COMPARING APPLES and BLUEBERRIES

Kevin Milligan is an Associate Professor of Economics in the Vancouver School of Economics at the University of British Columbia.  He is also affiliated with the C.D. Howe Institute and the National Bureau of Economic Research and since 2011, he has served as Co-Editor of the Canadian Tax Journal.  https://about.me/kevinmilligan

Kevin recently posted a comparison of the impact of the proposed Basic Personal Amount increase (from @liberal_party) to the Universal Tax Cut (from @CPC_HQ).

Both proposals are comparable in cost to the taxpayer with the Liberal (LPC) platform at $5.6 Billion and the Conservative (CPC) platform $300 million higher at $5.9 Billion.

The comparison doesn't end there and that has a lot to do with the phrase "floating the boat".
For ease of understanding lets say the first $10,000 is tax free for everyone. (The actual current amount don't matter in this instance because they change regularly and depending on which of the two parties form government that will change again.)

Trudeau's BASIC PERSONAL ALLOWANCE reduces the tax burden on the lowest wage earners, removing many from even paying taxes by increasing their Basic Personal Exemption amount.

Scheer's Universal Tax Cut however does very little for the low income earners but continues paying off for high income earners as though they were comparable to low income earners.

Effectively this shifts the tax burden to low income owners over the first 5 years while giving his key supporters a break on their taxes.

The first thing you need to remember is Canada has a graduating tax structure.

We are all exempt on the first few thousand (Basic Personal Exemption). Then we all pay one rate for the next tier, and depending on the government of the day that either increases or decreases as one moves up, again for ease of reference this explanation presumes:

• The portion of your earnings between $10,001 and $30,000 is taxed at a uniform 20%
• The portion of your earnings between $30,001 and $50,000 is taxed at a uniform 25%
• The portion of your earnings between $50,001 and $70,000 is taxed at a uniform 30%
• and so on.

So for a family earning a combined $125k/yr or less the Liberal plan clearly benefits them more, while families earning more than $250k/yr see less benefit above that amount, by comparison the Conservative plan continues to reward high income earners as if they were low and medium rate earners AND since the Conservative plan does much less for low income taxpayers than rich ones the tax burden effectively remains with the poor.

The concept of "floating the boat" actually directly speaks to the "bootstraps" that Conservatives always tell the poor to pull themselves up by.  The more money a poor person retains of their earnings the less support they need.  Money is their bootstrap.

Scheer's plan keeps the poor reliant on social services while helping the rich avoid their obligations, effectively removing the "boots" from them.

And worse, as we've seen in Ontario, since Scheer doesn't want to increase the debt, in order to pay for these tax breaks his Government would have to cut essential services, as Ford's government has, often to the most vulnerable in society.  

Meaning those poor become more reliant on a system that is less supportive of them.   

The promise to balance the books on the backs of the poor is a lie, it actually increases the risk of bankruptcy and homelessness among the poor and lower middle class, and because living under the threat of losing such basic needs is more stressful, it also increases first responder costs, medical costs, criminal costs and the burden on cities.

Shifting the cost burden from the Federal to the Provincial government doesn't help the taxpayers in those cities - but it does help the taxpayers in rural areas where there are fewer poor people, places like most of Alberta and Saskatchewan!

Thus cities get stuck with the bill, as they did when Conservative Mike Harris downloaded most services to them in the 1990's.

But Trudeau's plan, in "floating the boat" and giving the poor "bootstraps" sees more low income earners removed from the tax roll, and since money is their "bootstrap" the more bootstrap we give them the less they need help from the Government, which reduces demand on government services in cities, provinces and at the Federal level, therefore reducing costs to taxpayers everywhere while improving the overall status of all Canadians.

Mind you, if all you care about is the rural vote then obviously urban poor are an easy target because they likely won't vote for you anyway.

Except, places that don't help their poor find the burden eventually affecting the lower middle class.  And places that put that burden on the lower middle class cause problems for the middle class.

The rich don't care, they're usually in the Cayman Islands, Florida or on their boats.  Boats they bought with tax credits they got because governments were elected that gave them breaks at your expense.  It's not socialism to say so, it's history.

And that sort of corruption of a system only lasts until the next Revolution comes.