Trickle-down economics rest on the assumption that if the rich are doing well, we’re all doing well. Bosses give us jobs and pay us; if we scratch their backs, they’ll scratch ours. Right?
Not so much.
Nevertheless, this is the idea behind Jason Kenney’s “Job Creation Tax Cut” which will come into effect under Bill 3 if it’s passed, which is almost certain with a majority government. The Bill was tabled on May 28, six days after the newly-elected party’s throne speech.
In The Trickle-Down Pickle Part 1, we looked at why Bill 3 won’t be a windfall for working class Albertans.
Now, with Bill 3 tabled and the reality of an eight-per-cent corporate tax (dropped from twelve over four years) looming, Albertans are wondering how this will impact them. And research shows that contrary to Kenney’s suggestions, Albertans won’t just be left out of the wealth these tax cuts land employers, but they’d pay for it too, in more ways than one, putting us all in yet another pickle…or three.
Trickle-Down Pickle #1: Balancing the budget means something’s got to go by the fourth year
$7 billion in annual public spending to be exact. If the government sticks to its mandate of balancing the books by 2022-23, they’ll have to cut back on public programs to make up for the $3.7 billion not coming in (mostly from big businesses).*
For workers this means about 27,700 public sector jobs and 30,600 private sector jobs axed over the next four years.* Attrition will mean a loss of valuable, specialized job knowledge while layoffs will leave families, dependents and single people with a financial headache.
Our neighbours to the south have been living with their own version of Bill 3 since January 2018, when the US President slashed corporate taxes. Republicans said this would boost job growth, but data from the Bureau of Labour Statistics shows that the difference between unemployment rates in April 2018 and April 2019 is a measly point 3.
The fact of the matter is, Bill 3 doesn’t require businesses to hire more staff, and when profiteers have the option to pocket more money, they probably will.
Trickle-Down Pickle #2: Workers are hit twice
While Corporate Canada will see a drop in their taxes under Bill 3, Alberta’s personal income tax is not slated to change, meaning the working class will pitch in what they always have to the public purse.
Only now, with Bill 3 on the table, there’s a chance they’ll get less for their contributions as public programs (anything from home-care and wetland protection to education and affordable housing is a possibility) are zapped of funding and frontline resources.
This situation could be avoided. But even avoidable problems call for solutions, and for the UCP, this is the perfect opportunity to blow the privatization horn. Kenney has already talked about privatizing commercial laundry services and health care, as well as providing full subsidies for private schools and putting a halt to the public superlab in Edmonton. Who needs publicly funded services when we can just let profiteers swoop in, take the reins and pick up the slack that the government manufactured?
Well, everyday Albertans do, because all of these plans put them at risk of paying high out-of-pocket payments for important public services that should never depend on one’s income. Whether it’s paying more for their kids’ school books or dishing out cash for blood work, Bill 3 will face workers with more expenses than before…and remember, that’s after taxes.
Trickle-Down Pickle #3: Profiteers invest in profiteers, not communities
When Prime Minister Stephen Harper was in power, he famously slashed federal business taxes to the lowest rates in recent history, operating under the sam job-creation pretence as Kenney.
The mask slipped when it was discovered that at the same time, Canadian corporations were sending more money than ever to the world’s top ten tax havens.
Foreign investments and inactive shell companies are where Canada’s richest want their profits to go - it doesn’t matter that taxes are low at home. If hoarding money elsewhere or profiting off the backs of workers beyond borders can boost a boss’s bottom-line and their shareholders’ returns, they’ll probably do that before they invest in services at home.
No matter how you slice it, Bill 3 is a failed experiment with trickle-down economics: it may work for the few at the top, but it puts the rest of us, and our provinces’ economy in quite the pickle.
*Numbers taken from the Alberta Federation of Labour's report, "The Employment Impact of Election Promises: Analysis of budgetary scenarios of UCP and NDP platforms."