Under the Alliance plan, the present schedule of escalating marginal rates -- 17%, 26% and 29%, plus a 5% surcharge on higher incomes -- would be collapsed over five years into a single rate of 17%. Everyone would be taxed at what is now the lowest rate. But where the present system taxes all income above a basic personal exemption of $7,131, the Alliance would exempt the first $10,000. A similar amount would be exempt under the spousal deduction, plus a deduction of $3,000 per child.

All told, a family of four would pay no tax on the first $26,000 of income. They would receive the same exemption, what is more, and pay the same amount of tax, regardless of whether one or both parents worked, ending the present discrimination against one- income families. And a single parent would be entitled to the same total exemption as a couple.

Put it all together, and the Alliance claims that nearly two million current taxpayers would pay no tax at all under its plan. In addition, it would cut Employment Insurance premiums to $2 for every $100 in earnings from $2.40 today. It would raise the RRSP contribution ceiling to $16,500, or 30% of income (whichever is less), from its present limits of $13,500 and 18%.

Corporate taxpayers, meanwhile, would also pay a single rate, again by taxing everyone at the current lowest rate of 21% (versus today's 28% standard rate), a privilege now reserved for manufacturers and resource industries. The exception would continue to be small businesses, though even this preference would be narrowed somewhat. Instead of being taxed at 12%, a discount of 16 percentage points from the standard rate, small businesses would pay 10%, or 11 percentage points less than the new standard.

That's the plan. How does it stand up? The Liberals have been quick to attack the proposal, on two fronts: 1) that it is unfair, and 2) that it is unaffordable.

The first is rooted in the idea that the Alliance plan would mean the end of "progressivity" -- the idea, long accepted as a touchstone of tax fairness, that richer taxpayers should pay not just a higher absolute amount of tax, but a higher proportion of their income. But in fact they would still, even under a single rate. How can that be?

There are two ways to achieve progressivity. One, as in the present system, is to tax each additional dollar at a higher and higher "marginal" rate. The other, as the Alliance proposes, is to apply the same rate to a wider and wider share of total income. With a $10,000 basic exemption, a taxpayer earning $20,000 would pay tax on one-half of his income, for an overall rate of 8.5% (one-half of 17%). At $30,000, two-thirds of his income would be taxable; at $40,000, three-quarters; and so on. The proportion of his income paid in tax would rise accordingly -- that is, progressively.

Fair enough. But can we afford it? According to the Alliance, the total cost of its tax cut over five years adds up to $102.2-billion. But the surplus, according to Department of Finance estimates, will only total $95.5-billion. Does that mean, as the finance minister charges, that the Alliance would plunge us back into deficit? Or, failing that, would it require drastic cuts in spending, threatening funding for health and education?

Not quite. First, the Alliance forecasts the surplus will be more like $106-billion, using economic assumptions that are only slightly more optimistic than Finance: where last fall's Economic Update puts federal revenues, with no changes in policy, at $197-billion in fiscal 2005, the Alliance pegs the figure at $200-billion.

Second, the Alliance proposes to hold spending to a slightly slower rate of growth than the Finance Department's base case: 1% per year, versus about 3%. That's hardly draconian. And it gives it another $34.9-billion to put toward debt reduction: about the same as the Liberals would, assuming all of the finance minister's contingency reserve and economic prudence margins remained unspent.

That's still cutting it pretty fine. Both parties assume there will be no recession in the next five years. And neither party puts nearly enough toward debt reduction, considering not only the possibility of a recession, but the certainty of an ageing population, and the higher costs this will bring. Perhaps the economy would grow a little faster, in response to the Alliance's dramatic tax cuts, and thus yield more revenues in the long run. But that is to count money we don't yet have.

Which is sort of like running a deficit, when you think about it.