Saganash on taxes

by Aaron Wherry

Romeo Saganash proposes tax code reform.

About $152 billion gets redistributed currently. Much of that goes to incentives for corporations, deductions for the privileged, boutique credits for market segments, and loopholes for those with the best accountants. These expenditures skew the system away from progressive taxation – meant to help redistribute wealth to the less advantaged – toward regressive taxation that only increases the growing gap between the rich and poor … 

But most importantly, we can reduce inequality by raising the minimum standard deduction for everyone to the level of a living wage. That minimum deduction – called the “basic personal amount” on the form – is $10,527 this year. No one can live on that … Under my approach, the minimum threshold before any individual pays taxes could be raised well above $20,000. Each Canadian could earn a moderate living before paying any tax. The system would never again drive a hard-working person into poverty.




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Saganash on taxes

  1. It’s a reasonable sounding proposition but very very expensive by itself.  If it’s meant to be accommodated with closing other parts of the ITA then more details should be put forward. 

  2. NY Times ~ The Other Milton Friedman:

    Milton Friedman, who died last week at 94, was the patron saint of small-government conservatism ….. 

    Market forces can accomplish wonderful things, he realized, but they cannot ensure a distribution of income that enables all citizens to meet basic economic needs. His proposal, which he called the negative income tax, was to replace the multiplicity of existing welfare programs with a single cash transfer — say, $6,000 — to every citizen. A family of four with no market income would thus receive an annual payment from the I.R.S. of $24,000. For each dollar the family then earned, this payment would be reduced by some fraction — perhaps 50 percent. A family of four earning $12,000 a year, for example, would receive a net supplement of $18,000 (the initial $24,000 less the $6,000 tax on its earnings).

    Mr. Friedman’s proposal was undoubtedly motivated in part by his concern for the welfare of the least fortunate. But he was above all a pragmatist, and he emphasized the superiority of the negative income tax over conventional welfare programs on purely practical grounds. If the main problem of the poor is that they have too little money, he reasoned, the simplest and cheapest solution is to give them some more. He saw no advantage in hiring armies of bureaucrats to dispense food stamps, energy stamps, day care stamps and rent subsidies.

    • Yes, that was my argument about Saganash’s proposal.  It doesn’t go far enough to help those needing it most, and might have some unintended consequences further up (I don’t know because I didn’t study it, but did he?)

  3. I like the negative Income Tax approach personally. At the point where income drops below a threshold, families receive payments without having to apply to social assistance workers. When income goes above the threshold, they start to pay taxes. It was tested in Manitoba in the early 1970′s and showed that education, health status and employment levels all significantly improved over the long term as compared to families that received social assistance from the traditional welfare system.

    Senator Hugh Segal has been touting this approach lately and I wish he could get some of his fellow Conservatives to listen, because our government not only intrudes arbitrarily and unnecessarily but at great administrative cost into the lives of people who just need a leg up.

    Our governments intervene in almost every significant detail of social assistant recipients’ not just household costs and spending, but they also insert themselves into parenting, healthcare and education decisions. The evidence shows that  that “assistance,” probably due to a combination of stigma and absurd clawbacks on earned income, actually interferes with recipients’ attempts to become educated, maintain employment and be healthy contributing taxpayers.

    Fans of smaller government, where are you on this one? Let’s get government off the backs of the poor so they can help themselves.

  4. A good proposal for sure. But where would he make up the revenue shortfall? It’s easy to say “cut back on loop holes for corporations”, but that’s not an answer. That’s like saying you’ll balance the budget by “cutting back on bureaucracy”. 

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