This year, the per-vote subsidy once enjoyed by Canadian political parties ends. Parties will have to raise funds entirely through donations. So, who gives?
There is a generous federal tax credit for political donations, worth 75 percent of the first $400 donated, 50 percent of the next $350, and 33 percent of remaining donations. The federal tax credit can reduce taxes owed by up to $650.
Canada Revenue Agency reports the number of people claiming various deductions and credits by age, sex, income, and province in its annual Income Statistics. Using these, it is possible to work out who is giving to political parties.
Despite the generous tax credit, not many give - of all those who file a tax return (including those who pay no taxes), just 0.7 percent claim the political contribution tax credit. Eliminating non-taxable returns would raise the percentage claiming the credit to one percent of taxpayers.
Also, political donors are old. Forty-nine percent are 65 or older.
The picture below shows how political contributions, charitable donations and - to provide a basis for comparison - the basic personal tax credit are distributed across age groups. (The basic personal tax credit is something that everyone who has any taxable income at all claims, so it gives a clear picture of the distribution of taxpayers). The figure shows, for example, that almost 25 percent of those claiming the federal political contributions tax credit are 75 or older, even though that group represents just 9 percent of those claiming the basic personal amount.
The majority of those who claim the federal political contribution tax credit - 65 percent - are male. This is not an artifact of couples consolidating political contributions on the tax return of the highest earner. Unless one partner has no taxable income, there is no incentive for couples to move political contributions to the higher earner's tax return. By way of comparison, 54 percent of those claiming charitable donations are male - and there is a tax advantage to consolidating charitable donations on a single tax return, often that of the higher income earner.
People who give to federal political parties aren't rich - almost three quarters have incomes under $100,000. But that's because most people aren't rich - over 90 percent of people claiming the basic personal amount have incomes under $100,000. The next figure compares the distribution of people claiming political contribution tax credits, charitable donation tax credits, and the basic personal amount. It shows, for example, that ten percent of people claiming the federal political donations tax credit had taxable incomes between $60,000 and $69,9999. (The distribution has spikes where the size of the categories changes, for example, between the $55K to $59K income group and the $60K to 69K income group). To a greater extent than charitable donations, federal political contributions tend to be claimed by better off Canadians.
Another way of seeing this pattern is to see how the percentage of all taxfilers claiming the credit - those with and those without taxable income - increases with income, as is shown below:
In sum, those most likely to donate to political parties are male, relatively old, and relatively affluent. It's not hard to figure out why the Conservative Party of Canada prefers funding political parties through individual donations.
What are some alternatives to the present system? Well, we could go back to having per vote subsidies. Or the federal political contribution tax credit could be clawed back from people with incomes above $100,000 per year - and the savings could be used to make the political contribution tax credit refundable for lower income Canadians. That would go some way towards equalizing political influence across income lines.
But in a world where political parties disproportionately raise funds from rich old men, we can expect policies that disproportionately favour rich old men - in other words, we're funding a gerontocracy.