I like paying taxes. Taxes allow us to pursue our aspirations collectively and thus they greatly enrich the quality of life for the average Canadian family. Taxes have brought us high quality public schools that remain our democratic treasure, low tuition at world class universities, freedom from fear of crippling health bills and excellent medical services, public parks and libraries, safe streets and liveable cities. None of these things come cheaply.
Taxes also assist us in spreading our incomes over our lifetimes to maximize our well being by, for example, transferring income from our high-income years to our retirement years, from times when we are supporting children to times when we are not, and from periods when we are well and able to take care of our own needs to periods when we are ill or suffering from a disability.
Just as importantly, the public goods and services that we purchase with taxes leave working people more secure, healthier, better educated, more economically secure and therefore better protected against business threats and thus more able to win their fair share of the national income that we all collectively produce.
Taxes also allow us to discharge our moral obligations to one another. They enable us to establish democratically controlled public institutions that attempt to prevent exploitation in market exchanges and family relations; to ensure mutuality in our interdependence upon each other; to compensate those who are inevitably harmed through no fault of their own by the operation of a dynamic market economy that we all benefit from; to ensure a more socially acceptable distribution of income and wealth than that which results from market forces alone; to strive for gender and racial equality; and, to provide full entitlement and open access to those services essential to human development. As a result, taxes buy us a relatively high level of social cohesion and social equality and therefore the benefits of community existence. What would any of us have without community?
In spite of the fact that they enable us to collectively provide our most valuable goods and services, no one likes paying taxes. Therefore, promises of tax cuts are often a potent political ploy. However, before being seduced by the promise of lower taxes, Canadians ought to think seriously about the implications of a smaller public sector.
There is a good deal of public misunderstanding about the role of taxes in modern democratic states. In large part, this misunderstanding has been fostered by business interests and others who would like to roll back even further the economic and social borders of the public sector so that they can exercise unhindered power in our society through private markets. Part of their deliberate and clever strategy has been to use language and concepts in discussing taxes that make it appear self-evident that while citizens can afford more private goods and services, which businesses produce, they are deluding themselves and living beyond their means, if they think they can afford more public goods and services that they provide themselves through governments. Examples of such misleading characterisations of taxes abound.
Increased taxes cannot be afforded. This common, and compelling-sounding refrain, is patent nonsense. Many public goods provided by government and financed by taxes, such as health and education services, are necessities. Therefore, reducing the government supply of these services will not mean that people are no longer paying for them, it will simply mean that they are paying for them in the form of prices paid by private providers instead of taxes paid to finance their provision through the public sector.
Similarly, when people say that we can not afford to pay taxes to provide child and elderly care services, presumably they are not saying that we can no longer afford to look after our children or the elderly. What they must mean is that instead of spreading the cost of these services equitably, through the tax system, across the entire population, we should leave them to be borne by women, by and large, who provide these services unpaid in their own homes.
Thus, often when business interests assert that taxes should be reduced it is not because they think we can no longer afford the services that governments provide, but because they want to shift the cost of providing them from themselves and other high-income individuals to low-income families and women working in their homes at tasks that we all benefit from but for which they are not paid.
Taxes are a burden. This common description of taxes is equally misleading. Taxes are the price that we pay for goods and services produced in the public sector from which we all benefit. They are equivalent to amounts we pay as prices for goods and services produced in the private sector. Compounding the deception, at the same time they speak of public goods as being financed by the “imposition of taxes,” business interests often speak of private goods as being financed by “the dollar votes of consumers.” Here rational understanding is stood on its head. The vote, which is the symbol of democracy, is assigned to a marketplace transaction, while taxes, which are democratically determined, are treated as being amounts people have no control over but that are imposed on them.
Taxes restrict freedom. This common objection to taxes subtly reinforces the idea that the public sector simply consumes whatever it purchases with tax money, instead of using the money to deliver goods and services that benefit citizens. Taxes in fact increase the amount of freedom in society. In a market economy to have money is to have freedom. The government transfers over 65 percent of the taxes it receives to families in need in the form of pensions, child allowances, social assistance, and compensation for work-related injuries or loss of employment. Thus, while it might be said that taxes restrict the freedom of some, they greatly enlarge the freedom of others. Further, taxes spend on goods and services provided by government itself generally greatly increase our freedom, including, for example, the freedom to travel by using publicly financed roads and other transportation systems, the freedom to learn and think critically, freedom from concerns over crippling heath bills, and the freedom to enjoy public libraries, beaches and parks.
To promise, as some politicians are doing, that they are going to cut taxes in order “to allow Canadians to keep more of their hard-earned dollars” is simply a disingenuous way of saying “forget about recognizing your moral obligations to one another, to heck with pursuing your most noble aspirations collectively and do not worry about securing the blessings of real freedom.” These people do not deserve our vote, they deserve a civics lesson. As a famous U.S. jurist noted, taxes are the price we pay for civilization.
Ultimately, what is at stake in the debate over taxes and government is the question of who will exercise power in our society. Will important sources of power in society be controlled by only a small number of people where it will be exercised through private markets, or will important sources of power remain to be controlled by the majority of Canadians where it will be exercised through democratically elected institutions?
In support of their vision of the future, business interests and right-wing political parties keep warning us about the terrible legacy we are leaving our children in the form of a national debt and a bloated public sector. In fact, the much worse legacy we are in danger of leaving our children if we decrease taxes and continue to diminish the role of government in our collective lives is a fractured and divided society, without a sense of itself or its collective responsibility, and in which the economic elite is ever more able to defend itself politically. This would be a truly unjust and truly irresponsible legacy to leave our children.
Neil Brooks is a Professor at Osgoode Hall Law School and a CCPA Research Associate.