It seemed like an appropriate time for a post on taxes. For a number of reasons. First, it’s tax time—deadline April 30th, folks. Second, it’s also election time and the usual party will be peddling their platform largely on the basis of lower taxes. And third, to my disappointment our new prime minister scrapped the consumer carbon tax as well as the increase in capital gains tax, and I am inclined to say a few words about that. And finally there’s the question of taxes when the very rich have seen their incomes increase much faster than the rest of us.
A good start to a discussion of taxes is a quote from the great American jurist, Oliver Wendell Holmes, Jr., who wisely observed that “Taxes are the price we pay for civilization.” Indeed. Taxes allow for not only the basic infrastructure of a society but also for a more equitable, more compassionate society.
The Conservatives’ election platform on taxes suggests they are trying to Americanize us. They are pledging a $14 billion annual income tax cut. This suggests they just might be intending to do a Trump on our social infrastructure.
Perhaps they plan on saving a billion or so by defunding the CBC. With this effort they would add to the holes in our social infrastructure by gutting our culture and news. Add all this up and we would practically be Americans—nothing left but to formalize the arrangement.
As to Carney axing the consumer carbon tax, we lost an eminently fair way to pay for our pollution. If you produce volumes of toxic fumes for others to breathe, you should stand accountable, the more you produce the more accountable. It is also one of the very best ways to deal with global warming, humanity’s number one problem. However, I recognize that either because of the Liberal’s failure to sell the tax or Poilievre’s success with “axe the tax,” the public never bought in. So, I concede, Carney had to bow to politics.
I am less tolerant of his canceling the increase in the amount included in the capital gains tax. Currently only 50 percent of a capital gain is included, but this was scheduled to increase to 66.67 percent in 2026. This would see investment revenue taxed more like earned revenue, i.e. for taxation purposes a buck is a buck. This was one of the most progressive tax measures in decades, although needless to say not popular with investors. In any case, Carney decided to deep-six it. More politicking?
Conservatives often argue for reducing taxes to stimulate the economy, but that’s a dubious argument. The Scandinavian countries have income taxes much higher than ours yet their economies are even more prosperous and they rank higher on the World Competitiveness Ranking.
And why wouldn’t they? We should expect healthy, well-educated populations with good physical infrastructure to set high standards. Quality is expensive and high quality public services require high taxes. The price is high but the product is a bargain.
Mark Carney recently suggested that the recent binge of aggression towards us from Americans is due to their social inequality, specifically mentioning envy of our health care. “I think that Americans built their social safety net with enormous holes in it, that tens of millions of people fell through,” he said. “There’s a backlash, and that backlash is leading to them pushing out against us.”
Tax cuts proposed by the Conservatives will undermine some of those very things that makes being a Canadian so desirable and Americans so envious. The election offers us the opportunity to insist on patching those holes we still have in our own social safety net in order to retain our advantage, reminding ourselves in the process why becoming Americans has such little appeal.