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The Bull Meter: Stephen Harper on taxing the average Canadian family


 

[mac_quote person=”Stephen Harper” date=”March 28, 2011″]Thanks to our low-tax plan, the average Canadian family is already paying $3,000 less in taxes each and every year.[/mac_quote]
[mac_bull score=”1″]

This is one of the cornerstones of the Conservative narrative in this campaign. As John Geddes pointed out in Maclean’s last week, the $3,000 a year figure comes from Department of Finance calculations based on a hypothetical working couple with two kids earning about what the average family of four makes in a year: $100,000 before tax. Thanks to policies implemented since 2006, the department wrote, that family pays $1,963 less in income tax, receives $76 in child benefits, and reaps $960 in savings from the two-percentage points cut in the GST.

Now, since 960 is two per cent of 48,000, that last GST savings number seems to indicate that Canadian families spend around $50,000 a year in purchases of goods and services subject to GST. According to Statistics Canada, the average Canadian family indeed shells out $50,734 a year in expenditures, but that includes GST-exempt items as well, which might add up to a substantial slice of that total figure. The typical Canadian family, then, must be spending less than $50,000 a year in GST purchases–though we don’t know exactly how much less. So how did the Finance Department come up with $960? They couldn’t give us a breakdown of their calculations, but they told us that figure includes unspecified “indirect savings” coming from the fact that a lower GST also supposedly depresses prices for a number of tax-exempt goods and services.

Fair enough. Statistical estimates of this kind often take into consideration a complicated web of factors, and this could have been a zero bull story. Still, because we don’t know how much those “indirect savings” are, we’re giving it one bull.

Heard something that doesn’t sound quite right? Send quotes from the campaign trail to macbullmeter@gmail.com and we’ll tell you just how much bull they contain.

Sources:

Stephen Harper’s speech

Department of Finance, see: “Tax Relief for Families since 2006: Example”

Average Household Expenditures


 

The Bull Meter: Stephen Harper on taxing the average Canadian family

  1. Oh Erica, TGIF, you are in for a good dissing from ABC crowd, lol!!!

  2. I'd pretty much give him a pass on the 'we-don't-know-how-much-is-GST-exempt' calculation–maybe a half a bull, and I firmly believe no politician including Mother Theresa (if she'd been a politician) could make a statement without at least a half a bull.

    However, I'd also add a half a bull for the "average" family bit. Of the tax credits introduced since 2006, I don't qualify for a single one. I pretend I don't take it personally, of course, but that's a lot of tax credits to not qualify for. And yet, I'm not that odd of a family.

  3. It’s not really a tax cut if you’re running a deficit. Those kids will have to grown up and pay back the taxes that their parents didn’t pay plus interest. So for the kids the last five years have been a future tax hike.

    It’s like how young workers today have to pay extra into the CPP in order to cover the contributions their parents didn’t make.

    The average family of four owes $12,000 more on the federal debt than it did five years ago. I’d say that would make this one worth two bulls.

  4. Is that really the average family? 2 adults, 2 kids? Not saying that's inaccurate, I just really don't know. I thought it was smaller.

  5. But they raised income taxes when first coming into office. Is that factored in?

  6. Not what I was looking for, but it did lead me to what I *was* looking for. And as I suspected, the average family *IS* smaller than that:
    http://www40.statcan.ca/l01/cst01/famil50a-eng.ht

    Average number of children at home per family is 1.1. And with couple familes, it's a flat 1.0, because it's the single parent families that have 1.4 or 1.5 kids each. So right there you can shave half of that child tax credit off. Also, I assume having one less dependent would rather drastically affect your income tax payable — knocking it upward by a fair bit.

    Further, this table spells it out clearly: http://www40.statcan.ca/l01/cst01/famil40-eng.htm

    Average family size is 3, not four.

    So without even getting into the GST thing, 1 bull is probably the absolute minimum for this story, and two might be more appropriate.

    Incidentally, median is not the same as the traditional understanding of average, and certainly not the same as average family.. although.. with this additional information… let me check again. Hm. No, they don't seem to have it divided out by number of children. Although interestingly, a two earner family with kids tends to make more than a two earner family without. I wonder what might cause that?

  7. Maybe we'd have better figures if we implemented a mandatory census.

  8. Of course, you need to cross-reference this bull meter with the last bull meter where Harper put us into a structural deficit to pay for these tax cuts.

  9. and raised income taxes!

  10. Not in any way trying to argue with your analysis but I always thought that a family had to have children, so I'm surprised by the whole concept of families without children. Still the OED agrees with me even if Stats Canada doesn't.

    It occurs to me that it is possible that Harper was referring to families with children as well, as his speech does seem to imply that.

  11. They did? I don't recall that at all.

  12. First thing on getting into office they cancelled the tax cut by the martin liberals.

    I guess they were hoping you would forget!

  13. Oh yeah! And that caused a headache, too, because it was done retroactively back to July or something, so we had two rates that year. And come to think of it, every year after that, we've had the rate change in January AND a rate change in July in many provinces, so all the bookeeping programs have to be upgraded twice. Provinces are sneaky devils, and if the feds can get away with it, the provinces soon follow suit.

  14. I"m in line with Stats Canada on this one. My partner and I are very much family, more so than we are with our respective blood relatives, even though we have no kids, nor intention to have such. To suggest that because we don't have kids we're not a family I have to say I find a bit demeaning.

  15. Right, got you, they reinstated in 2007 I think, so we had a silly lowest average rate of 15.25% in 2006 (I think).

  16. It really wasn't intended to be at all insulting (and if I offended you I wholeheartedly apologize). I was only going by what I understood to be the meaning of the word (from the Oxford English Reference Dictionary).

    1. A set of parents and children, of relations, living together or not

    Although your definition of a family would be covered by:

    2a. The members of a household, esp. parents and their children

  17. To be fair, has it come back down the Martin rate yet? If so, the Harper quote is technically about going forward, and while it's worth remembering, it might not affect the bull meter.

  18. Yes, it's been 15% for a few years (since 2007 I believe), and the bands have gone up steadily.

  19. I'm sorry, but this is ridiculous, and Macleans shouldn't wade into these things unless they're going to bother to actually pay attention.

    The Tory quote is pulled almost verbatim from the brutally-partisan Department of Finance report quoted above (baselines as 2006 for an Action-Plan update? Really?).

    Anyways, I say almost verbatim because the Tories added that this is "the average Canadian family" where Finance had it as "a couple". This couple is created out of thin air, with specific data attached. But this data is not represented as average. Calling it average is a blatant lie. The Finance example has it as two income earners making 40 and 60 grand, so their family income is 100 000. The average family income in Canada is 68/69 grand (all figures 2008). So the Harper example takes as its "average" an example where the family makes times and a half the average national family income.

    Overall, then, we have the Tories a)misrepresenting the facts, and b)have absolutely no evidence for their assertions. And this only gets one bull?

  20. Sorry, to clarify, the 68/69 grand quote above is the median family wage, not the average. But medians are usually more helpful, anyways.

  21. "Is that really the average family? 2 adults, 2 kids? Not saying that's inaccurate, I just really don't know. I thought it was smaller."

    The premise of Harper's glowing tax scenario is based on a concept of the "average" family (2 adults, 2 kids) that probably hasn't been accurate for several decades.

    StatsCan figures have long revealed that this hypothetical construct of the "average" family is an accurate description of less than 1 in 4 of all households in Canada. Generally, households have been getting smaller, with an increase of single person units. Single parent families are now a significant percentage of the picture, and a proliferation of blended families, shared custody arrangements, and "child-free" marriages completely blur the portrait.

    I've often thought that Harper's social policies reflect a conception of Canada was historically frozen somewhere back in the '50s and this tax scenario is yet another example.

    Four bulls at least.

  22. Averages are meaningless, means are better, while most-typical means are best. ;-)

  23. Taxes are taxes are taxes….Even IF that $3000. figure was true, when you combine it with Provincial and Municipal and any other tax floating around out there, AND take into account the Deficit, I’d be willing to bet I’m not paying less now then I was several years ago.

    Tax free day use to be the end of June…Now it’s well into July. At least in Ontario it is.

  24. I would put it at 3 bulls in the statement unless you parse it carefully to mean exactly what it says and not what it implies. In which case it is still barely true.

    We are meant to take from this statement that taxes are down that much for average family, therefore taxes are proportionately lower for everybody. Huzzah! Let's buy something!

    But I can tell you as a single woman making less than $40,000 my taxes have not dropped. Not being able to max out my RRSP or take any advantage of the various home reno credit likely makes a difference. My mother is single and retired; she must withdraw her savings from her RRSP and pay tax on them; she sends a cheque to Ottawa every year at tax time.

    Averages taking into account those extremes at top and bottom, I have to wonder how much less the really top earners now pay.

  25. that makes you a couple not a family, sorry.

  26. Does this Bull-O-Meter factor in how much more tax I'm now paying as an Ontarian on goods or services that were once exempt from provincial tax but are now subject to HST?

  27. I would give it a 3 bull. There has been much needed tax relief for the formerly traditional family of 4. But virtually no tax relief for a single person earning the same amount. Since a family earning $100K pays out about 40% of their gross income on GST exempt housing costs, the $960 savings is not even close to reality. They also conveniently left out increases to CPP and EI premiums.

  28. If you have kids you qualify at least for the child tax credit. Any kids under 18 qualify you for that one.

    The other tax credits (Public transit, Child Fitness, etc.) are nothing more than worthless boutique add-ons to an already stupidly complicated tax return. If they want to help parents with kids, they should just increase the Child Tax Credit, or better yet, just lower the damned taxes already. Currently, the jump from the first bracket to the second is a whopping 7% – from 15% to 22%. I don't know what is so magical about making $40,500 that it requires that huge a jump in the marginal tax rate, but there it is. The 2004 version of Stephen Harper wanted to get rid of the 22% bracket altogether, so that anyone making less than about $80,000 would pay 15%. But the 2006 Harper thought a 2% GST cut was better. I liked the old "scary" Stephen Harper better.

  29. It would be more difficult for people to relate to an "average" family if that family had 1.4 kids. It's like saying the average human has one testicle. Mathematically accurate, but not very representative.

  30. It was only raised for 6 months. When they $hit-canned income trusts, they also reduced the rate back down to 15% again. So for 2006, on the T1 return, you had to average your tax rate for that year to 15.25%, and all the federal non-refundable tax credits were calculated at that rate as well. The following year it was back down to 15%.

  31. We still have a mandatory census. You don't need a long for to tell you how big families are.

  32. No, income taxes are not higher now than when he got in. In fact, the brackets were adjusted upwards by more than the rate of inflation a couple years ago, so they've gone down. The half a percent tax hike on the bottom bracket only lasted 6 months. The rate has been 15% since 2007.

  33. I don't think it is into July. And if it has moved into July, you can thank Dalton for that, with his healthcare tax. Thank David Miller as well if you live in Toronto.

  34. I am also single, and my taxes have gone down slightly, though not substantially under Harper. I agree, the various boutique credits are beyond insulting, and very nearly useless. Other than the child tax credit, the rest of them should be canned and just add a few hundred dollars to the basic personal amount to spread it around to everyone. If they want lower taxes, they can just cut the damned things. Lower the rates and/or expand the brackets.

  35. I suspect housing prices have risen to eat up that $960 many times over. Their biggest mistake was in cutting the GST by two points instead of trimming the income tax rates, particularly the two middle rates of 22% and 26%. Why do our income taxes jump from 15% to 22% – a full 7 points – at just over 40 grand? Is 40 Gs anything like a big salary nowadays? At least balance the rates out so they rise at a uniform level to the top. Instead of 15-22-26-29, why not 15-20-25-29, which would be an increase of 4 or 5 points each bracket, instead of jumping by 7 on the first increment and only 3 on the last. Even better, lower the bottom 3 rates to 14-19-24-29, which would be a 5 point increment each time; a more gradual marginal increase that still leaves the top bracket unchanged.

  36. you should run for parliament, these are the kind of ideas we need.

    Not saying that these exact figures would work, but we need some people who think outside the box.

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