Assessing Trudeau's proposed tax cut, child benefit

Three key questions about Trudeau’s pitch to the middle class

Ottawa bureau chief John Geddes on today’s Liberal policy proposals


Harper, Mulcair, Trudeau.  For Geddes' piece.By proposing a middle-class tax cut and a new child benefit, Liberal Leader Justin Trudeau today filled in some of the major gaps in what we knew about how this fall’s federal election will be fought, when it comes to economic policy.

Don’t miss Kevin Milligan’s clear analysis of today’s Liberal policy proposals. (The University of British Columbia economist and Maclean’s blogger is on Trudeau’s economic advisory council, so he had a jump on the story, much to the benefit of any reader seriously curious about this policy.)

What Trudeau has put on the table is, first, a pledge to cut the tax rate on income from $44,700 to $89,401, giving middle-income earners about $3 billion in tax relief. He’d pay for it by hiking the rate on Canadians making more than $200,000.

His second proposal, something called the Canada Child Benefit, is more complicated. The CCB would roll together some $18 billion a year of existing federal child benefits and add another $4 billion. The upshot varies for different sorts of families. But, for instance, Liberals say a typical two-parent family with two kids would get $490 a month, tax-free, under their plan, compared to $275 a month, after taxes, under the Conservatives.

At the same time, Trudeau would eliminate Prime Minister Stephen Harper’s signature $2-billion “Family Tax Cut” income-splitting measure, which allows couples with kids to save on their taxes by transferring income from the higher-earning to the lower-earning spouse. (That leaves the Liberals with $2 billion of their $4 billion in added CCB benefits to find someplace else.)

Here are three key questions to ask about what Trudeau is pitching:

Is it fairer? The $2-billion income-splitting program Trudeau vows to scrap distributes benefits to just under two million of the roughly four million Canadian families with kids, mostly to middle-class households—but only to those with two parents. The new Liberal CCB would boost benefits to all families with kids, except a few hundred thousand making more than $150,000. So this is bound to feel fairer to, in particular, single-parent households. As for the income-tax cut, it glaringly won’t help anyone making less than $44,700. When asked about this, Trudeau basically replied: Stay tuned.

Is it simpler? Anyone trying to gain a quick understanding of the CCB is apt to find it frustrating. That’s not Trudeau’s fault, though. The fact is, the new benefit combines and replaces a raft of existing ones, including some the Liberals like (for example, the Canada Child Tax Benefit and the national Child Benefit Supplement) and some they don’t (notably, the Conservatives’ beloved Universal Child Care Benefit, source of the familiar monthly cheques to parents). Overall, the Trudeau plan would certainly simplify the system. As for the middle-class tax cut and new top tax bracket, these are pretty straightforward changes.

Is it justified? Trudeau says the reforms are needed because middle-class Canadians “feel like no one is on their side.” We’ve been hosting lively debate at Maclean’s about the true state of Canadians earning around the median for years now (here’s a taste from the archives). Informed opinion varies. But the chart below shows something basic: median incomes rising during the Harper era for various types of households. Trudeau needs to show why these figures don’t reflect the real experience of middle-class Canadians. And Harper, of course, has to persuade them that, as these numbers might suggest, they’re doing fine.

Family type 2006 2007 2008 2009 2010 2011 2012
Couples, with or without children $70,400 $73,420 $75.880 $75,320 $76,950 $79,530 $81,980
Lone-parent families $33,000 $34,540 $35,990 $36,100 $37,050 $37,900 $39,350
Single person $22,880 $23,960 $24,810 $24,700 $24,680 $25,660 $26,570


Three key questions about Trudeau’s pitch to the middle class

  1. I am not sure about your last question. Isn’t it justified merely on the basis that all children, including those from single parent households, benefit? Or on the basis the credit is tailored to the recipient’s income?

    If middle class families are going to get more under this plan than Harper’s, I am pretty sure they are going to like it. Does it really matter if they are already doing better under Harper?

    • It does if one is rational!
      And there are among us those who are old enough to remember Liberal scandals that make those to-day look like peanuts. Trudeau II does not inspire.

      • Biggest scandal in Canadian history was Con…Sir John A.

        • He was a drunken puppet of the crown.

          Depends which history books you read, but was the former MP Louis Reil a freedom fighter or traitor to be hung? He went to Ottawa, didn’t liek what he saw, decided Manitoba west would be better off without colonial rule.

          Part of what hinders Canada from being a more successful country, is our innately corrupt political system.

          • No, John A wasn’t….and if you knew anything about his life you’d know why he drank

            Louis Riel was mentally ill.

            Canada’s political system is no different than anyone elses.

      • Heh. I do hope that CPC try campaigning on what happened 20 years ago. No doubt that will be just super duper effective.

      • Media manages people, and most people have short memories. Democracy is a ruse when your ballot choices are all puppet MPs to the leader, then lobbyists buy the party.

        Take Jim Prentice. In 2010 he voted for GM, auto, bank bailouts to be Alberta taxpayers obligation, and not once raised in media in the Alberta election. Its not a coincidence. Even CBC didn’t report on the Minister in court, and comments at CBC mysteriously cut off.

        Media is managed, you are not as free as you think.

  2. Only thing these politicians know is pandering, lies and tax greedy. Everyone is taxed too much. People are taxed to support govmint kids, they don’t have their own kids. Taxed so much we have less to spend on each others jobs. Taxed so much most do not save for retirement. Taxed so much we have no money to spend as statism greedy politicians/unions/bureaucrats take too much.

    Only answer pandering fools know, tax greed. Well guess what? Wonder why no one is investing in Canada? GREED. We punish investors, savers, private pensions with devalued money, pathetic returns below inflation and taxes losing huge value.

    Trudeau has, and never was middle class. Just journalistic BS. Trudeau has no clue what its like to be middle class.

    I dare media to pop this scenario to Trudeau, Mulcair or Harper: Why is there so much taxes hidden, real, property et al. taxes….even on healthy foods, basic clothing and more…hidden taxes from CBSA grabs $45 billion from us. CRTC racketeers cell bandwidth for obscenely high auction prices, yet another TAX GREED cash grab.

    And no one asks what benefit all these taxes are. For young, ask why:

    Canadians have to life earn $1,400,000 to pay $700,000 in taxes, $300,000 in fair interest, to buy a $400,000 home that is $200,000 in labour taxes, fees, tariffs and other hidden taxes to build the $200,000 tax-debt out home.

    At Government gets $900,000 and you get a $200,000 tax-debt out home, no need to look further on who is screwing who. We are economic slaves of corrupted Orwellian statism, where lobbyists bought our politicians and we pay like slaves. Our democracy is a farce when not one option the the rigged ballot talks of LESS taxes, less bailouts, less inflated contracts, less mindless consumption waste of no value….and media even accepts it and never questions our wasteful bloated governments of waste.

    That is the ruse of the Canadian system. Taxation, the modern day slavery. Supported by politicians, unions, bureaucrats across the nation.

    • For that tax money you are so loathe to part with, you get roads, water/sewer, healthcare, fire depts, law enforcement, and on and on. It’s a society, Dave – and the infrastructure costs. So we all have to contribute. If I remember correctly, you are a business man – which means you reap all kinds of benefits from those tax dollars – including educated employees (may not be your kids but you still get your investment back).

      Could they do a better job of spending our money? I think we all agree they can and should. But unless you want to go back to caves, taxes are inevitable.

      • Even Amanda Lang of all people speaks of the need to turn away from boutique vote buying tax gifts and look at the big picture, the need for investment in the country as a whole, to rise above individual greed and bring needed benefits to society as a whole.

        • I agree. Germany and the Netherland countries are moving ahead with green technologies and education for all. While were stuck in Canada with out plaid shirts on bragging about Northern resources which are running out. Why have we not diversified ? Why have we not made education affordable and introduced new programs in green technology???

  3. We really need help in BC. Its so expensive to live in Vancouver and Victoria and those cities are the only place you can go to school for a lot of programs. BCIT (the only tech school in BC) is located in one of the most expensive places in the world. Youth Need help – they can’t afford housing in BC along with school tuition, and books. As a middle income parent, I am going totally broke and under in debt trying to put 2 kids through tech. school at BCIT. Then, they might go on to finish a degree !! How ??? Also, we need jobs – move into new green technologies. You can’t even find green technology programs here in BC.