Categories: Andrew Potter

Tax freedom? What a lot of rubbish.

Only the Fraser Institute could see it as a bad thing that we spend less of our income on basics like food and shelter than we used to

by Andrew Potter on Thursday, May 28, 2009 1:00pm - 22 Comments

Meanwhile, the study notes, since 1961 the amount that Canadians spend collectively providing ourselves with national defence and other forms of security, health insurance, unemployment insurance, pensions, clean air and water, consumer protection, infrastructure, research and education, and other public goods has skyrocketed, increasing by 1,783 per cent per family.

The tax “burden” was so much lower then, wasn’t it? Sure, but so was life expectancy. Despite what the Fraser Institute wants you to think, this is what is known as progress, and only in the bizarro-world fantasies of anti-tax conservatives could a society where families spend over half their income on private necessities be considered preferable to the one we have today.

As it happens, the closest analogue to stunt holidays like Gas Tax Honest Day and Tax Freedom Day is the culture-jamming festival Buy Nothing Day. Held each November on what is supposedly the busiest shopping day of the year in the U.S., this annual celebration of anti-consumerist values exhorts participants to adopt a lasting lifestyle commitment to consuming less stuff and producing less waste.

Buy Nothing Day doesn’t make a lot of sense either, given the economic truism that for every consumer there must be a corresponding producer. Thus, Buy Nothing Day might as well be called “Earn Nothing Day”—though telling people with bills to pay to skip out on a day of work doesn’t quite have the same power as a rallying cry.

Indeed, with its mix of dopey populism and economic illiteracy, the anti-government right finds itself uncomfortably close to the anti-market left. Both are peddling economic half-truths and outright fallacies in the service of their competing but ultimately mirror-image ideologies.

The main difference of course is that while the left is generally expected to be economically illiterate, the right is supposed to know better. Their brand is economics, you might say. That is why, when it comes to the rhetorical strategies of Canada’s libertarian movement, it is hard to avoid concluding that the deception is deliberate.

Tags: , , , , , , , , , , , , , , ,

Bookmark and Share
  • madeyoulook

    The underlying message is not that some taxes may be too high, or that the share of taxation may be unevenly distributed. Instead, it is that all taxes are essentially confiscatory, an unfair and probably illegitimate transfer of income to the state from its rightful owner, the private citizen.

    Care to point out where they make that point (that ALL taxes are “unfair” and “illegitimate transfer[s]“)? Besides in your own imagination, that is. Thanks.

    • http://myblahg.com Robert McClelland

      After that, Mr. Potter, you can point out where anyone has ever claimed that water is wet.

      • madeyoulook

        Google (with safe search on) returns 77,000,000 hits for “water is wet claim.” Feel free to look araound.

        You’re welcome.

        • http://www.savedarfur.org Sophia Geffros

          You don’t want to know what comes up without safesearch….

  • madeyoulook

    Actually, the main “rubbish” about Tax Freedom Day is not that all taxes are evil. It’s that there is no such thing as freedom from taxes if you are a law-abiding citizen. There is NEVER a moment when Canadians “can finally start working for themselves.” Does. Not. Happen.

    EVERY additional dollar of legal income earned is subjected to the marginal taxation rate, and don’t think for a moment that productive people haven’t hesitated over the bother of additional economic activity, given the real return such effort provides.

    EVERY legal purchase of consumer goods (yeah, yeah, not food or prescription drugs, etc., I know) is subjected to sales tax.

    EVERY new hire is subjected to payroll taxes.

    And no, I am certainly not spouting Mr. Potter’s lame all-taxes-are-evil false lampooning. I am just saying he gets the complaint with the premise of “Tax Freedom Day” completely wrong.

    • Mike T.

      The concept is somewhat unique but not unworthwhile, and its a perfectly legitimate exercise in tax theory. In fact, the “main rubbish” is the deceptive methodology used in arriving at the date in question.

      And the theoretical possibility of some people engaging in the luxury of turning down work is pretty small next to the actual reality of the diminishing utility of money. Rational economic actors? Never met one.

  • http://www.jackmitchell.ca Jack Mitchell

    Excellent piece. Gad, the FIPD.

    That said, I’m of two minds. “Gas Tax Honesty Day” seems ridiculous to me, but I’d support a “Booze Tax Honesty Day.” I got into making Pina Coladas last weekend and am now out of rum. If it costs this much when I’m unmarried, I can’t imagine what it would cost to raise a family of four on Pina Coladas. Lowering the tariff on coconut cream would also help.

  • dgmckenna

    You miss the point of anti-tax folks. They are generally fans of garbage pickup, roads and other public goods. They are not fans of some of the goofier public expenditures and corrupt transfers of money.

    Elected officials are hopefully accountable for roads and real public goods. They are fewer complaints from the majority about frills and money for Cricket clubs. By reducing taxes, the government structurally has less money to waste while still providing the same or similar public goods.

    That’s one theory at least.

  • hosertohoosier

    Andrew, the libertarian right is anti-tax because that is the best way to market an anti-government message. They would love to also roll back government spending given the chance.

  • Mike T.

    Tax Freedom day has already passed. The methodology used to calculate it would make the people who cooked Enron’s books blush. Capital gains aren’t counted as income, ridiculous public charges are made into family expenses, and they are highly ‘flexible’ with their use of medians vs. averages. Professor Neil Brooks wrote an excellent paper on it which can probably be found online somewhere.

    When you treat it seriously without pointing that it’s falsified information, you’re already giving it far more legitimacy then it deserves. And you’re also spilling ink on people who don’t think highly enough of you to be honest with you.

    • Sisyphus

      Ah. Neil Brooks. A great and very funny man.

  • Andrew (not Potter or Coyne)

    It’s really a bit of a marvel that the CTF are still invited to panels of serious-sounding discussion given that they are such kooks that take liberties with statistics, economics, and all-around logic. Much of what they do is gimmickry and misinformation.

  • sf

    Potter fails to make the distinction that while the public and private sector can both create things, only the private sector actually produces wealth. It is true that the private sector is the producer of wealth, and the public sector is the consumer

    Here’s a thought experiment for Mr. Potter.

    Suppose the private sector can produce the outputs Y from the inputs X.

    Suppose the value on the open market of Y is more than X. That is called generating wealth. We, as a society, ended up with more than we started. If the value of X is more than Y, that is what we call a company that should go bankrupt, because it is a destroyer of wealth. Society would be better off if the company did not exist (for example, GM is currently such a company, albeit a company that wishes to hide how worthless their cars are by letting them languish in giant parking lots).

    Similarly, when the public sector takes X tax dollars and produces Y, and the market value of Y is less than X, then that is what is called destroying wealth.

    Why do I say market value? Because this is another area where simple-minded people like Potter get it wrong. The only way to determine the value of something is to find out what people will pay for it. In a communist society, one of the reasons everything goes haywire is because there is no way to measure the benefits of what people produce. Sure, producing rice can be a good thing, but not if there is so much rice already that nobody wants any of it. If that is the case, the production of the worthless rice is a destroyer of wealth because the resources that went into producing it are gone.

    Thank goodness we have a private sector, because that is the only way we can determine if the public sector is creating or destroying wealth.

    By comparing with the public sector, we can be certain that what we get back in return for our tax dollars is indeed worth less than what we paid for it, and thus the public sector is a destroyer of wealth.

    • Mike T.

      With this kind of “logic”, you could work for the Fraser Institute!

  • sf

    Potter also fails to notice that the increase in life expectancy has absolutely nothing to do with taxes. Life expectancy was increasing long before the income tax was invented, for instance.

  • Gaunilon

    Potter, I can remember when you stood in for Coyne on his own blog years ago. You were excellent then. What happened?

    Do you really think that it’s “all a boatload of nonsense” that high taxes are bad? Have you never read a book that lays this argument out logically? Try Adam Smith, the “Father of Economics” for starters. Maybe follow up with a little Thomas Sowell. If you still disagree, fine, but don’t display your ignorance by suggesting that there are no good arguments to the contrary.

    Another canard: higher taxes are the reason for our longer life expectancies? Really. Medical advances (largely from the private sector) had nothing to with it, right? Cheaper food packaging due to free market competition also didn’t make any difference, right? Make a case if you want, but your blithe dismissal of any possibilities other than the one you like best is juvenile.

    Here’s one more consideration for you: our government collects far more than it needs for the basic services of national defense, infrastructure, police forces, etc. The rest is spent on entirely optional things chosen by the government for our well-being: fancy architecture in Shawinigan, huge gun registries, the CBC, etc. Which is better in a free society: people choosing what their money is best spent on, or bureaucrats taking people’s money by force and choosing for them?

  • Dennis Wharton

    There may be anti-tax groups out there – the CTF is not one of them. You need to go only the the former CTF President John Williamson’s article -Why we should pay taxes. They are however, adamantly opposed to wasteful, irresponsible and nepotistic spending of our tax dollars. Every month, without fail, governments, politicans and bureaucrats at all levels provide the CTF with myriads of examples of their failure to respect our tax dollars in the manner that they should. ADSCAM happened because there were people in government who felt they could get away with defrauding the Canadian public. Some of them went to jail because groups like the CTF refused to accept their behavior a business as usual.

    Mr. Potter may not grasp the concepts behind Tax Freedom Day and Gas Tax Honesty, but his failure to do so does not make the need for government accountability any less necessary.

  • Rabbit

    Tax Freedom Day serves an important purpose. It gives Canadians a clear understanding of how much tax they pay in a highly concrete manner. That can only be a good thing.

    And then it compels us to ask “How much taxation is reasonable?” and “Are we getting value for our money?”

    I suspect that Potter’s real problem is that he doesn’t want those questions asked.

  • Sisyphus
  • asp

    Buy Nothing Day is about ecology, not economy.

  • http://intensedebate.com/people/AdamT AdamT

    I forgot to address one other thing:
    "The main difference of course is that while the left is generally expected to be economically illiterate, the right is supposed to know better. Their brand is economics, you might say."

    Actually, there is no evidence what so ever that the right has any expertise on economics, beyond the fact that they like to think they do. As I've written elsewhere: "Milton Friedman got one thing right on inflation 30 years ago, and since then, every conservative, no matter how stupid, thinks they're an expert on economics."

    Spouting things like "I know how to spend my money better than the government" and "the free market works and socialism sucks" doesn't make you an expert on economics, it just makes you a well loved caller on the Roy Green show.

  • Ryan

    The pervasive obsession this country has with calling taxes a good thing absolutely baffles me. A few Canadian groups get together and decide to promote the idea of lower taxes and lower government spending, and the journalists and academics can't wait to deride them as brainless extremists.

    But be LOGICAL for longer than the two minutes it takes to write journalistic tripe like this. There is nothing extreme, foolish, illiterate, or negative whatsoever with the belief that taxes and government spending should be lower. Only in Canada does such an opinion offend.

    And by the way, the spurious correlation of tax rates with life expectancy is probably the single most dishonest claim I've ever seen in journalism. Shame, shame, shame.

Previous

Next

From Macleans