It's become a familiar refrain: What was Justin Trudeau thinking? And the Liberal Leader has done it again, vowing to repeal any tax cuts Prime Minister Stephen Harper's government adopts before the next election.
"What I see across the country is that no one is telling me that we're going to be able to resolve the big challenges [we face] with more [tax] cuts," Mr. Trudeau told Radio-Canada last week.
A Liberal government would "invest" future budget surpluses – expected to total tens of billions of dollars over the next five years, barring a prolonged shock to the economy – in infrastructure, education, innovation and helping the provinces tackle health-care costs.
On one level, this makes political sense. Half of Canadians already get more income from government transfers than they pay in income tax. About 36 per cent of adult Canadians pay no income tax at all, so tax relief won't win their votes. And polls show that health care, education and public transit are big voter priorities.
Yet, by vowing to reverse Conservative tax relief before it's even announced, it's as if Mr. Trudeau is writing the Prime Minister's talking points for him. Mr. Harper aims to leave more money in voters' pockets – and Mr. Trudeau would turn around and pick them? Even Thomas Mulcair, whose New Democrats are supposedly left of the Liberals, won't take that bait. He promises that the NDP "won't touch" personal taxes.
Mr. Trudeau appears to be going on the assumption that Finance Minister Joe Oliver will spend as much as $3-billion annually of projected budget surpluses on income splitting. The debate over that unfulfilled 2011 election promise has become the closest thing Canada has to a culture war.
To recap, the Tories promised, once the budget is balanced, to allow couples with children under 18 to transfer as much as $50,000 in income from one spouse to the other for tax purposes. That would allow the higher-earning partner to shift part of their income to a lower-earning spouse, who is taxed at a lower rate.
Currently, single-earner couples pay more income tax than two-income couples with the same household revenue. Even among two-income households, there is inequity. A couple earning $70,000 and $30,000, respectively, generally pays more overall tax than partners who each earn $50,000.
Opponents of the Tory proposal don't deny there's inequity. But they suspect Mr. Harper's aim is to take us back to a Leave It to Beaver world, where women are stay-at-home moms dependent on their breadwinner husbands. There's something to this. Plenty of Tory MPs betray a soft spot for Beaver's world.
The Mowat Centre, a liberal Ontario think tank, says that income splitting would discourage women from working by "introducing a tax benefit that is optimized when one spouse stays at home." This "raises significant concerns about gender equity [and] women's bargaining power and welfare within the home."
What's more, income splitting would do nothing to ease the tax burden of single people, couples without children or single-parent families. Most of the benefits would accrue to well-off couples who don't need tax relief. And because most provinces would have to follow Ottawa's move, income splitting would weaken their already shaky balance sheets. It would cost Ontario alone more than $1-billion a year.
Even Mr. Oliver's predecessor, the late Jim Flaherty, expressed his own reservations (or floated a trial balloon) about income splitting when he said: "I'm not sure it benefits our overall society."
With so many trashing the Conservative proposal, Mr. Trudeau might feel safe promising to repeal it if Mr. Oliver introduces the measure in his fall fiscal update or next budget. But the Liberals risk a backlash.
According to the government's latest trial balloon, Mr. Oliver is thinking of introducing a modified form of income splitting that would restrict the benefit to working- and middle-class couples with children under 6. That would vastly reduce its cost and insulate the Tories against charges that they are favouring the rich.
The Conservatives have no doubt tested a limited income splitting plan in polls and focus groups and found it to be a winner. Even voters who couldn't immediately take advantage of it would presumably like having the option of income splitting in the future – not just those in Beaver's world, but women with busy careers and prospective stay-at-home dads, too. Even, gasp, gay couples.
What was Mr. Trudeau thinking, anyway? Or was he?