The Next Federal Election Is All About Class Warfare

Justin Trudeau was standing in front of a crowd of carefully-selected families, quieting a half dozen screaming kids. Thomas Mulcair was leafing through a children's book with a daycare class. Stephen Harper was flanked by two fighter jets as he spoke to a contingent of troops in Kuwait.

That was all in the same 24 hours.

So if you thought you were going to get through the summer without a near-constant reminder that three white men are publicly vying to poke, bribe, cajole, and convince the few hundred thousand people who will decide the course of next October's election, you were wrong.

In what is shaping up to be the biggest, loudest, and data-intensive campaigns in forever, Canada's three main political parties—and its two smaller ones—are gearing up for bloodsport. A

But while Harper tries to play up his national security chops, and Mulcair tries to remind everyone that he loves children, Trudeau's Monday-afternoon announcement underlined a clear theme: class warfare.

The Liberals
Not long ago it was just a smouldering car crash of a political party, but Justin Trudeau has rebooted the Liberal brand back to its default operating system.

Prior to this week, Trudeau was taking flak from all sides—he was opposing the mission against the Islamic State, supporting Canada's controversial anti-terrorism legislation, walking a fine line on various pipeline projects, talking about reversing the prime minister's tax cuts, and so on.

But, all the while—apart from a vow to legalize pot, a roadmap to improve transparency, and aggressive plan to not be Stephen Harper—Trudeau didn't have much of a plan of his own.

That changed on Monday when Trudeau announced his conversion to, if you believe the hype, Marxism.

The Liberal leader's new tax plan means that everyone earning between $44,000 and $90,000 a year will be taxed lower on that income (the rate drops from 22 to 20.5 percent.) To offset the cost, anyone making over $200,000 a year would see any income earned over that amount taxed at 33 percent (up from the 29 percent which currently governs everything earned over $100,000.)

Trudeau's plan would be a tax cut for about a third of the tax-paying population, roughly 7.5 million people.

If you make $50,000, his plan would mean you would save $80 a year. If you earn closer to $90,000, or more, you'll save $670 a year.

If you make $300,000 a year, on the other hand, Trudeau's plan means you pay an extra $3,300 in taxes. A millionaire would pay an extra $31,000, a billionaire would pay an added $320,000, and so on. There are, of course, various tax shelters and loopholes for the uber-rich to reduce their tax burden.

The whole thing, supposedly, is revenue-neutral.

Trudeau also wants to hack off an assortment of tax benefits for families with kids, replacing them with a big $22 billion pot from which he'll mail a fat monthly cheque to families. Low-income families are the main target of that plan. The more you make, the less you get.

In short: Trudeau's plan is really good news for someone other than you. The average income of under-35 year-olds is well below $40,000 a year.

The big policy plank was unveiled in a small, roadside diner in Aylmer—just across the river from Ottawa, but far enough away that you can no longer see Parliament Hill. Inside was crammed a dozen families on one side of the Hillary Clinton-themed restaurant, and a crush of journalists and staffers on the other. Trudeau breezed in, immediately started on some remarks, then took some probably-pre-selected questions from the audience, and then some definitely-not-pre-selected questions from journalists. Then he was whisked out into a waiting car.

Trudeau is really the only leader who has begun talking about those Canadians who have shirked their civil duty and moral obligation to get married and procreate. The Liberal leader even gave a shout-out to single parents and divorced people.

Virtually every big policy announcement from the other leaders has been about childcare and child benefits, even though less than 40 percent of the country actually has kids. And, unsurprisingly, those married with children make a whole lot more money than everybody else.

Pivoting to focus on the "middle class" (whatever that means) at the expense of the one-percenters means Trudeau has conjured up an enemy: inequality.

Over about 35 years—from 1976 to 2011, the only years for which there is data—inequality in Canada has gotten progressively worse. While the tax system does a lot to close the gap between rich and poor, Canada still has an after-tax Gini coefficient of 31.3. Put more simply: inequality in Canada is about the same as in South Korea and France, but worse than Germany and Australia. It's better than Mali, though.

Not everyone was stoked on the idea of further surpassing Canada's arch-rival, Mali.

The Conservatives
Minister for Employment and Social Development, Pierre Poilievre, was adamant that Trudeau's tax cut was, in fact, a reckless tax hike.

Poilievre figured that, because Trudeau would reverse their two big family-pandering initiatives, he was out to increase everyone else's tax bill (ignoring the fact that if a hypothetical Prime Minister Trudeau cancelled the initiatives, they would never actually have come into effect in the first place).

The Conservatives are hanging their collective electoral hat on three things, unveiled in last month's budget—income splitting, hiking the Universal Child Care Benefit (UCCB), and doubling the limit on Tax-Free Savings Accounts (TFSAs).

Income splitting only applies if you have a child under 18 and a spouse who makes a different amount of money than you. That means it'll help about two million families. On average, the families will save up to $1,129 a year ($985 for those on the lower-end of the scale, and $1,250 for richer families). Not everyone will benefit the same amount, however, as individuals will only save themselves money if their spouse earns less —wives with stay-at-home husbands, or vice versa, and high-earners with low-earning spouses will be the big beneficiaries.

The UCCB, meanwhile, is being expanded so that families get a cheque for $160 per month, per child under six, and $60 per month for kids aged six to 17. (An additional two million families qualify for this.)

The TFSAs are basically small tax havens for individuals. Right now, you can store up to $5,500 in the account—in bonds, stocks, cash, whatever—and you won't be taxed on the interest or revenue (though you would have already had to pay taxes on the principle). The government is proposing that the limit that can be put in the account be raised to $10,000.

The Conservatives have decided that their three schemes are way better than Trudeau's plan. Poilievre, following a set of talking points very closely, was adamant that Trudeau's plan would hike everyone's taxes.

So VICE asked him: let's say a hypothetical, unmarried, Canadian is making $70,000 a year. Would they pay less taxes under Trudeau, or Harper?

"They would pay more taxes under Justin Trudeau and the Trudeau tax," Poilievre answered. "For example, the Trudeau tax would take the enhanced tax free savings accounts away from people trying to save for the future."

VICE asked Ivey Business School economist Mike Moffatt how much that answer is bullshit.

"It's pretty bullshitty," Moffatt said.

He's part of the braintrust that helped draft the Trudeau's economic platform, but he's not actually employed by the Liberal Party. He points out that lowering someone's taxes is a bigger saving than removing the taxes on the interest earned in their bank account.

If you break down the numbers on the TFSAs, you'll see that doubling the limit really won't save you that much money in the short-term. If you put $10,000 in the account every year for five years and you're a wizard investor, Harper's doubling of the TFSA will save you an extra $700, over that five years. So, best-case scenario, you've saved $140 a year.

But, of course, most people aren't brilliant investors with $10,000 to kick around. So you, yes you, would probably save an extra $9 a year.

As the Parliamentary Budget Officer points out, "the growth in TFSA contribution room should increasingly benefit two groups: older and wealthier Canadians." They point out that lower-income holds tend to make smaller returns.

In other words: Harper's plan is really good news for the rich.

VICE tried to ask Poilievre just how much the TFSAs really benefit those making under $60,000 a year, as he keeps saying that Trudeau's tax plan would see them paying more. Poilievre said that the TFSAs predominantly help low-income earners, as two-thirds of those who maxed-out their contributions—kicking in the full $5,500—made under $60,000. So, how many? "Millions, and millions, and millions," said Poilievre.

Except that appears to be bullshit. The Department of Finance's own numbers say that lower-income taxpayers are less likely to max-out their contributions, while nearly all the rich people who use the accounts do.

Rhys Kesselman, a finance professor and the guy whose research led to the creation of the TFSA, says the data shows that the accounts help the wealthy and their spouses, not lower-income Canadians. He wrote an op-ed in Maclean's denouncing the plan to double the accounts entitled: "why TFSA doubling will exacerbate income inequality."

The NDP
The New Democrats don't really know what they want yet, but they know they don't want the Liberal or Conservative options.

Here's what we know about the NDP plan: Mulcair wants corporate taxes to go back up to 22 percent (they're at 15 percent right now). That would, probably, only apply to the biggest corporations. Mulcair also wants to re-institute the federal minimum wage, which only applies to workers in the federal sector (bureaucrats, telecommunications workers, airline employees, etc.) and set it at $15 an hour. His centrepiece is a childcare plan that would create affordable, $15-a-day child care spaces.

There are a handful of problems with that that've been identified by his opponents.

For one, hiking corporate taxes probably won't raise much new money—corporate earnings, and thus government revenue, increased as the corporate tax rate went down. It's not clear what the effect of raising those taxes would have.

The federal minimum wage would only only impact less than a million workers, as the vast majority of employees for federally regulated businesses already earn above $15 an hour. (Only a tiny fraction have wages at the provincial minimum wages, which range from $10 to $11 an hour.)

The NDP childcare platform, meanwhile, would only fund a million childcare spaces and wouldn't be means-tested, meaning the spots would be open to the rich, as much as they would be open to the poor.

Strangely, that was the NDP criticism of Trudeau's plan.

"It's a bit strange that two thirds of Canadians won't see any benefit from the tax cut proposals that were put forward, and particularly low-income Canadians," NDP finance critic Nathan Cullen said after Trudeau's announcement. He said that the NDP won't be raising income tax on anyone.

So VICE asked Cullen: don't you support lowering taxes for regular Joes, and hiking them for Jane Moneybags?

"Yeah, but we've talked about a number of the measures that would have wealthier Canadians paying more of their fair share," Cullen said, pointing to an NDP proposal that would close a tax loophole allowing employees (usually CEOs) to take their pay in stock options. They'd take the $700 million they expect to raise from that and put it straight into child benefits and tax deductions for working class folks. (Trudeau's plan, by comparison, transfers about $3 billion in tax burden from the middle class to the rich.)

Cullen didn't really say why the idea was bad, but he did say that people shouldn't trust Liberals.

"We have a long track record on [fighting income inequality] and know what we're talking about. Liberals have had the opposite track record, and that's a fact," Cullen said.

Class Warfare
The whole thing sets the stage for a long, loud battle that will rage from now until October.

Trudeau has another policy announcement—probably related to giving more money to families with kids—in the coming weeks. The NDP is expected to start dropping policy sometime in the near future. The Conservatives will essentially be campaigning on their budget, although a budget implementation act (basically a big omnibus bill that always contains a grab bag of big policy changes) will be tabled next week.

The camps are trying desperately to hedge their bets on which voters they can flip.

An endless array of focus groups, polls, and message-testing has led the parties to developing absurdly narrow campaign strategies designed to win over a tiny subset of the population. And, to keep track of that sliver of the voting public, each party has a robust, expensive, and creepily omniscient voter-tracking database.

Harper knows that the suburb dwellers around Toronto, Quebec City, Ottawa, Vancouver, and Winnipeg are keys to his re-election. Convincing a few thousand families in 30 ridings to vote Conservative will make the difference between a second Harper majority government and a Liberal minority. Making it rain onto seniors and brandishing his national security credentials for rural and generally afraid voters are also keys to that plan.

Mulcair needs to hang on to Quebec, and wants to make inroads throughout Ontario, the Prairies, and British Columbia. Many of those rural Quebec and west-coast seats are populated by lower-income families who would, in the NDP's estimate, benefit the most from cheap childcare and a minimum wage boost.

The Liberals need to re-win the cities: Halifax, Montreal, metro Toronto, Mississauga, Vancouver, and Calgary. They're less likely to have kids, more likely to be making over $50,000 a year, and probably used to be Liberal voters anyway.

If you don't fall into one of those categories—if you're a student, if you care more about climate change than your own income, if you're out of work—don't expect to have the federal election focused on you.

Follow Justin Ling on Twitter.