Six Priorities for the Upcoming Elections

Travis Fast

1.) Environment: Kyoto and its associated mechanisms for reducing carbon emissions are a place to start but it is clear from the European and American experience that government will have to use a series of carrots and sticks to force / encourage compliance within the private and household sectors. This means creative use of the tax system and legislated reductions in carbon emissions. Given the urban density in Canada the federal and provincial governments need to come up with a ten year road map for the public transit in the cities and an expansion of inter urban rail transit. This plan needs to be supported by a robust set of disincentives to automobile usage.

2.) Income Inequality: In an era of regulatory arbitrage particularly with regards to corporate and capital taxes there is a limit to how progressive the tax system can be made. Even if we conclude that Canada is already competitive in this respect it still means that there is not much room to increase corporate and capital taxes. As such stronger legislation for employee standards and industrial relations, which empowers workers to bargain over their share of the output they produce, is the easiest way to decrease income inequality between employers and employees.

3.) Taxes: As Canada is already quite competitive on corporate and personal income tax rates within High Income OECD countries tax cuts should be given low priority. Instead a revaluation of the tax mix and burden of the tax system should be engineered to accomplish social and economic goals.

4.) Health Care: We have long since past the point where tinkering at the margins of the system will suffice. It is time for a radical rethink of socialized Health-Care. Private delivery is not the direction to go. The left needs to think how health care can be delivered in a more cost effective and direct fashion. Ultimately this will involve creating new classes of health practitioners that can perform some of the functions now preformed by doctors. Community Public Health needs to be re-envisioned so that it takes the burden off the short supply of doctors and the expensive use of emergency health services.

5.) Education: For too long the K-12 system has been asked to do much more than simply educate young Canadians. It has become the primary agent of socialization for broad classes of citizens. This role needs to be recognized and accepted and specific policies and resources need be developed for the public education system, which allow it to accomplish these goals alongside producing high quality students. Given that a university degree / trades degree is now all but standard there should be greater emphasis on integrating the grades 10-12 curriculum with that of the first two years of university / occupational training.

6.) Higher Education:
University and Technical training are now standard requirements in the Canadian Job market. The funding of higher education needs to be made more accessible and affordable. The system of student loans is inadequate and regressive. Serious consideration should be given to using the personal income tax system to fund higher education. The most elegant solution would be to instigate an income tax premium for every year of higher education beyond grade 12. This would effectively allow the public to see a return on investment in education over the lifetime of workers earnings and would allow citizens to pay for their education over a lifetime of their earnings. Along side of this proposal special incentives need to be developed for the training of professionals and trades that are currently in short supply or are projected to be in short supply.

14 thoughts on “Six Priorities for the Upcoming Elections

  1. That is easy,

    The British, the Americans, the Russians, the Pakistanis along with Afghanis are responsible for the mess over there. Let their militaries’ sort it out while we provide reconstruction aid and perhaps some civilian security.

  2. I think you’ve got the Higher Ed. plank entirely wrong. The whole problem with HE today is that it has been infiltrated by the ROI/Human Capital logic, which all relentlessly progressive political economists know to be bunk. Re-creating a system in which individuals who benefit from HE pay more for it – at any point – will do nothing to stop HE from becoming ever more professionalized and corporatized. We don’t need an incentive based system in which the “highly educated”, knowing they are going to pay more income tax, are looking to find gigs that generate more income. And I’m not so sure that post-grad earnings inequities, which are clearly systemic, mean that your system is very equitable at all. This is really just income indexed loan repayments with a new name.

    Higher Education needs to be understood as something that has an intrinsic benefit, not the least of which is the ability to parse a progressive politic. Back to the drawing board, friend.

  3. I’m with Jan. Granted, “high politics” isn’t normally an election issue, but with the Afghanistan mission, Canada’s place in the world is a big concern this time.

  4. Intrinsic benefit you mean like clean drinking water? Like a public good? We pay for clean water and we pay by the amount we use over the lifetime of our consumption. If the city were providing water would you call this an indexed loan? Why should education financing be any different? All this plan does is make sure that those who get educated know where a portion of their taxes are going.

    The beauty of this scheme is that rich kids who don’t need loans will have to pay the same amount as their less well-off brethren for their education. And because it is based on tax rates, there is a good element of progressivity. Look, given the near universal requirement of a degree this proposal amounts to an increase in personal taxes on those who most can afford it. Moreover, you do not have to make payments if you cannot find a job, or are laid off, fired or quit because your boss is an ass. It also gives a counter cyclical element to the proposal. And these are all good things.

    But please do submit a paragraph length proposal of your own. Just remember education has to be funded either out of current tax receipts or increased taxes or user fees or all three. Be sure in your answer to clearly specify where the funding for your model will come from. Also be sure to include in your proposal an assessment of who the burden will fall upon.

  5. When did you start channeling Preston Manning? Look, what you’ve pitched here is a flat “higher education tax” that you’ve described as “progressive” because the flat amount is pinned on top of a progressive system (unless I’ve misunderstood). But this doesn’t make the system more progressive, it just makes taxes higher. And then only for those who go to uni (or college), irrespective of what they earn post-graduation.

    We’re both fans of a fairer tax system, but given that average returns from higher education are set to fall (if participation rates continue to climb), and given that there are so many systemic inequities in the labour market, why not just have a national system of post-secondary education financed through progressive taxes? Why ever would we want, ‘rich kids who don’t need loans to pay the same as their less well-off bretheren’? Let the rich kids pay more, particularly if they ‘win’ in the labour market where the game is fixed. Really, you need to dispense with the assumption underlying this scheme – that, “this proposal amounts to an increase in personal taxes on those who most can afford it”. That’s just not true. Many college and university grads won’t make much or any more than they would have if they chose not to go to school. All they’ll be doing is paying a higher tax-rate that their less educated colleagues who also work in Canada’s growing call-centre industry. What an organizing strategy this is!

    Now, if I’ve entirely misunderstood your paragraph, and you aren’t advocating a fixed amount on top of the marginal tax rate for those who get a higher education, if what you’re really talking about is making your ‘higher education tax’ a progressive marginal rate too, then I’m left to wonder why you think this elegent and not just overly complex? If this is a public good, and it is, then why don’t we all finance it in a fair and progressive way?

  6. Archie,

    While it may be true that there are diminishing returns to investment in education setting in, the fact remains that those with post secondary education either a BA or trades certificate not only earn more but also experience a lower rate of unemployment and a shorter duration of unemployment. You are simply ignoring the realities of the labour market to advance your desire for free education.

    We agree here on the goal just not on the programme to get there. But the fact reamins that after how many years of standing in the freezing cold and demanding free higher ed the CFS has achieved rather the inverse. Unfotunately for you my dear chap you are advocating for a failed policy intervention. If you want to maintain your rigid purity go ahead but purity won’t move the issue forward.

    As to your other nefarious points well lets just say I think you need to re-read the proposal. I know elegance confuses your ilk but you really should give it a try. At least it looks better in the freezing cold.

  7. Ouch. Of course I knew who I was stepping into the ring with…what exactly do you mean by, “your ilk”? Whatever, lets try putting a couple of numbers behind this:

    If a uni grad with a four year degree earns 50K post-graduation (assuming a 8-year post-graduation lag before that income sets in), and if the flat tax they pay as a result is ~2%, and if that person works until they’re just 65, then they’re gonna pay 35K for an education that presently costs 18K. Of course, if they defer upfront payment through OSAP, which many do under the present system, then the same worker would pay around 21.5K, maybe 22K.

    I think you need to check your facts about the CFS – a dedicated post-secondary education transfer has been endorsed by two of the major parties (though one of them never followed through when they had the chance). And but for BC and Ontario, tuition-fee freezes/reductions have been won across the country (and just previously in Ontario too). Admittedly on the tax front there’s been no movement, but there hasn’t been much focus on that as an organizing tactic. Perhaps you need to spend sometime outside – not only might the crisp air clear your head, but the added support would be fantastic.

    In terms of highly educated workers, I was never denying their good fortunes, on average, but rather saying something about the use of averages. I think if you check your numbers, you’ll find that visible minority women fair, after obtaining a university degree, only just slightly better than their relatively less educated white male counterparts. And you want to charge them 2% more income tax! Such flexibility!

    By the by, highly educated workers live longer and get sick less frequently. Should we tax those less educated workers that nonetheless earn in the upper income quartile at a higher rate? At least they’d know where a portion of their taxes was going.

    I don’t know that it’s purity Travis, maybe just simplicity, which is what I’ve always considered elegant. But then “my ilk’ would have to translate elegence into simplicity. I suppose, in the interests of peace, and given our present proximity from the halls of power, all I have is this to say:

    “a revaluation of the tax mix and burden of the tax system should be engineered to accomplish social and economic goals.”

  8. Travis,

    Your “human capital gains tax” is regressive in the sense that the tax is levelled at an equal rate on those with the same accumulation of “human capital”. Yes, you could consider it progressive *between* groups with different levels of accumulation, but the focus of the policy seems to be misguided. Doesn’t instituting a more progressive income tax system (higher marginal rates across more income tax brackets) accomplish the social policy goal (income equality) in a fairer way? I’m backing archie on this one.

  9. Secondly, you argue that water and education are the same type of “public goods”. In many respects water is a private good – you pay for virtually the entire cost of water through user fees. The reason why we fund (some of) higher education through the tax base is because of the spillover effects of higher education to the rest of society. Also, we should be thinking of higher education as a tool that, if funded/structured properly, can lead to greater income equality. I don’t see why we would want to tax that.

    I previously described your tax as a “human capital gains tax”. On second thought, it’s a “human capital accumulation tax”. We tax “human capital gains” (effectively returns to higher education) through the existing tax structure.

    As an aside, I’ve been placing human capital in quotation marks to get away from the neo-classical terminology/framework that is so very flawed. It seems you’ve jumped on that ship with this taxation proposal. Capital and “human capital” are not comparable concepts.

  10. Let us start back at the beginning. The present system to fund higher education is a hodgepodge schemes which have neither provided students with a reasonable system to fund their education nor universities with the adequate stream of revenue to fund growth or pay professors what they are worth. The tuition freeze in Quebec has left universities strapped for cash and made their professors some of the lowest paid in Canada. But let us leave the question of the funding of universities to the side for the time being.

    My own student loans are structured under no less than four different programs and I owe a total of $40, 000 amortized over 11 years this works out to roughly $70.000. None of this of course takes into account opportunity costs. If I were to work thirty years and instead pay a two percent premium on my tax bracket assuming an average salary of $80,000 @ 30 years I would pay $48,000. Clearly in this scenario I would come out ahead. Now I appreciate your overall points about progressivity.

    To make this proposal fully progressive all we need to do is attach the surcharge on to the brackets and make them progressively higher as you go up the brackets. So hypothetically it could look something like this:

    No PSE……………………PSE


    Something like the above ensures progressivity without effectively taxing those at higher rate who go to school longer ( MA PhD) but who do not see an increase to their income. Now of course all this would have to be put in the context of point three in the initial blog entry. I personally would like to see the first $18,000 of personal income non-taxed.

    In the future it would be nice if we could have a discussion that was based on the spirit (intent) of the post and not on hot botton ideological assumptions read back into what was originally articulated.

  11. Why not just eliminate the tuition fee tax deduction? It would clearly not generate as much revenue, but it would be a simpler measure that could put hundreds of millions back into the system.

  12. Also, I’d like to add “Addressing Aboriginal Poverty” as a 7th priority. With child poverty in First Nations communities at 1 in 4, we cannot afford to wait any longer.

  13. We really need to re-think healthcare. The current system is not sustainable. I agree with you that alternative delivery is part of that. For example a larger role for nurse practitioners and clinics is part of that. But so is private delivery under a single payer system. In Ontario it’s been done for decades. I had a hernia operation at Shouldice a few years ago. The quality of the work is superior to what you would get at a regular hospital (which is why people come from all over the world for hernia operations). During the last election, I worked as a volunteer in my riding. One evening I encountered a gentleman who had run radiology clinic — he claimed at a substantially lower cost and better access than the hospital that took over after he was forced to hand over the operation.

    In fact aren’t most GP’s private businesses who bill the province? As long as we’re maintaining the principle of public healthcare and the quality is high then who cares what the delivery mechanism is. The other thing that needs to be strongly considered is to expand the scope of preventive healthcare that is available under provincial systems (physiotherapists, nutriontists, etc.) and to make individuals more responsible for their own health. Introducing a basic deductible might be one mechanism. For example, allow for 3 (or 5 or whatever) doctor visits per year under Medicare, but beyond that have a minimum deductible beyond that.

    Deductibles could also be used to incent people to lead more healthy lives. For example, if I have poor diet and excercise habits and thus am at high risk for diabetes or heart disease or lower back problems, my GP could put me on a nutrition and excercise program. If I do not meet the milestones set out then a deductible would be introduced, which would continue to rise until I comply. After all why should we pay for someone who is going to just disregard their health. This has been used to good effect by public health plans in the U.S.

    And as far as the Environment goes using a tax mechanism should only be supported as long as is required to ensure price stability — after that let the market take care of it.

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