Andrew Scheer says he'll balance the budget by 2024. Until then, he's quite prepared to run deficits. But the question every voter should consider is this: What do those deficits accomplish or not accomplish? Andrew Jackson writes:
Despite his past claims to be a fiscal conservative, Scheer promises to balance the federal budget only at the end of the next Parliament, in 2024. That means he is, like US President Donald Trump, prepared to run deficits to finance a package of poorly thought out and regressive tax cuts.
There are good reasons to deficit finance investments which boost the economy and our future well-being – such as the investments in clean energy and pharmacare proposed by Jagmeet Singh and the NDP. But it makes very little sense for the federal government to borrow to fund tax cuts for middle and upper income Canadians.
The key Conservative promise is to phase-in a so-called Universal Tax Cut. This involves cutting the bottom federal personal income tax rate, which kicks in at a personal income above about $12,000, from 15% to 13.75%.
As David Macdonald of the Canadian Centre for Policy Alternatives has shown, the maximum tax saving – about $375 per year for an individual – will go to almost every person earning more than $47,000 per year, which is where the second tax bracket kicks in.
Individuals earning less than $47,000 per year will not get the maximum amount, and low income earners will get very little. A person earning $25,000 per year will get less than $50 in tax savings per year.
More than that, the Conservatives plan to give corporations a better tax break:
They propose to allow private companies pay the low small business tax rate on investment income of more than $50,000, which means assets of more than $1 million (assuming a rate of return of 5% on passive investment income.) This means that a wealthy lawyer can pay a small business tax of about 15% on investments, not the much higher top personal income tax rate.
The Conservatives also plan to allow owners of private corporations to pay lightly taxed dividends to their spouses, even if that spouse plays no active role in the corporation. The Parliamentary Budget Officer estimates that 97% of the tax savings will go to families with annual incomes of more than $150,000, and one third will go to families with annual incomes of more than $500,000.
Add it together, and the plan is to deliver tax savings of well over $500 million per year to wealthy owners of private corporations. It is often claimed that they need these vehicles to save for retirement, but they are being used on top of RRSPs and TFSAs which already shelter retirement savings.
And Scheer will pay for those tax savings by cutting foreign aid and infrastructure spending.
Here's the real take away: In Scheer's Canada, the rich will get richer and the poor will get poorer.
Image: 02varvara.wordpress.com
6 comments:
This is but only one of the valid reasons that the majority of Canadians should never vote for a Conservative government, Owen, especially when the current iteration of this party is basically controlled by the Reform component.
This article should be the headline in every newscast and on the front page of every newspaper. Unfortunately, what is that old saying? "There's none so blind as those that will not see".
This is an old story, Lulymay. We should be familiar with it by now.
With so many checkbook issues dominating this campaign, Owen, I fear too many will be willing to sell their birthright for a few shekels.
Mulrooney raised the debt . Harper raised the debt . Cretien lowered the debt. I suspect Sheer would be more like Harper than Cretien.
Ayn Rand's philosophy is pervasive, Lorne. To many of us, selfishness is a virtue.
Scheer's argument is pretty straighforward, rumley. It's right out of Ronald Reagan's playbook. Deficits are fine as long as they support tax cuts.
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