Thanks to the Tories, and you, taxpayers, for all this money you’re sending me

Posted on October 13, 2015 in Governance Policy Context – Full Comment
September 28, 2015.   Matt Gurney

I’ll be writing about the election today. But first, I want to thank you. Yes, you, the good, hard-working, taxpaying people of Canada. Thanks for all the money you’ve been sending me these last few years.

I mean it. It’s been great. Big income tax refunds every year. A home renovation rebate. The newly enhanced Universal Child Care Benefit (that $320 cheque just arrived on Friday). And, of course, the savings I accrue by driving freelance income through a corporation (when Justin Trudeau recently complained that too many Canadians were using corporations to lower their tax bill in entirely legal but awfully cute manoeuvres, he may as well have been pointing right at me).

Anyway, thanks so much. I promise I’m mostly using the money wisely. And that leads us, in a way, into the election. I’m in my early thirties, middle-ish class, and have young kids. This basically makes me the voter all the parties want to woo. It’s all very flattering.

That’s what made the Liberal party’s fiscal document, released this past weekend, so interesting. It’s not the numbers or the promises, per se, that’s so intriguing. It certainly wasn’t the repetitive and wearying blather about making the top one per cent pay their fair share. It was the commitment to actually scrap or modify some of the existing tax credits that have, with the help of my talented tax guy Kevin, allowed me to claim so much back each year at tax time.

The honest truth is, as helpful as these cheques are, I never feel great about receiving them. I take the money; it mostly goes right back to the bank, to pay for our recently completed home renovation. Even as I cash the cheques the taxpayers are so graciously sending me, though, I can’t quite escape the feeling that this is all less than optimal. That voters shouldn’t be bribed with their money and a bunch of other people’s money, too.

Just because I’m benefiting from the system, in other words, doesn’t make it fair. All the maddening little boutique tax credits the Tories have loaded up the tax code with in recent years (Attention Conservative partisans: yes, I know it’s not a new or exclusively Conservative practice) have tortured it into a twisted mess.

The reason I have a tax guy at all is simply because the complications of it are beyond me. It has made our system less fair and less efficient. It may be an effective way to win votes — the Tory majority of 2011 and current polls suggesting a good chance of another Tory government speak to that. But it isn’t very, you know, conservative.

This isn’t an endorsement of the Liberal plan. Their proposals would just skew the whole mess in a different direction, one they hope the voters will like more than what Stephen Harper is offering. It’s not about fairness, per se, just targeting most of the same voters with somewhat different offerings. But it is, at least, refreshing to see a major party actually talking about starting to untangle the mess we’ve made of the tax code.

There may be some specific tax credits worth keeping. Income splitting is also perfectly good way of helping families shoulder the burden of keeping one partner at home, should they choose to do that.

But there are still dozens of tax credits that we could wipe out at a stroke if we wanted to, freeing up billions of federal dollars to either fund priorities (hello, obsessively nattered about infrastructure deficit) or lower almost everyone’s income taxes.

The Fraser Institute, you may recall, put out a report earlier this year that identified 68 tax credits whose elimination would bring in an extra $20 billion a year to the federal coffers.

The institute calculated that that would let the federal government eliminate two entire federal income brackets, leaving Canada with only two, 15 per cent for almost everyone and 29 per cent for a relatively small number of high-income earners. In other words, basically everyone would get a tax cut.

I ran the numbers for my own income. I had to guesstimate a few things. I also assumed that I’d now claim precisely zero of the remaining credits, and that wouldn’t necessarily be the case. That said, the amount of money I’d save through a lower federal income tax rate was generally in line with, though admittedly somewhat lower than, the amount I’ve been receiving as a refund in recent years by claiming every single possible credit.

At the end of the day, though, the money I’d save by not needing a tax guy anymore (sorry, Kevin) and the time I’d save not having to fiddle around with my sandwich baggies full of receipts would make it a wash.

As nice as it’s been having all of you good people chip in a few hundred bucks to send my toddler to gymnastics, this is good policy. Some might even call it good conservative policy. Why the are the Liberals the only ones proposing moving us even vaguely in that general direction?

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