CBC and the skew

I like CBC and most of the time for me the mix is right.  The old journalistic mix – set up the basic skeleton of the story, cover both sides and then wrap up.   Certainly on an issue such as taxes, certain journalists will have skew things, as one of the more intrepid journalists told me, in favour of “the little guy”. 

But Robert Jones’ covering of the tax story yesterday on CBC left a bad taste in my mouth.  First, his expert source was the Help4Taxes guy who is trying to position himself as the middle class tax advocate to drum up new business – which is fine – but that populist rage from a guy who’s business telephone will ring the more shrill his commentary – has a vested interest in cranking up the volume.

When you cover a story, you need to give people the facts – not cherry pick the facts.  Just about any balanced story I have ever seen on taxation will tell the tax rates but also the amount of tax paid.  Not Robert Jones.  He tells us that the rich person will save $27,000 (the 1,300 persons) and the poor person (@$35,000) will save $349.

What he doesn’t tell you is that the guy making $350,000 will pay $148,135 in income taxes per year and the guy making $35,000 will pay $6,406 in total income tax (provincial and federal).  This is the taxes payable before deductions (see my point below).

A balanced story would have shown this fact so that people understand that in New Brunswick (and Canada) the richer you are, the more tax you pay.  Jones left this out deliberately.

Another point that Help4Taxes would neglect on purpose but the UNB economist shouldn’t have is this issue of tax shifting.  These high income earners (and we are talking about less than one half of one percent of tax filers) making more than $250,000 per year can find creative ways to pay far less tax anyway.  As I have pointed out several times, when former Premier Bernard Lord cut the small business tax to the bone, there was a significant migration of persons that were unincorporated self-employed to persons that were incorporated self-employed.  Why?  Because all of a sudden there was a big tax savings to being a corporation versus a private citizen as a taxpayer.

I don’t know the numbers but based on my experience, the bulk of doctors and other high end health professionals are set up as corporations and that has the impact of significantly reducing income taxes payable.

If you will recall, I wasn’t the biggest fan of the tax cuts that the government implemented.  I much prefer using the tax code to incentivize specific behaviour (whether it is carbon reduction, new investment in local business, etc.).  But I think in this case, Jones picked low hanging fruit that is designed for maximum titilation and to anger people, which it seems it has.

The real issues are far more complex and worthy of analysis.  Will these tax cuts actually stimulate the economy?  I am unsure.  Will they help attract skilled workers?  Will there be jobs for those skilled workers to begin with?

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5 Responses to CBC and the skew

  1. Anonymous says:

    If you like the CBC, you should stop right there. You are, again, obviously in a minority. Thankfully.

  2. mikel says:

    Actually, CBC is pretty much where the province goes for information, particularly CBC radio-and it’s no coincidence that the Irving media hasn’t covered the tax issue AT ALL. So, do you want bruised apples or NO apples.
    The first point is understandable, I think its a given that Jones probably assumed people KNOW the tax code is designed to be progressive. This SHOULD anger people, no doubt about it.
    You don’t mention what is REALLY missing from the story, namely, just as in the case of corporate income tax, what PERCENTAGE of New Brunswick’s total tax is paid by this group in the highest bracket-that would answer just how much they pay (not the numbers).
    And as I posted at the CBC site, the wealthiest of NBers are not guys in their garage who worked their way to millions. The majority of industry players in NB are guys firmly stuck to government subsidies. There were about half a dozen ‘criminals’ who became millionaires almost overnight back when McKenna made a backroom deal with them to supply gambling machines.
    And like David says, most of these people are incorporated. I would be VERY surprised to find that somebody earning $350,000 pays almost half that in tax.
    So again, how much of the budget do these people contribute vs. the middle class? Most telling is the $350 you will save if you make 35 grand. Wow, big savings. In most places that got swallowed up in your new property tax assessment. If you have a camp or cottage, half of that just went back to the government in new ‘fees’ anyway.
    And the other question hanging out there is what ELSE is being cut. We know legal aid got gutted, and in education they are reneging on class sizes-health care was just barely mediocre, so what effect is having less money going to have on govenrment services?
    Finally, go read the literature, there is virtually NO evidence that cutting taxes improves the economy except for the very skewered stuff that the Heritage Centre and AIMS produces. Most of those at the highest income levels got killed in the market, they certainly aren’t out there buying up more dunsters donuts, potato chips or animation.

  3. richard says:

    “Jones picked low hanging fruit”

    Perhaps that is just a useful counterpoint to the AIMS propaganda. Based on historical data there is no reason to believe that broad-based tax cuts will have long-term stimulatory impacts. In addition to tax cuts, over the past few decades we have seen a reduction in income tax brackets that have served to place more of the tax burden on the middle class and less on the wealthiest segment of society. Combine that with the ability to hide income offshore, various tax savings programs, etc and we see an unhealthy distribution of resources.

  4. Anonymous says:

    Skew things is right. Remember messr Jones’ questionable (weren’t properly identified) sources on the piece which he ran on auto insurance right before the vote in 2006. Not what a public broadcaster should be doing with our tax dollars.

  5. Pat says:

    I agree with Stephen that those in the high brackets can easily find more ways to divert income from becoming taxable. But to me that is all the more reason to keep a progressive system in place.
    Corporations and their CEO’s often complain about high taxes, but both are quick to take advantage of gov’t grants, low interest loans and tax havens. In a sense they are not paying their fair share, and those in the middle tax brackets have fewer write offs, tax havens and other deductions. Nor does the middle income person often have the disposable income to take advantage of the few deductions available to him or her.

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