Wednesday, February 12, 2014

Stephen Harper needs a reality check! "Check 1 ... Check 2 ... Check 3 ... Check! Check! Check! ..."

Good Day Readers:

Budgets are normally ho-hum, bland, unsexy, b-o-r-i-n-g events and yesterday's was no exception. No one gets overly horny and begins to fantasize. Oh for sure, the Tories could have balanced the books now but chose not to for political reasons. As the 2015 election approaches expect to hear in advance, "There will be a small surplus." But when the amount is formally announced it will be somewhat larger an old trick parties like to play - the Liberals have done it too.

But there's an issue that's about to explode onto the scene majorly. Stephen Harper with his traditional social and religious conservative roots is already on the public record as strongly favouring income splitting while his Finance Minister Jim Flaherty yesterday said he isn't so sure government coffers can afford to lose the estimated $3-billion annually it would cost to benefit a relatively small number of taxpayers at the expense of the majority.

You see, Stephen Harper just doesn't get it! The traditional one income earning family with a stay at home spouse (usually the mother) went the way of the do do bird many years ago to be replaced by single parent (look at divorce rates these days) and dual income families. One must wonder if he's noticed Canada has an aging population.

Below are a couple graphics illustrating the cost of an income splitting scheme.    

Click here to visit the Mad Men tax giveaway campaign page.

From deepening income inequality to rising unemployment, Canada faces a wide range of pressing economic challenges that ought to be addressed in next week’s federal budget. Yet little is expected in the way of, for instance, sorely needed measures to address our jobs crisis. Instead, the Conservative government is focused on balancing the budget so it can deliver on its highly political and expensive promise of a pre-election tax break.

According to the C.D. Howe Institute and the Canadian Centre for Policy Alternatives, the Conservative plan to introduce family income splitting will mean some $3 billion per year in lost federal revenues, and some $5 billion per year if the provinces follow suit.

What services and programs will be cut to finance this?

The ongoing slashing in Ottawa holds unsettling clues. Federal cuts to science and our social safety net, as well as the squeeze on transfers to the provinces that support programs like health care, are bound only to get worse. And all this in order to balance the budget for what amounts to a tax gift for the affluent.

Family income splitting would benefit only a small minority of families, giving a big tax break to high-income traditional families with one earner and a stay-at-home spouse, while delivering little or nothing to other families.

The move would allow couples with children under 18 to share up to $50,000 for tax purposes. That translates into a tax cut of more than $6,000 per year for a couple with one person in the top tax bracket. In the case of someone earning more than about $185,000 per year, income-splitting would allow the full amount of $50,000 to be shifted from the top to the bottom tax bracket, thus cutting the tax rate on that money nearly in half.

Single-parent families, already more vulnerable, account for more than one in four children, yet would receive nothing from the tax break. Nor would there be a benefit for working couples with children in which neither parent earns more than about $45,000. That is because both earners are already in the lowest tax bracket.
The math of income-splitting is such that there would be only small savings, if any, where both parents earn between about $45,000 and $135,000. In fact, according to the Canadian Centre for Policy Alternatives, the top 5 per cent of all families would see more benefit than the bottom 60 per cent — and 86 per cent of families would see no benefit at all.

This tax measure will be sold as a way to support families who choose to have one parent (usually the mother) stay at home to care for children.

If the Harper government really wanted to expand choices for families with young children in a fair way, it could improve maternity and parental benefits under employment insurance. This program allows for up to one year’s paid leave from work, but benefits are so small — on average, just over $400 per week — that many families have to cut the leave short.

Alternatively, the government could increase child benefits for lower-income families so that families choosing to work fewer hours, and thus to earn less, get more support through higher child tax credits.
The $3 billion that income splitting will drain from federal coffers would be enough to increase federal spending on child tax credits by more than 25 per cent. Or to double current spending on maternity and parental leave benefits. Or to make a significant contribution toward enhanced access to quality child-care programs.

But none of those policies would achieve what the family income splitting proposal is designed achieve: to prop up the traditional family model by encouraging one parent to stay home. Call it Harper’s $3-billion Mad Men giveaway.

No wonder the policy has been actively promoted by social and religious conservative organizations such as REAL Women and Focus on the Family Canada, which have opposed public child care and are strong believers in the traditional single-earner family.

While income splitting will be advertised as a boon to the middle class, it is in fact a gift to the well-off and a surreptitious sop to the socially conservative. It will benefit almost no one else.

It is a sad statement that the No. 1 priority of the government’s upcoming budget is to lay the groundwork to introduce a tax measure that will further increase income inequality while failing to meet the needs of the vast majority of families with young children.

This article originally appeared in the Toronto Star.

Will the Harper-Flaherty schism continue to grow to the point where Stephen Harper dumps his Finance Minister or Mr. Flaherty says, "I'm out of here I've had enough of these evangelical religious social conservatives!"

In a post-budget press conference yesterday, veteran CBC Senior Ottawa Correspondent Terry Milewski asked Jim Flaherty, "Why don't you just balance the budget now then retire?" The Minister's answer was most revealing - he said nothing.

You see boys and girls, the far right religious and social conservatives are ideologues who slavishly adhere to an ideology regards of what data and the facts might be saying. Unlike pragmatists they're incapable of turning on a dime.

The Tyee article is an excellent backgrounder on how voters/taxpayers got to where they are today with income splitting.

Sincerely,
Clare L. Pieuk
Income Splitting: So Divisive It's Splitting the Tories

Why Harper's going 'Mad Man' retro with his $3-billion tax gift to social conservatives

By Andrew Jackson
Wednesday, February 12, 2014

Discouraging women from working outside the home is surely not an appropriate goal for tax policy. But that may just be the motivation behind the Harper government's plan to introduce "income splitting" for families -- an expensive tax gift to traditional families with one breadwinner and a stay at home spouse.

The gift is already proving costly to Conservative party unity. The Harper government's own finance minister is speaking out against the policy that would deprive the treasury of tax revenues while benefitting mainly big earners.

But Minister Jim Flaherty is up against social conservatives in Tory ranks who built income splitting into the party's platform.

So why is income splitting so problematic that it's splitting even the party that proposes it?

It starts at the top, with Stephen Harper, who has long been haunted by the spectre of a hidden social conservative agenda.

The latest budget has set Harper up to make good on his promise to introduce income-splitting once the federal budget is balanced next year. As various studies have shown, this tax change would be immensely costly at almost $3 billion in lost federal government revenues, and it would mainly benefit a very narrow subset of families (a mere 14 per cent according to the CCPA) - mostly affluent single earner families with a stay at home spouse.

Call it Harper's $3-billion Mad Men giveaway. Income splitting would allow families to share up to $50,000 in income for tax purposes. This would benefit some couples by more than $6,000 per year in cases where one partner (usually a man) is in a high income tax bracket, and the other partner (usually a woman) has no or low earnings. There would, however, be no benefit at all for single parents (who account for more than one in four families with children), and very little benefit for couples where both partners work, but are both in one of the lower tax brackets.

Why would the Harper Conservatives put so much emphasis on a tax scheme that would worsen growing income inequality and foreclose spending some $3 billion on needed programs and services that would benefit all Canadians?

Alms for Evangelicals?
Part of the answer lies in the very close ties between the Conservative government and religious and social conservatives which have been documented by Marci Macdonald and Dennis Gruending, among others.
Evangelical Christian institutions in particular had close ties to the Reform Party and have maintained and even increased their influence on policy under the Harper Conservatives. They have lobbied for a so-called pro-family agenda, including opposition to gay rights, opposition to abortion rights, and, more successfully, policies to support the traditional family with one earner and a stay at home spouse.

Despite the fact that both partners in the great majority of today's families with young children choose to participate in the job market, or have little financial choice but to work, the Harper government scrapped plans to establish a national child care program after it took office, replacing it with an inadequate cash benefit paid out to all families with young children.

And while the Conservatives talk of the importance of promoting real choices for families with young children, they have done nothing to expand access to or benefits of maternity and parental leaves under Employment Insurance that would allow parents to care for children at home longer.

Meanwhile, social conservatives have organized through advocacy organizations and used their very close links to the Conservative caucus and to the prime minister himself for changes to the tax system to support traditional families. Notably, many of their proposals call for tax support for stay at home parents of all children, and not just pre-school children.

As far back as 1999, the Reform Party minority report to the House of Commons Finance Committee on taxation of families called for tax measures to "give parents... greater freedom to spend more time parenting and succeed economically while doing so." Many social conservative witnesses called for consideration of family income splitting at the Committee hearings, including REAL Women of Canada and Focus on the Family.

Pushed from far-right fringe

REAL Women of Canada is an avowedly conservative women's movement that has led the charge for family income splitting since at least the mid 1990s. They are a profoundly anti-feminist organization that also supports anti-union laws, and oppose public child care, abortion and same-sex marriage.

In a 2012 pamphlet titled "The Importance of the Family," REAL women argue the case for tax changes to support the traditional family with a stay at home spouse, usually a woman.

"Although there are serious financial disadvantages to single-income families, ie. decreased disposable income, there are, nonetheless, some important emotional and sociological advantages for such families, and, in the long-run, for society. That is, when one partner (either the mother or father) is the sole provider, energy can be directed by the other partner to full-time parenthood. This allows for complete attention towards the nurturing of the children and assists the family by creating values, faith and traditions, which are more readily achieved by this close family arrangement. Healthy families ensure the future of mankind."


British Columbia-based Focus on the Family Canada has also taken the lead in advocacy of tax measures to support the traditional family. They have links to the major American evangelical Christian organization of the same name and, according to journalist Marci Macdonald, received $1.6 million in services from the larger American organization between 2003 and 2006.

Focus on the Family Canada's mission is to "encourage and strengthen the Canadian family through education and resources based on Christian principles"; and its guiding principles include the preeminence of evangelism, the permanence of marriage, and the sanctity of human life. Like REAL Women of Canada, Focus on the Family Canada has opposed a publicly delivered national child care program, same-sex marriage, and gay rights in general (including the right of gay couples to adopt children.) It is anti abortion and promotes spanking in the interests of child discipline.

Focus on the Family Canada recently established the well-funded Institute of Marriage and Family Canada/Institut du Mariage et de la Famille Canada (IMFC), just as the Harper government took power. Located in Ottawa to influence the national policy debate, its mission is "to positively influence public opinion and promote public policy that values human life, the pre-eminence of marriage and the institution of the family." Ministers Stockwell Day and Jason Kenney spoke at the gala launch of the IMFC in 2006, according to Marci Macdonald.

The IMFC actively promotes income splitting, including through a major report it commissioned from well-known University of Calgary economist Jack Mintz in 2008. 
The core of their argument is "that (individual taxation) makes it much more difficult for one of the parents to stay at home to raise children or spend time doing voluntary work. Ultimately, high taxes imposed on single-earner families drive people to make choices that they may not wish to make. It is an important social issue, too, given Canada's falling birthrate and ageing society."

Reform Party roots

Focus on the Family and the IMFC in particular have had very close connections to the Reform Party, the Harper Conservatives, and the conservative Manning Institute which seeks to establish a broad tent uniting social conservatives and economic liberals.

Take the example of three individuals associated with the Manning Institute:

1) Darrel Reid was president of Focus on the Family between 1998 and 2004. Prior to that he had been director of policy and research for the Reform Party and chief of staff to Preston Manning as Leader of the Opposition. Subsequent to his work with Focus on the Family, he joined the Prime Minister's Office, rising from senior policy roles to become deputy chief of staff to Prime Minister Harper in 2009. He left the PMO in 2010 to become the executive director at the Manning Institute


2) Dave Quist worked for Harper as operations manager when he was Leader of the Opposition. He became the founding executive director of the IMFC, which he left at the end of 2012 to become vice president of the Manning Institute

3) Paul Wilson was appointed as director of policy and then acting chief of staff in the Harper PMO in 2012. Another former assistant to Preston Manning and Stockwell Day in the days of Reform and the Canadian Alliance, Reid has served as an executive assistant to cabinet ministers Diane Finley and Vic Toews.
Wilson is the former coordinator of the Laurentian Centre in Ottawa, which was established by Trinity Western University, mainly to place student interns in Ottawa jobs, especially with Members of Parliament. Trinity Western University is an avowedly evangelical institution which embraces social conservative values.

Real choices over right-wing deals

The key point here is that there are very close connections between senior Harper government policy advisers, and religious and social conservative organizations that want to use tax policy to help restore the traditional family with a stay at home spouse. That is likely a major reason why family income splitting looms so large on the Harper government agenda.

Not to be misunderstood, families with young children should be supported if they choose to have one parent stay at home for a period of time. Maternity and parental leaves make an important contribution to this goal, as do decent child benefits for lower income families. Both could and should be improved.

But the social and religious conservatives are less interested in promoting real choices than in promoting a traditional family model in which women are expected to stay at home for extended periods to care for children. That is why they not only call for tax measures to subsidize stay at home parenting, but also oppose government spending on badly needed childcare services.

And that is likely why Finance Minister Flaherty exposed a rift in his Conservative Party when he said of income splitting: "I'm not sure that overall it benefits our society."

No it doesn't. Canadian families deserve better.  [Tyee]

Read more: Federal Politics,


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