Flat Tax Limits State Theft
Economic expediency and tax socialism distinguished the recent debate about the flat tax over the pages of the Financial Post. Author and social policy consultant Martin Loney's commentary was in itself unremarkable. However, in the context of Mr. Loney's known position on equality of treatment for alló his rejection of the principle of non-discrimination was jarring. Mr. Loney is the author of a book that exposes the thin reed policies of preferential hiring in Canada. He comes out swinging against hiring practices based on race and gender, and the spurious group-justice concept that has come to usurp individual rights. Mr. Loney, it would seem, embraces the principle of equal treatment of all under the rule of law and equality of opportunity, as opposed to equality of outcomes.
Enter Mr. Loney's tax socialism. When it comes to doling out tax cuts, based on the characteristics of low, middle and high income, Canadians should receive different shares of the tax-cut pie, with low, and middle-income Canadians receiving more of the jobs, oops, tax cuts, than high-income earners. Substitute race or gender for income, and university posts for tax cuts, and you have Mr. Loney in revolt against the thesis of his own book. According to his prejudice, the wealthier you are, the more your private property is up for grabs. Or as Mark Mullins of the Canadian Alliance promised readers: As a "Canadian value", progressiveness in taxation is here to stay. Read: the rights of a minority will continue to be subjected to the "values" of the majority.
While Mr. Loney dismisses the identity politics of gender and race, he does in his book allude to income inequality and growing disparities between social classes. His willingness to dispense with justice on the issue of property then becomes clear. While it is wrong in his estimation to discriminate between people based on their race or gender, it is fine somehow to discriminate between them based on their ability to accrue wealth, which, it can be argued, is intrinsic. Regardless of how socialists account for the natural inequalities of men, they agree that to compel some members of society to supply others with their needs is just conduct.
The numbers tell us that the top 30 percent of Canadian income earners pay 65.7 percent of all taxes, but also earn 58.3 percent of all income. Presumably the statistician merely wishes to impart information by pointing to the portion of income, all told, the rich earn. Mr. Loney, on the other hand, is guilty of obfuscation when he says high-income earners should not get the benefits of a flat tax because "a taxpayer earning $90,000 receives three times the income of an average earner."
Receives? From whom? Mr. Loney here implies that there is a delimited income pie from which a disproportionate amount of wealth is handed over by fiat to the rich; a most disingenuous characterization when you consider that, in a free market, labour productivity is the main determinant of wages.
Economist William Watson chorused his difficulties with the Alliance flat tax proposal on the grounds that it doesn't eliminate enough deductions and exemptions and hence fails to broaden the tax base. In short, deductions benefit the individual taxpayer, but constitute a social waste and are thus economically inefficient. The utilitarian gladly trades justice for expedients; the socialist, however, has no concept of justice to begin with. He prefers mob rule to the cherished constitutional principles of equality and consent.
Bear in mind that taxes are private property confiscated by force. To test this try not paying them. The flat tax is thus only a hobble in the right direction and must be supported by tax deductions. Be they mortgage-interest deductions, RRSPs or "charitable and tuition deductions," the more the tax bill is reduced, the more private property remains with its rightful owners.
Further, in a free enterprise system, people do not pay for goods and services in proportion to their income (or else Bill Gates would be paying a million dollars or so for a loaf of bread). Rather, they all pay the same amount. The fairest method of taxation then would be a poll or head tax, where we are all taxed equally. That the poor would not afford much would limit government spending like nothing else.
The debate would be incomplete without Mr. Loney's last-ditch attempt at justice. Yet another reason he opposes a flat tax is that it stands to benefit the workers of the pay-equity engorged public sector. This is like objecting to the abolition of slavery because some slaves with jobs inside the manor stand to benefit more than slaves toiling in the cotton-fields.
©2000 By Ilana Mercer
The Calgary Herald