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Why cut taxes for the rich?

Is Premier Christy Clark paying off the "champagne-and-caviar set," or is there more to the income inequality debate?
Mike de Jong
Premier Christy Clark listens as Finance Minister Mike de Jong delivers his third budget speech in the B.C. legislature

VICTORIA B次元官网网址 The B.C. governmentB次元官网网址檚 third straight budget surplus is the main battleground for provincial politicians this spring, with little else on the order paper to argue about.

The main conflict is over the tax cut for the rich that results from removing a two-year surtax on personal income greater than $150,000 a year. ItB次元官网网址檚 an outrage, says the NDP, starving our threadbare government services of more than $200 million over the next three years.

NDP leader John Horgan set the tone in his reply to Finance Minister Mike de JongB次元官网网址檚 budget speech:

B次元官网网址淚 can appreciate that the minister was celebrating with the champagne-and-caviar set, but the rest of British Columbia saw $700 million in increased fees and taxes on their backs.B次元官网网址

Old news, de Jong replied. It was a temporary surtax on high-income earners to help get B.C. out of its post-recession red ink, and it expired as it was legislated to do.

This political theatre doesnB次元官网网址檛 help people understand whatB次元官网网址檚 actually going on. First, a lot of that red ink was B.C. Liberal blood from dismantling the harmonized sales tax and repaying Ottawa for that failed experiment.

Second, this temporary tax on the rich was a political strategy by de Jong and Premier Christy Clark, limping into an election most expected them to lose. De JongB次元官网网址檚 debut budget in February 2013 also accelerated a small increase in corporate income tax, stealing two populist planks from Adrian DixB次元官网网址檚 NDP platform.

Ending the surtax not only kept a promise, it kept B.C. competitive with Alberta on personal income taxes. High wage earners and many of their businesses are more mobile every year, which is why this yearB次元官网网址檚 budget also extended tax breaks for high-tech and digital media companies.

Another tweak in de JongB次元官网网址檚 budget was to increase the low-income cutoff for personal income tax from $18,000 to $19,000. Those with the lowest incomes are relieved not only of income tax but also medical premiums, which continue to march up by another four per cent, and are mostly paid by employers.

As with the federal election set for this fall, we will hear a lot about the burden on the vaguely defined B次元官网网址渕iddle class.B次元官网网址 In B.C. they have to dig deeper for car insurance, hydro, ferry rides and post-secondary tuition, while those top-hatted champagne-sippers party on with their tax holiday?

Well, not exactly. HereB次元官网网址檚 an assessment from , research co-ordinator at the Macdonald-Laurier Institute and former chief economic analyst at Statistics Canada.

Just after the 2013 B.C. election, Cross noted that Canada, its provinces, Europe and the United States have all been adjusting their tax systems to increase the load on wealthier people and ease it from the poor.

This has closed the wage gap considerably in Canada. By 2010, the top 20 per cent of earners were paying 58.3 per cent of all income taxes. ThatB次元官网网址檚 up from 50 per cent in 1976, showing how long CanadaB次元官网网址檚 income taxes have been B次元官网网址減rogressive.B次元官网网址 This is the main reason why B次元官网网址渋ncome inequality,B次元官网网址 that other great cause of the left, started leveling off in Canada around 1998.

Cross points to measures like the low-income exemption from income tax. By 2013, the bottom 40 per cent of Canadian households were paying just 6.8 per cent of income taxes, and more than a third of income tax filers were paying none at all.

Cross asks and answers the central question: Should the rich pay more? B次元官网网址淚f itB次元官网网址檚 a misinformed attempt to compensate for imaginary losses of low-income people, the answer is clearly no.B次元官网网址

Tom Fletcher is legislature reporter and columnist for Black Press. Twitter: @tomfletcherbc

 





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