is the effect more saving or less saving?" Kesselman asks. Once all the studies are done, the results are "pretty mixed," he says.

Kesselman, who now holds the Canada Research Chair in Public Finance at Simon Fraser University, says the tax-free accounts aren't having their intended effect, with the danger they will once again be perceived, as the RRSP once was, as "tax relief for high earners."
...
Despite championing tax-free savings accounts more than a decade ago, Kesselman has changed his tune.

Since tax breaks have failed to motivate people to save for retirement, he has now reluctantly begun advocating a compulsory savings plan, under which savers are forced to contribute to a pension big enough to support themselves through their retirement.

- Meanwhile, Kate McGillivray reports on how exorbitant housing prices are driving an entire generation away from Toronto's core.

- Jubilee Debt Campaign highlights how the UK's disastrous experience with high-priced P3s should serve as a warning to the rest of the world. And Thomas Walkom notes that Ontario's NDP is rightly looking to reverse any push toward privatization - unlike the Libs who prefer to lock in more corporate payoffs.

- Martin Kenney discusses Canada's shameful role in facilitating global tax evasion. And Harvey Cashore, Kimberly Ivany, Frederic Zalac and Gillian Findlay report on KPMG's tax dodges in particular.

- Finally, Katie Hyslop points out that even in an election-year budget, Christy Clark's B.C. Libs couldn't be bothered to lift a finger to deal with child poverty. CBC offers a reminder as to how poverty affects a child's ability to learn in school. And Patrick Butler examines the close link between child poverty and family disruption as children are taken into state care.

Tuesday Morning Links

This and that for your Tuesday reading.

- The Broadbent Institute details Rhys Kesselman's research on how the Cons' expanded TFSAs are nothing but a giveaway to the wealthy. And Dean Beeby reports on their withholding of EI supplements from the families who most need them - paired with a complete lack of responsibility or contrition now that the problem has been discovered.

- Matt Saccaro discusses the widespread burnout among U.S. workers as huge increases in hours worked and productivity have done nothing to improve wages or living conditions over a period of decades. And Bill Tieleman slams the Cons for gratuitously attacking the unions who offer the best chance of improving the lives of workers.

- Marc Lee summarizes the Cons' failed energy and climate change policies, as their only accomplishment has been to set back both our opportunities and our expectations when it comes to building a sustainable economy.

- Dr. Dawg writes about Aaron Driver's case as an appalling example of an individual being locked up for precrime. And Shannon Gormley argues that we don't face a choice between security and privacy, and that in fact overreaching legislation like C-51 threatens both:

So if a mass surveillance apparatus had only one job — preventing terror attacks — it might have fallen under the proud ownership of a trash collector by now. But cyber spies have other uses. It’s bleakly effortless to imagine a government getting creative with a system ostensibly designed to track security threats but — oh, what’s this? — also tracks every digital movement of political opponents, economic competitors, media critics and internal whistleblowers.

We needn’t imagine much. We already know: that Britain’s spy agency has listed investigative journalists as security threats and that its sticky tentacles have pocketed emails from the world’s top news organizations; that the NSA has mused that within the next 10-20 years it might conduct surveillance in a such a way that its “findings would be useful to U.S. industry”; that it has spied on Brazilian oil company Petrobras; and that its Five Eyes counterpart, the Australian Signals Directorate, has spied on an American law firm representing Indonesia when Indonesia was in a trade dispute with the U.S and — another exemplar of generosity of spirit — offered to share its findings with the U.S.

But even if surveillance agencies had a track record of intercepting and only targeting security threats, we might be troubled by something more fundamental: the assumption that privacy rights aren’t part of what people need secured.

A privacy violation is a serious security breach. When we can’t make a call to a client or send an email to a lover or type a character into a search bar without an overpaid 20-something in a far-off cubicle being able to know about it, then it’s not just our privacy that has being rudely violated. It’s our security as well.

And more besides. If people are partly made by what they think, and partly made by the ways they choose to share their thoughts, then in an age where our communication with each other is monitored relentlessly and without our consent, how is our personhood not under attack?

- But the B.C. Civil Liberties Association makes clear that the fight over C-51 is far from over, as voters will have every opportunity to judge Canada's political parties on their response to a threat to our civil rights. And Justin Ling reports on new polling confirming that its principled opposition to the Cons' fearmongering has been an important element in the NDP's rise in the polls.

Tuesday Morning Links

This and that for your Tuesday reading.

- Will McMartin highlights the fact that constant corporate tax slashing has done nothing other than hand ever-larger piles of money to businesses who have no idea what to do with it. But Josh Wingrove reports that Justin Trudeau is looking for excuses to keep up the handouts to the corporate sector.

- Joseph Stiglitz offers (PDF) a thorough review of our options in lessening corporate hegemony, while Elizabeth Warren and Rosa Delauro ask why citizens should accept trade agreements being written in secret by and for the corporate sector. And David Dayen lists some of the lies being told to try to push the Trans-Pacific Partnership.
 
- Meanwhile, James Fitz-Morris discusses the top-heavy giveaway arising out of the Cons' tax-free savings account scheme. And Stephen Tapp writes that an ill-advised balanced-budget law is aimed at a problem far less significant than the ones it will create.

- George Lakoff offers some messaging suggestions for progressives. And Luke Savage challenges the rhetoric of "aspiration" as a substitute for fairness:

The “aspirational middle class” is a soundbite engineered to be maximally inclusive and minimally concrete. It is Britain’s post-Thatcherite/New Labour analogue to “the American Dream” – that mythical journey of growth, personal prosperity, and self-creation which is theoretically open to all and practically open to few. The superficial elegance of this vision is that we all ostensibly have access to it, if we choose. The reality is that people belong to different classes, both social and economic, and aren’t more or less “aspirational” because of it (at least not in the commonly understood meaning of the word). Conceptualizing social disparities and economic structures in terms of personal aspiration is a convenient and very deliberate way of ignoring how these structures benefit some and constrain others. The built-in myth of self-sufficiency, in which the individual is always solely and completely responsible for her own outcome, also very deliberately neglects the inherently social nature of our lives: the schools which give us education, the libraries which give us books, the communities in which we are raised, the parents and others who give us care, the roads and transport networks on which we travel.
...
(I)t bears worth asking why we should privilege a particular kind of personal aspiration which mostly or wholly aspires to make and keep a small number of people extremely wealthy and which elevates the acquisition of personal wealth to the status of cardinal social value.

- Finally, Dennis Raphael discusses how Canada's choice to shred its social safety net decades ago is producing harmful health outcomes today - and asks that we be pay more attention to the future effects of our actions.

Monday Morning Links

Miscellaneous material to start your week.

- Barrie McKenna takes a look at how the Cons are pushing serious liabilities onto future generations in order to hand out short-term tax baubles within a supposedly-balanced budget, while Jennifer Robson highlights the complete lack of policy merit behind those giveaways. And Ian McGugan writes that even as they're trumpeted as attempts to improve saving none of the Cons' plans have anything to do with actually improving retirement security, especially for the people who need it most:

Our reliance on private savings to fund our retirements makes Canada an outlier among developed countries. Public transfers – programs such as Canada Pension Plan and Old Age Security – account for less than 39 per cent of seniors’ incomes compared to 59 per cent on average among OECD members.

Women are most at risk, especially if they are divorced or separated. “Higher poverty among older women reflects lower wages, more part-time work and career gaps during women’s working lives, as well as the effect of longer female life expectancy,” the OECD notes.

These are problems that Ottawa should be addressing, but isn’t. Instead, it’s bending its efforts to ensuring that those who already have substantial retirement nest eggs can live even better.
...
To make matters worse, the TFSA system narrows the tax base. As wealth builds up in those tax-sheltered accounts over the years to come, Ottawa will have to push more of the tax burden on to the remainder of the population – in effect, shifting the load from affluent, older Canadians onto younger, poorer Canadians.

There are ways to fix the problem while still maintaining all the good parts of the TFSA program. Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives, recommends instituting a lifetime cap of $150,000 on contributions to TFSAs, as well as a lifetime tax-exempt limit of $450,000 on each TFSA holder. That would allow typical Canadians to amass a substantial nest egg without subsidizing million-dollar-plus portfolios for the affluent.

- Zach Carter reports that at least some U.S. Democrats are rightly challenging the position that free trade agreements like the Trans-Pacific Partnership should be drafted entirely by corporate interests without any public accountability, then accepted without question. And Paul Krugman responds to the trade-at-all-costs crowd by pointing out that there's little reason to think the TPP will do much to encourage trade in general - as opposed to locking in monopolies - in the first place.

- Jim Coyle reports on George Lakoff's advice for progressives in framing our vision for Canada. And Susan Delacourt observes that there may be a natural disincentive for parties to try out new or different messages even if they otherwise wanted to.

- But lest anybody presume that political courage will never be rewarded, Ryan Donnelly comments on Tom Mulcair's opposition to the Cons' terror bill - which was once seen as a political risk, but has proven to be a boon instead.

- Finally, Michael Harris points out that Mike Duffy's trial may represent the only opportunity to seek honest answers from Stephen Harper about his appointment of ineligible senators.

Tuesday Morning Links

This and that for your Tuesday reading.

- Mariana Mazzucato writes about the creative state - and the need to accept that a strategy designed to fund the economy that doesn't yet exist will necessarily need to include some projects which don't turn out as planned:

Like any other investor, the state will not always succeed. In fact, failure is more likely, because government agencies often invest in the areas of highest uncertainty, where private capital is reluctant to enter. This means that public organizations must be capable of taking chances and learning from trial and error. 

If failure is an unavoidable part of the innovation game, and if government is crucial for innovation, society must be more tolerant of “government failure.” But the reality is that when government fails, there is public outcry – and silence when it succeeds. 

...

Private venture capitalists cover their losses from failed investments with their profits from those that succeed; but government programs are rarely set up to generate significant returns. While some argue that the government’s return comes through taxes, the current tax system is not working, owing not only to loopholes, but also to rate reductions. When NASA was founded, the top marginal tax rate was over 90%. And capital gains tax has fallen by more than 50% since the 1980s. 

In order to build support for public investment in higher-risk innovation, perhaps taxpayers should receive a more direct return, by channeling profits into a public innovation fund to finance the next wave of technologies. When investments are in upstream basic research, the spillover effect across industries and sectors is sometimes enough of a social reward. But other cases might require creating alternative incentives. 

For example, some of the profits from the government’s investment in Tesla could have been recovered through shares (or royalties), and used to cover the losses from its investment in Solyndra. Repayment of public loans to business could be made contingent on income, as student loans often are. And the prices of drugs that are developed largely with NIH funding could be capped, so that the taxpayer does not pay twice. 

One thing is clear: the current approach suffers from serious shortcomings, largely because it socializes the risks and privatizes the rewards. This is hurting not only future innovation opportunities, but also the government’s ability to communicate its role to the public. Acknowledging the role that the state has played – and should continue to play – in shaping innovation enables us to begin debating the most important question: What are the new visionary public investments needed to drive future economic growth?

- Meanwhile, Kevin Carmichael points out that the Cons' small thinking is dooming Canada to economic mediocrity at best. PressProgress notes that the Cons once again seem to be focusing their sole efforts on tax trinkets for those who need them least. And Armine Yalnizyan offers some suggestions to fix the inequality and revenue loss which we can expect from the Cons' out-of-control tax free savings accounts.

- Canadian Journalists for Free Expression examine C-51 by the numbers, and find that nothing much about the Cons' terror spin adds up. And even business leaders are joining in to decry the Cons' plan to end privacy and data integrity.

- Anders Lustgarten discusses how callous disregard for the lives of people in developing countries generally is reflected in the needless deaths of refugees. And Ethel Tungohan follows up on the need for more fair refugee policies from a Canadian perspective.

- Finally, David Dayen notes that the TPP is just the latest deal to lock in corporate profits at the expense of human interests.

The definition of privilege

Connor Kilpatrick is right to observe that while we should be willing to take note of privilege in many forms, we should be especially concerned with organizing to counter the grossly outsized influence of the very few at the top whose whims are typically allowed to override the common good.

But there's a handy dividing line available to assess the difference. After all, there's already been plenty of work done in sorting out who has the most influence on the U.S. political system.

On the best evidence available, any privilege associated with middle-class status or involvement in mass movement has effectively no effect on government policy. In contrast, the privilege associated with belonging to the top 10% or the organized business lobby includes the capacity to overrule anybody else in how we're governed.

To be fair, the Gilens/Page data is based on the U.S. rather than Canada. But when the Cons' key policies like corporate tax slashing, individual tax havens and income splitting focus their handouts on the top 15% here, there's little reason to think a substantially different standard applies here than in the U.S.

So it's not hard to see who's in the currently-excluded class, and who has enough privilege to warp public policy in their favour. And anybody short of the top 10% should have every incentive to change the balance between public-interest politics and elite domination in favour of the former.

Tuesday Morning Links

This and that for your Tuesday reading.

- Carol Graham discusses the high financial and personal costs of poverty:

Reported stress levels are higher on average in the U.S. than in Latin America. Importantly, the gap between the levels of the rich and poor is also much greater, with the U.S. poor reporting the highest levels of stress of all cohorts. Of course ‘stress’ is a complex phenomenon, however: “Good” stress is associated with the pursuit of goals, while “bad” stress is associated with struggling to cope. Bad stress, which is associated with an inability to plan ahead, lower life satisfaction levels, and worse health outcomes, is more common at the bottom of the distribution.

Pain, worry, sadness, and anger (reported as experienced the day before or not) are also all significantly higher among low income cohorts than among wealthy ones, while reported satisfaction with life as a whole is significantly lower...

...
There are also big differences in reports of chronic suffering across income groups, according to a recent study by Ronald Anderson. Those with incomes below the poverty line were twice as likely to report chronic pain and mental distress as those earning $75,000 or more, and three to five times more likely to have extreme pain or extreme distress.

Experiencing discrimination is also associated with stress. Among other things, discrimination raises the transaction costs of simple things such as getting a loan or buying a home. Maternal stress related to discrimination is associated with lower birth weights—which are linked to worse outcomes on a number of progress indicators—thus passing disadvantage on to the next generation...

- And Eli Hager comments on the spread of new debtors' prisons in the U.S. as just another areas where people living in poverty are facing gratuitous obstacles.

- Gaspard Sebag reports on McDonalds' widespread tax evasion. And while we can fully expect any corporation to argue that it's managed to stay in a legal grey area, Jon Stone finds that the public isn't prepared to tolerate that kind of hair-splitting from corporations who aren't paying their fair share.

- And there's particularly little reason to see any meaning in bare compliance with the letter of the law when, as Michael Gould-Wartofsky writes, the game is rigged in favour of the wealthy to begin with. Speaking of which, the Globe and Mail weighs in on how tax-free savings accounts have been designed to devour Canada's federal budget in the name of transferring wealth upward.

- Mark Dowie covers the failure of Stephen Harper's all-in bet on the tar sands from a U.S. perspective.

- Finally, Tim Harper rightly argues that Canada needs to stop any slide into intolerance - no matter  how determined the Cons are to push us in that direction for political gain. And PressProgress highlights how the combination of bigotry and gross intrusions into civil liberties has even right-wing commentators slamming the Harper Cons.

Sunday Morning Links

This and that for your Sunday reading.

- Armine Yalnizyan counters the Cons' spin on tax-free savings accounts. And Rob Carrick points out that raising the limit on TFSAs would forfeit billions of desperately-needed dollars to benefit only the wealthiest few in Canada:

TFSAs are Swiss army knives – a financial knife, corkscrew, screwdriver and more. But doubling the annual contribution limit of $5,500 is a bad idea.

Message to the federal government: Please don’t, because we can’t afford it.
...
A report from the Parliamentary Budget Officer this week says the federal government would lose $14.7-billion a year in revenue by 2060 and the provinces would lose $7.6-billion a year. That’s a tremendous amount of money to forgo in a country with a population aging as quickly as ours.

The latest population estimates from Statistics Canada suggest that seniors will account for 25.5 per cent of the population by 2061, up from 14.4 per cent in 2011. You can imagine what this trend will mean for government spending on health care and income programs such as Old Age Security and the Guaranteed Income Supplement.

In fact, Ottawa was so concerned about the sustainability of OAS – it’s funded from general government revenue – that it announced that it would gradually increase the age of eligibility to 67 from 65 starting in 2023. Ottawa saved a whack of money doing that. Now, it’s looking at depleting the savings it realized with a higher TFSA contribution limit.

- Thomas Walkom offers some suggestions to save Canadian capitalism from its own most destructive impulses. And Don Lenihan discusses another set of big ideas worth considering, while recognizing that none of them will come to pass without a more effective political process.

- Elizabeth Douglass writes that between plunging prices and increasing recognition of safety and climate risks, 2015 is off to a rather rough start for the oil industry. And that's before doctors start highlighting pollution and climate change as serious health issues - which Kyle Plantz reports to be a foreseeable and desirable possibility.

- Meanwhile, Bruce Johnstone reminds us that farmers are still suffering from the Cons' choice to prioritize the use of rail to transport oil.

- Aarian Marshall discusses what the Cons' census vandalism has cost Canada:

Though Peterborough’s situation is particularly difficult, it’s not an anomaly. In 2006, 93.5 percent of Canadians responded to the then-mandatory long-form census. In 2011, 68.6 percent returned the NHS. This is despite the fact that census officials distributed more surveys to compensate for the predicted drop in response rates—to one in three Canadians in 2011 instead of the one in five in 2006. Still, Statistics Canada withheld 2011 NHS data for 1,128 of 4,567 Canadian census subdivisions. “[A]pproximately 25 percent of geographic areas do not have reliable National Household Survey data available for their use,” Canada’s auditor general wrote in a 2014 report.
...
“Because of the move to the voluntary NHS, Canada is a richer, whiter, more educated country now,” says Ryan Berlin, a Vancouver-based economist and demographer with the non-profit Urban Futures Institute. Berlin is making a joke here, one that’s been making the rounds in Canadian academic conferences for the past few years. But he’s not wrong. Certain populations—low-income residents, immigrants, the disabled, aboriginal peoples, and those without a firm grasp of the English language—were far less likely to return the voluntary census. These are also often the communities most in need of social programs. The question marks are particularly disconcerting in the wake of the worldwide  recession. Where are the needy? Canada isn’t entirely sure.

While statisticians with the Canadian government do have sophisticated mathematical tools to help estimate how many underserved citizens they missed, the 2011 still survey left glaring uncertainties. In one example, the NHS found that Filipinos were the most represented group among immigrants who entered Canada between 2006 and 2011. But a footnote in the Statistics Canada release notes that this result is “not in line with administrative data from the Department of Citizenship and Immigration Canada which provides the number of recent immigrants by their country of birth settling in Canada each year.” Why the gap? It could be sampling errors, it could be response patterns, or it could be an “under or over estimation of certain groups of recent immigrants in the NHS.” Officials say they just can't be certain why they don’t know what they don’t know.
...
Academics also stress that census data is often used as a benchmark, to check whether other data sets derived from alternative sources are correct. Now there appears to be no universally-acknowledged set of numbers against which to check one’s own work.

- Finally, PressProgress points out that the Harper Cons and their mouthpieces seem to be the only people alive - whether in Canada or elsewhere - who don't think the tragic and ongoing history of missing and murdered aboriginal women in Canada merits a public inquiry. And Stephen Maher highlights the complete disconnect between the Cons and Canada's First Nations who rightly expect far better.

Thursday Morning Links

This and that for your Thursday reading.

- Jacob Hacker and Paul Pierson link inequality and climate change as massive problems which are generated by political choices (and thus amenable to correction through the political system):

Rising inequality is no more natural than global warming. And just as with global warming, our biggest fear should be that it becomes increasingly self-reinforcing — not because of some “natural” economic process, but because economic power begets political power, which can be used to further increase economic advantage. Look around, and the evidence that this is a real threat abounds. To cite just one example of many, the Koch brothers network, led by businessmen who are committed libertarians opposed to any effort to reduce inequality, are planning to spend almost $1 billion in next year’s election.

In other words, read beneath the headline of Leonhardt’s article and you have an argument for greater alarm about the toxic relationship between rising inequality and the dysfunction of the federal government — a message exactly opposite of the one that the inequality deniers want to hear.

- Frances Woolley writes that tax-free savings accounts - and particular the expanded version which the Cons are planning to push soon - represent both a deliberate choice to exacerbate inequality, and one of the most devastating attacks yet on Canada's federal revenue system:

RRSPs leave a legacy of tax revenue to future governments. Increasing TFSA contribution limits does just the opposite – it creates an investment vehicle that is ripe for abuse, whether by generating super-normal returns, or by sheltering income in a TFSA while claiming government benefits. At the same time, it deprives future governments of the opportunity to tax investment income.
...
There’s a saying in policy circles: “the costs are the benefits.” For some, the revenue foregone by expanding TFSAs is a cost. For others, it’s a benefit. Prime Minister Stephen Harper is on the record as believing in small government. One sure-fire way to shrink governments is to deprive them of revenue. Doubling the TFSA limit will do that. Not now, and not in a year from now. But in 10, 20, or 30 years’ time, the doubling of the TFSA limit will gradually erode the ability of Canadian governments to raise revenue, redistribute income, and pay for public services.

- But then, individual savings likely aren't the best means of ensuring retirement security in any event, as David MacDonald finds that a retirement system based on mutual funds diverts massive amounts of savings toward financial sector compared to the alternative of effective pension plans. 

- Michal Rozworski notes that while Canada's wage picture isn't quite as bad as the U.S.' over the past two decades, it's most certainly nothing to celebrate - particularly since any gains were tied up almost entirely in since-deflated oil prices.

- Finally, Haroon Siddiqui laments the Cons' wilful stupidity in dealing with the Middle East. And Paul Adams calls out the tantrum-based foreign policy which includes pulling funding from friendly service providers for having the nerve to question John Baird.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Lee-Anne Goodman reports on studies from both the Parliamentary Budget Officer (PDF) and the Broadbent Institute (PDF) showing that enlarged tax-free savings accounts stand to blow a massive hole in the federal budget while exacerbating inequality. And PressProgress documents and refutes the pitiful response from the right.

- But then, I suppose we shouldn't expect the Cons' actions on TFSA to differ from their usual mismanagement. And Scott Clark and Peter DeVries write that the Cons' tax baubles in general have accomplished nothing useful, while Ricarda Acuna notes that Alberta (as the exemplar of the Cons' low-tax, high-inequality philosophy) is paying a heavy price for a PC government's refusal to collect appropriate revenue or preserve the value of public assets.

- Tim Dickinson writes that Stephen Harper's bluster about "superpower" status has officially fizzled out. And Karl Nerenberg outlines the main themes of the Cons' stay in power - and how they reflect a fundamental clash between Harper's whims and Canadian values.

- Bryce Covert reports on the billions of dollars siphoned out of middle-class retirement funds every year by the U.S.' financial services industry, while also pointing the difficulties in reining in such a lucrative rent-seeking operation. And Bill Black exposes how HSBC's CEO used tax evasion techniques to hide his own pay from his peers (h/t to Cory Doctorow).

- Finally, Tim Harper highlights the irony in the Cons' reliance on the courts to be the sole arbiters as to the validity of CSIS actions up to and including targeted killings when the same government doesn't believe judges are qualified to deliver criminal sentences. And Justin Ling reports on the NDP's efforts to make sure C-51 isn't rammed through Parliament without serious scrutiny, while Kady O'Malley notes that the Cons' plan is to avoid letting experts be heard.

Monday Morning Links

Miscellaneous material to start your week.

- Ed Broadbent laments Canada's failure to meet its commitment to end child poverty - and notes that the Harper Cons in particular are headed in exactly the wrong direction:

This child poverty rate is a national disgrace. It jumped from 15.8 per cent in 1989 to 19.2 per cent in 2012, according to a Statistics Canada custom tabulation for Campaign 2000.

The Harper Conservatives have continued to let down the country’s poor children and their parents. They have not increased targeted income supports for low-income families. Instead, they are expanding flat rate benefits, similar to the old family allowance program abolished as regressive by Mr. Mulroney’s government. These taxable payments are too low to have a real impact on poverty. They don’t come close to paying the costs of child care; they don’t create a single child-care space.

While failing the poor, the Conservatives are proposing new measures that disproportionately favour affluent families. Income-splitting will cost $2-billion a year and deliver no benefit at all to single parents or to two-parent families with both earners in the lowest tax bracket.

The maximum benefit of $2,000 will go mainly to very high-income traditional families with a single earner. The late Jim Flaherty appropriately rejected such unfairness while serving as minister of finance.

The growing gap between the poor and the middle-class, let alone the top 1 per cent, flies in the face of the democratic ideal that all children should have equal opportunities to develop their talents and capacities to the full.

- David Climenhaga discusses how the Cons' obsession with income-splitting is based on their desire to preserve gender inequality. James Fitz-Morris reports that the Cons have long been aware of the obvious regressive effects of tax-free savings accounts - particularly since they may allow a special class of wealthy retirees to take in money from means-tested programs because their investment income isn't counted.

- Tavia Grant writes about a new report confirming that we need our tax system to actively combat inequality in order to avoid having it get worse by default. And Michael Babad points out that the ranks and wealth of the uber-rich are growing faster in Canada than in other comparable countries.

- Meanwhile, Robert Devet highlights how arbitrary benefit cutoffs can be disastrous for people actually living in poverty. And Jesse Ferreras finds that a lopsided market (coupled with a lack of public policy action) is leaving single women and mothers in particular without adequate housing.

- Finally, Michael Harris notes that a culture of fear seems to be about the only factor the Cons still have in their favour among an otherwise unfriendly Canadian public - and that Stephen Harper has been highly selective in deciding which supposed threats to emphasize for political benefit.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Brian and Karen Foster question why steadily improving productivity has led to increasing stratification rather than better lives for a large number of people:

(W)ith all the optimism, why hasn't technological progress actually opened up a world where we all work, and we all work less? Why do we still have some people working overtime while others sit idle, wishing for employment? Why are we not seeing the spread of work-sharing schemes, where the duties of one job are divided into two or more jobs?

We have a government program that helps companies do this for a short time instead of laying workers off, but generally the closest we come to work-sharing is splitting a job that was once full-time and salaried into a suite of part-time, short-term contracts with no benefits. Conceivably, we could spread the work around without diminishing job security and drastically cutting wages. We could use work sharing as a long-term employment strategy rather than solely as a crisis response.

Sticking with the idea of long-term strategies, why haven't we seriously considered the success and promise of Basic Income schemes -- like the one tested and then quietly abandoned in Dauphin, Manitoba?

At the very least, why haven't we shortened our work week in recognition of our increased productivity? (Because it is increasing, despite all the fear mongering; the worst that happens, generally, is "poor growth.")

Why, as Bertrand Russell wondered nearly a century ago, have we chosen "to have overwork for some and starvation for the others" when "modern methods of production have given us the possibility of ease and security for all"?

- And Carol Goar recognizes that paper wealth doesn't do much to help anybody who hasn't managed to siphon off real money from the increased price of houses and other assets:

• Families’ net work may have increased, but their cash buffer is gone. On paper, they’re better off because of a 47-per-cent appreciation in the value of homes since 2005. But that kind of wealth can shrink — or vanish — for reasons beyond their control. All it would take is a run-up in mortgage rates, a tightening of credit conditions or a real estate sell-off by aging baby boomers.
• Younger families didn’t do nearly as well in the survey as their baby-boomer parents. Households with a principal breadwinner between 35 and 44 had a median net worth of $182,500. Those with a primary earner between 55 and 64 had almost triple that amount ($533,600). With baby boomers holding so much of the nation’s wealth, it’s not surprising Trudeau and Mulcair are picking up distress signals from the next generation of voters.
• Household debt rose at a faster pace than assets. “Because assets are far larger than debt, net worth still increased,” explained economist Leslie Preston of Toronto Dominion Bank. But that was little comfort to middle-class families carrying a large mortgage, a car loan, a line of credit and a couple of maxed-out credit cards. If interest rates climb — even one or two percentage points — they’ll be in financial trouble.
• The poorest 20 per cent of the population — some 2.7 million families — lost ground. That quintile now includes many Canadians who considered themselves middle class before the recession. The contraction of the manufacturing sector, corporate downsizing and outsourcing eliminated well-paid jobs, pushing them down a level.

These developments reshaped people’s attitudes and expectations. Working hard was no longer the key to upward mobility. A good education didn’t necessarily lead to employment. A job didn’t mean a pension. Career planning became an oxymoron. Condos were the only homes most young couples could aspire to own.
...
What is beyond dispute — no matter whether wages, income or wealth is used — is that inequality is growing. Those at the top are getting richer and those at the bottom are sinking deeper into poverty.

Canadians in the middle see themselves moving down, not up. Even if they hang on, their kids — burdened with debt, struggling for a foothold in the job market, still living at home — will fall back.

That is what Trudeau and Muclair are tapping into. It’s not acute financial distress. It is a gnawing conviction the ladder of opportunity is broken.

- In a similar vein, Robert Reich identifies inequality as the major problem in the distribution of what we produce. And Rhys Kesselmen highlights how the Cons are going out of their way to exacerbate that inequality by setting up and expanding new tax shelters like TFSAs, while Penny Kome interviews Allyson Pollock about P3s as another means of converting social resources into private profits.

- Michael Harris wonders whether the Cons' big bang is coming soon. And Josh Wingrove reports that they're using their majority to stifle any discussion of their own admitted lies to Parliament, while Paul Adams laments their hollow-threat diplomacy on the international stage.

- But Alex Boutillier notes that the NDP is looking to set a more positive example for political consultation, planning to hold its own public hearings into the Cons' election legislation if Harper and company refuse to allow for any to occur through Parliament.

On middle ground

Tim Harper's column today is certainly worth a read in exposing the implausibility of the Cons' "economic stability" theme. But I'll point out that he completely buys the Cons' equally flawed spin as to who stands to benefit from the major planks they've hinted at in their 2015 platform:

The Conservatives under Harper have introduced a child-care benefit and a Working Income Tax Benefit to boost the working poor, but they are eager to put other measures aimed at the middle class in the window in 2015.

If the budget is balanced by then, the Conservatives are committed to doubling a children’s fitness tax credit, allowing income-splitting on family tax returns, introducing an adult fitness tax credit and doubling the limit on its Tax Free Savings Accounts to $10,000 annually.

Now, it may be true that the messages about income-splitting and TFSAs are intended to appeal to middle-class voters. But when it comes to the effects of those promises, there's little reason to think the middle class stands to benefit in the slightest.

Once again, here are David MacDonald's calculations on the distributional impact of income splitting:

Table 1 shows the distributional impact of Harper’s “Family Tax Cut.”  What is immediately clear is that this tax cut is anything but fair.  In fact, no family making under $41,000 gets any benefits whatsoever from the “Family Tax Cut,” no matter how they split their income up.  The poorest quarter of all Canadian families, which make $50,000 a year or less, share 0% of the total benefit and will see an average benefit of $20 a year.  Put another way, those half a million Canadian families that are stretched the most would see essentially no benefit from this proposal.

It isn’t only the poorest Canadians who get a bad deal out of the “Family Tax Cut”, middle class Canadians don’t fare well either. The middle 44% of Canadian families with children, those that make between $50,000 and $100,000, only get 39% of the benefit.  In essence, the “Family Tax Cut” steals from the poor and middle class to give to the rich.

At the very least, one would expect that something that is “fair” provides the same amount to all families with children, rich, poor or in the  middle.  However, the “Family Tax Cut” would provide 61% of the benefits to the richest third (32%) of Canadian families who make over $100,000 a year.   The very top 10% of families that make over $150,000 capture almost a third (28%) of this tax cut.

And similarly, Andrew Jackson summarizes the results of research into the impact of tax-free savings accounts:

Maureen Donnelly and Allister Young look at the slightly-longer UK experience with Individual Savings Accounts (ISAs), a plan similar to TFSAs. They find that beneficiaries of TFSAs are likely to be predominantly older, wealthier taxpayers, with relatively little benefit for low-income individuals. Rhys Kesselman argues that without a series of reforms, expanding the TFSA contribution limit would aggravate the TFSA’s existing deficiencies and result in a windfall for high income earners, allowing high earners to shelter additional wealth from income tax, and leading to higher GIS payments/lower OAS recovery tax.

Which is to say that the Cons' supposed "measures aimed at the middle class" serve only to exacerbate the across-the-spectrum inequality that's been stoked by the Libs and Cons alike over the past few decades - with the middle class once again losing ground compared to the wealthy. And while we might expect political spinmeisters to pretend otherwise, commentators like Harper should be smart enough to challenge the Cons' message rather than echoing it.

Tuesday Evening Links

This and that for your Tuesday reading.

- George Monbiot discusses the effect of inegalitarian and austerian policies imposed by the UK Conservatives:

(T)he neoliberal programme has closed down political choice. If the market, as the doctrine insists, is the only valid determinant of how societies evolve, and the market is dominated by giant corporations, then what big business wants is what society gets. You can see this squalid reality at work in Cameron's speech last week. "We have listened to what business wants and we are delivering on it. Business said, 'We want competitive tax rates,' so we are creating the most competitive corporate tax regime in the G20 and the lowest rates of corporation tax in the G7 …". What about the rest of us? Don't we get a say?

The neoliberal hypothesis has been disproved spectacularly. Far from regulating themselves, untrammelled markets were saved from collapse only by government intervention and massive injections of public money. Far from delivering universal prosperity, government cuts have pushed us further into crisis. Yet this very crisis is now being used as an excuse to apply the doctrine more fiercely than before.

So where is the economic elite? Counting the money it has stashed in unregulated tax havens. Thirty years of neoliberalism have allowed the super-rich to detach themselves from the lives of others to such an extent that economic crises scarcely touch them. You could see this as yet another market failure. Even if they are affected, the rich are doubtless prepared to pay an economic price for the political benefits – freedom from democratic restraint – that the doctrine offers.

- Meanwhile, Andrew Jackson points out the Canadian Tax Journal's feature on tax-free savings accounts as a gratuitous giveaway to the wealthy.

- Alice takes a look at the fund-raising trends for Canada's political parties, with perhaps the most interesting development coming in some of the names showing up on the NDP's donor list:

(A) quick scan of the party donor lists hints at another part of the explanation. With names like Louise Arbour (if it's the same person, once touted as a potential Liberal leader), and that of a former national campaign director for the Green Party showing up on the NDP's return, it suggests the strategic voting / contributing card is being played by the NDP for a change.

- Linda McQuaig laments the fact that climate change is apparently being treated as something less than newsworthy even in the midst of a summer loaded with extreme weather.

- Finally, Jason Kenney and his staff are coming up with news ways to try to silence anybody who actually cares about the well-being of refugees in Canada. But thankfully the Law Society of Upper Canada wasn't willing to play along with a frivolous complaint which could have served as a precedent to silence professionals across the country.

Saturday Afternoon Links

Assorted content for your weekend reading.

- Thomas Walkom highlights the lesson we should draw from the economic devastation caused by the shutdown of an Electro-Motive plant which was supposed to serve as a poster child for corporate giveaways:

Using tax breaks to encourage domestic production is a standard prescription. Yet, ironically, that’s exactly what the Harper government did.

In 2008, it offered tax write-offs worth an estimated $5 million annually — not to Electro-Motive (which, at the time, was owned by two hedge funds) but to Canadian railway firms that used locomotives.

The idea was to encourage companies like CN to replace their engine stock more quickly. And if it hadn’t been for globalization, the scheme might have created a few more jobs in London.

But globalization does exist. Canadian railways can still get those tax breaks on new locomotives. It’s just that now they will buy them from Indiana and Mexico.

None of this means that manufacturing has to be doomed. Ottawa could take a leaf from the U.S. and pass Buy Canadian legislation. The province (which is not tightly bound by international trade agreements) could penalize companies that purchase goods from jurisdictions with unfair labour laws.

Governments could even copy the tactic of Trudeau-era trade minister Ed Lumley, who famously threatened to hold up the import of Japanese autos until companies like Honda built assembly plants here.

But Canadian governments don’t do such things. To be seen as anything but avidly free-trade spooks both politicians and business.

- Meanwhile, Erin notes that artificially low royalties are doing nothing at all to spur resource development, but plenty to ensure that the public doesn't benefit when resources are exploited.

- Barbara Yaffe theorizes that the NDP should abandon its environmental principles in order to try to win seats in the West. To which I can only offer a reminder what happened - in Western Canada and elsewhere - to the last official opposition to try to appease the oil sector rather than providing some meaningful alternative to a government which acts as a wholly-owned industry subsidiary.

- pogge wonders whether any self-pronounced speech warriors will take up the cause of environmentalists singled out for silencing by the Con government for the content of their message.

- Finally, Frances Woolley compares the relative effects of RRSPs and TFSAs. But it's worth pointing out that the people who benefit most from the multiplicity of tax-sheltering devices are those who don't have to choose between them, but can instead take advantage of all of them.

On unequalization

As usual, the Cons' latest attack on social programs - this time the Old Age Security which has played a key role in lifting Canadian seniors out of poverty - is supposedly based on some inescapable lack of fiscal capacity to provide a reasonable standard of living. But the truth is that there's a rather simple choice to be made as to what priorities to fund - and the Cons are squarely on the wrong side of it.

Let's consider the Harper spinmeisters' doomsday scenario as to what OAS might cost by 2030. The Cons' estimated total cost is about $108 billion. But based on Statistics Canada's medium-case demographic estimates, seniors ages 65 and 66 will make up only 11.5% of the total population aged 65 and up as of 2031.

So if OAS is relatively evenly applied across the age spectrum, the savings from pushing back the retirement age for Canadians in general will amount to 11.5% of $108 billion - or just over $12 billion per year.

At the same time, the Cons plan to push through general income splitting and increases to tax-free savings accounts. And those plans - targeted squarely at large-single-income households and those wealthy enough to have $10,000 to sock away every single year - will cost...just under $12 billion per year. And unlike the Cons' numbers for OAS, that's without taking into account any growth in the size of the tax base in the meantime.

So no, cutting the OAS by applying a higher retirement age isn't a matter of necessary fiscal prudence. Instead, it's half of a large-scale plan to redistribute wealth from those who make little enough to qualify for the OAS, to those who already have money to burn. And there's no way the Cons should be allowed to balance the budget on the backs of would-be retirees without answering for the fact that their goal is to hand that same money to those who need it least.

Update: Dave and Jymn have more.
[Edit: fixed wording.]

Parliament In Review: October 24, 2011

Monday, October 24 saw another day dedicated largely to discussion on the Canadian Wheat Board - with the Cons simultaneously declaring that there's nothing to debate and failing to respond to the concerns pointed out repeatedly by the opposition, while a few extra points against the bill found their way into the conversation.

The Big Issue

Perhaps the most noteworthy development in the debate was an observation as to one of the main contrasts between the Wheat Board as it stands and the shell the Cons want to leave to be demolished over the next few years, as Wayne Easter repeatedly questioned why the Cons' legislation would fire all of the directors actually elected by farmers while leaving their own anti-CWB appointees in place - particularly those with a direct stake in destroying the Wheat Board due to their interests in its competitors.

Meanwhile, Pat Martin slammed the complete lack of evidence, planning or competent management in the Cons' determination to trash the Wheat Board as quickly as possible before pointing out plenty of evidence that farmers benefit from the Wheat Board as it stands. Andrew Scheer rejected Wayne Easter's argument that the Cons' legislation violates the privilege of MPs. Yvon Godin repeatedly called for the Cons to keep their promise to allow farmers a vote on the fate of the Wheat Board. Kevin Lamoureux responded to the Cons' "count the seatzzzz!" rhetoric by pointing out how similar arrogance caused the Mulroney PCs to implode in Western Canada. Ryan Cleary noted that Newfoundland is moving toward its own marketing board for fish, while Gerry Byrne raised similar questions about an existing program for freshwater fish. In question period Ralph Goodale asked why the Cons are so eager to see all the most important decisions about Canada's farming industry made by U.S. agribusinesses, while querying whether the Cons would do anything to stop foreign takeovers in the grain industry. And Malcolm Allen pointed out how consistently the rhetoric of "trust the market!" has proven disastrous for ordinary people who end up paying the price for the errors of the corporate sector.

Screen Plays

The other bill discussed at some length was Con MP Patrick Brown's private member's bill to set up a national cancer screening strategy. But while there was little dispute on the substance of the bill, opposition MPs did raise a couple of noteworthy points as to how it fits with the Cons' normal view of health care: Anne Minh-Thu Quach pointed out the need for improvement in the wider health care system rather than the single issue alone, while Hedy Fry noted that the Cons' willingness to take steps toward direct action to combat breast cancer makes it implausible for them to claim they can't do anything about other health issues based on jurisdiction.

In Brief

Nycole Turmel slammed the Cons for bulling ahead with the purchase of F-35s with no regard for whether they'll function in the Arctic. Robert Chisholm again noted the Cons' incompetence in dealing with supposed friends and allies. Lysane Blanchette-Lamothe questioned the Cons' determination to direct the spoils of tax-free savings accounts to the people who need them least. And Jean Crowder questioned the Cons' spin that there's reason to cut Service Canada jobs as unnecessary at a time when EI claims are actually rising.