Budget 2013: Women cannot afford more tax cuts for the rich
TheStar.com – opinion/editorialopinion – The more tax revenues are cut, the more women pay in loss of services and government resources.
Feb 28 2013. By: Kathleen A. Lahey
In Canada, tax cuts are expensive and sexist: the lion’s share of tax cuts go to men, and women get the bulk of the spending cuts that inevitably follow — or evenprecede — tax cuts.
Canada is the undisputed “tax cut” leader among the most highly developed countries in the world. As of 2011-12, Canada’s race to shed tax revenues was outstripped in the OECD only by New Zealand and the Slovak Republic — and more cuts for the richest are in the works for 2013-2015.
When the recession hit in 2008, emergency unemployment insurance ($8.3 billion) and infrastructure spending ($29.5 billion) could have been paid for out of operating surpluses from previous governments ($38 billion) — if Canada had not already cut its annual tax revenues with expensive GST cuts and pension income-splitting benefits.
When the recession began, further tax cuts could have been put on hold. Instead, however, the federal government cut another $130.4 billion in revenues between 2008-9 and 2012-13 — while running up new deficits of $115.8 billion.
Borrowing money to cut taxes so severely is expensive. In 2012-13 alone, Canada would have had $40.1 billion more revenue if the 2008-2012 tax cuts had not been made.
The political claim is that tax cuts “stimulate” the economy. Harper-era tax advertising conveys this with TV commercials showing people walking around plucking various tax cuts and benefits out of thin air. When questioned, the claim is that tax cuts “create jobs,” and that “raising taxes on job creators . . . . will kill jobs.”
In reality, tax cuts are more like tranquilizers. Tax cuts don’t stimulate anything — they leave money right where it falls, and it will sit there quietly until the person holding it feels like making the effort to move it along.
And this is where men end up getting the lion’s share of tax cuts. Because men receive approximately 63 per cent to 64 per cent of all income in Canada, they end up getting sometimes as much as 90 per cent of specific tax cuts.
In contrast, because women as a whole receive only about 36 per cent or 37 per cent of all income in Canada, their shares of specific tax cuts can be as low as 10 per cent, and, on average, is around 38 per cent to 40 per cent.
So when money falls out of the federal tax system, it falls predominantly into male hands. And every time money falls out of the federal tax system, women get shortchanged.
In 2012-13, rough estimates indicate that because women did not receive a 50-50 share of the $40.1 billion left with taxpayers as the result of tax cuts, men ended up receiving $5.6 billion of women’s fair share.
The price women pay for tax cuts does not stop with watching the majority of the money fall into men’s hands.
In recent years, Canadian governments as a whole have made total tax cuts equal to 4.5 per cent of annual GDP. This is why every level of government is crying out for more money, even as they keep cutting taxes.
When an entire country’s revenue system springs such a huge leak, it is not the “women and children first” of nautical chivalry, it is “cut women’s and children’s services first.” Thus, the current government summarily cancelled the long-overdue national child-care program that had been established in 2005, and replaced it with programs that reward women for not working for pay — the Universal Child Care Benefit and pension income-splitting. In the 2012 budget, cuts to public employment, women’s health programs, EI and the OAS/GIS system all hurt women more than men.
The more tax revenues are cut, the more women pay in loss of services and government resources.
Tax cutting in Canada is not over. The government plans to enact parental income-splitting in 2014 or 2015. This will cost $7 billion to $9 billion annually. Low-income parents will save very little from this — perhaps even less than $100. Those with incomes of $169,000 or more will receive $2,750 in tax cuts every year. Couples living on one very high income can receive up to $7,000 annually.
And in 2013, the government plans to reduce top personal income tax rates. If the top 29 per cent bracket is eliminated, only the 14 per cent richest taxpayers will get any of that $3 billion in tax cuts. Approximately 95 per cent of that $3 billion will go to men.
Really, women simply cannot afford any more tax cuts for the rich.
Kathleen A. Lahey, professor, Queen’s University Faculty of Law, specializes in tax law and policy.
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