Academic Institutions, Diversity, and Racism

As I’ve mentioned on twitter, myself and my research team have been working very hard to develop an Equity, Diversity, and Inclusion (EDI) research and engagement statement. It is not hard to imagine that such statements will become as ubiquitous as Teaching Philosophies, and rightfully so. Further, given that the academy, especially economics, suffers from a real lack of diversity, especially among Black and Indigenous scholars we need not only top down strategies, but bottom up action as well.

As a result, we have been expanding our reading about racism in higher education because understanding the barriers is important to being able to work to overcome these barriers as part of our own statement. We do not want a meaningless statement, we want to develop something meaningful, actionable, measurable, and rested in evidence. As part of this work, I recently came across an article that was published in Workplace. As detailed on their website:

“Workplace is a refereed, open access journal published by the Institute for Critical Education Studies (ICES) and a collective of scholars in critical university studies, or critical higher education, promoting dignity and integrity in academic work. Contributions are aimed at higher education workplace scholar-activism and dialogue on all issues of academic labor.”

The article I found is titled “Higher Racism: The Case of the University of British Columbia—On the Wrong Side of History but Right Side of Optics.” I will summarize the article here as there are some really important lessons from this case study, not only for my own purposes, but for what we are trying to achieve overall, which is increasing diversity and inclusion at academic institutions writ large. Again this is a summary of the article, but I encourage you to read it.

Before I start, I will provide a side bar on academic freedom. I am doing this because academic freedom becomes an important theme in the outcome of this case study. Many who are unfamiliar with academic freedom, which oddly includes a lot of staff who work at academic institutions, it is important to remember, as many forget, that academic freedom includes the ability to express one’s opinion about the institution, its administration, and system in which one works. This is generally outlined by the Canadian Association of University Teachers and specifically outlined at UBC. However, since that is often trampled, a work around is to publish these expressions which seems to be how this article came about.

The paper begins by outlining that academic institutions, faculties, and all department/schools/faculty members have to confront the fact that our industry is and members of it are racist. Time is over for task forces, working groups, etc and to openly critique the mismanagement that led to the lack of diversity.

It then outlines in detail that UBC, despite having plan after plan on diversity, ended up reappointing a number of non-racially diverse Deans without attention to representation, working against the plan to achieve the results in the many plans that existed. The paper includes a screen shot of the leadership of UBC which was an announcement of the new Deans, demonstrating that lack of diversity in the decanal ranks at UBC despite, again, plans to the contrary.

Feeling that this was contrary to all the existing plans (or paying lip service) working to achieve diversity, the paper details internal actions taken by faculty at UBC to challenge this outcome to no avail, except to appoint a Senior Advisor to the Provost on Racialized faculty. These actions then turned external (see note on academic freedom). When criticism went external, UBC managers became very hostile to faculty using their rights under academic freedom, and began to exercise both direct and indirect forms of censorship, including hiding under the guise of “respect in the workplace.”

The paper concludes by noting this case study shows the way in which the higher racism of managers works to maintain individual and systemic racism and how managers shield themselves from criticism.

This is a really interesting case study in how bottom up action to push the University to meaningfully move on meeting its EDI statements lead to the managers using other policies to attempt to curtail academic freedom being able to challenge the institution, the leadership of the institution, and the managers therein on meeting EDI objectives. It is also very concerning to see staff at a university to use the notion of respect in the workplace as trumping academic freedom, especially on such an important topic as EDI.

I would certainly be interested in hearing views on this case study, the issues raised, and the outcome of this case, given that those of us at other academic institutions could face similar actions in the face of pushing for diversity and inclusion in very non-diverse disciplines, departments, faculties, and institutions.

Addendum: In picking away further at this, I found a blog post that also resonates: “As a serving member of the UBC Board of Governors I observed how power was deployed through the fulcrum of civility. Public ‘niceness’ hid what could best be called backroom verbal brawls and artful displays of institutional power. When those of us elected dissidents spoke out in public the push back was intense. But, it was not framed around what was said, only how it was said.  Our tone, our gender, our assertiveness was called out. The acts of dismissal, overt and explicit subterfuge of management was ignored. We have arrived at a moment in time were the form of communication displaces the value of content. I hasten to add I am all for civility, but there are moments when academic freedom does trump niceness. The problem is when management and their allies control what is nice, dissidents will almost always lose.”

On Conflict of Interest in Public Policy

In academia, disclosing information related to potential conflicts of the authors in written work is fairly well accepted practice, particularly sources of funding along with any paid or unpaid positions with relevant organizations. All reputable journals have rules require that such information must be disclosed in all papers published in the journal itself.

But what about in any official public commentary? What should be disclosed on your website? Your bio? A priori in an interview with a journalist? In a written op-ed? Testimony to public bodies? In any case where you are presenting yourself as an informed and unbiased expert on a topic?

This is such an important question that myself, Melanee Thomas (Ucalgary, Poli Sci), and Kayla Doody (MPP Candidate) have been actively engaging in research in this area. The purpose of our research is to provide a clear framework professional ethical framework to guide all of those engage in policy work. I am disappointed that our research expertise and knowledge has been so far dismissed by some people and entities engaged in public policy commentary who purport to support independent, unbiased, evidence-based, policy relevant research.

Our research has shown us that there are actually some generally understood expectations in this area, expectations that have grown over the last 10 years. First, anyone and everyone who engages in commentary should have a pre-prepared public disclosure statement available for anyone to review and anytime. Second, all media outlets need to require that all policy commentators to publicly and pro-actively disclose any potential conflicts. In interviews this would require a formal statement at the beginning of any interview of the nature “Do you have any conflicts to disclose” and in any written policy commentary would require a written disclosure in the article itself similar to that which occurs for published research. A number of highly reputable media outlets already engage in these activities, including The Conversation.

Further we have found clear guidance from some organizations. The American Economic Association provide members with professional ethical guidance that it is expected that they apply similar principles to op-eds, columns, any testimony, and any interviews with journalists. The University of British Columbia appears to have to the most detailed and comprehensive policies and guidance on this for academics, including covering conflict of community. Government legislation also provides relevant material for our work, further demonstrating that the issue of conflict of interest is well known and the matter of disclosure clearly used as a method for ensuring transparency. Further, academic research has also provided important guidance related to the important of communicating non-financial or community conflict of interest. For example, the need to your involvement in a political party when commenting on policy or activities of said political party.

As Kayla as expertly summarized “Disclosing financial and non-financial conflicts appropriately and accurately raises the standards [for public policy commentary in Canada and]…. allows readers and listeners to confidently and accurately assess the information presented to them.” When policy academic and commentators fail to provide disclosure, it provides readers and listeners a false sense of trust and accuracy of the statements being made. It is long past time to allow this continue and it is time that the policy field is brought in line with other academics and research areas of conflict of interest disclosure and understanding. I would hope that many of our Canadian governing bodies like the Canadian Economics Association, the Canadian Political Science Association, the Canadian Association of Programs in Public Administration, Institute of Public Administration Canada, Canadian Association of Journalists, and related pay attention to this important issue and incorporate their own rules related to conflict disclosure.

Tax Conspiracy Theories: BC Home Owner Grant Edition

A recent article in the Vancouver Sun was drawn to my attention today. Here is the link. It is about an administrative change to the Home Owner Grant (HOG) in B.C. with quite a bit of gnashing of the teeth and biting of the nails about this being a signal for some nefarious change. While this tax economist can only dream that the HOG will some day be slain, it tells me, yet again, how little people in BC understand the eligibility criteria for the Home Owner Grant.

Now I know quite a bit about the Home Owner Grant. As loyal readers know, I lived in BC for 10 years (*whisper* I was also born in BC in a quaint town called Victoria). I was also one of the lucky few to be able to afford a home in Victoria, BC. The luck of having equity from selling a house in Toronto and then again in Winnipeg (a rolling stone, my friend, a rolling stone). I was also the Chair (yes, I was the Chair, not Paul Ramsey as originally reported in the Vancouver Sun article) of the MSP Task Force. We were tasked with finding ways to replace the revenues from the MSP premiums which the BC government was, rightfully, eliminating. While our work was derailed, long story that includes a tale of ICBC dividends, our final report made recommendations related to the HOG.

For those of you not aware, and here I will quote my own report:

“The HOG is a provincial grant that offsets property taxes on the principal residence of most homeowners in B.C. The basic HOG amount is $570. An additional amount of $200 is available everywhere in the province except Capital Regional District, Metro Vancouver, and the Fraser Valley Regional District. There is a further additional amount of $275 for seniors and additional grants for veterans and persons with, or living with a person with, a disability.”

The HOG is intended to reduce the School Tax portion of the property tax bill which is a provincial tax levied on the annual property tax bill. A homeowner qualifies for this grant if their property is assessed below a threshold [currently $1.625M] AND you meet the eligibility requirements which are that you must: 1. be the registered owner 2. occupy the residence as your principal residence 3. be a Canadian citizen or permanent resident of Canada.

Until this year, home owners applied for the grant through their municipality despite the grant being a provincial grant being applied against a provincial revenue source. Quoting again from my own report: “As a result of the mismatch of administration with the impact of the tax, municipalities have little or no incentive to audit HOG applications and to ensure that applicants are in fact entitled to the grant. Information sharing arrangements being implemented with the B.C. Assessment Authority will allow for better enforcement of eligibility criteria in future, but there is an expectation at present that many people receive the HOG who are not eligible, an efficiency and fairness concern.”

Starting this year, home owners now apply for the grant directly through the province, the entity giving the grant for the tax being levied. Makes perfect sense actually. And to apply, you will obviously need to know your property information and, gasp, horror of horrors, you will need your social insurance number. Why, oh why, would you need that, the pearl clutchers ask? To verify your eligibility, my friend. See look above. You can’t just be a home owner. You have to be a Canadian citizen or permanent resident of Canada. How is that easily verified? By your SIN number. But the municipalities didn’t ask for that information? Correct, that was a problem as it was known that the grant was going to people that were not eligible. See above. But you can’t just willy nilly ask for my SIN number! Correct. That is why moving the application to the province and, poignantly, to the Ministry of Finance, who is responsible for the tax and the grant, is important since that Ministry already has the authority to ask for your SIN number.

Now, as someone who has now twice recommended changes to the HOG, not only as part of the MSP Task Force, but also as part of the BC Basic Income Expert Panel I’d be more than happy if this administrative change signals something more. But as someone who knows a lot about tax, tax policy, tax administration, and politics, I highly doubt the HOG is going anywhere. The HOG is bad policy, we can do better, much better, and get better bang for our buck, but man, home owners like their cookies and politicians are too scared not to bake this one up every year for them.

No, 800,000 ineligible Canadians did not receive the CERB.

Today, the National Post published a piece in their Canadian Politics section with the factually incorrect headline “More than 800,000 ineligible people received CERB, as a cost of nearly $1.7B, CRA documents reveal.” (UPDATE: NP changed their headline after this piece went viral–see end of post. ANOTHER UPDATE: NP has now deleted the whole article–see end of post) What is worse is that the second paragraph of the story tells you why that headline is factually incorrect. All you need to a soupcon of tax knowledge to know that. If you don’t have that soupcon of tax knowledge then you should interview tax experts before publishing such drivel. The National Post should be embarrassed at how its bias leads to such disgusting errors.

My loyal Dead for Tax Reasons readers always enjoy a good tax take down, so let’s go!

Here is the first paragraph:

“A Conservative MP says Canada Revenue Agency has some explaining to do after more than 800,000 ineligible people got Canada emergency response benefit cheques.”

National Post

Well first of all, the CERB was a program was administered by Services Canada, not CRA (UPDATE: for all those bitching to the contrary, please see Part II of Bill C-13 that defines the Minister as the Minister of Employment and Social Development). While you could also apply for the CERB through your CRA My Account, that was simply an application option. The main application portal was through the usual Services Canada portal.

The CERB was also delivered on a trust then verify process. The verification process has been ongoing, but has already heated up and will continue in earnest through the upcoming tax filing season. CRA will be one of the entities doing verification. The CERB was intentionally designed that way. To ensure speedy delivery. You know, in the time of an unprecedented economic shock. One that has and continues to hit women, low wage workers, and racialized Canadians more than anyone.

But wait, there is more. Let’s move on to the second paragraph:

CRA’s own records — filed in an inquiry of ministry tabled in the House of Commons — show 823,850 people who didn’t file a tax return in the past year received $2,000 monthly CERB cheques at a cost to taxpayers of nearly $1.7 billion, according to Blacklock’s Reporter.

National Post

I mean holy hell with a tidge of knowledge about the CERB benefit you know this is just clickbait. Was tax filing an eligibility criteria for the CERB? No. Let’s go through this one step by step.

Is tax filing a general legal requirement? Nope, not at all. While there are various corner cases, the most important aspect to tax filing is that only people with a with tax payable to CRA are required to file a tax return. What you say? Yes. Legally, filing is required if you have tax payable. It is not required if you do not. So anyone with a refund owing is NOT required to file. The fact people do file is more because most people (2/3) are owed a refund and really want it or because they actually do not know the rules or want access to tax benefits like the Canada Child Benefit (CCB).

Was tax filing an eligibility requirement for the CERB? No. The eligibility requirement was

You earned a minimum of $5,000 (before taxes) in the last 12 months, or in 2019…

Government of Canada

Yah, guess what, you could have earned $0 in 2019 yet have earned $5,000 in 2020 and be eligible for the CERB. And guess what, WE HAVE NOT FILED 2020 TAX THIS YEAR! The filing deadline for 2020 taxes is currently set for April 30, 2021.

And guess what, you could have earned $5,000 in 2019 and not have filed and be eligible for the CERB. As noted above, tax filing was not a required eligibility criteria. And you can legally not have filed taxes for 2019 and still be eligible. And, you know what, CRA can determine all of this because of third party reporting. What you say? Yes! Hold onto your seats for this one!

CRA uses third-party information reported separately to CRA and matching techniques to verify the information.  Third-party reporting, or matching, is a tax policy concept according to which a third party (i.e., neither the individual nor the tax authority) provides an impartial verification of income. For example, all employers are required to report to the tax authority on a T4 information slip the wage income of their employees, on or before the last day of February of the year following that to which the income information applies. While not all income is subject to such reporting, a significant amount is. This means that CRA actually already knows a fair amount about much, if not all, of the income earned by a significant number of tax payers. So yah, you can not file your taxes and CRA can still assess your eligibility for the CERB. It is almost like it is 2020.

The article also uses the sentence:

The CRA didn’t explain how non-tax filers could have claimed the benefit.

National Post

Probably because people at CRA thought the question must be a joke. I mean, seriously, this is pretty straightforward from all the public information and a tick of knowledge. UPDATE: They’ve since responded, see the end of the post for their response.

The NP article also tries to use the notion that people with high incomes claimed the CERB but did not need and should not have gotten it. The CERB was not means tested. CERB was replacing lost income as the result of the pandemic. THAT WAS INTENTIONAL! Did they lose income? I bet they did. In fact, lots of self-employed people were hit pretty hard a few months in to the pandemic. Contracts were suddenly cancelled, invoices not paid, it was a serious disruption. To suggest such people should not have claimed a benefit they were eligible for while going through a dramatic income shock would also be suggesting that those hit pretty hard by the Oil shock, but who earned a lot money before that, should have been able to sustain themselves. I would hope the CPC MP cited in this article does not think such things. Then again Kelly McCauley is from Edmonton so maybe he does not really understand the Oil shock, after all I am told by the UCP most people in Edmonton are out of touch.

UPDATE: I’ve received two, no wait three (UPDATE: FOUR), emails from Tom Korski from Blacklocks, whose seems a bit befuddled by all this, and seems like a bit of a jerk TBH. Let’s look at the order paper that started all this, happily provided to me by another more reputable (fact checking on tax details) journalist. The question asked was:

With regard to recipients of the Canada Emergency Response Benefit what is the number of recipients based on 2019 income, broken down by federal income tax bracket?

Government of Canada

Now, Tom is all perplexed because if CRA didn’t administer the CERB then why did CRA respond to this question, why were the data tabled in the House by CRA. *Pinches Bridge of Nose* because the question wanted to know the recipients by income. Only CRA has information on people’s income IF they filed their taxes.

Who else then would answer this question? Services Canada does not know your income, they do know your employment income if you had a job loss AND your employer issued an ROE, but that is not complete information about income. But to be eligible for the CERB you simply had to have reduced hours, or lost self-employment income, or reduce provincial benefit income or a job loss. I.e. you did not have to lose a job to qualify for CERB. So the question asked was answered by CRA because they are the only ones who could answer the question. I mean if you asked the same question about GIS, CRA would respond despite GIS being administered by Services Canada.

Tom then asks how would CRA verify $5,000 in employment income is not thru [sic] tax filings. Well see above. It is called third-party reporting. I mean our whole system while it is based on self-assessment it is also based on verification and third-party reporting is the main pillar of verification. CRA actually knows everything about a significant portion of Canadians that for them self-assessment is not needed and we, like many countries, can move to auto filing. What you say? Yes, and if you are interested you should watch the Canadian Tax Journal as a whole policy forum will be dedicated to this!

Tom then doubles down and asks “What is the mystery class of more than 800,000 workers with “employment income” who don’t file taxes?” And he asked this after I sent him a link to my blog. I mean, what is not exactly clear? I don’t know, but if you want to read more see my co-authored piece of tax filing, or Jen Robson and Saul Schwartz’s piece in CPP, or a similar piece in the McGill Law Journal.

Tom, incensed as I did not immediately respond to the aforementioned email, emailed me again with this

Dear Dr. Tedds: no answer, but I won’t hector you further. Knowing your keen expertise in tax issues, you may find it interesting to observe CRA filings indicating, for instance, 1 in 4 Yukoners claimed CERB benefits. That’s 25% of the total population: school-age children, people at the remand centre, hermits, infants, you name it.

In BC claimants outnumbered jobless five to one. I suspect these people may be part of the invisible army of “workers” with “employment income” who operate outside the tax system. I know MPs in all parties who keenly await an audit of this program. We’ll be sure to contact you for comment at the time.

Regards

Well, Tom again wants to believe you had to be JOBLESS to to claim the CERB. No, nope, nadda, not true. I mean, here are the eligibility criteria. The eligibility criteria is related to income loss. Yes it includes job loss, but that is not the sole distinction.

Do we have fraud with the CERB? Yes, see for example this. Do we have errors with the CERB? Yes. The eligibility criteria changed nearly daily before and after it was rolled out. Personally, I am following this case to see what happens. Did some idiot apply for CERB in the name of his horse? IDK, but if he did that would be fraud since you needed to meet the eligibility criteria and the horse clearly does not.

I”ll assume that Tom signed off his email as a form of a threat. But whatever, my writings and opinions on this matter are pretty clear and shared by the likes to Tammy Schirle and Jen Robson, so I am in very good company. In the meantime, Tom goes into the email folder called “Assholes.”

UPDATE 2: CRA provides a response

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UPDATE 3: After this blog was posted, the National post changed the headline of its article

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UPDATE 4: The National Post silently removes the article

UPDATE 5: I scanned all the Postmedia newspaper sites and sent emails to every editor of a Postmedia newspaper site that contains the story about 800,000 Canadians being ineligible for the CERB based on factually incorrect information. I have also submitted two complaints with the the National News Media Council, one related to PostMedia and one related to Blacklock’s. I encourage you all to do the same: https://www.mediacouncil.ca/complaint/

The Pandemic Inspired Speech From the Throne

I was sadly in a meeting when the Speech from the Throne was being read, so I am just catching up on the details. I gotta say anyone saying this is not an exciting SFT, which for me are always an eye rolling affair, must not be a women, a parent, a low-income person (working hard to join the middle class), Black, racialized, indigenous, a person with disabilities, and any intersectionality of these. I am hopeful and somewhat inspired, well as best as an economist can be.

The framing is important. “This is our generation’s crossroads.” “This is an opportunity to…build back better, together.” This is the signal many of us have been waiting for, that we finally get that Canada has left many behind, that we can’t continue to paper over the gaps we have in our society and economy, and that we have tackle inclusive growth head on. Right on, man!

To solidify this, the SFT says clearly “This is not the time for austerity.” High Five, sister! We cannot let fear mongers and pearl clutchers worry us into taking action that is only going to allow the gaps in our society and economy to fester any longer. Let’s focus our spending on addressing these and, not said in the SFT but which I hope we see, is lets stop spending in those areas that are not focused on the clear vision set out in this SFT.

What are clear calls to action that are important to this?

First, reforming the EI System of for the 21st century. EI still reflects the work environment of the 1960s and not that of 2020. We should re-envision the EI system to be a better safety net for workers. Because of huge gaps in the EI system, the provincial income assistance systems have to long been the only support that workers not covered by EI or related programs to fall back on. But our income support systems are actually not really designed for workers. Let’s use the right tool for the job, and a comprehensive worker support program is it.

Now if I were the government thinking of blowing up the EI system, I would also think strategically about how we can make changes to employment system that will actually make a huge difference to our tax and transfer system as well. I wrote about this here. Currently, information on tax filers and their income is only received once a year, at tax time when individuals file a self-assessed tax return for the previous calendar year by April 30. This means there is no regular reporting of information to ensure that benefits can be responsive to within year income shocks. This means all means tested benefits are delivered as refundable tax credits and not a negative income tax. Could the system be changed for more regular reporting, like monthly? Yes. Currently, most employers in Canada report aggregate information on wages, withholding, and payroll taxes to CRA regularly, yet in Australia, Ireland, and the UK, for example, employers report this information in real time to the tax authority on an individualized basis . This enables the real-time interaction of tax and benefit systems, which, in turn, ensures that income supports are modified as income changes. And that is what a negative income tax is. Canada cannot currently deliver a negative income tax and all those calling for a negative income tax type basic income are not presenting details on how this can be done. It can only be done if we change and we should change our reporting system regardless of whether a basic income is implemented or not.

How does this relate to EI? While such a system could be argued to increase the ‘red tape’ and reporting requirements of employers, you could entice employers by giving a quid pro quo of eliminating EI premiums and funding a comprehensive worker support program through other revenue tools. I’d bet that would end any grumbling employers would have.

Second, we are going back in time to dust of the early learning and childcare agreements from Paul Martin’s time in power, bringing that up to 2020, and build a Canada-wide early learning childcare system. They note clearly that the focus is on high quality and accessible ECE, learning from the mistakes of the Quebec childcare model. Yes! Let’s do it. And yes, let’s bring Alberta kicking and screaming into a world where most parents work and where education is understood to be am essential public service!

Third, we are going to create an Action Plan for Women in the Economy using an intersectional lens. OK, I am going to urge the government here is drop GBA+ and move to a intersectionality based policy analysis framework that addresses the benefits that comes from mainstreaming intersectionality. That is, stop doing GBA+ at the end of the policy process, and instead ensure our entire approach from designing our institutions, to identifying problems, to considering the trade offs among our options, from an intersectional lens. Fantastic.

Fourth, we are going to move forward on a basic income for people with disabilities. I actually have a lot to say here, but I can’t, not yet. But if the feds do this right, with a broad definition of disability as in place in B.C. (and does not use the definition of disability under the DTC or CPPC) then holy hell this is fantastic and I hope will ensure that persons with disability no longer have to rely on horrible provincial governments like the one in Alberta to ensure they are treated with respect and have the resources for social inclusion.

Fifth, near and dear to my heart, is that the government will introduce free, automatic filing for simple returns to ensure citizen receive the benefits they need. Those not knowledgeable about the tax system do not understand that only people who actually owe money to the government are required to file taxes. As I and coauthors laid out in this piece, relying on tax filing as as trigger for benefit eligibility is bad policy as it risks missing many eligible recipients. While on average, 12% of working age-adults do not file taxes, the incidence of non-filing is even higher among the most vulnerable: 97% of the homeless population do not file their taxes, 33% of social assistance recipients do not file their taxes, 40% of eligible first nations families do not receive the Canada Child Benefit because they don’t file taxes. Therefore in the in the context of benefit delivery deemed filing and auto assessment, as has been done in Estonia, Denmark, and the United Kingdom, is needed. This is a method of tax filing that transfers the onus of tax filing from the individual to the tax administrator, as well as to ensure that all citizens are auto-assessed for income support benefits. This makes me feel heard. That all my shouting on this blog and on twitter and in my research matters! Fuck yah!

And finally the SFT acknowledges that systemic racism exists. Sorry white dudes, your lived experiences do not match those we are not white. And the pandemic hit nonwhite Canadians much harder than white Canadians. See for example this Statistics Canada piece. Now what I hope is that the government see that if it moves to a real intersectionality based policy analysis framework then there is a lot more that can be done that what is outlined in the SFT. I would have liked to have seen a real commitment to UNDRIP in the SFT and that is a real lost opportunity.

So overall a lot of people in Canada are going to see hope here. And some people in Canada are going to be the usual naysayers and fretters as though none of this is important. I’ll be many of those folks are white men. Yah Dudes this is what it is like to be left out of policy making in this country. I’ll get choked up over that in about 150 years.

*This is an SFT. There is no funding committed. There are no revenue estimates. There are no details. There never are. I’ll wait for the economic update in a month or two before I get overly wound up here. I hold out hope, as I alluded to above, that we can get rid of spending that does not move us on this vision. Call me a dreamer, but I am not the only one ;-).

BCs Meek and Unambitious Economic Recovery Plan

Yesterday many waited for the BC Government’s 1:30pm PT announcement on it Economic Recovery Plan. People were more excited than usual (I mean who other than me, Kevin Milligan, and Rob Gillezeau get excited about such things) as lots of rumours are swirling about the Premier dropping the writ. And so the their Economic Recovery Plan dropped along with Backgrounders.

Now as always I was tied up in meetings and did not get a chance to take a look until this morning. I was hopeful, buoyant, upbeat, and eager to read the plan. After all, BC really led the response to the COVID-19 pandemic and did fairly broad consultations in advance of preparing this plan. And many were saying it would be their road map for their Election Platform.

For those of you not following BC politics, BC must have a general election in Fall 2021. The current BC government is a minority government, where the NDP has formed the government with the backing of the BC Greens through the CASA agreement. This government has survived since September 2017, following the demise of the BC Liberal minority government.

Election talk started to heat up back in August when MLA Tracey Redies resigned her seat, meaning a by election would have to be held by the end of February 2021. Since BC has a fixed budget date, which is the third Tuesday of every February, that meant that a by election could overlap with the budget, which is not ideal for a minority government since budgets are confidence votes.

Premier Horgan has also been polling as THE most popular premier in Canada (Premier Kenney is dead last). We are also seeing long serving an popular NDPers come out of retirement to run for riding nominations. And the snap election called by the minority PC government led by Premier Higgs in New Brunswick that resulted in a PC majority led to many speculating that Horgan might pull a similar stunt.

We also know that most of the terms with the CASA agreement with the BC Green’s were met (hello, waves, we would still like to table our BI final report) and Andrew Weaver who signed CASA but is now sitting as an independent agrees an election now is not reneging on CASA.

The BC Greens just wrapped up their leadership race which was secured by Sonia Fursteneu. Sonia has been front and centre in much of the CASA terms and comes to the party with a strong foundation in Green policies. Plus she is a real joy to work with!

So, yes, it seems possible that BCs Economic Recovery Report may form the basis of an election platform. And so Friday morning while having my coffee I began my read of it.

The first thing that jumped out at me? The Report is….short. 36 pages plus an extra 15 for backgrounders (links above). The second thing that jumps out at me? Despite the commitment from this government to do GBA+ analysis following the MSP Task Force report urging them to take GBA+ seriously, especially related to economic measures, and despite the pandemic hitting women and racialized communities harder, there is no GBA+ analysis at all. This signals to me this government does not at all take GBA+ seriously.

The third thing that jumped out at me is that there is just not a lot of detail and absolutely no analysis at all. The whole document seems rushed and poorly developed. Which as I read on page 4 may be intentional since it says “The next steps….will be included in Budget 2021.” So then, one is left asking why then did you need to come out with this report now if not about paving the way for a general election?

The fourth thing that jumps out at me like a 3D Jaws is, and this usually drives me bonkers about all election platforms and budgets, is that I don’t see a clear message. I see a lot of little things, but what I don’t see is the clarity of message. What is this all meant to achieve? What is the goal? What type of province are you building? And remember that this government has previously had clear strategies before, particularly that laid out in their Poverty Reduction Strategy. Yet I see no mention of the Poverty Reduction Strategy. What to make of that……

So my overall assessment? The BC Economic Recovery Plan is just a bunch of tired and boring measures that have been repackaged as though there is some sort of magic sauce here. Who led this creation of this document? My money is that the person shares three characteristics: male, pale, stale.

What specifics can I get behind….sort of? The biggest thing I can get behind, as it came out of my mouth, is the support for local governments for operating costs and reduce revenue. But what I don’t see is the commitment to work on a new deal for Municipalities to recognize the structural shifts impacting their fiscal future. That is, there is no vision here.

The next item I’ll give a hat tip to is expending the Early retirement bridging program in Forestry. But what I don’t see is thinking about how a more general program is needed paired with wage insurance to help other sectors transition.

It is also nice to see an acknowledgment of the gaps in digital connections, both WiFi and cellular. But WOW, the fact that there is no mention about low income and vulnerable BCers who scrambled to access these services during the pandemic when places like libraries closed and school went online is another huge missed opportunity.

The Plan will also provide a one year rebate on the PST for select machinery and equipment. Seriously? One year!? I mean look at the MSP Task Force. We recommended the PST here be dropped. The Competitiveness Commission like 10 years made a similar recommendation. 1 year *shakes head*.

There are other things, but nothing really worth mentioning. So what is my assessment? If this is the BC NDP’s election plan then they are running on polling popularity, not ideas. There are no bold ideas here…at all.

Want a basic income? Fix your system first.

During COVID-19, the Canada Emergency Response Benefit (CERB) was designed to quickly and easily reach a large segment of the Canadian population and many have called for it to be transformed into a Basic Income. Whether or not a basic income is a good idea is not the subject of this blog post and I am not going to weigh into that debate at all.

I am also not going to weigh in on what a basic income is. There are many, many models of a basic income, based on a 13 by 3 choice matrix. That means everyone using the term basic income likely means something different and they are not making clear what model they have in mind in talking about a basic income. I will, however, remind everyone that a basic income is not just another cash transfer. And anyone who thinks that that is all a basic income is has not actually read the voluminous literature on a basic income. If all you are designing just another cash transfer, stop calling it a basic income.

I am also not going to weigh into the conversation of how do you integrate, layer, or replace the current system with a basic income. This is actually something I have considered in detail. However, I know that most people have not. For example, many basic income advocates are calling for the CERB to be transformed into a basic income. Does that include how the CERB beneft was defined as income? If so, do you understand how that interacts with existing programs in unintended and perverse ways? If not, what definition of income should this new basic income benefit be? Why? And what implications does this have for the whole system? You can read my coauthored piece here on just some of the perverse implications of the CERB on social assistance beneficiaries. This is not just a technical detail to be left to the technocrats like me.

What I am going to weigh in on is that the entire tax, transfer, reporting, and income support system needs to be fundamentally changed BEFORE we even consider the merits of a basic income. Why? Two reasons.

First, administratively our entire tax, transfer, reporting, and income support system is so archaic that it layering a basic income on top of it would mean that those who need and deserve the support from a basic income the most would most likely be left out.

Second, philosophically our entire tax, transfer, reporting, and income support system is based on principles and values that are diametrically opposed to those of a basic income that layering a basic income on top of this existing system would mean that the basic income would simply replicate the fundamental problems in the current system that basic income advocates say the basic income would solve.

This is not to say there are not other issues, but rather here are two things that need to to change first and foremost. And these two things that I am going to outline are things that I have said for years now and do not represent any new critiques. Further, these two things are things that NEED to change regardless of whether a basic income, of any type, is pursued or not.

We begin by acknowledging a simple truth: In Canada, the tax system is not just used to raise revenue; it is also an important instrument for achieving various social objectives. As a result, the tax system is now closely intertwined with the income support system: many key income support benefits are either delivered through the tax system, like the Canada Child Benefit (CCB), or are dependent on information provided by the tax system, like the Guaranteed Income Supplement (GIS). Further, many are now calling for the creation of a basic income and for the tax system to be the core administrative structure for such a program. As a benefit administration tool, the tax system has advantages; however, it is also problematic for several reasons, not least because the onus to file tax is on the individual and filing is not, generally, legally required.

Applied in the context of benefit delivery, such an approach thus risks missing many eligible recipients. While on average, 12% of working age-adults do not file taxes, the incidence of non-filing is even higher among the most vulnerable. As laid out in this piece, 97% of the homeless population do not file their taxes, 33% of social assistance recipients do not file their taxes, 40% of eligible first nations families do not receive the Canada Child Benefit because they don’t file taxes. Therefore in the context of a basic income that needs a list of Canadians, needs an administrative structure including a delivery vehicle, and should there be an tax mechanism to recover the benefit, this issue with filing needs to be addressed. Can it? Yes, through deemed filing and auto assessment, as has been done in Estonia, Denmark, and the United Kingdom. This is a method of tax filing that transfers the onus of tax filing from the individual to the tax administrator, as well as to ensure that all citizens are auto-assessed for income support benefits.

Also currently, information on tax filers and their income is only received once a year, at tax time when individuals file a self-assessed tax return for the previous calendar year by April 30. This means there is no regular reporting of information to ensure that benefits can be responsive to within year income shocks. This was actually a substantial critique from Albertans who were affected by the oil price shock but whose benefits were delivered based on income reported prior to the oil price shock. This means all means tested benefits are delivered as refundable tax credits and not a negative income tax. Could the system be changed for more regular reporting, like monthly? Yes. Currently, most employers in Canada report aggregate information on wages, withholding, and payroll taxes to CRA regularly, yet in Australia, Ireland, and the UK, for example, employers report this information in real time to the tax authority on an individualized basis . This enables the real-time interaction of tax and benefit systems, which, in turn, ensures that income supports are modified as income changes. And that is what a negative income tax is. Canada cannot currently deliver a negative income tax and all those calling for a negative income tax type basic income are not presenting details on how this can be done. It can only be done if we change and we should change our reporting system regardless of whether a basic income is implemented or not.

As alluded to above, our income tax system currently relies on self-assessment., which means the onus is on the individual tax filer to provide complete and accurate information to the government on the income taxes they owe and, as a results, the benefits they are eligible for. The self-assessment process happens once a year, at ‘tax time’, when individuals must file a self-assessed tax return for the previous calendar year by April 30. This self-assessment is then verified by the tax authority using matching or third party reporting. Third-party reporting, or matching, is a tax policy concept according to which a third party (i.e., neither the individual nor the tax authority) conducts an impartial verification of income. For example, all employers are required to report to the tax authority on a T4 information slip the wage income of their employees, on or before the last day of February of the year following that to which the income information applies. Yet, in Canada not all income—notably, self-employment income—is subject to verification, meaning that such a process fails to capture a growing segment of the Canadian workforce: those employed in precarious, non-standard, and contract work. This raises concerns, not only about increased tax non-compliance, but also about a growing burden on tax filers to keep proper records and learn complex tax information. Can this be addressed? Yes! SAF-T in Europe and South America are both using blockchain to automate the current income matching process. Blockchain then allows for the matching process to be expanded to all forms of income—particularly self-employment income—, as well as payments, transfers, and even assets in a real-time environment, thereby also improving compliance and the ability to auto file and assess individuals for benefits. If blockchain is added to a system that stores information on individuals’ digital footprints then this data can be used across their life-cycle to improve tax, transfer, reporting, and benefit delivery in Canada, as is already done is Estonia. In Estonia, X-road assigns a unique digital identity to every Estonian that is used to access more than 600 government services, including voting, medical services, and tax filing. And such a system would that overcome the fact that in Canada there is no super-database of all Canadians, their bank accounts, and addresses is maintained, which if it did exist could be used to issue quick payments in times of crisis.

The list presented here is not exhaustive, but these are essential changes we must make in order to not only bring our tax, transfer, reporting, and benefit delivery system, especially in the face of the changing nature of work. In this context, digitization and the digital economy hold significant potential to revolutionize not only day-to-day tax and benefit administration, but also the provision of emergency income support during times of crisis. And these are not ‘nice to have’ changes. These are essentially modernization changes we must make to even have a chance of achieving the principles of a basic income of simplicity, respect, economic security, and social inclusion. And these ideas represent those ideas I am flushing out for a paper that I am co-authoring for the Canadian Tax Journal.

Now think about these principles of a basic income: simplicity, respect, economic security, and social inclusion. How far away from these principles is our current system? Well pretty much light years. How do we know? Well you could have spent the last two years, as I have, studying the current system in all its current detail or you can simply extrapolate this from the calls for a basic income. Why in the world would anyone think that this system could just be eliminated and these values not embedded into the basic income system? Consider, for example, the principle of respect. If the basic income is delivered to households then you will be bringing into the basic income system ‘boots under the bed audits’ simple because of the beneficiary unit. These audits are particularly targeted at women, and particularly racialized and vulnerable women. Instead, we have to first bring the current system, which is at the opposite end of the spectrum from a basic income, closer to the principles and value of a basic income so that we don’t replicate the current features of the system in a basic income design.

This just outlines real, hard, and fundamental changes we absolutely have to make to our current system, with or without a basic income. And we absolutely have to make these changes in order for us to have any hope of implementing cash transfers that are aligned with the principles of a basic income. But in doing do, we are going to run up against different values of all of us in society. Are we ready to do that? Are we ready to have that discussion? I hope so, because we need to have it in order to move forward and address the lessons we learned in this pandemic, lessons though that many of us knew needed to be learned even before the pandemic even hit.

How to understand and interpret Statistics Canada’s measurement of the poverty gap

While I haven’t seen much chatter about this, on Tuesday Sept. 8, 2020 Statistics Canada released new statistics related to Canada’s official measure of poverty, the Market-Basket Measure (MBM). This new release updates the base for MBM from 2008 to 2018 and has been long awaited by the academic community. Of course, though, these statistics sometimes become political fodder.

I noticed that Pierre Poilievre decided to make hay with the poverty gap measure.

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I can’t let this go because this tweet shows he does not have a clue as to what the poverty gap measure means and how to interpret it. Just because the gap widens actually does not mean poverty worsened. Come along for a basic arithmetic ride!

The MBM threshold is the disposable income below which someone would be considered living in poverty. The gap, or the depths of poverty, is defined as the gap between the MBM income thresholds and the average income of those whose income is below the MBM.

Technically referred to as the “average gap ratio”, it is expressed as a percentage of the MBM income threshold. For example, a family of four living in Vancouver with an income of $30,000 and an MBM income threshold of $40,644 (that is what it was under the 2008 base) would have a gap ratio of 26.2%. The average gap ratio for a given population (e.g. all families of four) is the average of these values as calculated for each family.

Examining depths of poverty over time is potentially problematic as interpretation of the movement over time is difficult. Consider this example: suppose there are only two families. Family A has an income of $19,000/year and family B has an income of $15,000/year. Otherwise, both families are exactly the same. Suppose as well that the poverty line is $20,000. Given these incomes, the average gap ratio is 15%. Suppose that due to some policy change, both families receive an extra $1,000 of income. Family A is moved out of poverty to an income of $20,000 and family B remains in poverty with an income of $16,000. After this policy change, the average gap ratio is 20%—the average gap ratio has gotten worse however both families have a higher income. Thus, as the average poverty gap increases, it is possible that all families are better off. This occurs because as there is an improvement in poverty reduction, i.e. there are fewer families with income below the income threshold, the number of persons/families over which the average gap ratio is measured decreases.

Regardless of this shortcoming, the average gap ratio is useful in assessing how much resources are needed at a point in time to eradicate poverty through a perfectly targeted cash transfer. For example, an average gap ratio of 15% means that a perfectly targeted cash transfer that is 15% of the poverty line is needed to eradicate poverty. This provides intuition on the magnitude of the average gap ratio and intensity of poverty.

Additionally, this shortcoming has implication for governments as they work towards their defined poverty reduction targets: there is a trade off between an improved poverty rate and an improved average gap ratio. On the one hand, the government could focus on moving those persons/families just below the poverty line to the poverty line (or above). This would decrease the poverty rate but could potentially increase the average gap ratio. On the other hand, focusing on those persons/families in the greatest depths of poverty and helping them move closer or above the poverty line would decrease the average gap ratio but may have less of an impact on the poverty rate and would potentially be more costly.

Either way, comparing gap numbers over time as Pierre has done is just not an appropriate use of the gap measure. And by inappropriately using the measure, he also came to an incorrect conclusion. That is politics for you, I suppose. All bluster, no fact.