Saturday, 22 October 2011

The Strange Case of the 'My Tax' Multiplier

Taxes are unpopular, maligned and denigrated. Raising them is rejected as sound public policy and, thanks in part to anti-government conservatives - both small and big c - serious talk about issues of taxation, apart from cutting them, is deemed political suicide. This has been expressed in Canada by all levels of government. In Ottawa, the Harper Government forged ahead with reckless cuts to the hated GST, draining federal coffers of billions of dollars in needed revenue and helping create a 'structural' deficit before the onset of global recession. This, according to erstwhile academic and Conservative hack Ian Brodie, is a policy that works. How sad that the effectiveness of public policy is no longer measured in the tangible good it delivers to the public but is instead measured by electoral success of a party. Sadder still is how taxes have been so firmly politicized that a tax - justifiably hated in the way it came into existence and then - that is far more equitable and makes good financial sense has been rejected as a legitimate policy option. The 'Progressive' Conservatives under Tim Hudak ran on the same basic narrative: people hate taxes!

This narrative, however, is far from complete and is falsely overstated. While paying taxes and parting with income is never entirely pleasant, this is, as the jurist Oliver Wendell Holmes famously noted, the price we pay for civilized society. Moreover, the tax demon is a useful straw man that is easily exploited and deployed by conservatives. It isn't taxes per se that irk them, but what taxes stand for: an expanded role for government beyond building roads and maintaining law and order. The greater tax income,  the greater the possibility of government intervention. Siphon off and deplete the main source of government income - taxes - and, as a corollary, the ability of the government to function dissipates. Taxes themselves are not the enemy - they are acceptable to purchase weapons, fund bloated police budgets or invest heavily in unneeded prison infrastructure - rather, the enemy is what taxes bring apart from these. Social assistance, libraries, arts, public transit, parks and the like are for conservatives the rotten fruit of taxation.

In Toronto, a year ago this coming week, Rob Ford trounced his competitors by running against high levels of taxation without visible rewards, promising to cut the gravy. It turns out, however, that Ford's conception of gravy is, to most citizens, the lifeblood of a livable and just city. The supposedly universal hatred of taxation narrative so often brandished was soundly put to bed by the thousands of citizens who completed online surveys about the Core Services Review or presented deputations in several long sessions at City Hall. The message was essentially unanimous: citizens value the services the city provides and are willing to pay to maintain them. Moreover, even those who did not receive tangible benefits from higher levels of taxation were willing to ensure other citizens would not be deprived of them. The message, however, was quickly dismissed. Ford Nation, that silent and monstrous majority of a beast, would not countenance such talk. As the Mayor, his allies, and the press made clear, the vocal minority were the unemployed, entitled Millerites and union thugs, and not representative of the city at large.

While the political narrative on taxes has taken this sad turn in which to suggest we take a serious look at taxation as a public policy tool is derided, it is clear the public perception of taxation as a concept is badly distorted. Government income is not treated as a pooled collective resource - which it is - but is envisioned as the intermingling of individual funds which can be traced directly back to where the funds originated: the individual tax payer. By this logic, money paid in income tax is tagged, comes with a tracking PIN and can be located by its 'owner' throughout the public system. One need only look to various news outlets - see, for instance, the Sun News network in its entirety, or opinion columnists especially at the Globe & Mail or National Post - to watch these phenomena play out. When an aspect of public policy offends the sensibilities, particularly of those on the right, the author becomes indignant, decrying the abuse of 'my tax dollars' to fund things they don't agree with. Why, they ask, should I be forced to fund something, say abortion or pride parades, that I do not agree with morally. Why are my taxes being used to fund 'foreign workers' or privilege foreign students over Canadian ones (to borrow the Hudakian election trope)? The issue is no longer one of democratic debate, negotiation and bargaining. It becomes a cold customer service transaction akin to subscribing to cable TV: I only want to pay for the channels I personally watch and enjoy. I don't want the arts channels, I'm too young to need medical care, but do keep the Murder, She WroteChannel going for when I need it.

This is obviously not a new sentiment, but there seems to be an expansion of what I'm going to call the 'my tax multiplier'. The basic premise is that when a fixed amount is inputted - the total an individual pays in taxes a year - that amount is multiplied by an indeterminate number - almost always infinity dollars - in which the effects of one citizen's meager tax contribution expands exponentially across the system, encompassing every area that individual has an opinion on public policy. It's the taxation rhizome, popping up in unexpected places. It's also a mathematical and logically impossible vision of how tax dollars work.

Let's run a hypothetical example in which everything is simplified for sake of parsimony. Take Maggie, a successful but not too bright writer for an unnamed news outlet living and working in Toronto. Assume she parts with about $19g of her money a year in taxes. That tax money could buy about 40% of her local city councillor and that's about it. This is all her contribution covers. Wait, but that means she isn't paying for her MP or MPP? Maggie is obviously a freeloader mooching off the rest of us. Thankfully though, our intrepid diatribe scribe can invoke the mystical powers of the 'my tax' multiplier to amplifier her purchasing power and counteract the laws of mathematics. Suddenly her initial $19,000 contribution to society has become that cheat code for The Sims that grants unlimited funds upon the user. She now traces her tax dollars to all sorts of questionable programs and expenses and is enraged upon discovering that her $2.1 billion contribution is paying of the HST rebate in Quebec. Outrage!

There is a multiplier effect from individual contributions to the collective tax pool, but once deposited they cease to have a single owner. Ownership becomes collective. Maggie's contribution is no longer hers to direct and control, it becomes subject to democratic ownership. Despite loss of control, the benefits are augmented and she gains far more than she could purchase along. Indeed, the services and infrastructure she depends on to get to and from work each day would run her into the billions. In effect, each of us benefits from something someone else has contributed to, yet this fact is so frequently ignored for an individualist language. Democracy isn't a buffet. Tax dollars do not come with an opt out clause for the simple reason that once in the system, individual contributions become indistinguishable from all the others. Paying taxes simply affords the same right guaranteed to everyone: the right to criticize and disagree. There is no notwithstanding clause to dictate where your money goes. The result of populist drives led largely by conservative parties and pundits is to posit taxation as a purely individual fact in which the benefits and costs must be visible. It sees taxation as a burden, not as something that results in mutual benefits. Most lamentably, however, this thinking encourages the atomization of society in which perceived individual wants trump collective needs and any sense of solidarity erodes. This is perhaps the most costly repercussion of the current discourse on taxation in this country,  more regrettable - and ultimately more harmful - than the loss of government income that has accompanied it.

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