Wednesday, 11 July 2012

Pundit to NDP: Tax cuts for fat cats wins votes

According to Mia Rabson, working and middle 
class Canadian prairie voters value tax
cuts for fat cats.

Image Source: The Political Carnival 
Recently I've stumbled across an article by Mia Rabson from February of this year. I was looking for serious - and preferably empirical - work and info on the political dynamics of the prairies. How the hotbed of working class populism became the the Alliance and later CONs back yard and what the future of my region looks like were of high interest to me. The more info I could obtain, the better.

Sadly, Rabson's fluff piece doesn't provide it. Rather, she barrages the readers with a deluge of conventional wisdom, like tax cuts for the rich and powerful being a winning political strategy.

It starts out, of course, less brazenly. 

If there was anything that stood out on the stage at the Pantages Playhouse Sunday during the NDP leadership debate, it was that the party born on the Prairies doesn't have much "prairie-ness" left to offer. 
It is sort of sad that more than half the debate appeared to focus on the fact that the NDP has been virtually shut out from the region that gave birth to it, and how to change that. 
Just one of the nine candidates on the stage was from the Prairies. Out of the 56 seats on the Prairies right now, the NDP has just three. 
The NDP might have been born in Saskatchewan but it hasn't won a seat there since 1999. In Manitoba, the NDP federal caucus has been cut to just two.

("Path to power tough for federal NDP". Mia Rabson. February 27, 2012. Winnipeg Free Press)
It should be noted that despite the much moaned dearth of Federal Dippers in Saskatchewan, the CCF won only a single seat there in the 1958 Federal election  and the NDP had ZERO seats from the 1960 election until the 1968 election. The CCF did well in Saskatchewan in 1953 and 1957, but the trend was downward in the initial years after the NDP formed. Tommy Douglas, when leader of the Federal NDP, couldn't win a Saskatchewan seat so had to serve in the House by winning a seat in British Columbia. The NDP rebounded, but there was quite a bit of variance over the next few decades when it came to NDP seat counts from the Saskatchewan, with some elections showing up to 11 New Democrats from Saskatchewan and others delivering two. The 2004 to present NDP shutout from Saskatchewan has precedent.

The essential story, whether it involves Diefenbaker or the Reform/Alliance/CONS, seems to be that the populist forces of the Canadian Prairies tilt left or right depending on the occasion. Sometimes the prairies turns up mass amounts of leftwing populists, sometimes a mix of left and rightwing populists, and still other times they turn out rightwing populists exclusively. We're witnessing the latter right now.

But zero seats in Saskatchewan does seem like overkill. The NDP must really be alienating Saskatchewanians to get nothing in terms of MPs from the province. Surely, I guess Saskatchewan workers have interests perfectly in-line with rich oil companies and just fear sustainability measures that much. There's another, more accurate, explanation however: poorly drawn districts.

The configuration of Saskatchewan's 14 federal ridings is unique in Canada, with some political observers wondering just where the lines should be drawn.

Even though Saskatchewan's two largest cities, Regina and Saskatoon, have enough residents to create urban-only ridings, voters in both cities share their members of parliament with their rural cousins.

It is a rural-urban combination that is not seen in any other part of the country, and one observer says it is producing questionable election results.

"The results in Saskatchewan's elections suggest that something is terribly, terribly wrong," Denis Pilon, a political science professor at the University of Victoria, told CBC News Thursday.

"The Conservatives are popular in Saskatchewan, no one should deny that. But their ability to turn their votes into seats is way out of line," he added.

Pilon examined recent elections and found that, even though Conservative support ranged from 42 to 54 per cent of the vote in the province, the party's candidates captured 93 per cent of the seats — or 13 out of 14.

("Sask. riding boundaries unique: political scientists". April 29, 2011. CBC News )
Perhaps observers curious about the dearth of Dipper seats in Saskatchewan should look there before telling the NDP to move right? Just a suggestion.

Manitoba voters have elected four consecutive NDP majorities to the provincial legislature since 1999. It was not that long ago that Saskatchewan voters did the same thing.

It may not sound plausible that voters will move between the Tories and the NDP but in Manitoba and Saskatchewan they obviously do.  
("Path to power tough for federal NDP". Mia Rabson. February 27, 2012. Winnipeg Free Press)

Indeed, it seems that prairie voters award whoever most successfully claims the mantle of populism. Years of focus by the right on issues of Western alienation while the NDP's attention was eastwards (much to Dave Barrett's ire) - building up an impressive grassroots apparatus in the process - has served the CON inheritors well in this region. At the provincial level in Manitoba - but not presently in Saskatchewan - the NDP machine has remained well-oiled.

There were few signs in the debate Sunday the party has any clue how to attract those middle-ground voters to the NDP side.  
("Path to power tough for federal NDP". Mia Rabson. February 27, 2012. Winnipeg Free Press)
Tellingly, Rabson feels entitled to state what average voters think without actually discussing polls on issues or any other such trivialities that obstruct her talking points. Telling voters what they think is a lot easier than actually finding out what they thing after all, isn't it?

It is noteworthy that the provincial NDP in Manitoba and the federal NDP do not see eye to eye on everything. Perhaps with the one recent exception of the Canadian Wheat Board, the Manitoba NDP, under Gary Doer and now Greg Selinger, has been more onside with the federal Conservatives than the federal NDP.

On economics, the NDP in Manitoba cut the corporate tax rate more than four points, eliminated the small business tax rate and incrementally reduced personal income taxes. It was not enough for some and too much for others.

But most people love to hear they are going to get to keep more of their own money. It's a smart doorstep policy to pitch. And it worked.

Are any of the federal leadership candidates proposing tax cuts? Not really. Most are proposing reversing the corporate tax cuts or putting strings on them. At least one candidate -- Brian Topp -- is proposing a huge tax increase on the wealthy.

That might play well with the NDP base but it's unlikely going to go very far in attracting new people to the party.  
("Path to power tough for federal NDP". Mia Rabson. February 27, 2012. Winnipeg Free Press)
Slashing the small business tax rate to nothing was certainly a popular, populist move on the Manitoba NDP's part. I don't by it as good tax policy, it encourages "chunking" of big businesses into smaller parts and the rationale often given of small businesses as "job creators" is bunk. While bad policy, it seems like good politics.

The problem with Rabson's assessment is that Federal NDP leadership candidates didn't need to propose any small business pandering in their platforms because the party ran on it last election. They already proposed special tax breaks for small businesses.
We will reduce the small business tax rate from 11 per cent to nine per cent to support a sector of our economy that creates nearly half of all new jobs in Canada. 
(2011 Federal NDP Platform, section 2.1: "Reducing the Small Business Tax Rate".)
The Federal NDP, btw, didn't improve it's seat count in Saskatchewan despite pandering to small businesses. Other factors, evidently, were at play.

There were also some derided "strings-attached" tax breaks as well, but they still are pretty damn generous.

  • We will introduce a Job Creation Tax Credit that will provide up to $4,500 per new hire:
  • Employers will receive a one-year rebate on the employer contributions for the Canada Pension Plan and Employment Insurance premiums for each new employee hired;
  • Companies and organizations that keep a new employee for 12 months or more will be eligible for a retention bonus - a $1,000 non-refundable tax credit;
  • This initiative will help create 200,000 family-supporting jobs a year.

(2011 Federal NDP platform, section 2.2: "Establishing a Job Tax Credit".)
And more tax breaks for capital owners and skilled workers was also in the Federal Dipper platform.

  • We will extend the Accelerated Capital Cost Allowance for eligible machinery and equipment acquired before 2016. This would apply to machinery and equipment for primary use in Canada for the manufacturing or processing of goods for sale or lease;
  • We will extend eligibility for the mineral exploration tax for an additional three years beyond March 31, 2012. This will apply to flow-through share agreements entered into on or before March 31, 2015;
  • We will establish FedNor as a fully independent regional development agency with a new mandate to invest exclusively in Northern Ontario. We will double the FedNor funding;
  • We will give tradespeople and indentured apprentices whose job sites are located at least 80kms away from their ordinary residence a tax deduction for their travel and accommodation costs.

(2011 Federal NDP platform, section 2.3: "Extending Tax Credits for Job-Supporting Investment".)
The whole bag of tax break goodies is in a section titled "Practical First Steps to Reward The Job Creators", btw. The deference to small businesses in particular couldn't be any more apparent, with the title leading credence to the (factually wrong) notion that small businesses are particularly good (net) job creators.

Rabson's remarks on corporate and high-income tax rates are also comical. This is so because she goes from observing how people love to "keep more of their own money" to implying the non-sequitor that tax hikes on the rich and corporations are unpopular. A hardworking Canadian probably hates paying high taxes1, but the prospect of lower taxes on the wealthy so Sam Katz can purchase a home in Arizona or so a corporation can give their executives bonuses is a loathed policy.

But Mia Rabson needn't use common sense or countless precedents in various American polls - a populace much more conservative than Canada's yet still supportive of tax fairness. A good year (January 27, 2011) before her column was published (February 27, 2012), Abacus Data released a survey on the issue of corporate taxes.

First, without any background knowledge, context, or political messages, Abacus Data asked the opinions of Canadians on the present corporate tax rate. Was it "too high", "too low", or "just right"? Just to warn you, because of rounding the numbers don't necessarily add up to 100.

Claims that taxes were "too high" was the least popular response (24%), with "unsure" (25%) beating it. A plurality of 29% agreed that corporate taxes are "too low", with 22% claiming that they're "just right". The NDP, far from being away from the "middle ground" of Canadian politics, fits comfortably in the discussion with the view which a plurality of Canadians agree to: corporate taxes are too low. Since many polled were unsure this represents an opportunity to persuade more by revealing just how low Canada's corporate tax rate is. Sadly, there was no regional breakdown of results from this question.

Canadians on the fairness of the corporate tax rate.

Image constructed by The Analyst based on Abacus Data survey
results released January 27, 2011.

The survey also presented two narratives, that of the Harper Government and that of Opposition Parties, against each other. It highlighted some background issues, such as the lack of knowledge Canadians had about Canada's corporate tax rate compared to other G8 nations.

The survey question presenting the duelling narratives went like this:

Recently, there has been a debate in Canada about what the federal government should do about corporate tax rates.

On one hand, the federal government argues that lower corporate tax rates encourage investment in Canada and create jobs.

On the other hand, opposition political parties argue that Canada already has the lowest corporate income taxes already, and the money should be spent on more important things like health care or reducing the deficit.

("Canadians not Keen on Corporate Tax Cuts". Abacus Data. January 27, 2011.)
Canadians on the Corporate Tax Rate.

Image constructed by The Analyst based on Abacus Data survey
results released January 27, 2011.

The results showed that a majority (57%) of Canadians sided with the Opposition Parties, while a minority (21%) sided with the Harper Government. Support for "strings attached" and higher corporate taxes, far from being an achilles heel to the Dippers, is one of their saving graces.

Position of Saskatchewanians/Manitobans ("Prairie Canadians")
on the Corporate Tax Rate.

Image constructed by The Analyst based on Abacus Data survey
results released January 27, 2011.

Data from the "Prairies" (Saskatchewan and Manitoba) cement that opposition to corporate tax cuts has popular support nationally as well as in this region. 51% agreed with the opposition argument while only 20% agreed with the government. Alberta was the only province where an absolute majority didn't agree with the opposition - only 45% agreed. There, though, the government position was only supported by 30% of the people, with "neither" getting 25% - so a plurality of Albertans disagree with the Harper government on corporate taxes!

Position of Albertans on the Corporate Tax Rate.

Image constructed by The Analyst based on Abacus Data survey
results released January 27, 2011.
This data shows, contrary to Mia Rabson's unsupported assertions, that corporate taxes are the perfect issue for the NDP to run on in the Canadian Prairies. For one, even in Alberta, they polarize the electorate in a lopsided fashion that disfavours the Conservatives. There's a wide opening, particularly when it comes to "neithers", "unsures" and those who think corporate taxes are "just right", to sway them to support corporate tax increases if they realize just how low the corporate tax rate is.  Indeed, the fact that 40% of Conservative supporters were "unsure" (23%) or thought corporate taxes were "too low" (17%) presents the opportunity to drive a major wedge into Harper's coalition between the plutocrats and prairie populists.

The fact of the matter, whether columnists in the corporate press like it or not, is that most Prairie Canadians and Canadians in general oppose Harper's corporate tax cut agenda.

But what about taxing the rich? 

A Broadbent Institute-Environics survey found that Canadians have deep concerns over inequality in this country.

71% of Canadians believe that widening income inequality undermines Canadian values. This is a strong, values-based issue that the NDP has ran on for years. Many pundits (who are more sensible than Rabson) have attributed the rise of income inequality as an issue as partly causing the rise of the NDP last election.

Some key findings from the Environics survey include the following:

  • 64% of Canadians would be willing to pay "slightly higher" taxes to protect social programs. That includes 58% of CON voters!
  • 83% of Canadians favour increasing taxes on the wealthiest.
  • 70% of Albertans and 78% of those in Saskatchewan and Manitoba think that income inequality is a big problem for Canada. 
Canadians, it seem, value public services for working and middle class Canadians much more than tax cuts for the rich and powerful. The Federal NDP has a great opportunity to channel the people's will next election and win big, destroying Harper's hopes of establishing the CONs as Canada's "Natural Governing Party".

1 Though they might be persuaded to accept higher personal taxes if it's presented as a tradeoff for better public services. 64% of Canadians would be willing to pay "slightly higher taxes" according to the Broadbent Institute-Environics survey if that's what it would take to protection social programs like health care, pensions, and postsecondary education accessibility.

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