A perspective on taxation

It is always a joy to read Dan’s reports from the House of Commons. The message delivered March 18 was no exception.

I have to challenge Dan, though, on his presentation and use of percentages to demonstrate how the Harper government has weighted tax cuts to most benefit “low middle income earners” — or households earning between $12,200 and $23,300. The math suggests otherwise.

According to Dan’s numbers, a four-percent increase in after-tax income for those low middle-income households (earning up to $23,300) amounts to a maximum gain of $938.

Meanwhile, the net after-tax gain for the top 10 percent of income earners (earning at least $159,444 according to the report cited) — which Dan presented at 1.4% — calculates at a minimum of $2,232. That is more than double the savings delivered to low middle-income earners.

The difference is even more dramatic if we use the 1.4% increase in after-tax gain for the high-income earners — the top 1% with a median income of $324,298. Those income earners came away with $4,540 in after-tax gain.

To humour Mr. Albas, if we retain consistency with Dan’s messaging and present using percentages, that suggests the top 1% came away with 500% more in after-tax gain.

Dan’s research is taken from a May 2014 Parliamentary Budget Officer report entitled Revenue and Distribution Analysis of Federal Tax Changes: 2005-2013. Specifically, it appears to be taken from the Key Points summary at the beginning of the document. Had Dan or his team dug a little deeper into the report they would uncovered this paragraph:

“In absolute dollar terms, reduced tax burdens from [personal income tax] rate reductions skews toward households with larger incomes. These households are most likely to have multiple income earners who most fully benefit from a lower tax rate on the first $43,953 of taxable income. The top 20 percent of income earners accrue almost half of the financial benefits of a PIT rate reduction.” 

For the record, it’s not just personal income tax reductions that benefit higher-income homes. The report also found: “In absolute dollar terms, the fiscal impact of the Child Tax Credit skews toward households with larger incomes. The top 20 per cent of households (income of $109,197 or more) accrue half of the financial benefits of the credit.”

Not surprisingly, additional language suggests similar benefits for high-income Canadians in other areas as well.

Curiously, the Harper government plans to do away with the two measures the PBO suggested most benefited lower income Canadians — the Working Income Tax Benefit and Canada Child Tax Benefit.

The numbers as presented by Mr. Albas do not add up to a net benefit for lower income Canadians. I’d like to believe in this case Mr. Albas is guilty of not doing his homework.

The alternative would otherwise suggest a deliberate attempt to mislead his constituents.

Andrew Stuckey