Thursday, February 13, 2014

Will He Go With A Bang Or A Whimper?

Yesterday, Jim Flaherty signalled that he is packing his bags. In announcing his opposition to income splitting, he placed himself in direct opposition to his boss and the men, like Jason Kenny, who hope to replace the prime minister -- if and when he retires. Flaherty also became a target for social conservatives -- mainly evangelical Christians -- whose vote Harper bought with his promise to split incomes. Andrew Jackson writes:

Evangelical Christian institutions in particular had close ties to the Reform Party and have maintained and even increased their influence on policy under the Harper Conservatives. They have lobbied for a so-called pro-family agenda, including opposition to gay rights, opposition to abortion rights, and, more successfully, policies to support the traditional family with one earner and a stay at home spouse.

Despite the fact that both partners in the great majority of today's families with young children choose to participate in the job market, or have little financial choice but to work, the Harper government scrapped plans to establish a national child care program after it took office, replacing it with an inadequate cash benefit paid out to all families with young children.

The key point here is that there are very close connections between senior Harper government policy advisers, and religious and social conservative organizations that want to use tax policy to help restore the traditional family with a stay at home spouse. That is likely a major reason why family income splitting looms so large on the Harper government agenda.

The fact that Flaherty is opposed to income splitting does not mean that he is opposed to families. There are lots of things that could be done to support families with one working spouse -- like paying a living wage. That, however, would run up against the business community, who maintain that labour costs are too high. That is why they support the Temporary Worker Program, which has the effect of driving down wages for all Canadians.

Besides the obvious unfairness of income splitting -- analysts on all sides agree that the benefits would go primarily to the wealthy -- there is the fact that Mr. Flaherty's vaunted six billion dollar surplus would be cut in half:

Call it Harper's $3-billion Mad Men giveaway. Income splitting would allow families to share up to $50,000 in income for tax purposes. This would benefit some couples by more than $6,000 per year in cases where one partner (usually a man) is in a high income tax bracket, and the other partner (usually a woman) has no or low earnings. There would, however, be no benefit at all for single parents (who account for more than one in four families with children), and very little benefit for couples where both partners work, but are both in one of the lower tax brackets.

In other words, income splitting is -- economically -- as stupid as cutting the GST. By now Flaherty knows that, despite his claims, the prime minister is no economist. The question is: Will Flaherty go with a bang or a whimper? Will he resign, stating his strong opposition to a stupid promise? Or will he join the other bobble heads and slip quietly away?


bcwaterboy said...

Time and again harper has failed to deliver to his rabid "pro-family" base, will be interesting to see what he does in coming months to secure those impatient fence sitters. He knows full well he is guaranteed a percentage of that demographic, but it's not enough for a majority unless they orchestrate a mass stay-at-home on election night. As for Flaherty, his retirement can't come soon enough.

Owen Gray said...

The evangelicals have felt snubbed from the very beginning, waterboy. For that reason, I expect Harper will deliver on his promise.

But Flaherty knows that the promise makes the party extremely vulnerable. I also suspect that he has told or will tell Harper that he'll fight the next election without the current member from Oshawa.

rumleyfips said...

There are constituencies that voted for Harper again and again and are now being abused. Senior, veterans, fishers, farmers,anti-women groups and others are not getting what they were promised.

Harper and his advisers seem to think that these people will never vote anything but reform so can be ignored.This plan seems to indicate a belief that a less than 30% will maintain power when new ridings and suppressed turnout are factored in.

Owen Gray said...

There is a method to their madness, rumley; and it has been borne out by recent history.

But they keep slicing the pie into thinner and thinner pieces. In the end, they will be left with the crust.

The Mound of Sound said...

Whenever you alter tax policy it is essential that the social or economic benefit be manifest. Income splitting based on nothing other than coupling does not meet this test. Why should childless couples be treated any differently than two single people? There is no public policy justification for that.

There is a sound public policy reason for allowing low or moderate income couples with children to income split. They're already shouldering a financial burden for rearing children who will be our next generation of citizen/taxpayers.

Owen Gray said...

Precisely, Mound. The "family values" crowd have been espousing policies that -- for the last forty years -- have undercut families.

e.a.f. said...

I think Flaherty hasn't been happy with harper for some time. When you watch when Harper is up on his feet in the House, those around him will get up and applaud or sit and applaud, make comments, whatever, they are always cheering him on, especially the two blonds right behind him, on either side, along with one woman of asian decent, What has been on interest is, Flaherty just sits there and looks straight ahead. Its always interesting to watch politicians with the sound off and just focus on the body language. Flaherty left the Conservatives a long time ago. He continues in his position. Will he run in the next election? Most likely not, given his age and health. Will he go quietly, perhaps, but not as quietly as harper wants him to. if Flaherty continues to voice his views on "income splitting" it may split the cons. This maybe very entertaining yet.

Owen Gray said...

The Conservative drama might get very interesting, e.a.f. -- particularly if the rift between Harper and Flaherty grows.