Greater equality through taxes

Kevin Milligan and friends consider how to deal with inequality.

Brian Topp assumes his proposed 35-per-cent federal rate would yield $3 billion in new revenues. Economists have fairly good estimates of how much revenue "slippage" we might expect for top earners, and these estimates suggest the additional revenue might slip down closer to $1.5 billion ... How could this new money be used to help those who are struggling at the bottom? Cutting income tax rates in the bottom bracket doesn’t do much, since the basic exemption and other tax preferences mean that few low-income earners actually pay income tax. Instead, the right target is to enhance our system of refundable tax credits. As examples, think of the HST/GST credit, the Canada Child Tax Benefit, or the B.C. Family Bonus. These payments can be targeted by family income and delivered efficiently through direct deposits into recipients’ bank accounts.

More from Kevin and the gang here, here and here.