So, who wants to talk about higher taxes?

Brian Topp tells the NDP, and everyone else, taxes can also be raised

by Aaron Wherry

Brian Topp wanted to talk about taxes. Paul Dewar wanted to stick to the issue he and the other leadership contenders were supposed to be discussing. “I thought we were talking about the environment,” Dewar said. A few seconds of crosstalk ensued and then the moment—a rare point of conflict in the first NDP leadership debate—passed.

Afterwards, Topp stressed his larger point. “If we want to win a government mandate, we need to go after a government mandate,” he told reporters. “And the way to do that is not only to issue your list of spending proposals, but to show how you’re going to fund them.” It was suggested that perhaps his fellow candidates weren’t ready to have that discussion. “I intend to fix that,” he said.

The early going of the race to become the next leader of Her Majesty’s loyal Opposition has been so polite that this had the feeling of a rude guest interrupting afternoon tea. But figuring out how to get candidates within the NDP talking about this may be the easy part. The real challenge would seem to be changing the entire national political debate to include taxes as anything other than that which must be cut.

Topp’s proposals are fourfold. He would create a new 35 per cent rate on incomes over $250,000 and gradually increase the corporate tax rate, currently scheduled to fall to 15 per cent in the new year, to 22.12 per cent, the rate that applied before the Harper government took office. With the exception of profits made from the sale of homes, small business and farms, he would tax capital gains as ordinary income and he would also fully tax income made from cashing in stock options. And in making the case for a robust discussion about taxation—“Taxation has become the third rail in Canadian politics,” he lamented—Topp has stressed not only the need to fund important public services, but also the need to fight rising inequality. “Market forces tend to distribute income unequally,” he wrote in a memo outlining his proposals. “One of the roles of the tax system is to recognize differences in Canadian families’ ability to pay: higher taxes are levied on people with more, and lower taxes on people with less.”

The response from the Conservative party was perhaps predictable. “From Topp to bottom,” party officials quipped in a memo sent to MPs, supporters and TV pundits, “this plan would take money out of the pockets of hard-working Canadians, kill jobs, and threaten Canada’s fragile recovery from the global economic downturn.” The Conservatives have won three consecutive elections on a mantra of lower taxes, from cutting the GST to offering a plethora of tax credits. Earlier this year they won a majority while arguing for further reductions to the corporate income tax rate.

Since that election, the Occupy movement has made economic equality part of the political discussion. In the United States, where the protests have been large and widespread, President Barack Obama has made taxing the rich a key part of his plans to reduce government debt. And he has found a vocal proponent in Warren Buffett, the multi-billionaire investor and magnate. “My friends and I have been coddled long enough by a billionaire-friendly Congress,” he wrote in a New York Times op-ed. “It’s time for our government to get serious about shared sacrifice.”

The recession did not hit Canada as hard and the resentment toward the financial sector is, consequently, not as high. But income inequality has been shown to be increasing here, and equality, as a theme, has become a more prominent idea—various NDP leadership candidates seizing on it and interim NDP leader Nycole Turmel even putting the Occupy movement’s concerns directly to the Prime Minister during question period. That may compel, or at least segue to, a debate about how we tax and who we tax. And that debate may be more likely when the government and official Opposition are as diametrically opposed as the Conservatives and New Democrats are.

Also looming is a discussion about what we want to pay for and how we want to pay for it. “The issue of raising taxes eventually drives from the question of what you perceive or would like the role and size of government to be,” says Scott Clark, the former deputy minister of finance and senior adviser to prime minister Jean Chrétien. As various voices have warned, shifting demographics and an aging population will only increase the strain on government, most notably in terms of health care. Various other areas, from education to infrastructure, could be better funded. “Everyone says, ‘Health care is unsustainable,’ ” Clark notes. “Nothing is unsustainable if you’re willing to pay for it.”

Clark and Peter DeVries, another former senior official in the Finance Department, are among those who say part of the federal deficit is structural, and they have called for sweeping tax reform in pursuit of efficiency: simplifying the tax code, eliminating special preferences, lowering personal income taxes and restoring two percentage points to the GST. That—especially when it comes to raising the GST—may not be politically possible, but some kind of discussion about taxes may be unavoidable. “The problem is the debate has to have a context and in the last election there was no context,” he says. “The context in the next election, on health and all the other things, will be a different context for a discussion of what do Canadians want and are they willing to pay for them.”




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So, who wants to talk about higher taxes?

  1. Interesting that Topp doesn’t have the guts to go after the principal-residence capital gains exemption.  What a chicken.  There’s a huge inequality issue there, and Topp won’t touch it, because he’s scared of losing upper middle-class votes.  What a weasel.

    • Upper middle class? Methinks home ownership is much more widespread that THAT.


  2. With the exception of profits made from the sale of homes”

    That’s one enormous and egregiously regressive exception.  

    Nobody makes much money from investing or working in Canada; to get rich in Canada, you scrimp/borrow cash from parents for a downpayment, buy a house in the exurbs, pinch pennies and commute for hours for 15 years, then sell for a six figure tax free profit.

    Topp would have the poorest 30% of Canadians who rent subsidize the windfall tax free profits of the much wealthier 70% of Canadians who own.  This is somewhat at odds with traditional definitions of social justice.

    About 500,000 homes are sold every year in Canada.  Assuming average capital gains of $25K and an average 20% fed. tax on gains, the feds could wet their beak to the tune of $2.5 billion annually, with another $1.25 billion kicked to the provinces via provincial piggyback taxes on fed income tax, all without increasing income tax rates and by merely closing a loophole for the relatively wealthy, with the added positive externality of driving down housing costs, making housing more affordable.

    • Look, if you want to redistribute wealth away from the “relatively wealthy”, go big or go home – confiscate houses from the “relatively wealthy” (you know, the ones who “…
      scrimp/borrow cash from parents for a downpayment, buy a house in the exurbs, pinch pennies and commute for hours for 15 years…” and allocate them among the folk who aren’t prepared to do so.

      “…with the added positive externality of driving down housing costs, making housing more affordable.”

      Which did absolute wonders for the economy of our neighbours to the south.

       BTW, you forgot to mention how municipal property tax levels would have to be adjusted to ensure the cities all get their pound of fle…er…”fair share” when your marvelous tax plan starts to work its magic.


      • Which did absolute wonders for the economy of our neighbours to the south.”

        Shelter, like food and clothing, is essential to life.  You do not create prosperity by making these items more expensive.  

        But you’ve got my curiosity piqued: please, explain to us how half-million dollar exurban bungalows, how making housing significantly more expensive, how mortgage interest payments gobbling up household income is actually good for Canadians.  

        Presumably under your genius plan we can boost the economy by tripling the cost of a loaf of bread and quadrupling the price of winter coats – seems counterintuitive, but I’m willing to hear you out.

        “BTW, you forgot to mention how municipal property tax levels would have to be adjusted”

        Municipal property tax levels would have to be adjusted.  Happy now?

        • “Shelter, like food and clothing, is essential to life.  You do not create prosperity by making these items more expensive.  ”

          I was alluding to the lesson the US learned from meddling in the housing marketplace to accomplish some kind of social engineering, i.e. increasing the rate of home ownership among unemployed convicted felons.  While not conceding your point that prosperity is not created by “making …(shelter)…more expensive”, by taxing away “sweat equity”, you create a pretty big disincentive to create it.  I will resist the urge to refer to current high profile examples of how well the whole “shelter” thing works out when underwritten entirely by government with no incentive on the part of a shelteree to preserve, let alone improve it.

  3. Please NDP – please pick Topp and run on this (though you can keep soft nationalism as well)!

  4. edit double post

  5. edit double post

  6. Good to know……I hate him already.

  7. The most successful part of the right’s smoke and mirrors economic campaign is the idea that taxes and government are the enemy of the common folk — in fact those not in the millionaire class NEED government (and taxes to support it) — those who can afford to pay for anything they might need are the ones disadvantaged by it.

  8. The NDP economic plan certainly as Brian Topp promotes, and that of Adrien Dix in British Columbia is completely flawed. We do not need any more taxation as we are heavily taxes now as it is. The real problem is that we have too much government and duplication at all levels. Too many stupid Boards and Agencies and way too many special interest Commissioners. If we got back to basics and eliminated all the special interest agencies, red tape and useless programs, Canada would have more money than it really needs. Gross taxation for all purposes for all government level expenditures should not exceed 20% of ones income. This permits consumers to spend their money and thus increase jobs and the overall economy as a result.

    Unfortunately, the NDP believes that people should be taxed to death and then be dictated to by their idea of a socialist collective.

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