Friday, March 27, 2015

Dollar for dollar

Thomas Mulcair's Progress Summit commitment that an NDP government will redirect the value of a stock option tax loophole toward families in need will surely make for one of the most important moments of a summit directed at developing exactly those types of ideas.

So it's unquestionably important that Mulcair is willing to take Canada in the direction of redirecting corporate giveaways toward people with a genuine need. That said, it's worth taking a look at the numbers as to how far today's announcement will go.

Canadians for Tax Fairness estimates the stock option loophole at a cost of $1 billion per year. But at least some responses - albeit ones which I'd take with a grain of salt - are questioning whether the net revenue would be less due to offsetting changes in corporate taxes.

And the nominal cost of eliminating child poverty (ignoring for the moment the larger benefits of doing so) is substantially higher than even the raw number: see e.g. the National Council of Welfare's estimates showing the sticker price of ending poverty as a whole at over $12 billion.

What's more, it's not clear that the money raised by closing the tax loophole would go solely to the gap between current sub-poverty incomes and getting families to the poverty line. That's fine in policy terms, as need and inequality don't end immediately at the poverty line - but it means we should be cautious in presuming that every dollar raised will address the immediate goal which provided the context for Mulcair's promise.

Of course, we can also expect positive consequences from the reduction of both inequality and poverty. So it's not hard to see today's announcement as a major first step toward both questioning corporate giveaways, and meeting the goal of ending child poverty. But it likely doesn't represent the end of the story either.

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