My Stop the Cuts letter.

Dear Brian Mason, Minister Hancock and Premier Stelmach:

Albertans have sacrificed and worked hard over the past fifteen years to help eradicate our provincial debt. They did so because they knew that future payments on that debt would pose a risk to the quality of services the Alberta government provided in the future.

Now that Alberta is debt free and has gone through a significant boom, we expect that Alberta will have the highest quality public services in the country. We deserve it.

Reacting to plummeting energy prices by slashing funding will only jeopardize our future prosperity.

Our long term prosperity is dependent on developing creative and critical thinkers who are committed to working together to solve the problems of society. The only way to build that citizenry, is through a world class public education system, where students have the supports and opportunities to develop to their full potential.

Education funding cuts puts that future at risk! Now is the time to make the wise investments, the ones that will pay off for years to come. The future is so uncertain - we need to do everything possible to ensure that Alberta is ready for it.

As a concerned Albertan, I urge you not to cut funding for our schools.


Sincerely,

Jonathan Teghtmeyer
Edmonton

If you care about the future of education in Alberta, and the future of Alberta in general. Take 5 minutes and send your own message at www.stopthecuts.ca

Save the economy - get rid of the flat tax

In my post yesterday, I examined provincial personal income taxes for a variety of income earners. I realise now that I wasn't clear on my main thesis.

The primary point I wanted to make is that flat tax systems extraordinarily benefit high income earners - and do so at the expense of middle class workers.

My analysis showed that an Albertan earning $40,000 pays 40% more in income tax than her counterpart in British Columbia. At the same time, the Albertan making $200,000 pays 18% less than a similar west-coaster.

But let's also keep in mind two important considerations.

Dollar for dollar, that high income earner is saving $4,000 out of his $200,000 while the low income earner is paying an extra $700 out of $40,000. Who do you think notices that difference more?

Secondly, my calculations do not include deductions. How much tax do you think that $40,000 earner is deducting because of RRSPs, political contributions or investment dividends? Now, how much do you think that $200,000 earner is deducting?

But, more importantly let's think about the impact on the economy. Plain and simple, economic activity is generated by spending. The healthiest thing for us, economically speaking, is to have people spend money and to have them spend it locally. By injecting cash into the local economy, local people have jobs - local people with jobs means more people spending money locally.

Cash in the hands of working people gets cycled around the economy and spent over and over and over again - generating economic activity.

Cash in the hands of the wealthy doesn't get spent as much. A greater percentage of their money is saved or invested - removed from the local economy.

It makes much more sense to shift the tax burden from the working class and move it towards the wealthy. First off, they can afford it more and secondly they will benefit indirectly from the economic activity generated by the spending of the working class - whether its because of bonusses, businesses or returns on investments.

It's time that Alberta got rid of the flat tax, for the benefit of all of us.

Debunking the low taxes myth.

Albertan premiers have for a long time convinced Albertans that Alberta is the tax haven of North America. The last guy we had loved to talk about the Alberta advantage. The new guy wants us to think we have the freedom to achieve and tells us things like, "we have very low tax rates for people working in the province."

Either one of two things are happening for Premier Stelmach: he is trying to mislead us or he has no sense of what "working" people make.

He must not be talking about people who make between 30 and 80 thousand dollars a year. Because they could move to BC or Ontario and pay less in taxes.

This graph shows the amount of provincial personal income tax paid in 2008 by someone making $30,000, $50,000 and $70,000 of taxable income. If you're making $40,000 in Alberta you would pay $2,383.90 or 6% of your income to the province. Meanwhile, in BC you would be paying 4.2% and in Ontario you're paying 5%. (All data is calculated from Revenue Canada tax returns with only the personal deduction claimed)

In fact, as income levels rise, Albertans pay more tax than Ontarians until they start making $80,000. British Colombians save on taxes until they start making over $120,000.

The main reason for this, of course, is that Alberta has a flat income tax rate, while BC and Ontario have progressive tax rates. In fact, Alberta is the only province (and one of only a few jurisdictions) to have a flat tax.

We have it because we were duped.

In 2001 King Ralph moved Alberta to a flat tax and combined it with a tax cut. We bought the idea of a flat tax, because we liked the tax cut that happened to come with it. In actuality, the ones who really save with flat taxes are the wealthy.

To further support my claim that Alberta has revenue issues, this chart shows the 2008 personal income tax paid in 6 provinces, depending upon a person's taxable income.

In all of the other provinces as an individual's income level rises, the proportion taken for provincial taxes also rises. Except for Alberta, represented by the blue line, where the more you make the more you save.

There is an Alberta advantage alright - it's just felt most by those people who make the most money. Here are the tax levels for people earning $150,000 and $200,000 in the various provinces:

So while the Albertan making $40,000 is paying $693 a year more in taxes than his counterpart in BC, the Albertan who makes $200,000 is saving $3,874.

This provides for me two interesting alternatives. We could cut taxes for 6 Albertans by raising taxes on one siginificantly wealthier Albertan with no affect on the treasury. Or we could tax him at a level that all of the other provinces deem to be fair and save our public services.