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?