Beyond The Commons

Aaron Wherry covers all the goings-on in and around Parliament Hill. Follow Aaron on Twitter: @aaronwherry

Categories: Beyond The Commons, Capital Read

Idea alert

by Aaron Wherry on Tuesday, October 20, 2009 12:04pm - 132 Comments

Ed Broadbent suggests taxing the rich to fight child poverty.

About 100,000 Canadians are in the top tax bracket for earners making more than $250,000. On average, those individuals earn more than $600,000 a year. Broadbent, 73, said increasing their taxes from 29 per cent to 35 per cent would put billions more toward eliminating child poverty, increasing the amount spent by $3.7 billion.

“With just that single move we would double the amount given for the national child benefit supplement and take children out of the devastation of poverty,” he said during a speech at the University of New Brunswick.

Tags: child poverty, Ed Broadbent, poverty, taxation, taxes, University of New Brunswick

More by Aaron Wherry

Foreigner

Bad idea. They'll all "go Galt" and we won't be able to live without their productive activities.

Jesse

No, but people with that kind of money are highly mobile. Tax migration is very, very common.

They'll just take their skills and relocate to a jurisdiction with a lower marginal rate.

Mike T.

This concept tends to be overplayed far too much when addressing this kind of question. While it's impossible to forecast how many (if any at all) would move because of a 6% hike on exceedingly high dollars, it's likely there'd be an overall benefit in revenue making up for any "loss".
http://intensedebate.com/people/Thwim Thwim

Highly unlikely. People don't choose where they live just based on the taxes. They have commitments and various attachments, family, industry, community, even simple familiarity with the area. These things all play against (and strongly) the idea of higher taxes.

Of course, the myth that the rich will pick up and move at the drop of a tax hike serves rather well to keep people who don't think things through scared.

http://intensedebate.com/people/s_c_f s_c_f

People don't choose where they live just based on the taxes

It's easy for people with money to relocate. People with small businesses relocate all the time. And it's been seen to happen. It is the primary reason why US states like Michigan are declining while states like Texas are thriving. It's the primary reason why the Canadian maritimes provinces are perpertually "have not".
http://www.intensedebate.com/people/s_c_f s_c_f

People don't choose where they live just based on the taxes

It's easy for people with money to relocate. People with small businesses relocate all the time. And it's been seen to happen. It is the primary reason why US states like Michigan are declining while states like Texas are thriving. It's the primary reason why the Canadian maritimes provinces are perpertually "have not". In fact, large segments of the maritime provinces are residents of Ontario, Alberta and elsewhere.

http://intensedebate.com/people/Thwim Thwim

I'm not arguing people move.
I'm arguing that blaming the tax rate exclusively for the move is ludicrous.
Jesse

Exactly.

Thwim's declaration that this is a "myth" doesn't stand up to empirical evidence.
http://intensedebate.com/people/Thwim Thwim

Oo! I'm always willing to see evidence. Please present.
http://intensedebate.com/people/jolyon jolyon

Here's two for a start:

"Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts." WSJ, May 18 '09

"Switzerland’s 26 cantons are attracting more high net worth individuals looking to buy super-prime residences …. Barnes said: “Research shows, of the 300 richest people in Switzerland, half are foreigners seeking tax breaks, financial infrastructure and quality of life. Switzerland ticks most high net worth individual buying boxes.” Welath-Bulletin, Sept 28 '09

People move within, and without, their countries to find best tax rates. This is not a 'myth'. Though I do believe more people move their money to offshore accounts than leave the country.
http://www.intensedebate.com/people/jolyon jolyon

"Oo! I'm always willing to see evidence. Please present."

Here's two for a start:

"Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts." WSJ, May 18 '09

"Switzerland’s 26 cantons are attracting more high net worth individuals looking to buy super-prime residences …. Barnes said: “Research shows, of the 300 richest people in Switzerland, half are foreigners seeking tax breaks, financial infrastructure and quality of life. Switzerland ticks most high net worth individual buying boxes.” Welath-Bulletin, Sept 28 '09

People move within, and without, their countries to find best tax rates. This is not a 'myth'. Though I do believe more people move their money to offshore accounts than leave the country.
anonymoose

I remember seeing a study in the US (and I wold assum that it would translate to Canada) that the top 5% of taxpayers in the US contribute close to 80% of the tax revenue to all governments. sounds like more than their fair share to me.
foreigner2

not if you consider their share of the assets–in particular the financial, no-work-to-get-the-income assets. And their share of the taxes has decreased under Bush's administration, while their share of the income has increased.
http://intensedebate.com/people/SisyphusThis SisyphusThis

The tax man cometh ..

http://ataxingmatter.blogs.com/tax/2009/10/more-o…
http://intensedebate.com/people/Jenn_ Jenn_

A good time to remind everyone that Canada has a law on the books that requires you disclose any investment assets outside Canada worth $100,000 or more. If you get caught up in this U.S. probe, there won't be any "last chance" deadline.
http://intensedebate.com/people/Thwim Thwim

Very nice. Still waiting to see any evidence that it's exclusively the tax rates, though.
http://intensedebate.com/people/s_c_f s_c_f

You already have, perhaps you missed it: "more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas"

Or you are saying it's just a coincidence that people are migrating out of the nine highest and migrating into the nine lowest. A gigantic coincidence.
Mulletaur

That's all within the same jurisdiction, the United States. A higher federal tax would affect all taxpayers across Canada equally. There is no correlation between the statistics you cite and the argument you are trying to make.
http://intensedebate.com/people/s_c_f s_c_f

You do realize that most Canadians live near the border? And that the US is filled with Canadians?
http://www.intensedebate.com/people/s_c_f s_c_f

You do realize that most Canadians live near the border? And that many Canadians live in the US?
Mike T.

in fact, there's not even any evidence presented regarding what role, if any, tax played in the decisions to move.
http://intensedebate.com/people/SisyphusThis SisyphusThis

Ah, the magical flexibility of labour.

But they always come back.

Foreigner

What skills? Research and development? Craftsmanship? Mechanical? Singing or playing an instrument? Writing?…Cooking?

I'm not generalizing and saying that wealthy people haven't become wealthy through talent, hard work and a good deal of luck, but I do believe that assumption that wealth=merits needs to be examined. It's become really entrenched to think that wealthy people are necessarily talented, when we so many examples that suggest otherwise. Like Conrad Black and Barbara Amiel, for example…

http://intensedebate.com/people/Thwim Thwim

By skills, substitute "capital". In our capitalist system which forces resources to pool, it's a valid concern.

foreigner2

tax mobility is likely overrated. It is hard to pinpoint, and there isn't much really good statistical evidence. Do you want to move to Somalia to avoid taxation, for example? If you move to a country with apparently lower rates you may find that the incidence of taxation and the particular combination of taxes results in actually higher rates.

Besides the rich are not really the most productive–many have already passed the productive phase and are now operating more like monopolists (think of Bill Gates' Microsoft) to squelch real innovation and the productivity it can engender. Most of the real entrepreneurial activity, I think, comes from small business ventures. (That is, after all, the way Microsoft started.) The rich are more likely just to take their passively earned dollars and invest them in some wacky shelter offshore.

http://intensedebate.com/people/OntarioTown OntarioTown

Would that include parliamentarians that make that much or more (i.e. PM)?

herringchoker

Actually a good place to start with retired MPs drawing generous pensions supported by taxpayers rather than a superannuation fund.
Katherine

Yes (the PM makes around $310,000). The next level of people – the Speaker, Ministers, and Leader of the Official Opposition – each make approximately $237,000, not enough to be paying the tax. Which gives an idea of how rich the people it would affect are.

http://intensedebate.com/people/jolyon jolyon

I think we should implement a tax on all dippers who suggest raising taxes during recessions or act like rich people are atm's who won't move their money out of the country when tax rates increase. I think this tax idea of mine would expand government coffers to pay for the national child benefit supplement much quicker than more taxes on rich.

http://intensedebate.com/people/s_c_f s_c_f

I think we should confiscate Ed Broadbent's money and donate it to child poverty tax credits. Ed won't mind living on hand-outs, he's always trying to create hand-outs for other people.
http://www.intensedebate.com/people/s_c_f s_c_f

I think we should confiscate all of Ed Broadbent's money and donate it to child poverty tax credits. Ed won't mind living on hand-outs, he's always trying to create hand-outs for other people.

http://intensedebate.com/people/jolyon jolyon

Excellent idea. Let dippers pay for the cockamamie schemes they propose with their own money.

Partisan nonpartisan

So I take it you're not one of those conservatives that value free speech …

http://intensedebate.com/people/s_c_f s_c_f

Maybe if you could elaborate on the connection to free speech, I fail to see it.

Lord Kitchener's Own

A tax on people based on the suggestions they make? Seems like a pretty obvious infringement of free speech to add an additional tax on someone for what they say.

Also, Jolyon seems to be suggesting not simply taxing anyone who makes such a suggestion, but only members of the New Democratic Party who make such a suggestion, so it's kinda an attack on the freedom of association too.

Of course, he's not being serious, but still, the connection of his hyperbole to free speech is pretty obvious, isn't it?

http://intensedebate.com/people/s_c_f s_c_f

He was being facetious. And frankly, it is poking fun at the fact that dippers are always in favour of bigger government, as long as the money is not coming out of their own pockets. Make the "rich" pay is their motto, where "rich" is conveniently defined to mean everyone who makes more than themselves. I'd gladly substitute "dippers" for "rich".
http://www.intensedebate.com/people/s_c_f s_c_f

He was being facetious. And frankly, it is poking fun at the fact that dippers are always in favour of bigger government, as long as the money is not coming out of their own pockets. Make the "rich" pay is their motto, where "rich" is conveniently defined to mean everyone who earn more money than themselves. Dippers are often people who love to take low-paying jobs social welfare jobs so they can feel good about themselves at work while they pick the pockets of other people who earn more and contribute more to our collective standard of living. I'd never advocate bigger government, but if I can't have my way, I'd gladly substitute "dippers" for "rich", make the "dippers" pay for it.

http://intensedebate.com/people/Thwim Thwim

jolyon satirically suggested applying a tax to certain types of speech.. thus making it not free.

http://intensedebate.com/people/Blamo Blamo

The idea of a progressive tax system is based on "those who have more should pay more," not "those who suggest it should pay more."

http://intensedebate.com/people/SisyphusThis SisyphusThis

Tobin tax.

http://intensedebate.com/people/TwoYen TwoYen

This is not the Tobin tax, which was a truly insidious principle that would have taxed all financial transactions.

http://intensedebate.com/people/SisyphusThis SisyphusThis

I know it's not the Tobin tax … which is so insidious that a number of European countries
use versions of it to no insidious effect at all.

http://intensedebate.com/people/s_c_f s_c_f

These are the same old tired ideas that do more to increase child poverty than reduce it. You don't tax the people and the small businesses creating jobs. It is jobs that reduce poverty and raise living standards, not tax credits.

Andrew (not Potter or Coyne)

I’d rather a Guaranteed Annual Income and abolition (or at least reduction) in minimum wage, welfare etc.. Ensure everyone has enough to afford basic necessities and give them the incentive to work to afford the rest.

http://intensedebate.com/people/s_c_f s_c_f

I can't see the difference between welfare and a guaranteed income.
http://www.intensedebate.com/people/s_c_f s_c_f

I can't see the difference between welfare and a guaranteed income. But I do agree with the idea of incentives to work.

tobyornottoby

GAIN, if implemented as a "hegative income tax" as proposed by Senator Hugh Segal and others, would remove the discincentive to work embedded in our social assistance programs in Canada. Instead of clawing back earnings it would merely set a point at which a citizne goes from being a recipient to a taxpayer.

Also has the advantage of including the working poor invisibly, and eliminating both the administrative costs and the petty interference in people's lives by the social asssistance bureaucracy (however well meaning they are).
Andrew (not Potter or Coyne)

Welfare either prohibits you from working, or claws back (ie, taxes) the marginal income at ~ 100%. That kills any incentive to work, unless the individual can earn enough to make it over a huge tax hump.

GAI eliminates basic personal exemption and welfare, and taxes income back, usually a fairly high rate until the break-even point on taxes (say 50 or 60%). Since the poor place a higher value on each marginal dollar than the rich, even keeping just 40% of each extra dollar you earn is a fairly strong incentive to work.

Welfare and GAI are all about incentives. Beyond that, GAI allows us to dismantle the enormous bureaucracies that oversee such programs and adjudicate claims. Letting the poor keep income supports while working rather than sitting at home means less crime, more

http://intensedebate.com/people/s_c_f s_c_f

Now I see what the difference is. It seems to be some sort of augmentation of welfare through the tax system. I like the idea of reducing marginal rates. And I like the elimination of bureaucracies. I'd have to think about this more to decide if I like the idea overall. There are a lot of issues to consider. I don't like the idea that it removes the unique concept (stigma) of being on welfare and the need to apply for welfare, which is a disincentive to go on it. I don't like anything that further complicates the tax system, either.

http://intensedebate.com/people/jolyon jolyon

"I can't see the difference between welfare and a guaranteed income."

I was always skeptical of negative income tax until I read Friedman's Capitalism And Freedom – he makes compelling argument for guaranteed incomes.

http://en.wikipedia.org/wiki/Negative_income_tax

Katherine

How do you know they're creating jobs? How do you know they're not working as CEOs for companies that have minimal operations in Canada and are doing mining in Honduras or managing factories in China or something? Or lobbyists, or lawyers? There's a lot of jobs that pay less and do more for the economy.

If you've got an idea for precisely indexing tax cuts to the number of jobs a business creates within Canada, and the wages the jobs pay, I could support that. But what you're offering here is just rhetoric.

http://intensedebate.com/people/avr avr

This is a wonderfully innovative and heretofore-untested concept that could surely have no negative repercussions.

http://www.TennisVagabond.com Big Dave S

That was funny.

http://twitter.com/chromesushi Chrome Sushi

Outside this discussion I think we need to fix our tax brackets anyway. They're way too big. It's silly that someone making $41,000 and someone making $81,000 are in the same bracket.

http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Absolutely. We should also implement a mortgage interest tax deduction on principle residences.

http://intensedebate.com/people/SeanStok SeanStok

Really? Doesn't that just artificially inflate the housing market? And discourage folks from paying down principal debt?

Honest questions, by the way, I may well be wrong in my suspicions of such schemes.

http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Principally, it allows renters to become owners, and allows people who are forced to spend a disproportionate amount of their income on mortgage interest, some relief. I would gladly see reductions in the personal RRSP amount to offset the tax revenue loss. RRSP's are highly regressive.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Principally, it allows renters to become owners, and allows people who are forced to spend a disproportionate amount of their income on mortgage interest – typically young familes – some relief. I would gladly see reductions in the personal RRSP amount to offset the tax revenue loss. RRSP's are highly regressive.

Jesse

America allows this and its one of the key reasons identified for why Canada didn't have a similiar sub prime mortgage meltdown.

It DOES encourage people to buy more than they can afford and takes away the incentive to pay down.

Also, there is nothing wrong with being a renter. A certain segment of the population, especially the young, SHOULD be renters.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

That's ridiculous. It was the highly leveraged nature of those mortgages that was to blame for the meltdown. Somehow, I am guessing that you are not a renter yourself.
http://intensedebate.com/people/YYZ YYZ

Intereset deductability and leverage ratios for mortgages are not independent events.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

…and a butterfly flapping its wings in Cairo can effect the future of Sioux Falls.

Explain how allowing interest deductions are going to change the regulations on leveraged mortgages.
dan in van

Under the current swindle, er system, renters can be owners with a mere 5% downpayment. They can vest in low interest mortgages that are spread over 30-35 years. This formula has already done wonders in making home ownership a reality for a million+ canadians who are 35 and under, while knocking out those who are in their late 30s and up. It has resulted in a grand bubble that no doubt Ed thinks will forever swell and swell with no threat of coming down to earth. Because banks will continue to loan more and more money at cheap rates, of course. Plausible, if you think Stephen Harper is a leader (and not some scapegoating geek with a narcissistic complex)…
http://intensedebate.com/people/Jenn_ Jenn_

It is disturbing for me to agree with Jesse, but in this particular case, I do. I am also a renter, in spite of not being anyone's version of young. I do not need to be encouraged to purchase a house I really can't afford. (I just don't like anything in my price bracket.)

And it most certainly discourages paying it down, as witness by the number of clients who never pay down the investment loans they've taken out–no matter how many millions they are sitting on.
kcm

And why should the taxpyer subsidize Houseowners over renters?
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Actually, home owners would receive nothing, it is people trying to own, i.e. people making payments on homes, that receive the benefit, and only on the interest, so the bigger your interest payment the more you benefit. After years and years of boomers driving up the market, the next generation is forced to purchase in highly inflated markets, on top of being saddled with the previous generation's accumulated government debts.
http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

So, to restate — why should taxpayers subsidise yuppies?
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Because early boomers have been living high on the hog, and because its a great thing to encourage home ownership, and because young families get a bad deal with the current tax scheme because they can't take advantage of widely available tax shelters.
http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

It just seems very unfair that those who, in the States, even with mortgage tax credits, are unable to buy don't get the same candy enjoyed by those who are able to buy. That seems very unfair to me. Intergenerational comparisons aren't much use. The cost of living has gone up, that's just the way it is.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

If you are talking about a necessity that everything about tax schemes needing to be highly progressive, then you're right, interest deductibility is not a progressive cure-all, but it is a league ahead of RRSP's on the progressive scale.

Intergenerational comparisons aren't much use to people who have benefitted, but to those who are disadvantaged by them, it is reality. The reality in this case, is that younger people are at a huge disadvantage when it comes to purchasing a home, and yet they are going to have to pay off an inherited and massive debt.
http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

Hear hear.
http://intensedebate.com/people/SeanStok SeanStok

I don't take it as a given that renting is a bad thing, for starters.

While I see the logic of providing relief to young families, I'm concerned that such a scheme would simply endorse the cultural value that everybody gets to live in a big house with two new cars and large screen television – regardless of income realities. That sort of ethic is exactly part of what spurred the current economic woes.

But even if I were to accept the benefits you note, you still haven't addressed my initial concerns. An artificially inflated housing market (because nobody cares about the monthy interest on mortgages anymore) would eventually undo the gains for those of modest incomes – that dream home might still remain out of reach for low income renters. Also, my property taxes are based on an assessed "market value", here in Ontario. If the housing market gets driven up, my municipal taxes will skyrocket.

And what of the disincentive to pay down principal? Doesn't that just enrichen the banks, and leave many households exposed with outrageous debt?

At the end of the day, I still think the only winners would be banks and real estate agents.
http://www.intensedebate.com/people/SeanStok SeanStok

I don't take it as a given that renting is a bad thing, for starters.

While I see the logic of providing relief to young families, I'm concerned that such a scheme would simply endorse the cultural value that everybody gets to live in a big house with two new cars and a large screen television – regardless of income realities. That sort of ethic is exactly part of what spurred the current economic woes.

But even if I were to accept the benefits you note, you still haven't addressed my initial concerns. An artificially inflated housing market (because nobody cares about the monthy interest on mortgages anymore) would eventually undo the gains for those of modest incomes – that dream home might still remain out of reach for low income renters. Also, my property taxes are based on an assessed "market value", here in Ontario. If the housing market gets driven up, my municipal taxes will skyrocket.

And what of the disincentive to pay down principal? Doesn't that just enrichen the banks, and leave many households exposed with outrageous debt?

At the end of the day, I still think the only winners would be banks and real estate agents.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Owning your own home is a good thing. Arguments that investing in your own home leads to careless spending and investment practices, totally misrepresent what really happens. Current economic woes are directly related to highly leveraged loans in an unregulated economy, it has no reality in a contemporary Canadian economy, other than the depressed world markets caused by other economies.

As to your original concern, you seem to imply that we do not already live in an artificial economy. The notion of an 'artificially inflated' market presumes that the current tax regime has no effect on spending power. Young families are artificially burdened with tax rates right now. They can't afford to shelter their earnings in RRSPs or other tax shelters, and spend a disproportionate of their earnings on housing. All tax regimes are artificial, so arguing against changing them because it would have an artificial effect is mistaken. Similarly, you are mistaken on how your property taxes are calculated. An increase in your assessed value will have no effect on your taxes, unless the increase is more than the average increase for the municipality. As for the disincentive to pay down the debt, the interest you have to pay on a mortgage is more than enough incentive to pay down your debt.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Owning your own home is a good thing. Arguments that investing in your own home leads to careless spending and investment practices, totally misrepresent what really happens. Current economic woes are directly related to highly leveraged loans in an unregulated economy, it has no reality in a contemporary Canadian economy, other than the depressed world markets caused by other economies.

As to your original concern, you seem to imply that we do not already live in an artificial economy. The notion of an 'artificially inflated' market presumes that the current tax regime has no effect on spending power. Young families are artificially burdened with tax rates right now. They can't afford to shelter their earnings in RRSPs or other tax shelters, and spend a disproportionate amount of their earnings on housing. All tax regimes are artificial, so arguing against changing them because it would have an artificial effect is mistaken. Similarly, you are mistaken on how your property taxes are calculated. An increase in your assessed value will have no effect on your taxes, unless the increase is more than the average increase for the municipality. As for the disincentive to pay down the debt, the interest you have to pay on a mortgage is more than enough incentive to pay down your debt.
Jesse

"All tax regimes are artificial, so arguing against changing them because it would have an artificial effect is mistaken."

No, its actually basic economics. Taxes are often described as "distortionary". If they alter behaviour in ways beyond the simple effect of having less money then they will artificially impact on the market.

Some people actually advocate using price signals to modify behaviour ex. sin taxes on junk food.

Since its quite obvious that a deduction for mortgage payment has nothing to do with gov't revenue then its clear that the purpose of this tax is to influence behaviour.

You've said it yourself, its about increasing affordability for renters to buy homes. Its only fair that we look at what the pros and cons are of such a distortion in the tax code.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

I don't see the point in arguing against the premise that all taxes are artificial by pointing out that all taxes are artificial.

What it is about is making the tax scheme more equitable.

Its only fair that we look at what the pros and cons are of such a distortion in the tax code.
Except for the obvious flaw of calling any tax change a 'distortion', I would absolutely agree.
http://intensedebate.com/people/SeanStok SeanStok

"An increase in your assessed value will have no effect on your taxes, unless the increase is more than the average increase for the municipality."

False. Here in Waterloo, municipal taxes are directly levied as a function of the assessed value of one's house. So you need to revisit that argument.

"All tax regimes are artificial, so arguing against changing them because it would have an artificial effect is mistaken."

I still don't buy the helping young families all that much (or that owning a home – huge liabilty that it can be, is the way to go about it). Wny not just mail extra cheques to low income families, if we must?

No it's not. Some artificial changes are more profound than others.
http://www.intensedebate.com/people/SeanStok SeanStok

"An increase in your assessed value will have no effect on your taxes, unless the increase is more than the average increase for the municipality."

False. Here in Waterloo, municipal taxes are directly levied as a function of the assessed value of one's house. So you need to revisit that argument.

"All tax regimes are artificial, so arguing against changing them because it would have an artificial effect is mistaken."

No it's not. Some artificial changes are more profound than others.

I still don't buy the helping young families all that much (or that owning a home – huge liabilty that it can be, is the way to go about it). Wny not just mail extra cheques to low income families, if we must?
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

False. Here in Waterloo, municipal taxes are directly levied as a function of the assessed value of one's house.

Wrong, Waterloo Tax Calculation

In Waterloo, like other municipalities, a tax rate that changes every year -not a fixed dollar charge – is applied to the current assessed value. If the market goes up, that tax rate goes down, unless the municipality is purposefully raising taxes.

Some artificial changes are more profound than others.
Now you are just arguing about preferences, regarding the change, not your original complaint regarding artificiality.

Wny not just mail extra cheques to low income families</o>
I am arguing that the burden on young families is not equitable, that does not mean only those people the government determines as low income.

The reason why owning your house is a good idea is that it dramatically increases a person's investment in their community. That is a very good thing.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

False. Here in Waterloo, municipal taxes are directly levied as a function of the assessed value of one's house.

Wrong, Waterloo Tax Calculation

In Waterloo, like other municipalities, a tax rate that changes every year -not a fixed dollar charge – is applied to the current assessed value. If the market goes up, that tax rate goes down, unless the municipality is purposefully raising taxes.

Some artificial changes are more profound than others.
Now you are just arguing about preferences, regarding the change, not your original complaint regarding artificiality.

Wny not just mail extra cheques to low income families
I am arguing that the burden on young families is not equitable, that does not mean only those people the government determines as low income.

The reason why owning your house is a good idea is that it dramatically increases a person's investment in their community. That is a very good thing.
http://intensedebate.com/people/SeanStok SeanStok

I see what you mean about property taxes – but the reality is municipalities tend to raise them or leave them flat. But your point is taken, without surrendering mine. ;)

"Now you are just arguing about preferences, regarding the change, not your original complaint regarding artificiality. "

Yes. I prefer artificial distortion to be minimized, while recognizing that some artificial distortion is necessary. I don't see that as such a crazy stance to take.

"The reason why owning your house is a good idea is that it dramatically increases a person's investment in their community."

Boy, it's amazing how financial logic so quickly becomes social engineering. That aside, I was a renter for many, many years. To suggest that renters are less invested in their communities is a positively feudal view of citizenship, and one I find offensive. It's the same reason I hate the use of "taxpayers" – it suggests two tiers of citizenship.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

I prefer artificial distortion to be minimized
I think that you are missing my point, which is that everything in a tax scheme is an artificial distortion as far as the marketplace is concerned. It is always going to be a redistribution of wealth, and in the case of mortgage interest deductions, it favours those who are trying to own their home.

I was a renter for years as well, and owning my home definitely makes me more interested in what is going on in my community, and has increased the amount of my available time that I commit to community improvement. Its not about tiers, its about vested interests.
http://intensedebate.com/people/SeanStok SeanStok

"I was a renter for years as well, and owning my home definitely makes me more interested in what is going on in my community."

That makes me sad to hear.
http://intensedebate.com/people/Jenn_ Jenn_

Thank you, Sean. Speaking of what is going on in our community, have you been to the Science in the Pub Q2C feature? Fabulous.
http://intensedebate.com/people/SeanStok SeanStok

I'm afraid my limited kid free time has been dedicated to the studio this month, but I'm glad to hear you've made it, and that it was as cool as I thought it would be.

There's been something surreal about having Oktoberfest and Q2C overlap, I must say.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Why? I have always been a community volunteer and interested in my community, but more so now. Pretending that having the majority of my investments – sadly trifling in amount but wth – tied up in my home, doesn't make me more sharply focused on my community, would be a silly pretense.
http://intensedebate.com/people/SeanStok SeanStok

Using that logic, I can't see why you'd want mortgage interest to be tax free. I'm sure you'd sure hate to see fledgling home owners deprived of their full sense of community, if they were relieved from paying the full burden of debt.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

No, I wouldn't. Everyone should share in the full burden.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

I prefer artificial distortion to be minimized
I think that you are missing my point, which is that everything in a tax scheme is an artificial distortion as far as the marketplace is concerned. It is always going to be a redistribution of wealth, and in the case of mortgage interest deductions, it favours those who are trying to own their home.

I was a renter for years as well, and owning my home definitely makes me more interested in what is going on in my community, and has increased the amount of my available time that I commit to community improvement. Its not about tiers, its about vested interests -like a bacon and eggs breakfast, the chicken is interested, but the pig is committed..

Andrew (not Potter or Coyne)

That’s a thoroughly bad idea. It does nothing to help long-term housing affordability.
Foreigner

Absolutely. We should also implement a mortgage interest tax deduction on principle residences.

Bad American idea. It basically privileges ownership over renting, which is not always the best thing for everyone, particularly in urban areas, where a mix of ownership and rental properly is vital to prevent middle-class flight to the suburbs and urban decay.

I'm surprised to see you repeating practically every assumption that has been thoroughly discredited for a year now.

http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Right, in the U.S. they had highly leveraged loan schemes, in the U.S. they have mortgage interest deductions, therefore, … well … oh … gee.. there are two things about mortgages happening in the U.S., … and…welll… gee… the U.S. is bad so if they are doing something, we should denounce it.

Foreigner

There you go.

Mike T.

An ugly legacy of Mulroney that tends to get left behind in all the other worse stuff.

http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

I heard he is responsible for H1N1 too.

http://intensedebate.com/people/TwoYen TwoYen

and the world trade center attack as well

http://intensedebate.com/people/s_c_f s_c_f

I'd rather see a flat tax (with a personal exemption that is smaller). We should all pay the same rate. I don't like the fact that some of us are more equal than others.

http://intensedebate.com/people/sourstud sourstud

I thought Ed Broadbent had moved to North Korea to help them with their economic problems. What happened?

http://intensedebate.com/people/TwoYen TwoYen

Ed simply stayed in Canada and began spouting North Korean ideas. Same thing without having to worry about whether he has electricity.

sbt

This is an idea that Bono doesn't even support (with his own money that is).
dan in van

Typically, other than a couple serious people here most of the right don’t want to deal with poverty but want to scare and insult those who propose any ideas to solve the problems. I agree, Broadbent’s 6-percent solution is whacked, but poverty is an issue that strips our citizens (and the nation) of their potential. Not all of it is self-inflicted, not all of it is society’s fault, but it will take a collective solution to solve it. It will mean more investment and more innovative ideas, some that have been tried before — the business micro-loans that worked in India, started by a Canadian I believe, is one thought. But childhood poverty should be on the front burner right now and that is something that a tax hike of the upper brackets (2%?) should be considered.

Neil from Calgary

Was he a Canadian? I thought he was from Bangladesh, the country where the Grameen Bank began its micro-credit revolution.
Jesse

I fully support stopping all foriegn aid, all contributions to international organizations, and all tax deductions to charities that do work in foriegn countries and redirecting that money towards those in poverty in Canada, especially our native peoples.
http://intensedebate.com/people/Lord_Bob Lord Bob

If I had a brilliant cure-all solution for poverty I wouldn't be wasting my days commenting on Macleans.ca, that's for damned sure.

jay

Didn't what Broadbent is proposing here used to be called progressive taxation? Imagine the pile-on in comments sections like this if he were to suggest raising the minimum wage.
Neil from Calgary

I thought raising taxes would only exacerbate the economic malaise, not mitigate it. And with the mobility of investment and income, wouldn't this $3.7B figure become a moving target, with lower-than-expected revenues? A tax hike is a gift that keeps on taking.
tobyornottoby

Negative.
http://intensedebate.com/people/Lord_Bob Lord Bob

A New Democrat advocating robbing the rich and giving to the poor? Is this, strictly speaking, "news"?

Foreigner

After the trillions of debt-financed public funds that have been doled out to the wealthy over the last year, don't find it a little silly to refer to taxing wealth as "robbery?"

It should be clear who the thieves are by now, and it ain't the poor.

http://intensedebate.com/people/Lord_Bob Lord Bob

The poor wouldn't be doing the stealing in this case. The government would be doing the stealing.

If you could find where I implied that big bailouts and "stimulus" were completely ethical, I'd really appreciate it.

Foreigner

I'm just reacting to equating taxation with theft. It's sillier now than it's ever been.

http://intensedebate.com/people/TwoYen TwoYen

maybe Ed Braodbent was influenced by that kid in Washington state who has been robbing from the rich and giving to himself?

http://intensedebate.com/people/VinceClortho VinceClortho

Ed Broadbent, the man who said in 1988 that Health care would be dead in 25 years due to free trade……well free trade has 4 years left to kill it.

But thats just a credibility on economics issue.

The bigger point for Ed….there is no end of causes that it isnt worth taxing the rich for. Just curious when he thinks the rich are taxed to much?

Once again a combination of bad idea alert and old idea alert.

I guess Glenn Pearson wasnt posting today.
joe in ottawa

Broadbent= LOSER/FAILURE
Andrew (not Potter or Coyne)

Mortgage interest deductibility does nothing to increase affordability of houses. In the long run, it would just cause the price of house to be bid up so that the carry cost of a mortgage on a given house is the same in after-tax dollars. It would represent a massive transfer of wealth from people who do not own homes to people who currently own them.

It’s a bad idea. It’s stealing from your children.

http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

We are talking about a tax deduction. The benefit flows at a very slow and very delayed manner. There is no upward pressure on housing prices, that's an absurd notion. Stealing from your children?

Sounds like a fear tactic by someone who can't benefit.
http://www.intensedebate.com/people/Ed_Sweeney Ed_Sweeney

We are talking about a tax deduction. The benefit flows at a very slow and very delayed manner. There is no upward pressure on housing prices, that's an absurd notion. Stealing from your children?

Sounds like a fear tactic by someone who can't benefit and doesn't want anyone else to.

Andrew (not P or C)

Um, no. People could instantly carry significantly larger mortgages, and at least some proportion would proceed to do so. At first they would get more house per after tax dollar, but in the long-run, house prices would rise (enriching current owners), leaving it a wash in terms of affordability and huge hole in the federal balance sheet. Where does that money go? It enriches current owners of housing. Who does it impoverish? Our children, via permanently reduced government revenues.

kcm

It never ceases to amaze me when people say: ' a tax deduction', they seem to imply it just comes out of thin air. Now clearly some tax deductions are good and eventually pay for themselves…some…not so good.
http://intensedebate.com/people/Ed_Sweeney Ed_Sweeney

Um no, they couldn't carry significantly larger mortgages. They realize a small portion of the total benefit many months after the purchase. The effect on the total market is also significantly diminished because most buyers are not financing the majority of their purchase. Your argument assumes that 100% of the tax reduction is used to increase the buying price, even though the benefit is realized over a 25 year period, and that the majority of purchases are highly financed, neither of which are true. If there was any apprehension of even a slight upward pressure caused by such an incentive, then a one year waiting period could be added, before eligibility.

http://intensedebate.com/people/OntarioTown OntarioTown

Deal with poverty? The ad (self-promoting taxpayer money) ads of how many millions and growing – sure could feed a few.
Surplus Deficeit

Oh noes, taxing rich people! Can someone provide some sort of proof that taxing rich people slightly more is terribly destructive on the economy?

http://intensedebate.com/people/s_c_f s_c_f

Can anyone provide proof that more taxes and government handouts has any effect on child poverty?

Katherine

Go Broadbent! Nice, simple idea to improve people's lives. It's not as if 35% for money over $250,000 is even a particularly high rate. There are probably tax rates that damage productivity – in the 1960s the highest tax bracket was something like 70% – but this isn't one.

http://intensedebate.com/people/madeyoulook madeyoulook

Does anyone else want to remind Katherine we have provinces, and sales taxes…?

http://intensedebate.com/people/s_c_f s_c_f

I'd like to remind her that there was more child poverty when the highest tax bracket was 70%. If high taxes reduced child poverty, then we'd have seen it by now, somewhere in the world, and we haven't. Even Sweden is reducing taxes these days.

Katherine

Having done some calculations, a person earning $300,000/yr would pay an extra $3000 in taxes (ie, an additional 1% of their income) with this tax. Not a high price to pay to prevent child poverty in Canada, and certainly not enough to motivate someone to leave Canada or stop working.

http://intensedebate.com/people/s_c_f s_c_f

Yes, the only flaw in your argument is the fact it would not reduce child poverty, it would increase it. Child poverty happens when children have parents who don't work, can't find a job or choose not to work or have no desirable skills, and by low-income single mothers choosing to have more children to avail themselves of more government handouts.

http://intensedebate.com/people/madeyoulook madeyoulook

“With just that single move we would double the amount given for the national child benefit supplement and take children out of the devastation of poverty,” he said during a speech at the University of New Brunswick.

I like Ed Broadbent. Reasonably principled. Articulate. Able to put his thoughts together coherently in order to engage in dialogue and debate.

And oh-so-scary wrong that it is to Canadians' credit that they never gave him the keys to 24 Sussex.

Here we go again finding ways to eliminate child poverty. When there are only two ways to eliminate child poverty, neither of which we, myself included, will ever want to do. One: sterilize poor people so they stop reproducing. Two: confiscate poor people's children and give them up for adoption.

One sure-fire way NOT to eliminate child poverty: pay poor people more money to encourage them to have (more) kids.
hosertohoosier

Poverty is relative. We will never "solve" child poverty because the better off the poorest get, the higher the poverty line moves. For a single person in a city in 2002 the poverty line was $19,261. In 2006 it was $21,202 (http://www.ccsd.ca/factsheets/fs_lic02.htm). This is an increase of 10%, while prices rose only 8.23%. This doesn't seem like a lot, but consider that a single mother on welfare today makes about $15,000, depending upon the province. That is about equal to the average income in 1965. When you consider that welfare is tax-free, you can move that date even later.

We aren't failing to address poverty, rather, as we get richer collectively, our notion of poverty changes.
hosertohoosier

FYI I am accounting for inflation in my 1965=2009 analysis.