Federal budget 2016: Who are the Liberals' middle-class winners? Good question

Who is Canada's Joe the Plumber, the Republican activist who didn't want Barack Obama redistributing his hard-earned cash? Look closely at the federal budget and you will see the Liberal take on whose tax money is to go to someone else, Neil Macdonald writes.

Meet Canada's Joe the Plumber, whose tax money is going to someone else

Minister of Finance Bill Morneau makes the peace symbol towards the visitors' gallery in the House of Commons as he prepares to deliver his first federal budget. (Adrian Wyld/Canadian Press)

Let's stop gnawing on this question of the federal deficit. It's sort of boring.

There will be one, and we'll find out exactly how big this year's deficit is around August of next year, and it probably won't amount to a hill of beans in the big picture anyway.

Plus, the Trudeau government's prediction of  $29-billion is almost certainly inflated, to tee up the happy announcement of a lower number somewhere down the road.

What's vastly more interesting, I think, is the question of who is Canada's Joe the Plumber, and the answer is definitely in this budget. Plus, it's precise, and it's revealing.

Joe the Plumber was the fellow in Ohio who received some spontaneous instruction from Barack Obama during the 2008 American election about the role of government.

He told the future president he wanted to buy a plumbing business, and complained Obama's plan would tax him more heavily. Obama responded that yes, it would, if he took in more than $250,000 annually: "I think when you spread the wealth around," he concluded, "it's good for everybody."

That was seized upon by Republicans as advocacy of wealth redistribution, and within days, Joe the Plumber was a national icon.

Who's getting redistributed

Obama, of course, was right: There's always a conceptual Joe the Plumber, and every year, someone in government sits down and pinpoints him.

Then it proceeds to take money from him and everybody who makes more money than him, and turns around and gives some of it to people who make less.

This year, the Trudeau government has decided that Canada's Joe the Plumber (and his wife) make about $195,000 combined.

Any family making more than that does not qualify for the new Child Care Benefit, a whopping new federal handout, and from now on anyone making more than $216,000 will pay significantly more income tax, about four per cent more.

The cover shot of Finance Minister Bill Morneau's first budget yesterday. (Patrick Doyle/Reuters)

Even more interesting is who Joe's money is being redistributed to.

Yes, the government is making admirable (and costly) efforts to improve the miserable circumstances of indigenous people on the grounds that their ancestors were brutally displaced and abused, and Canadians really should give to them until it hurts.

And the government is also offering some pretty expensive relief to those unfortunate Canadians who have suddenly found themselves living on unemployment benefits because of forces beyond their control, like the plummeting price of oil.

But most of the gain in this budget, most of the new dosh, isn't going to the neediest. It's going to people that this government deems are most deserving.

For example, a family living in Saskatchewan's Fort Qu'Appelle with two kids and a household income of, say, $130,000 will now receive a dose of other Canadians' money, and the Liberals will effect the transfer of that wealth.

Who's middle class?

Whether that is reasonable is for voters to decide. But that is what the Liberals are doing, in the name of "growing the middle class," to use the title splashed across the cover of the budget document.

What's the middle class? Good question.

Finance Minister Bill Morneau was asked that yesterday, and banged on vaguely about people who are worried they aren't going to have a job for 20 years, or who are worried about their retirement or putting their kids through university.

(The minister's budget speech actually cited "two parents with two kids in university" as the Canadian norm, which seems a tad unrealistic.)

One of the senior government officials on hand to brief reporters, though, was much more precise: To this government, the perfect definition of middle class is a family with two children and a household income of $90,000.

That two-income family will not just see its income taxes cut by this government, it will receive a direct, tax-free government handout of $5,650, which represents a net increase of $2,505 from the benefits in place under the previous government, according to this example included in the budget documents.

Together with their tax savings, that adds up to a pretty healthy chunk of cash.

Of course, whether a Canadian woman making $90,000, and with a stay-at-home husband and two kids, needs thousands of dollars of someone else's money is a political question.

Indeed, if that family lives in downtown Vancouver, rather than Fort Qu'Appelle, and has no savings and kids with special needs or university in their future, it probably is strapped.

But this much can be stated as fact: most of the wealth the government is redistributing isn't going where it will do the most good.

Economists tend to agree that governments achieve the greatest stimulative effect by giving money to poor people, not people making $90,000, or $110,000, or $130,000.

Because poor people spend the money. They have to. They're poor.

The middle class folks Trudeau's government is cosseting are just as liable to spend their windfall on reducing credit card debt, given the nosebleed levels of personal debt that exist out there. Or even less virtuously.

Good old Joe

Here's a quick rule of thumb: Anyone who puts super grade fuel into his or her car and has trouble making ends meet needs a cheaper car, not someone else's redistributed wealth.

Truth be told, says Sahir Khan, a budget specialist formerly with the watchdog Parliamentary Budget Office, the government is not giving money to people based on the economic quintile they occupy. The Liberals are giving money to people who vote for the Liberals.

And while not everyone has much sympathy for those making more than $216,000 a year (except perhaps others in that bracket), this government's decision to tax these individuals more heavily will push them, in some provinces, into paying well over 50 per cent of their income to governments.

And thus, of course, to their fellow Canadians.

Those people may decide, in the spirit of sunny ways, that they're fine with that. Or they may change their behaviour to avoid tax.

Or earn less. (Or maybe even get divorced, thereby getting around the "marriage penalty" embedded in the household income calculation.)

If they do, this government will have to borrow more next year, and probably redefine good old Joe.

Babbling baby interrupts Bill Morneau’s budget day speech

6 years ago
Duration 0:45
A crying baby temporarily halted Finance Minister Bill Morneau as he was delivering his first federal budget in the House of Commons on Tuesday


Neil Macdonald is a former foreign correspondent and columnist for CBC News who has also worked in newspapers. He speaks English and French fluently, as well as some Arabic.


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversation  Create account

Already have an account?