03/23/2015 09:10 EDT | Updated 03/23/2015 09:59 EDT

Income-Splitting ‘Like Socialism For The Wealthy,' Former Harper Speechwriter Michael Taube Writes

A former speechwriter for Prime Minister Stephen Harper says the Harper government’s income-splitting plan is “like socialism for the wealthy,” and is warning the Tories that the policy is bad politics.

“When you really think about income splitting, it’s the equivalent of state-run socialism for the wealthy,” Michael Taube wrote in a column in the Toronto Sun.

“A few of us will shift income to get a tax credit directly from the government, paid for by taxpayers. Doesn’t have much to do with free enterprise and the private sector, I’m afraid.”

Taube, who has penned columns in numerous newspapers including the Ottawa Citizen, Toronto Star and the Washington Times, argued the Tories were treading on dangerous ground by enacting policies that turn attention to income inequality.

“Conservatives should, as a rule, avoid issues involving potential income disparity. Situations that create ‘winners’ and ‘losers’ never work to our advantage. It always looks like we’re favouring the wealthy, paying lip service to the middle class, and thumbing our noses at the poor,” he wrote.

Taube’s column came out following a report from the Parliamentary Budget Office that projected the income-splitting plan would benefit only 15 per cent of Canadian households, mostly at the higher end of the income ladder.

The report estimated the plan would cost the federal $2.2 billion annually in lost revenue. It also said the plan would reduce employment in Canada by 7,000, mostly the result of women leaving the workforce as a result of the new tax benefit.

The Tories’ income-splitting plan will allow couples to shift up to $50,000 of income from one spouse to another to reduce the top tax rate paid on the money. The maximum benefits are capped at $2,000.

Critics point out the tax break does nothing for single-income and single-parent households, and nothing for two-income households where both incomes are similar.

“Contrary to popular belief, many Canadian couples don’t have huge disparities in their annual salaries. Hence, they’ll collect very little of the $2,000 tax credit -- and the ones that do, don’t desperately need the money, either,” Taube wrote.

As he noted in his column, he’s not the first prominent conservative to come out against income-splitting, noting both the late Finance Minister Jim Flaherty’s doubts about the plan, and strong criticism of the plan from the C.D. Howe Institute and anti-tax groups such as Canadians for Tax Fairness.

Flaherty reportedly clashed with other cabinet members over the policy, and told reporters at one point, “It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all.”

Flaherty said that, if it were up to him, he would have taken the money spent on the income-splitting plan and used it to pay down Canada’s public debt.

Taube is urging the Harper government to keep income-splitting out of the federal budget, expected to be tabled this spring.

“That’s coming from a right-wing conservative, folks. Think about it,” he concluded.

(H/t: Press Progress)

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