Saturday, December 10, 2005

Old/Wealthy Vs. Young/Poor

I like it right here but I cannot stay
I watch the TV; forget what I'm told
Well, I am too young, and they are too old
--The Stokes

Harper keeps the gravy train going:
Harper's caravan travelled to Guelph early yesterday, where he toured a recreation complex for seniors.

He pledged that if elected, the Tories would implement a five-year, $2.2 billion tax measure that would immediately increase the basic annual exemption for pension income from $1,000 to $2,000, and eventually to $2,500.

"This is designed to deal with the high marginal tax rates that low- and middle-income seniors have," he said.

Politically, this might help him, although the elderly strongly trend Conservative anyways.

But, this policy, like the GST reduction, isn't a policy that is "good" economically or socially. The GST, despite its critics, is a relatively fair tax. It doesn't punish saving or earnings, but taxes consumption - a far more fair idea than source deductions, where a worker has no choice but to pay rather than make a rational decision as to pay it or not.

To turn to this policy for a moment, the Conservatives are playing to the field that they own, and with no real "rational" explanation for this re-jigging of the tax rules. Seniors, nobody likes to admit, are actually the main beneficiaries of our tax system.

They are the usually the ones able to have medical bills capable of the 3% threshold. They have pension deductions, dependents, etc, etc...

What's more disconcerting is that senior citizens (for the most part) are far richer than any other age segment of Canadians but are still the main recipients of social benefits, aka: government cash. Older North Americans are far richer in net wealth and often net income, and yet receive, by far, the lions share of government transfers, meaning in many cases that the net amount of tax they pay (paid vs. received) on their often huge incomes they receive is often negative.

And what a contrast to the treatment of young Canadians. No student loan bankruptcies? Tough break. Good luck buying a house with a $20,000 student loan hanging around your neck.

And with a huge retirement population of me-era baby boomers about to retire, look for more pandering by the parties of the most powerful and monied demographic of Canada: the voting block of the over 65 set.

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