As I mentioned briefly on Sunday, Ignatieff’s proposal to cancel the corporate tax cuts should form the main ideological fault line of the next election campaign. That’s not to say it’s all the election will be about – let’s not kid ourselves, we’re still going to get “Harper’s a dictator” and “Ignatieff’s just visiting” attack ads. But when it comes to policy, we may finally have found an answer to the question “what would Ignatieff do differently from Harper?”.

Is it good policy? Well, I’m not an economist. Most economists like corporate tax cuts, but Canada is already quite competitive in this domain, and even executives recognize that corporate tax cuts may have to wait until the economy improves. On the whole, I tend to think the cuts would be good for the economy, but investing the 5-6 billion in early learning or post-secondary education will also help us in the long run.

Besides, as we all learned during the Green Shift Self Destruction Tour ’08, good policy doesn’t always make for good politics. So how will this play out politically?

For the Tories

We’ve already seen them refer to this as Ignatieff’s “job killing tax”, and that seems like as good a way as any to message it. Corporations don’t vote, so Harper absolutely has to connect this to individuals, and “job killing” is a whole lot easier to talk about than the nuances of international competitiveness and trickle down economics.

They’ll try to frame the election as the “tax and spend” Liberals up against Harper, the sound and stable economic manager.

For the Liberals

This gives them some wiggle room to propose new programs and/or promise deficit reduction. In effect, it’s their chance to differentiate themselves from the Tories and the success of this gambit is ultimately going to rest on what they propose to do with the 6 billion.

I personally don’t think there’s a lot of sympathy for corporations out there, so expect them to frame the campaign as the Conservatives in bed with big business, against a Liberal Party who will actually do something to make your life better.

For the NDP

Overlooked in the early analysis of this move has been what it means for the NDP. As is often the case when the Liberals take an idea of theirs, this isn’t good news for our Dipper friends. Because really, if you care about the issue, why vote for the guy who can’t do anything about it? And if Layton tries to out do Ignatieff and promises tax hikes…well…that just pushes him further away from the mainstream and makes Ignatieff’s position look more centrist, by comparison.

In effect, NDP ads against big business and corporate tax cuts would now become de facto third party advertising for the Liberals. Jack’s either gonna need a new wedge issue, or a convincing narrative that turns NDP/Liberal swing voters off Ignatieff.