Hiding From Reality Behind Statistics
I’m feeling pretty good today; you might even say I’m feeling quite perky. The National Post’s Andrew Coyne has pointed out once again how well we are all doing in a recent commentary he wrote criticizing the Liberal’s recent tax strategy targeted to the middle class.
I don’t criticize him for taking a swipe at the Liberal plan. Like the Conservative plan, it’s selective about which Canadians receive benefits and which get chosen to help finance those benefits. It’s basically just two different approaches to arranging the same deck chairs on a ship. No matter which partisan arrangement you choose, it does nothing to improve the ship.
But while I have no issue with his criticism of Trudeau and the Liberals, I take great exception to the simplistic assertions he makes about the economic well-being of Canadians in general.
Andrew Coyne is a whiz with numbers; just ask him and he will be delighted to demonstrate it for you. It’s unfortunate he doesn’t take the time to look beyond those selective stats or wander about the streets of some Canadian cities. It might give him a better understanding of just what’s what in the Great White North these days.
Let’s start with his assertion that the middle class has never had it so good.
According to Mr. Coyne, middle class salaries have never been higher and that’s true; it’s just that there are fewer of them when compared to population growth. The Canadian economy is shifting and there is more contract and part-time employment than at any time in our history so while it is true that full-time salaries have increased, the number of full-time jobs has not.
He also draws the comparison between salaries in 1997 and 2012. His figures show that after tax income has increased by 24% and that too is true. Unfortunately his numbers don’t include the increased numbers of user fees charged by government, increases in utility costs or the fact that the consumer price index has increased by 40.02% in that same period of time.
In other words, the middle class may have more available money after income taxes today than they did a decade ago but the cost of living is significantly higher.
In Ottawa, for example, the average cost of a home almost doubled from 1994 to 2004 and it has continued to rise in line with the national average.
In just the first decade of this century, from 2001 to 2009, the national average increase in housing prices rose 49% and a further 17% in 2010 making it increasingly difficult for many to purchase a new home. This year, housing sales are down year over year as more people are opting for the cheaper option of renovating their existing home although even renovations are expected to decline by 13%.
Also consider gas prices which affect not only operating a personal vehicle but the increased cost of shipping goods which gets added to the price of those goods. Even after the recent plunge in oil prices which caused a significant drop in the price of gas, gasoline at the pumps is still double the cost it was in 1997 and the cost of food has never been higher.
Do you see a trend developing here?
Salaries may be higher today than they ever were having increased by an average of 24% to use Andrew Coyne’s numbers but the cost of living has almost doubled. It doesn’t matter how much money you make; if your costs rise faster than your income, you’re losing ground and that’s what Andrew Coyne ignores.
Then there’s the ‘defend’ the wealthy nonsense.
The top CEOs in this country are earning as much as $10,000/hr and the absolute minimum hourly earnings of the bottom of the 1% is $91/hr. In the past three decades, their income has increased by 37%. By contrast, the minimum wage which many seem to think will decimate our economy has grown from $4/hr to a whopping $10.20/hr.
It’s true that the top 1% have seen a decline in their average income over the past few years but it still remains almost 1/3 higher than it was in 1997 and the top wage earners have more forms of compensation available to them with a wide range of options to further reduce taxes.
In other words, despite Mr. Coyne’s concern for their well-being, the top 1% continue to see larger income increases than the 99%.
More to the point, minimum wage earners do not have access to the bouquet of tax breaks and investment tax shelters that are available to the 1% or even the middle class. Low income families pay the same for hydro, gas, user fees, and food as as those in higher income brackets but have less available income to protect themselves from price increases.
Oh, I know – it’s their own fault. They should have stayed in school and got real jobs. Maybe (there’s nothing like a good stereotype to rationalize an opinion); but the fact remains that the arguments in favour of protecting the super wealthy at the expense of everyone else are starting to wear a little thin.
It’s one thing to look at a few numbers from Stats Canada and form an opinion. It’s something else to extrapolate what is actually happening beyond trying to use after after tax disposable income as the indicator of how well everyone is doing.
We now have more food banks in this country than at any other time in our history and in country as wealthy as Canada the fact that so many need help just to provide food for their families is a disgrace..
Governments now hand out more money to those on social assistance than we, as a society. are prepared to pay in the fom of a decent minimum wage to those willing to work.
How does that make sense?
I don’t begrudge the wealthy their wealth. Good on them for being successful and I don’t believe they should be penalized with higher taxes but we have a system of taxation that penalizes the wrong end of the income scale; a tax system that is so regressive and overly complex even the politicians that keep tinkering with it don’t understand it.
I don’t disagree that trying to redistribute wealth is a fool’s errand equally as illogical as simply giving to some more money that has been taken from others. That’s not only unfair, it’s just so much socialist fuzzy logic. It’s not what I advocate. But it is equally absurd to manipulate the real situation with selective statistics just to criticize the tax reduction program of a political party you don’t support.
I don’t subscribe to the “from each according to their ability to each according to their need” philosophy either. But I do believe in the idea of everyone paying equally for the services government provides; When a corporate giant like Apple admits before a U.S. Senate Committee to not having a tax residency in order to avoid paying its share of taxes, the lack of fairness becomes more than apparent.
And that’s the real issue; our tax system is regressive and arbitrary. It has been used by governments of all political stripes to try and redistribute wealth and to buy votes either with handouts to selected demographic groups and outright grants to corporations in the desperate hope of creating jobs.
Canadian governments continue to cut business taxes even though they are almost a third lower than those in the United States. It hasn’t worked. The unemployment rate is stagnant, corporations like Toyota and Volkswagen and GM are on their way to warmer climates and taking their jobs with them.
The Liberal government of Ontario has even handed Volkswagen a half billion to help it relocate to Mexico in the desperate hope that just maybe Volkswagen will purchase auto parts from Ontario manufacturers in the future.
If cutting business taxes was all that was required to keep corporations and their jobs in Canada, we wouldn’t be watching so many leave town.
If doing the same thing repeatedly but expecting a different result is the definition of insanity, then government tax policy qualifies – but so does a partisan defense or rationalization of it.
If you want to fix something, you first have to be honest about what is broken. Then you have to have the collective will to fix it. You won’t find much of that in politics these days and, unfortunately, not too much in the mainstream media either.
It’s just so much easier to criticize than to demand a return to sanity by admitting we’ve been supporting the failed political leadership of the past four or five decades.
Rationalizing the irrational is not going to fix anything.
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