Flat tax

Alberta's abandoning its flat provincial income tax. Here's Bill Watson's requiem for it:

Everyone’s assumption is that flat-rate taxes can’t be progressive. That presumably bothers Alberta’s Conservatives, who, unlike Ottawa’s, are still at least nominally Progressive. But the assumption isn’t true, at least not in terms of average taxes. If some minimum amount of income is exempt from taxation — and in Alberta it can be over $18,000 — then the average rate of tax rises with income. For example, at a 10% rate the first $10 of income above $18,000 generates a $1 tax liability, which produces an average tax rate of $1/$18,010 or just 0.006%, a rate that rises — progressively — with every extra dollar of income and approaches, even if it never quite reaches 10%.

Some studies done by perfectly reputable economists, i.e., not “far-right” nutbars, suggest the best rate structure, even taking the interests of poor people into account, may by an umbrella, in which rates rise for a while but then, for the super-mobile highest earners, actually decline—though try selling that in the current inequality-obsessed political environment!

The full article is embedded below, in an ingenious setup that Canada's National Post is using. When I selected the text to copy, I had a pop-up asking if I'd like a licence. I said yes, then saw I could embed the full article so long as I also embedded the paper's ads with it. And so it is below. Instead of yelling about bloggers being content thieves (while scraping their scoops without or with little attribution), the Post's making it easy. I like it.

William Watson: Requiem for the flat tax

By ending its flat tax rate Alberta is snuffing out an important policy beacon for all Canadians To conservatives everywhere, a sad part of the latest Alberta budget was the extinguishing of the province's flat tax, which Ralph Klein introduced in 2001. Albertans with taxable income have been paying 10% on any and all additions to…

Alberta nannies

Oh, Alberta. What happened? Back when I was in Manitoba, Alberta was the wild West of Canada - its Texas. Birthplace of the Reform Party, assassin of political correctness, emblem of everything that the rest of Canada wasn't.

And now Lorne Gunter tells me Nanny became Premier via a Tory leadership convention. She's pushing the drink driving limit down from .08 to .05 and aiming to ban smoking in cars. Writes Gunter:

When I pointed out in these pages that even the Traffic Injury Research Foundation thinks it’s a bad idea to impose harsh punishments on low-blood-alcohol drivers, and that instructing police to crack down on social drinkers will mean they have fewer resources to stop habitual drunks, who are the true problem, Ms. Redford had her Transportation Minister, Ray Danyluk, write the Post to say how wrong I was. Mr. Danyluk insisted that drivers above .05 but below the legal limit in the Criminal Code may have caused as many as 28 deaths over the past five years.

Yes, Mr. Danyluk, but would your premier’s intrusive new law have saved them all, or even most of them?

And, further, do we have any clue whether that's a high or a low accident rate given the number of drivers on the road who have BAC between .05 and .08? It's impossible to tell unless the police start releasing stats on the proportion of drivers on breath-check who have that BAC - we need to know the base rate.

Bad things will continue to happen no matter how much social engineering nanny statists engage in. What’s more, on a cost-benefit basis, trying to save 10 or 15 deaths over five years (two to three a year) by harassing tens of thousands of law-abiding drivers is a poor use of resources and could lead to that many extra deaths being caused by criminally drunk drivers who will now escape detection.

A statistical life is worth about $7 million. Suppose that the legislation worked and saved 5 lives per year: $35 million. Add to that a bit of reduced injury cost and property damage. But net out enforcement costs and reduced consumer surplus from folks now too scared to have a glass of wine with dinner... tough call to say there's any prima facie case that this passes cost benefit even assuming that Danyluk's numbers are right. And they're probably not because of failure to account for base rates.

But not content to stop with her pokenose new drinking and driving law — sorry, make that sipping and driving law — Ms. Rutherford now intends to crack down on smoking. She proposes to ban smoking in vehicles with passengers 16 and under and to ban the scourge of flavoured tobacco.

The American satirist H.L. Mencken once wrote that a puritan is a person with a “haunting fear that someone, somewhere may be happy.” Premier Redford is one of the new health and safety puritans who worries constantly that others may not be as informed as she is and so are engaging in vices that are bad for their health.

And, Alberta has a tendency of keeping Premiers around for a while.

The culture that is Alberta

Alberta continues to list homosexuality as a “mental disorder” along with bestiality and pedophilia, and doctors used the diagnostic code to bill the province for treating gays and lesbians more than 1,750 times between 1995 and 2004, government records show.

The province has known about the classification for more than a decade and the Conservative government first promised to change it in 1998. On Tuesday, Health Minister Gene Zwozdesky repeated that promise.

So noted the Western Standard's Shotgun blog, who puts it up to a Bootleggers and Baptists story. The bootleggers are the doctors providing the cure-the-gayness treatments; the baptists are, well, the baptists.

The political cost is low for keeping gayness treatments on the books, but it's moderate for getting it off the books. A fair chunk of the Alberta Tory base does think homosexuality is a mental disorder, or worse a sin according to their religious doctrines. Why modernize the diagnostic code if it's going to piss off both a small clutch of doctors and the gay-is-sin crowd? Best to leave well enough alone. Until the political cost rises.

Beneath the politicking, there's a genuine issue at stake. The overwhelming majority of us know, at least from the time of puberty, whether or not we prefer those of the opposite sex. For a small minority, finding their orientation is less clear cut.

Sorting out sexual identity is an emotionally fraught experience that can take years, even decades. There is a role for specially trained psychologists to help people work out these concerns. It's a sensitive issue that the blunt hand of a bureaucratic state is ill equipped to deal with. Homosexuality isn't a mental disorder. Believing that government health care can cure "gayness" is, however, some sort madness.

Indeed.