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The Politics of Rich and Poor in Alberta

Alberta's flat tax doesn't favour lower income brackets as much as the progressive income taxes in other provinces.
Alberta's flat tax doesn't favour lower income brackets as much as the progressive income taxes in other provinces.
Stats Canada

Yesterday, I took note of the politically-hazardous left-wing Trojan Horse the Redford government has included in their budget.

The Social Innovation Endowment has been pledged to mostly fight social problems like poverty. Alberta is not immune from the existence of poverty, and in any forward-thinking society poverty is social enemy #1. Any initiative that will reduce or even wipe out poverty is an absolute social good.

But as it turns out, Alberta doesn't really need the Social Innovation Endowment in order to reduce poverty in the province. For the most part what Alberta needs is business as usual.

While Alberta's Gini coefficient -- the statistical measurement of income disparity -- leads Canada, that's a smaller part of the story than so-called "social justice" activists would have you believe. Alberta also leads Canada's provinces in median income. Unless you look to the territories, where the figures are skewed by smaller population, nowhere else in Canada even comes close. Half of all households in Alberta earn more than $89,000.

It's true that in Alberta the rich are getting richer. But the poor? Most of them are getting richer, too.

Albertans also happen to pay less tax on their country-leading incomes, again for the most part. Albertans who earn less than $130,000 are taxed less only in two other provinces: Ontario and British Columbia.

This matters. In various jurisdictions across Canada -- particularly at the federal level -- there has been a rush to remove the poorest Canadians from the tax rolls altogether. At first glance this seems like a good idea; purely from an emotional perspective. Considering this issue a little more carefully reveals a potentially cancerous effect on fiscal policy: removing the poor from the tax rolls introduces a perverse incentive to vote for politicians who promise to increase taxes (particularly on the wealthy). After all, it's easy to vote to increase taxes when you don't pay any at all.

No wonder Ontario's public finances are such a basket case. Alberta's flat tax rate -- and the necessity that very nearly all Albertan voters realize that tax-related campaign promises apply to them -- is something of an innoculation against political profligacy.

With Alberta already leading the country -- and perhaps even the entire world -- in reducing poverty it seems all the more likely that the Social Innovation Endowment may instead be funneled, in whole or in part, into radical political activism.

Call me paranoid. But if Alberta is going to have such a fund as the Social Innovation Endowment, the legislation creating it should be a lot more detailed as to what can and cannot be done with it; especially seeing as how the province already has the endowment's number one target well in hand.