Taxing the poor

I just listened to a very good NPR podcast called “Taxing the Poor”. It’s very interesting and I agree with the overall premise. They look at Alabama (but most states and provinces have this) and all of the taxes that hurt disporportionately people at the lowest end of the economic spectrum. Sales taxes are a good example. The rich and the poor pay the same tax on a can of pop – but on a percentage of income basis the poor pay a much higher rate.

I don’t know how this translates to Canada which has HST rebates, child tax rebates, etc. designed to mitigate this effect somewhat on the lower end of the spectrum. It’s my feeling that in Canada these taxes (sales, gas, property, fees) hit the middle class far more here than in other places. Once you get just beyond the HST rebate, child tax rebate levels, you are being taxed on all these items full bore and you have property tax and of course provincial and federal income taxes for which the highest marginal rate, I would argue, hits people in the maybe ‘upper’ middle class.

But that really wasn’t my point. I was disappointed when the journalist brought the $800 million in tax breaks for the recent steel plant into the equation. The poor people that were interviewed were outraged by this. They were livid that a large German firm could get massive tax breaks while they couldn’t buy bread. I thought the thing was completely skewed. What about the 2,000 high paying jobs for Alabamans? What about the fact that the taxes wouldn’t be paid either if the firm had chosen South Carolina or New Brunswick? It’s a complex issue, I don’t doubt it but NPR played fast and loose with this issue and at the end it was flat.

At some point, somebody has to show the link between economic development efforts and helping the poor, helping fund social programs, helping raise the economic standard of living.