CORCORAN … National moves to soak the rich.

Polls insist that low-tax less-government Alberta is about to fall into the hands of high-tax big-government forces led by the New Democratic Party’s Rachel Notley. How leaders of the province’s Conservative and Wild Rose factions, supposed defenders of sensible government and free market values, bungled their way into this risky scenario is a story for political pundits to tell. If the polls are right, however, and Notley’s NDP chugs to victory on Tuesday, it may be time to reassess the ideological state of the nation. There is always a populist market for tax and grab parties with big plans to reshape the economy by imposing new programs and regulations. Just look at Ontario. Even the Harper Tories play the game. But if Alberta goes Orange on Tuesday, it may be time to declare that Canada is slipping into the hands of a National Soak-the-Rich Movement and all the ideological baggage that comes with it. Among Notley’s high-profile plans as part of her “commitment to you and your family” is a big increase in the top marginal income tax rates. Now at 10 per cent, the NDP would raise the top rate to 14 per cent on Albertans earning more than $200,000 and 15 per cent on earnings above $300,000. Adding that rate to Justin Trudeau’s new promise Tuesday of a four per cent jump in the top marginal federal tax rate would raise Alberta’s top combined fed-prov tax rate to more than 47 per cent. That’s not far off Ontario’s current rate of 49.5 per cent — although that top tax grab would rise to 53.5 per cent under the Trudeau plan. Both Trudeau and Notley claim their tax-the-rich schemes will deliver significant revenue gains. Trudeau’s economic team says his tax hike will produce $3-billion a year in fresh cash. Notley’s numbers show a cumulative windfall of $3.5-billion over the next five years. That’s on top of the $2.8-billion increase in revenues anticipated by Premier Jim Prentice’s own ill-conceived plan to increase marginal tax rates. These numbers, especially the $6-billion soak-the-rich total in Alberta, will likely prove to be fiction, in part because a) there may not be enough high-income earners around to tax in future years and b) those that are around will be actively looking for ways to organize their

Alberta’s NDP rise, and Trudeau’s plan, may be a sign of Canadian ideological slippage

affairs so as not to pay more taxes. There is ample economic evidence to support the idea that raising tax rates on high-income earners does not automatically generate proportional amounts of cash. When 50% of earned income is taxed, people find ways not to earn it. Consequently, when this revenue fails to materialize as planned, governments are left with cash shortages and deficits. Since the rest of Notley’s fiscal plan for Alberta includes a steady climb in new spending and tax credits worth $11.8-billion over five years, Alberta will be in even deeper fiscal doo-doo than it is already. The idea that there’s a fat 1% sitting on a vast pile of inequality that can be ironed out is now shaping up to be an ideological epidemic. But there’s more to the Notley economic agenda that soak-the-rich. The leading policy move, aside from the major redistribution credits and job-creation schemes, is a promise to find ways to increase the processing of resources within the province, an ancient liberal/left idea that has long fascinated economic interventionists. The Notley plan calls for “a careful review of how Alberta will promote resource processing and fair royalties.” To get that plan rolling, an NDP government will establish something called a “Resource Owners’ Rights Commission” that will, within six months, report on “measures to promote greater processing of Alberta’s energy resources” within Alberta. The objective will be to “ensure a full and fair return to the people of Alberta.” Such talk has great popular appeal, although it is hard to believe that there are still economists and politicians around who believe that governments can successfully and profitably micro-manage investment. Alberta’s disastrous Heritage Fund record should be enough of a lesson. But true believers still exist, including the economist quoted in the Notley election platform, who said Alberta “has the potential to be a leader in renewable energy, new products based on hydrocarbons and environmental stewardship.” The markets for oil and gas — and the energy products that they feed — are global ones that are shaped by investment decisions based on international markets. Canadian politicians and economic nationalists have forever believed that, by manipulating royalties and other policies, they can overcome the pull of global markets for efficiency and low prices. These dreams rarely succeeded in the past. They were losing strategies, even before the era of globalization. Is Alberta, and Canada, now trying to turn back the economic and ideological clock by taxing the rich and trying to pick economic winners?

P