Thursday, November 06, 2014

They Claim He's a Smart Man


The Conservative "Family Tax Cut"  is straight out of the fifties. Linda McQuaig considers three families, each earning a total $100,000 in income:

Imagine three families, all raising kids, all with total household incomes of $100,000.

In the first household, the breadwinner is a single mother. Her benefit from the Family Tax Cut: zero.
The second consists of two working spouses, each earning $50,000. Their benefit from the Family Tax Cut: zero.

The third consists of a man earning $100,000 with a stay-at-home wife. Their benefit from the Family Tax Cut: Bingo! They get $2,000.

Incomes are equal, but benefits are not. What's the difference?

By what stretch of logic could that be considered fair? Are the other two families not “hardworking” enough? Does the Harper government consider them defective in some way?

Their only flaw, in terms of qualifying for this tax break, is that they’re not the kind of traditional family that Stephen Harper and his base clearly prefer.

Income-splitting also would reinforce the dominant role of men in relationships. The income-splitting itself is for tax purposes only. There’s no actual transfer of money to the lower income spouse (typically the woman), so it will do nothing to increase her autonomy or bargaining power within the relationship.

Harper's economic policy is straight out of the 19th century. His "family policy" is straight out of the middle of the last century.  His view of the future only stretches as far as the next election.

 And they say he's a smart man.


Anonymous said...


Not McQuaig's writing its self, but what's left unsaid.

In the first case, who's the single mother going to split her income with? One wonders how she ended up with a child, but how easily I forget that males are no longer important, or even wanted for that matter.

In the second case, the income is already split.

In the third, what she doesn't say is that without the Harper tax break, that family pays $2000.00 more than the second case, because the greater single-income earner is taxed at a much higher rate than where the incomes are already split 50%.

Same income, different ammounts.

In the 2nd case, leaving provincial tax aside, the rate of income tax is 22% for each partner. At $50,000 ([50000 * 0.22] * 2 = $22,000) each, that's $11,000 each or $22,000 for the family.

In the 3rd case, federal income tax is at 26%. At $100,000, that's income tax of $26,000. (100000 * 0.26 = $26000)

Same income, different ammounts.

Do you realize McQuaig is arguing, and by extension you are arguing in favor of perpetuating a financial injustice, while simultaneously making an argumennt for keeping people poor?

Steve said...

As usual this scheme rewards Alberta and punishes Ontario and Quebec.

Today Honda announced an 800 million dollar investment in Ontario. Usally both the feds and province would put in 10%. Surprise Suprise Suprise the feds gave nothing.

The war on on Ontario and Quebec has to defeat Harper in 2015.

Owen Gray said...

You're forgetting McQuaig's argument about costs, Anon. Not every family faces the same costs -- and costs, not just incomes -- should be considered when developing tax policy.

Owen Gray said...

They say that Ontario could well decide the next election, Steve. Apparently Mr. Harper feels that, if he won a majority without Quebec, he can also win a majority without Ontario.

thwap said...

This will cost $27 billion.

What a travesty.

Anonymous said...

The effect of costs on families is an interesting argument, but one which actually works completely against what McQuaig is asserting. She doesn't state that costs are comparitively higher because of a dramatically increased demand for work relative to a constant supply of work. The renumeration for labour remains steady, while, everything else from houses, to cars to food experiences a surge of demand, yet the supply remains constant. This pushes the price upwards, which is causing those increased costs.

Norm said...

The example of 2 family earners may be correct but a single parent can claim a dependent allowance as can the single family earner with a non working spouse and that's with or without kids. It just makes the 2 earner family with or without kids that much worse off.
Or am I missing something?

Owen Gray said...

And they claim they know how to control costs, thwap.

Owen Gray said...

It's clear that the policy is meant to encourage the traditional one earner family, Norm.

The problem is that the economy the Conservatives have worked so hard to build does not encourage one earner families.

Owen Gray said...

But the supply doesn't remain constant, Anon. The supply of what used to be called "affordable housing" has shrunk. But the supply of high end condos has surged.

Anonymous said...

@Anonymous 10.12 a.m.

Harper likely thrives because of people like you who apparently need to educate themselves on many things, including how our tax system works. Lol.

For a start, for a taxable income of 50K (i.e. 2nd case), not all of it is taxed at 22%. The first $44K (approximately) is taxed at 15% and only the remaining $6K is taxed at 22%. Leaving prov. tax aside, the total family tax is only about $16K, not $22K. BTW, this may explain why many Cons supporters seem to think that they are paying more taxes than they actually are, perhaps because they do not understand how to calculate their taxes. Lol.

Similarly, for a taxable income of $100K (i.e. 1st and 3rd cases), the first $44K (approximately) is taxed at 15%, the next $44K (approximately) at 22% and only the last $12K at 26%. Thus the tax payable is only $19K (approximately), not $26K as you claim. Big difference between $19K and $26K, no?

It is true that case 2 pays lower taxes by approx. $3K but the point had already been made that this two breadwinner household likely needs to spend more on daycare/childcare, commuting expenses, meals, etc. than a household with one spouse at home.

Second, you have ignored the point already made that the single parent household (i.e. case 1) pays the same amount of taxes, $19K in the example above, without getting the benefit of the income splitting for a household with only one spouse working (i.e. case 3). Add to this the fact that the single parent household would likely incur the same additional expenses (child/daycare, commuting, meals, etc.) that a stay home spousal household would not incur and the unfairness becomes clear.

No, Harper may not be smart, but he seems cunning enough to know that his base consists of people like this poor fellow here who seems to need help to calculate his/her taxes, eh?

Anonymous said...

Congratulations Owen. You are now a topic of conversation on the Harperite radar of hate!

Anonymous said...

Yes Owen, mostly owned by financial institutions through long mortgages.

What happens when the owners begin to dwindle whilst competing for a shrinking pool of buyers?

Owen Gray said...

That's precisely why governments need to occasionally stimulate demand, Anon. Otherwise, an economy collapses from the bottom.

Owen Gray said...

I agree that the world needs more love and mercy, Anon. But am I missing something?

What's the connection between the song and the prime minister? That love and mercy are not part of his DNA?

Owen Gray said...

Let's see if Anon responds, Anon.

Anonymous said...

Oh noes! Not a difference of $1,000! My entire argument, debunked by being off by a $1,000!

The best part of this is that you don't actually listen to yourselves. It's so sadly predictable.

You've now argued that you are not in favor, that you are against creating an economic incentive for two parent families, or more precisely, for two parent families to try to avoid divorce.

I wish I could make this stuff up.

Anonymous said...

Owen - What?

Please explain how a government can continue stimulating demand?

Owen Gray said...

By building the kind of infrastructure that makes an economy competitive, Anon.

Anonymous said...

The final phase of the Reformacon's reign of error...

They're actually starting to believe
their own bullshit.

Owen Gray said...

They've believed their own stuff for a long time, Anon.

Anonymous said...

Owen - You never did answer the question. Who's going to buy Toronto's concrete boxes in the sky?

Owen Gray said...

They might remain empty, Anon, and serve no purpose -- like the pile of dead money that is sitting atop our economy.

Anonymous said...

Owen - Yes, they might at that! And what do you suppose will happen to the owners who tried to sell them because they were planning to retire on the money that selling their home may have generated?

Owen Gray said...

And that's precisely the problem, Anon. It's better to have money circulating among the many than coagulating among the few.

Anonymous said...

Owen - Oh?

I don't need two residences, how about you?

Pretty sure my children will only need one each as they would fall into the under 10 demographic.

Guess it will be up to the government to artificially hold down the prices for all the unemployed and underemployed 20-somethings and 30-somethings. Oh wait! The government can't really do that can it? The government can only subsidize new purchases, either through low-interest rates, or stealing it from the future.

But, at some level, I'm not sure that any amount of government manipulation will be able to outweigh the laws of supply and demand. And when demand goes down, which it will, supply goes up, and the price falls.

To think that government can, or should prop up this teetering system is... well. I'll let Mr. Whittle take that one.

Owen Gray said...

I'm not suggesting that government should fiddle with the laws of supply and demand on a daily basis, Anon.

But when those two elements get out of whack, only government can restore the balance. We have lived with supply side economics for thirty-five years.

It's time for a re-balancing act.