Quotulatiousness

March 31, 2011

Corcoran: Harper’s family tax plan full of “shabby contradictions”

Filed under: Cancon, Economics, Politics — Tags: , , — Nicholas @ 12:28

I think it’d be fair to say that Terence Corcoran is not a fan of Stephen Harper’s proposed “family tax plan”:

By calling this a “family tax cut,” and playing it as a matter of tax fairness, the Conservatives have managed to gloss over the shabby contradictions it introduces into Canadian tax policy. The Tory announcement said that the United States, France and other countries allow some form of income splitting. They do, but that’s not saying much about taxation or fairness.

France has a full-blown family tax regime, in which the incomes of both spouses are blended at a tax rate that is based on a formula that includes the number of children. But so what? France has one of the highest marginal tax rates in the world, and a notoriously dysfunctional tax burden that distorts behaviour and incentives. The U.S. income-splitting regime isn’t exactly revered for its soundness, in part because it clearly discriminates against single earners or anyone not part of a married couple. Nor are children a requirement to be part of the U.S. splitting regime.

[. . .]

The Harper family tax cut, based on the debatable tax policy ideal of taxing families instead of individuals, is a misguided income-splitting scheme that demonstrates once again that the Conservatives will never, ever get around to cutting personal income tax rates. The cost of the family tax cut will come at the expense of across-the-board income tax cuts for other Canadians. To pay for the family cut, other Canadians will have to continue to pay marginal tax rates that are too high.

The family tax cut, in some ways, is just another tax expenditure, a special tax treatment aimed at fulfilling some social-policy objective. The major beneficiaries are likely to be higher-income single-earner couples with children. Everybody else is out of luck.

To pull out the old saying, “that’s a feature, not a bug” to the Conservative party faithful.

4 Comments

  1. […] Corcoran: Harper's family tax plan full of “shabby contradictions … Partager avec vos amis! : […]

    Pingback by Projet du Bas-Churchill : Stephen Harper confirme que des discussions ont lieu | Vive le Québec — March 31, 2011 @ 18:03

  2. Let’s face facts, the only way that any Canadian government can cut taxes is to cut spending. And that said, there seems to be no impetus to cut spending at all. Every time the CPC talked about cutting anything the opposition and the media cry like little spanked babies. What we need is a government that would stand up and tell the teat suckers to go make it on their own. Cut every grant, for starters, then cut the politician’s office costs, then cut the political subsidy (the $2.00 per vote thing). There are other areas to cut, but if we at least started with the grants we would be well on our way.

    Comment by Dwayne — March 31, 2011 @ 19:53

  3. Let’s face facts, the only way that any Canadian government can cut taxes is to cut spending. And that said, there seems to be no impetus to cut spending at all.

    The Conservatives in Ottawa have discovered the joys of spending (our) money. Our only hope was that they’d manage to start cutting before they discovered how much fun it is to be generous out of someone else’s pocket. Whether that was ever a realistic hope is something we’ll never know. Now that Harper and Company know that the way to stay in power is to pretend to be the Liberal Party, there’s no hope of spending cuts whatsoever.

    Even if they manage to win a majority in this election, I think the damage has been done. Reforming the electoral subsidy is one of the things that we can still hope for: Harper will do it because it would gut the Liberals, not because it’s the right thing to do (that’s merely a convenient co-incidence).

    Comment by Nicholas — March 31, 2011 @ 22:47

  4. Sadly I agree… there is no hope of a resurgence of the Reform Party I guess. Still, I look down south and know that if we had any other socialist as the PM we could be in a whole bigger world of hurt.

    Comment by Dwayne — April 1, 2011 @ 21:52

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