Taxes - Perhaps We Should Call Them Something Else

Coming from a family of commoners, it was very clear to all of us as we were growing up that we were benefiting greatly from the social welfare state in Canada. Both my parents and my brother made good use of our public healthcare system. I shudder to think of what would have become of us if we had to pay for our own health insurance if we did not have access to Medicare. Thank you, Tommy Douglas! I feel the same way about our public school system. The vast majority of Canadians, it would appear, have formed a consensus that having a strong and viable commons is a good thing for any civil society. Indeed, it may be a prerequisite.

So it was with amazement and even a little exasperation that I read the media response to what has recently become known as the Buffet Rule. In early 2011 Warren Buffet, one of the richest men in the US, stated publicly that he would like to see the US federal government implement a higher minimum tax rate for taxpayers in the highest income bracket. Buffet wanted to ensure that he and other rich Americans do not pay a lower percentage of income in taxes than less-affluent citizens. Buffet’s declaration, as many readers will recall, occurred during a very troubling economic crisis in which many Americans expressed concern over rising government debt. (And this continues!)

The response, led by Fox News pundits connected to the Republican Party, decried Buffet as a fool, expressed anger at his plan, and as expected, many Fox News viewers began to follow suit, making derisive comments about the man. A few months later, the gentle approach of Mr. Buffet was eschewed by the horror story writer Stephen King, himself quite a wealthy individual. Mr. King laced his public retort with profanity as he derided any working- and middle-class Americans calling for the rich to pay LESS tax than they themselves pay. Mr. King’s feisty attitude made a lot of sense to me, given the hostile reaction to Mr. Buffet's suggestion.

According to the US-based Tax Foundation, a pro-market think tank, the Buffet Rule, if enacted, would provide an additional $36.7 billion annually to help maintain what is left of the American commons. That's $36.7 BILLION!

And much of the American public is against this plan??

I would have predicted that any resistance to the wealthy paying higher tax rates to come from the wealthy themselves. Yet, here were some members of that very class stating that more public monies were needed to fix the roads, help public schools operate with adequate funding, and in general just make government more functional AND that they were willing to help foot more of the bill! And quite surprisingly, the resistance to this plan has emanated out of the very social classes who would clearly benefit from this kind of tax reform! Yes, I know that the billionaire Koch brothers funded the Tea Party rallies, but still, many people have been duped.

Clearly, the public school system has failed. Unless things change, an acutely false political consciousness may very well be the death knell of American civil society.

I am like most people in that I do not want to pay taxes for just anything. Of course, our social welfare state (including public healthcare and public education), our roads, and yes, even our police force are among the expenses I want to support through my tax dollars. Yet, I loathe when public funds are spent on things that disgust me. As an example, I did not agree with Prime Minister Harper handing over our tax dollars to the big banks. After all, Canadians have become used to hearing about incredible profits for the biggest banks for each quarter. I was somewhat surprised then, when Mr. Harper handed the biggest banks in Canada over $25 billion in late 2007, claiming the economic crisis required some sort of action. Call me crazy, but I think any business should take from its own profits and savings to deal with difficult times before they accept any money from the public.

(By the way, at the time our Prime Minister gave the banks our money, the media were calling this a return to Keynesian economics. It was nothing of the sort. But this will be the topic for a future post.)

It is my belief that the utter hatred of paying taxes is worse in the US than it is in Canada. Yet, there are signs that the American attitude is creeping north of the border, as well. I was in Toronto in the fall of 2010, shortly before the municipal elections there. Mayoralty candidate Rob Ford was riding a wave of support over his plan to “end the gravy train” at city hall. Once elected, Ford proceeded to end the “gravy” train by attempting to implement library closures, and stop city workers from mowing the lawns of city parks, among other services. Are such things really considered “gravy”?

There is a similar trend out here on the prairies. Over the past couple of years, parents have seen cuts to public education result in the disappearance of many educational assistants, among other things. Yet, during the provincial election last November, the governing Saskatchewan Party promised more tax cuts if re-elected. The result was the Sask Party winning 49 out of 58 seats. Clearly, the tax cut discourse still resonates with many voters.

Now in 2012 we have seen the tax cuts result in an end to the tax credit for the province’s film industry, almost insignificant wage increases for teachers, and more plans to privatize crown corporations. And this in an era of potash-induced prosperity!

A few days ago, this same Saskatchewan government decided to give the local professional football team $90 million for a new football stadium. Apparently, the private sector had done a cost-benefit analysis and pulled out of providing funds for the stadium. The Saskatchewan Party decided it would make up the difference! And like with Harper's "gift" to the biggest banks, a few citizens expressed disgust at this use of tax dollars, but the resistance seemed to be quite tiny.

So what really is going on here? As the gap between the wealthy and everyone else grows to grotesque levels in both Canada and the US, people lament having to pay taxes. Yet, a fair tax system is the most effective way of redistributing wealth in a society. It is the only way to strengthen or even maintain a civil society. It is the most effective strategy to invest in our children and in our grandchildren.

An important question that needs to be asked is this: If not through taxes, how should a government acquire enough money to pay for the services required for a civil society? (Perhaps raising royalties on Big Oil and Potash Corp would help, but the pro-corporate sectors in this province would scream to the heavens above that this is an unfair tax on Big Business!)

Perhaps a re-branding is required. The word “tax” has too much baggage, conjures up too many negative emotions in too many people. I do not know what a better term might be – would hysteria ensue if the term was “citizen investment”?

Clearly, some kind of strategy is required. There are simply too many stories from the US and other western nations of governments not having enough money to fund important aspects of civil society. Even Toronto’s mayor must be thinking to himself that the gravy train has long ago left the station.

(More to come on the Great Tax Cut Debate in another post.)