REGRESSIVE TAX EXPENDITURE MISCONCEPTIONS INCLUDING GOVERNMENT DIVIDEND CHEQUES

Posted on August 31, 2018 by ffswpadmin

REGRESSIVE TAX EXPENDITURE MISCONCEPTIONS INCLUDING GOVERNMENT DIVIDEND CHEQUES

(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice.)

This opinion letter was originally submitted in abbreviated format to a local newspaper in response to a reader opinion letter. It emphasizes the bizarreness of Conservatives who don’t see Alaskan natural resources dividends as being equivalent to a basic income program, view dividend cheques to be a right, not a privilege (while touting individual responsibility), and have no problem with receiving these monies even for children who haven’t worked for it or paid taxes.

The blog post ‘Money Benefit Programs Financially Benefit Married/coupled Persons and Families More Than Singles’ highlighting Alaska Permanent Fund Dividends was originally published several years ago and has been reproduced in its entirety at the end of this post.

RE: READER OPINION LETTER ON ALASKA PERMANENT FUND DIVIDEND (PFD)

(Alaskan dividend program was established by the Republican (conservative) party in 1976. From 1996 to 2015, the benefits have ranged from a low of $846 to a high of $2,072 annually. For a family of four the twenty year total amounts to $113,156, and for a single person household the amount is $28,289. A lot more can be done with $113,000 than $28,000. And, all is not as rosy as it seems. Alaska also has concerns about excessive government spending (pfd-effect). For the third straight year, dividends would be more than $1,000 less than they would be under the previous formula written into state law).

The reader opinion letter, while stating Klein and related Conservative ilk took money out of voter pockets, also implies that it is better that every Alaskan man, woman, and child has received $43,000 in annual dividend cheques since 1982 – 2017 amount was $1,100. Single person household would have received $1,100, lone parent with child or married with no children $2,200, two adults, one child $3,300 and two adults, two children $4,400. You figure out what each household would have received over twenty years during lifecycle of rearing children.

The same truth applies to Klein $400 bucks. A family with eight children received $4,000 while single person received $400 (this is a true story).

Why is it that Conservative families are always in the business of making more money for themselves, but tout individual responsibility? Why should children, like a one day old infant receive dividends when they haven’t paid any taxes or contributed to getting those resources out of the ground? Instead, they are consuming resources such as education without contributing to them by paying taxes.

It doesn’t matter whether it is dividend cheques, Klein ‘bucks’ or natural disaster relief funds (fire-disaster-assistance). When children are treated financially equal to adults, single adults will always be the losers even when they have worked more than forty years, not used EI or maternity/paternity benefits, paid education taxes when they have no children, etc. Families with children are receiving government transfers that singles don’t receive.

Financial fairness for all Canadians, regardless of marital or child status, will only be achieved when Market Basket Measure and net worth and assets are included in financial formulas. The Canada Child Benefit is financially fairer than natural resource dividends (good thing for lone parents and poor families). The Market Basket Measure cost of living scale counts an unattached individual as 1.0, and adds 0.4 for the second person (regardless of age), 0.4 for additional adults, and 0.3 for additional children. The addition of an adult or child to household does not double or triple the cost of living, but adds smaller percentage to it.

It is time for politicians, married persons and families to stop the financial cherry picking and gaslighting. Instead of spreading half truths it is time to develop fair financial formulas based on MBM and net worth irrespective of what political party person belongs to.

ANALYSIS OF REGRESSIVE TAX EXPENDITURES SUCH AS DIVIDEND CHEQUES

Critical common sense thinking highlights the fallacies of Conservative thinking which they, themselves, cannot see.

Conservatives don’t see Alaskan dividends as equivalent to basic income programs and they don’t see this as equivalent to socialist programs. Doug Ford, since coming into power as Ontario Conservative Premier, has broken his promise by deleting the basic income pilot program authored by the outgoing Liberal Party. Alaskan dividends are as socialiastic as any basic income program.

Karl Widerquist and Michael W. Howard on Alaskan dividends (see blog article below) state: ‘It provides a model of cash transfers to individuals without any stigma of dependence, fraud, waste, or failure—attributes often attached recipients of other government cash transfers. The PFD funding source in natural resources rather than in taxes on individual income or wealth seems to exempt its recipients from any need to justify their use of the dividend, and to exempt the transfer as a whole from the ‘socialist’ label….’

Alaskan dividends are paid irrespective of any income from other sources and does not require the performance of work or the willingness to accept a job if offered. Unlike social assistance programs, it is not means-tested. Surely, this should rile up Conservatives who continually talk about personal responsibility and denigrate the poor as being lazy. Conservatives never want to raise the minimum wage.

Conservatives just don’t get that Alaskan dividends are a regressive tax expenditure. Karl Widerquist and Michael W. Howard state: ‘the PFD together with the elimination of the state individual income tax that was part of its founding has an overall regressive effect on income distribution. To have a significant redistributive effect, the PFD would have to be recouped from wealthy individuals; in the absence of a progressive state income, consumption, or wealth tax, the PFD would have to be distributed on a sliding scale with larger dividends given to those with less income from other sources, rather than as a uniform flat payment….’

Alaskan dividends are paid out to individuals rather than households. Payouts based on Market Basket Measure (MBM) or OECD Equivalence scales (equivalence-scales) would be financially fairer and would spread monies over a longer period of time.

What about those states or provinces that do not have natural resources? How do they handle progressive versus regressive tax expenditure? The answer is through taxes and social justice programs.

It has been argued that it is preferable to have dividends from natural resources be distributed broadly rather than end up in the pockets of only a few corporate executives, wealthy shareholders, and political cronies. However, dividends distributed without marital status, number of children, income and net worth and assets consideration still means there will be an uneven distribution of dividends benefiting wealthy the most.

REPRODUCTION OF PREVIOUS BLOG POST

http://www.financialfairnessforsingles.ca/singles/2016/03/07/money-benefit-programs-financially-benefit-marriedcoupled-persons-and-families-more-than-singles/

MONEY BENEFIT PROGRAMS FINANCIALLY BENEFIT MARRIED/COUPLED PERSONS AND FAMILIES MORE THAN SINGLES

Married/coupled persons and families often receive ‘free money’ benefits that financially benefit them much more than singles.

Two very good examples of these benefits are the Alaska Permanent Fund Dividend and the ‘Ralph Klein $400 Bucks’ Program.

Alaska Permanent Fund Dividends

The Alaska Permanent Fund Dividend (PFD) program implemented in 1982 is an annual payment paid to individuals (children as well as adults) rather than households. It is paid irrespective of any income from other sources and does not require the performance of work or the willingness to accept a job if offered. Unlike social assistance programs, it is not means-tested.

The book “Alaska’s Permanent Fund Dividend: Examining Its Suitability as a Model”, edited by Karl Widerquist and Michael W. Howard states the following:

‘…..In 2008, when the PFD reached its highest level at $2,069, the individual poverty threshold in the United States was approximately $11,000; for a family of four it was approximately $22,000. Thus, at its highest level, the PFD would have provided less than 20 percent of the income necessary for an to individual to reach the poverty threshold, but almost 40 percent of the income necessary for a family of four to reach the poverty threshold……Thus, on basis of its level alone, the PFD is at best a partial basic income…

Finally, because of its flat and universal nature, the PFD on its own makes a very modest contribution to the reduction of inequality. But the PFD together with the elimination of the state individual income tax that was part of its founding has an overall regressive effect on income distribution. To have a significant redistributive effect, the PFD would have to be recouped from wealthy individuals; in the absence of a progressive state income, consumption, or wealth tax, the PFD would have to be distributed on a sliding scale with larger dividends given to those with less income from other sources, rather than as a uniform flat payment….

The PFD does serve as an excellent model for the conceptualization of natural resources as commonly owned—an important step along the path to acceptance of the idea of a basic income. It provides a model of cash transfers to individuals without any stigma of dependence, fraud, waste, or failure—attributes often attached recipients of other government cash transfers. The PFD’s funding source in natural resources rather than in taxes on individual income or wealth seems to exempt it recipients from any need to justify their use of the dividend, and to exempt the transfer as a whole from the ‘socialist’ label….’

It has been argued that it is preferable to have oil profits distributed broadly rather than end up in the pockets of only a few corporate executives, wealthy shareholders, and political cronies.

Alaska is the only state that does not collect sales tax or levy an individual income tax on any type of of personal income, either earned or unearned. Every Alaskan, children as well as adults, receives a payment each year from the Alaska Permanent Fund Corporation. The USA does not have child benefits, although there is a child tax credit system for parents or guardians of children under 17 who meet certain requirements. (The PFD is taxable by the Federal government).

Further review of information shows that in 2002, the poorest 20% of Alaskans relied on their dividend for 25% of their total income….some Alaskans depend on their dividend for up to a quarter of their yearly income, especially Native Alaskans, who make up 15% of the population. Those in poverty brackets and many of those living a subsistence lifestyle cannot afford to lose the dividend as a source of income.

However, review of articles on this program also states that the sense of entitlement has been established where it is very difficult to reduce state spending in this particular benefit at the expense of politicians losing their jobs, because state residents view these dividends as ‘rights’, not ‘privileges’.

One could argue that monies are being given to children who have not earned that privilege. They have earned no money and have not paid any taxes.

If one looks at the PFD contributions over a twenty year period (lifetime of a family with children) in comparison to singles /individuals, the financial unfairness becomes apparent very quickly. From 1996 to 2015,the benefits have ranged from a low of $846 to a high of $2,072 annually. For a family of four the twenty year total amounts to $113,156 and for a single person household the amount is $28,289. A lot more can be done with $113,000 than $28,000.

Prosperity Bonus (‘Ralph Klein $400 Bucks’) Program

The Prosperity Bonus, also nicknamed Ralph (Premier of Alberta at that time) bucks, announced in September 2005, was the name given to a program designed to pay money back to residents of the province of Alberta as a result of a massive oil-fuelled provincial budget surplus. This program gave $400 to every citizen of Albertan in the year 2005.

For a family of four, the benefit was $1,600, while a single/individual received $400.

ANALYSIS

‘Free Money’ Benefits allow families to achieve greater wealth than singles/individuals even though the children of these families have not earned any income or paid any taxes. Married/coupled persons without children also achieve greater financial benefits because of accumulated assets times two.

SOLUTIONS

To achieve greater financial equality between singles/individuals and married/coupled persons and families, the following suggestions are submitted:

Eliminate children from these programs until they reach the age majority since they have not made any contributions to the coffers in the form of salaries or taxes; rather, they are using resources such as education instead of contributing to them.
Top up benefits to singles at rate of 1.4 Market Basket Measure to that of married/coupled persons as it costs more for singles to live than married/coupled persons living as a single unit.

(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.)

BOUTIQUE TAX CREDIT INCONSISTENT AND FINANCIALLY DISCRIMINATING (Part 1 of 2)

Posted on June 16, 2016 by ffswpadmin

BOUTIQUE TAX CREDIT INCONSISTENT AND FINANCIALLY DISCRIMINATING (Part 1 of 2)

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

Revisions were applied to this post on June 19, 2016.

(Preface: Every political party has introduced tax credits to give financial benefits to certain members of the population more than others. However, during the reign of the Conservative party under Prime Minister Stephen Harper, a plethora of tax credits were introduced. This led to coining of the phrase ‘boutique tax credits’. Much of the following information has been taken from the ‘Policy Forum: The Case Against Boutique Tax Credits and Similar Tax Expenditures by Neil Brooks’ (brooks). The Neil Brooks discussion provides an excellent overview of why boutique tax credits are so wrong and discriminatory. While many families, especially poor families do not benefit from boutique tax credits, ever singles also do not benefit from most of the tax credits. If there are any negatives to the study it is that financial discriminatory impact of tax credits and expenditures for ever singles and to some extent single parent with children family units is not fully recognized).

The author of this blog has long thought that boutique tax credits are financially discriminatory to singles. However, we cannot even begin to articulate what Neil Brooks has so eloquently stated in his article. The entire article is worth a read including the footnotes which provide excellent information on many commentaries and studies of this topic. For this post, we attempted to condense the PDF from 68 pages to 8 pages, for example, by eliminating the many footnotes – see condensed version at the end of this post. Blog author’s comments have been highlighted in blue).

This has been a very difficult post to write in terms of length as there is so many excellent points that have been made by Neil Brooks in his study, so be forewarned that the condensed version of the Brook;s article is eight pages long).

PROBLEMS WITH BOUTIQUE TAX CREDITS (AS IDENTIFIED BY BLOG AUTHOR)

SUMMARY OF TAX PROBLEMS:

Problem 1 – Conservative boutique tax credits purposely target traditional family values (single income families). Boutique Tax Credits initiated by the Progressive Conservative Party under Stephen Harper purposely target traditional family values. The party never gives a definition of traditional family values or who is included in the traditional family. They talk about the family unit as ‘essential to the well-being of individuals and society’. A reflection of their belief in the importance of the role of the traditional family in society, another objective was to privilege single-earner families through the tax system (page 76). (Blog author’s comments: Ever singles are generally not included in these boutique tax credits).

Problem 2 -tax expenditures introduced by the Conservatives of Boutique Tax Credits were targeted at relatively narrowly defined groups of potential Conservative voters (page 67). Finance Minister’s budget moved to put the finishing touches on building a new Conservative coalition through a series of tax cuts, rebates and other subsidies aimed at select segments of the voting population (page 73). By enacting these tax expenditures, as opposed to across-the-board tax cuts, the Conservatives were able, at a much lower cost, to favour middle-class families with children, middle-income and well-to-do seniors, and other much more narrowly targeted groups ( page 77). (This is what this blog author calls ‘selective’ democratic socialism).

Problem 3 – Tax Credits and Expenditures ignore traditional tax criteria that apply to technical tax provisions, namely, equity, neutrality, and simplicity (page 69).

Problem 4 – Conservatives were “pleasing their electoral base with . . . dollars in pockets for boutique programs rewarding wealth and socially conservative values (page 69). An example is pension splitting where wealthy married/coupled persons benefit the most, poor and married or coupled persons with equal incomes benefited to a lesser extent.(Blog author’s comment: Ever singles and divorced/separated persons are not able to use this tax credit).

Problem 5 – Tax Expenditures Can Serve as a Bribe to Potential Voters (page 77) By enacting these tax expenditures, as opposed to across-the-board tax cuts, the Conservatives were able, at a much lower cost, to favour middle-class families with children, middle-income and well-to-do seniors, and other much more narrowly targeted groups.

In 2011, the average taxpayer with an income between $100,000 and $150,000 paid $3,633 less in taxes. The average taxpayer with a very modest income of between $20,000 and $25,000 saw only $475 back in the same period. These numbers are before the impact of the new Family Tax Cut and the doubling of the Child Fitness Tax Credit – both of which are likely to accelerate the same trend. (/canada2020). (Blog author’s comment: Poor families and ever singles including seniors are least likely to benefit (senior-singles-pay-more).

Problem 6 – It is very difficult to get rid of tax expenditures or tax credits once they are implemented. Political parties are reluctant to eliminate them even if they are discriminatory for fear of losing votes. Also, tax expenditures are extremely hard to repeal, even the truly awful ones, since eliminating a tax expenditure will be framed as a tax increase (page 78). (Blog author’s comments: Will it ever be possible to eliminate the pension splitting from which wealthy families benefit the most? And, who is paying for this?) Neil Brooks calls pension splitting an “outrageous pension income splitting scheme that should be repealed and the revenue used to enrich, or reduce the clawback, of the old age security pensions” (page 122). Reducing clawback will not solve problem of inequality if clawback is not increased for singles and reduced for married or coupled persons through income-testing.

Problem 7 – Tax expenditures that are relief measures transfer income from one group of individuals to another. (Blog author’s comment: Instead of these relief measures targeting lower income individuals and families, many have benefited wealthy families the most. Ever singles benefit the least).

Problem 8 – Psychological impact of tax credits or expenditures (The Public Appears to Favour Policies Framed as Tax Breaks-page 83). people’s psychological biases predispose them to favour tax expenditures, certainly over direct spending programs……label—tax relief versus direct outlay—matters.” These studies are also consistent with other survey results in which respondents admit to have benefited from tax expenditures and yet deny ever having used a government social program.(Blog Author’s comments: The reverse effects of Tax Credits and Expenditures are often not discussed, that is, the anger and financial despair that some citizens feel towards those that are receiving more of the benefits without, for example, application of income-testing principles).

Problem 9 – Tax Expenditures Reduce the Political Pressure for Public Programs (page 84) One of the Conservatives’ major political goals has been to resist the public provision of social programs. Hence, another explanation for the popularity of tax expenditures under the Conservatives is that they were a step forward in implementing a broader political project, a private-sector welfare state.Tax credits for private caregiving work reduce the political pressure for publicly provided long-term care facilities.. …. Supplementing the wages of low-income workers with a tax credit reduces the pressure to offer public service jobs to the unemployed…..The tax subsidization of tuition fees, textbooks, and interest on student loans reduces the political pressure for more direct government support for universities.

Problem 10 – Tax Expenditures Make the Tax System Less Transparent (page 94) and Tax Expenditures Divert the Resources of the CRA and Create Administrative Problems That Damage Its Reputation (page 94)

- Complexity and number of tax credits make them very difficult to interpret and lawyers and accountants become intimately involved in their implementation. As a result attention is directed towards interpretation of these credits instead of tracking abuse of the tax system.
- Many are badly designed (page 96)
- Tax Expenditures Often Do Not Serve Important Objectives of Government Policy (page 97)
- Tax Expenditures Often Do Not Achieve Their Objectives Equitably (page 104)
- upside-down effect of tax deductions
- all tax credits should be refundable.

(Blog author’s comment: Past posts have talked about upside-down financial effects (housing), and tax credits should be refundable and income-tested. To have someone else confirm these facts is reassuring. It would be nice if political parties and governments also realized these facts.)

Problem 11 – Education – Conservatives completely exempted certain scholarships and fellowships from tax in their first budget in 2006. The exclusion of a $10,000 scholarship for a low-income student who has no other income provides that student with no implicit subsidy. However, the same exclusion will provide an implicit subsidy of $2,200 to a higher-income student in the 22 percent tax bracket. If the point of the exclusion was to benefit needy students, this upside-down effect is perverse (page 104)

Problem 12 – Low income individuals and families benefit the least. A credit that can be offset against a taxpayer’s tax liability is of no value to a low-income person who has no tax liability because his or her income is less than the amount of the basic personal tax credit, for example. Hence, all tax credits should be refundable (page 106)…..In terms of delivering subsidies equitably through the tax system, if the primary purpose of a tax credit is to incentivize or assist low- or middle-income individuals, entitlement to the credit should be income-tested so that it vanishes when a taxpayer’s income reaches a certain amount (page 108). Income-testing so that it vanishes when income reaches a certain amount should vanish quicker for for married or coupled persons than singles as it costs more for singles to live than married/coupled persons as a family unit.

Neil Brooks has also stated that analysis of financial formulas such as distributional tables should show beneficiaries by income class, gender, household type, age cohort, and geographical region. This is based on known facts that females and disadvantaged persons based on race likely benefit least from tax credits (page 111). (Blog author’s comments: Analysis of household types is important as ever singles and early divorced singles are likely to benefit the least from all tax credits).

Problem 13 – The proliferation of tax expenditures, such as the boutique tax credits, gives rise to significant rent-seeking social costs. (page 114) and encourages relevant interest groups to lobby for analogous tax expenditures. (page 114). (Blog author’s comments: Powerful lobby groups such as families and seniors often lead to tax credits and expenditures targeting these groups. Ever singles do not have this kind of financial and lobbying power. As a result they are likely to receive less of these benefits).

Problem 14 – Boutique tax credits are useless when they target everyone in a group, for example, seniors. Giving age credit to all seniors benefits wealthiest seniors more as poor seniors do not have enough income to apply tax credits (page 122).

Problem 15 – This problem as been added by the blog author, that is there is a compounding effect to tax credits when they are applied one on top of another for specific groups. An example is when child tax credits are given to married or coupled family unit, who then are also able to use pension splitting credits as seniors. As a result, married or coupled persons with children are able to gain more wealth than ever singles who are not able to use any of these credits.

Problem 16 – This problem has been added by the blog author, that is the so called ‘merry go round credits and expenditures which disappear and reappear. Some citizens can never get on the merry go round because their place in line keep getting pushed back or they are kicked out of the line or they excluded from the lines. For example, there are some parents who have never benefited from any the child tax credits because they had no children during implementation of some tax credits only to have these tax credits abolished when they do have children.

CONCLUSION

(Blog author’s comments: it would seem that a solution to the elimination of Tax Credits and Expenditures with fairness, equality, neutrality and simplicity for all, perhaps, should be to provide three government funded basic rights: healthcare, college/university education, and universal day care).

THECASEAGAINSTTAXCREDITSANDOTHEREXPENDITURESCONDENSED

This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.

‘SELECTIVE’ DEMOCRATIC SOCIALISM FINANCIALLY DISCRIMINATORY FOR SINGLES AND THE POOR

Posted on May 4, 2016 by ffswpadmin

‘SELECTIVE’ DEMOCRATIC SOCIALISM FINANCIALLY DISCRIMINATORY FOR SINGLES AND THE POOR

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

Democratic socialism or socialized democracy has achieved some very good things for equalization of social rights in Canada such as the Canada Pension Plan, Employment Insurance Plan and universal public healthcare as well as human rights policies. Also included are benefits meeting the current basic needs of society for all – care for the elderly, school systems and social security systems such as Old Age Security and Guaranteed Income Supplement. This has resulted in improving the lives of women, First Nations, racialized Canadians, the poor and the elderly by social equalization.

Worker benefits won by unions have greatly benefited fairness in working conditions: such as equal pay for equal work, weekends off, lunch and work breaks, vacation and sick leave, minimum wage, eight hour working day, overtime pay, child labor laws, safety and health laws,workers compensation, pensions, health care insurance, etc. The list goes on and on.

Unfortunately, some of the social and economic equalization has been undone by governments giving tax cuts to profitable corporations and high income individuals, giving boutique tax credits to only certain parts of the population and replacing progressive tax systems with flat tax systems. Results of unequal social benefits include lack of affordable housing (violating Maslow’s hierarchy of basic needs), high student debt and less job security.

Raising the minimum wage to $15 an hour has been a contentious issue. The ruling social democratic party in the province has said it is not fair for a single parent to work 50 hours a week and then have to stop at the foodbank to feed the family. Review of research states the premise behind ‘a minimum wage policy supported by a strong social policy is an efficient mechanism against poverty and income erosion of the poorest households. Minimum wage is one of the instruments which can control wage disparity and in this way reduce income inequality’.

An editorial view in the Calgary Herald, April 22, 2018 ‘Meddling with Wages’ (meddling-with-wages) argues against increasing the minimum wage :

‘a higher minimum wage of $15 will add further pain to employers and hurt those the measure is intended to benefit.’

The editorial implies that the single parent referred to in above paragraph does not happen very often and only occurs for two per cent of the provincial population. The editorial then goes on to state that most of the two per cent are not single parents, but youth getting a start in the labour force by working part time while living at home.

‘ The minimum wage was never intended to be something a single person could support a family on. Raising the minimum wage….further imperils the the viability of small businesses and creating greater incentive to trim by shedding jobs and cutting hours.

Canadians are helping low-income families through generous supports from both the federal and provincial governments . More should be done to lift people out of poverty, of course, but it should be achieved with programs that boost their skills and increase their employability. It should not be done by clumsy government meddling.’

Blog author’s comments: Writer states that the minimum wage was never intended to be something a single person could support a family on. Really? REALLY? The premise behind a minimum wage policy supported by a strong social policy is an efficient mechanism against poverty and income erosion of the poorest households. Minimum wage is one of the instruments which can control wage disparity and in this way reduces income inequality. To say that a young person still living at home does not deserve a wage equivalent to a single parent is like saying all those persons working in sweatshops in Bangladesh also don’t deserve a wage equivalent to the same jobs performed in non-third world countries. Also, raising the minimum wage helps the economy through increased spending on the necessities of life and more taxes being paid to support social programs.

Two reader comments put a proper perspective on the results of not increasing the minimum wage. First comment (from Canadian Poverty Institute at Ambrose University) ‘Businesses should pay decent wages’ (pressreader):

‘…..If minimum wage had kept up with inflation, it would be around $15 today. While education and training programs may reduce poverty, demands for austerity would cut exactly these programs. In abdicating responsibility to pay decent wages, business uploads the cost of low wages to government. Poverty costs the provincial government $7-9 billion annually.

A business model based on poverty wages is untenable. Decent wages are the cost of doing business.

Ensuring a decent income is a shared responsibility. Individuals are doing their part by working. Business must do its part by paying people appropriately, not relying on government and taxpayers to pick up the tab.’

Opinion letter from second reader ‘Creating a more humane province’ (pressreader):

‘By concentrating heavily on the economics of the minimum wage (and indeed, low wages in general), the editorial misses the central point that wages are more about increased opportunity for inclusion and participation. To deny an expansion of these dimensions to low-income workers, simply because of stereotypes, economic short-termism and the assertion that only two per cent of people actually work for minimum wage, reflects a fundamental misunderstanding of what it means to be a citizen of this province.

I’m glad our provincial government continues to act in the interests of ordinary citizens and realize that the expansion of justice has a cost. A higher minimum wage, together with the provision of living wages, is the price we can and should pay for the creation of a more just, humane and inclusive province.’

Then there are those who have no regard for left-wing politics. An example is Calgary Herald editorial comment: ‘How soon we forget the economic carnage of left-wing policies’ (calgaryherald). The argument made is that:

‘those who ignore socialist history are doomed to repeat it…..If nobody had ever tried left-wing policies before, we might be justified in giving this “new” socialism a chance. Unfortunately, the world has long been a laboratory for socialist policies with mostly disastrous results.

Democratic socialism has left valuable legacies – like subsidized, widely available health care and education – but also has created a lot of economic carnage. During the 1970s, big-spending, left-wing governments in Canada, Scandinavia and Great Britain created high unemployment and sluggish growth before buckling under the weight of their taxes and debt…

……The province’s premier doesn’t understand, or perhaps doesn’t care, that raising taxes makes struggling citizens poorer, and just transfers wealth from the already wounded private sector to the public sector.

She wants to appease her union comrades by massively raising the minimum wage , which will raise inflation , hurt less profitable industries and reduce employment…..How did our collective memories become so short?’

Reader’s opinion letter ‘Right-wing policies fail’ (pressreader) in response to this editorial states:

‘This column is nonsense….The highest rate of unemployment in the U.K. in recent years were under the reign of Margaret Thatcher. Currently, the only people who benefit from the right wing U.K. government’s policies are the rich.

Food banks, unknown in my younger years, are common and very necessary.

It’s also true that the province’s unemployment rate is unacceptable, but to criticize the premier is wrong. If our economy had been less dependent on oil and gas, we would be better off.

The right-wing trickle-down economic theory is utterly discredited.’

‘SELECTIVE’ DEMOCRATIC SOCIALISM

As noted in the above, there has been much that has been good about democratic socialism, but there also has been negative outcomes to democratic socialism. One negative is what we will call ‘selective’ democratic socialism where certain members of society get more social benefits than others.

Examples of ‘selective’ democratic socialism:

Women not being paid same amount as men for same job – Unions have forced the private sector to enforce social benefits such as eight hour day, overtime pay, vacation and sick pay, etc., and above all equal pay for equal work, but the private sector in many cases still has neglected to pay women the same wage for doing same job as men.

There are many who object to the wages and pensions federal and provincial civil and public servants receive. They say these employees are paid too much money, thus causing economic concerns. The irony of this negativity is that one reason why the budgets for civil, public and union employees is higher is that women are actually paid the same wage as men doing the same job.

It would be nice if right-wing financial think tanks used some outside the box thinking and conducted studies on how much of the budgets of unionized employees is dedicated to paying women equally to men. Or, vice versa, how much more money would it take to pay women in the private sector equally to men?

Keep minimum wages low and don’t consider living wages – ‘Selective’ democratic socialism allows the top employees (elite one per cent and the rich) to outpace wages of those at the bottom. Then, because they have the money to do so, they will bypass the democratic social programs of health care and public schools to pay for elite services of private health care and private schools.

Married/Coupled person get more benefits than singles and the poor (singles often excluded from these benefits) – Many persons leaning to political right and working in the private sector view defined contribution public pensions to be unfair as they perceive money for these pensions to be coming from the public purse. However, they also refuse to recognize that singles receiving public pensions are supporting/subsidizing the public pension plans of married/coupled persons. While married/coupled persons are receiving their public pensions, they have been given a boutique tax credit where they get to pension split (benefit added on top of benefit), thus paying less income tax. Singles don’t get to do this and poor married/coupled persons do not get the same benefits from pension splitting as the rich. Yet another level of ‘selective’ democratic socialization is added to the mix when widowed persons (who now technically are single) get a supplementary public pension from their deceased spouses.

It is very difficult for political parties to eliminate the unfair pension splitting tax credit for fear of being voted out. A solution to making the playing field fair for singles versus married/coupled persons could be to give singles a fully refundable tax break during their pension years that is equivalent to amounts received in pension splitting by married/coupled persons. For the widowed person’s public pension marital manna benefit, a solution to remedy this could be to give the widowed spouse whatever is left of the pension in a lump sum just like single deceased persons receive in their estates upon dying. Again, it would be nice if financial think tanks would use some outside the box thinking to evaluate how fair the public pension system is to singles versus married/coupled persons and to analyze who really is getting the bigger slice of the pie.

Affordable housing prices out of reach for singles and poor families – Another ‘selective’ democratic socialist outcome is when affordable housing solutions are put in place, but the poor still pay more per square foot for this housing. The housing prices are out of whack when rich proportionally pay less per square foot (often the bigger the house the less they seem to pay per square foot), but ‘ever’ singles, early divorced persons and poor families pay more. As a result, they also pay more in housing and education taxes, real estate fees and mortgage interest charges than the rich since these are based on price and not the square footage of the housing.

What better evidence is there of this than the case where a single person from San Francisco created a ‘pod’ in the living room of an apartment so he could have a private place to sleep instead of the couch (singles-deserve-affordable-housing). Another is ‘free rent for sex’ advertisements resulting from the out of control Vancouver housing market (pressreader.)

Then there is the insanity of the charmed lives of the rich building luxurious playhouses for their children (pressreader). These playhouses range from $7,000 to $100,000 and may include electricity, fireplaces and cabinets. The sleeping pod of the San Francisco single man could probably be the size of the doghouse for the pets of the children owning these playhouses.

‘Selective’ democratic socialism where families get social benefits and singles are excluded – Many government and business financial solutions and social programs appear to include only families with singles being excluded. One example is Habitat for Humanity who build houses for families only, not singles.

‘Selective’ democratic socialism above all means FAMILIES RULE – Government and politicians in their discussions talk mainly about family, family, family and the middle class instead of talking about ‘families and individuals’. Singles are rarely included in the discussions. ‘Selective’ democratic socialism by definition is exclusionary and selects families to receive benefits with singles rarely being included equally in the benefits.

CONCLUSION

These are just a few examples of ‘selective’ democratic socialism. How positive or negative democratic socialism has been is in the eye of the beholder. However, it is very hard to say that there have been more negatives than positives when one looks at the list of all the accomplishments of union rights and democratic socialism.

Now, if only ‘ever’ singles, early divorced singles and poor families were included equally to other members in society in democratic social formulas, the world would be an even better place.

This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.