Tax time has come and gone again in Canada, which can remind us of politicians’ comments on taxes. Many politicians, especially conservative ones, have talked about tax relief, offering all kinds of tax cuts and rebates for everything from fitness to children’s art programs. Oftentimes, they also guarantee that these tax cuts can be paid for without reducing frontline services or major programs. If anything, they also talk about other kinds of spending, whether taking the fight to ISIS in the Middle East, getting tougher on crime, and upgrading the military’s equipment.
In all the talk about taxes, though, nobody seems to ever want to discuss what an acceptable minimum for taxes might be. If conservative politicians think that taxes are too high, then what is an acceptable minimum tax rate that people should have to pay? Conservative political programs and goals cost tax dollars too.
Unfortunately, this never seems to come up. Author Alex Himmelfarb, in his book Tax Is Not A Four Letter Word, talks about the ‘free lunch’ mentality that has taken root in a lot of modern political talk. We can supposedly have all the tax credits and cuts we want, without ever having to give anything up in terms of essential services. Rob Ford exploited this with his claim of “no service cuts, guaranteed”, while Jim Flaherty claimed that the Harper Conservatives “did not balance the budget on the backs of Canadians”. Both these claims turned out to be untrue, but they illustrate the point well.
Many of the conservative projects mentioned above are good and important ones. We should be contributing to the fight against ISIS, the army deserves better equipment than the antiquated junk they’re often stuck with, and the longer violent criminals stay behind bars, the better. However, they cost money, and it’s not always clear where the money will come from if the tax base is constantly and endlessly reduced.
Say what you will about progressive politicians and parties, but they at least have some sort of idea where the money to finance programs and projects will come from when they talk about tax increases. On the other hand, when conservatives continually promise more tax cuts and spending on their own programs, all while promising to keep the books balanced, one is left to wonder where the breaking point is.
Back in the 1990s, conservative politicians like Ralph Klein, Mike Harris and Preston Manning showed a lot of courage with the blunt honesty they gave to Canadians. They were up front about the fact that the results of the cuts needed to keep Canada and the provinces from going broke were not going to be pretty. Politicians like Rob Ford and Stephen Harper lack much of the same courage, having played to the ‘free lunch’ mentality described above.
There’s obviously a limit to how high taxes should go, and that limit will change from time to time. But doesn’t that also mean that there should be a minimum level of taxation?
And if so, what is it?
This article was originally published in the St. Albert Gazette on April 30, 2016.
5 thoughts on “What is the right amount of tax?”
Thanks, Jared, for raising this important question. I have posted on related questions a few times. In short, I think we need to (a) have more taxes generally (so we can invest more in social programs), and (b) coordinate tax policies better across countries to avoid races to the bottom. Here are the posts:
P.S. It’s clear you don’t support the Harper/Ford approach, but what do you think is the answer to your question, Jared?
The right amount of tax is arguably a moving target-sometimes taxes might need to go up, sometimes they might need to go down. Sometimes new programs might be necessary, sometimes cuts are the way to go. The thing is that circumstances are changing all the time, and a one-size-fits-all approach leads to all sorts of headaches. As much as possible, though, you should try and stay out of deficit, and pay down debt as much as possible.
That said, one major principle would be that the tax system should be as plain and streamlined as possible, Tax credits, where they exist, should be as broad and applicable as possible-I like the tax credits for families with children and members with disabilities, since anyone can have kids and anyone could have a disability. What I don’t care for are policies like income-splitting, which exclude single people and couples who are in the same income bracket.
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Everything you say here is sensible, Jared, but are you willing to be any more specific in assessing the current situation? For example, I agree in general that we sometimes need more tax, and sometimes less, and that we on average overuse deficits (though I personally support a federal deficit in today’s economic climate), but where do you think we are today relative to where we should be? Is now a time for more tax? Less tax? More/less spending/deficit? Are there any specific changes to the tax code that promote streamlining that you would like to see?
I think it might be worth reviewing the entire tax code, top to bottom, to get rid of all the inefficiencies and loopholes that have crept into it over the years. Not only does it have the potential to bring in more revenue, it would also save businesses and households a lot of time and effort in calculating their tax bills. I’ve seen both progressives and conservatives call for this, for these reasons.
There are specific tax proposals out there, such as Linda McQuaig and Neil Brooks advocated in their book “The Trouble With Billionaires” that even the conservative Jonathan Kay found quite reasonable. Eric Kierans and Walter Stewart talked in “Wrong End Of The Rainbow: The Collapse Of Free Enterprise In Canada” about replacing corporate taxes with value-added taxes and taxes on business costs. I can’t really judge the values of these proposals myself, but they could be considered in a review of the tax system.
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