Flaherty's Smoke and Mirrors

More evidence of the Harpocrites Tax Unfairness. Business got the biggest tax cut while you and I got crumbs.

And even though many in booming Alberta are better off now than they were a decade ago, the taxation on working families earning median incomes; $40-$60,000, are paying for the tax cuts to business.

Simply put it is our taxes paying for Flaherty's corporate welfare while the Conservatives fail to invest the remainder of our money in much needed social programs.

Economists say the personal income tax relief in the Harper government's Tuesday mini-budget is paltry and does little to improve incentives to work, save and invest in a country already suffering from weak productivity growth.

The overall tax breaks that Finance Minister Jim Flaherty doled out this week will ramp up to $14.7-billion annually within five years, but less than 11 per cent of that went toward personal income tax rate cuts. Only about $1.5-billion is directed at lowering personal income tax rates, in this case cutting the lowest bracket rate to 15 per cent from 15.5 per cent.

Global Insight (Canada) chief economist Dale Orr calculates that the personal tax burden on Canadians keeps rising despite the Conservatives' fall mini-budget.

"This puts the small magnitude of that [mini-budget] relief into perspective," he says.

As a result of the relief Mr. Flaherty offered, personal income taxes collected by Ottawa as a share of all personal income fall to 9.8 per cent this fiscal year from 10.11 per cent. But then they rise to 10.12 per cent and soar to 10.94 per cent by 2012-13, only slightly less than where they would have been without the mini-budget.

The marginal effective tax rate on personal income - the tax paid on the next dollar of income someone earns - remains extremely high for most earners in Canada.

Typical marginal effective tax rates for families with children climb above 50 per cent for incomes in the $20,000 to $30,000 range and exceed 60 per cent for those earning $30,000 to $40,000, according to calculations by C.D. Howe Institute research director Finn Poschmann.

For most families, the rate doesn't drop below 50 per cent until incomes hit $45,000.

Edmonton's economic boom is making the rich richer, but most households are barely better off than in 1981, says the Edmonton Social Planning Council.

In making the comparison today, the council reached back to the peak year of the last big oil boom, rather than to the leaner intervening years.

It makes sense to compare "apples-to-apples" boom years, council researcher John Kolkman said as the non-profit agency called for more than $1 billion in tax breaks and increased spending for low-income Albertans.

Using Statistics Canada figures, Kolkman said the median earnings level - the point where half of income earners make more and half earn less - stood at slightly more than $32,000 in 1981, and only $300 above that in 2005. He adjusted 1981 earnings to equate them to the dollar's 2005 buying power.

Even so, in inflation-adjusted terms an increasing proportion of Edmonton-area families are making $100,000 or more, the Statistics Canada numbers show. Back in 1981, about 27 per cent of families were making at least that amount, in 2005 dollars. As of 2005, more than 30 per cent were in that earnings range.

About 55 per cent of families in 1981 were earning between $40,000 and $100,000 in inflation-adjusted 2005 dollars. The middle-income range accounted for just 43 per cent of families by 2005.

About 18 per cent of families earned less than $40,000 in 1981, using the same inflation-adjusted dollars. Families in that lower-income range peaked at about 38 per cent in 1995. As of 2005, they accounted for 27 per cent.

"A greater percentage of families are doing better," Kolkman said. Even so, he said some families that were once middle income have since lost ground.

SEE:

Tax Cuts For All

Tax Cuts For The Rich Burden You and Me

Tax Fairness For The Rich

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