Taxes cannot be judged as fair in isolation. Taxes are a byproduct of government spending. They never exist by themselves.
The result of the normal “fair tax” discussion is one of who should pay and how much. The conventional wisdom is that those with more should pay more. Like income taxes. Another form is the ones who gain the greatest benefit should pay more. Like gasoline tax. Then there are the social imperative taxes. The ones that prevent evil. Like taxes on alcohol and cigarettes. Consumption taxes are everywhere. Sales taxes. Lastly there are “service fees,” those thinly disguised taxes that support government services where they expect people will require the service and it looks like a normal commercial transaction. Like drivers licenses.
In the end there are hundreds of taxes. The fairness argument attaches to each individually, and the fairness argument would fail if it were implemented globally.
All taxes exist to support government spending and at the political level, no one cares who pays or how much, as long as the money is there.
True fairness must be at the spending level.
What fairness argument could you make for a tax specifically designed to pay for negligent overspending? Or for corruption? Or for unneeded programs? Answer, there is no tax that would “fairly” fund these.
The question of a fair tax cannot be understood without a discussion of the spending purpose of the tax.
At one time a liberal was a person who believed that governments should exist to the extent needed to secure the borders, to provide a system of law and order, to create agreements with other similar countries and to provide necessary infrastructure which was beyond the financial ability of individuals. No one believed that the government should supply everything the citizens might want. Everyone believed that the government would do whatever they must as economically as possible.
Liberal has changed its meaning. Like gay, wicked, bad and sick used to mean something else. Today, liberal means a person who is interested in large, all serving governments. They are governments who attach the idea of fair to the revenue side of their budget without consideration of the spending side. No classical liberal would have ever done that.
Its seems that obfuscation is the key to government today. Recently the Ontario government called new taxes, “revenue tools.” They must believe that the people are dumb. Given that we have elected these various governments and allowed them to create their bureaucracies, there may be some validity to that assessment.
The people must begin to dial back these monstrosities. They are neither useful not affordable. The experiment has been tried and found wanting. Governments cannot give people everything that they might want.
I will begin to have hope when a politician somewhere makes the point that government debt is deferred tax. Not the kind that they like to rail against in the corporate sector, but the kind that the people will be forced to pay someday in the future.
The only way governments can get money is to take it from the people. The sooner we cause them to be frugal with spending, the sooner we can begin to keep more of the money to use as we find fit.
The only way the government can balance their budget is to unbalance ours. Please notice that there is no magic.
Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.
firstname.lastname@example.org | Twitter @DonShaughnessy | Follow by email at moneyFYI