“Due to budget cuts, the light at the end of the tunnel has been turned off.” – message on an Occupy Movement sign

Here we are, facing another Provincial election. Again we hear from all sides that tax cuts are the way to a bright future. Even the NDP are proposing tax cuts for small businesses. Cutting taxes has been the dominant political focus in North America and other western democracies for the last three decades. The message: the problem is government, the solution is tax cuts.

Alex Himelfarb has a different perspective. Given all his credentials, his message is worth considering. For starters, he’s a senior Canadian civil servant, academic and author. In 2000, he was awarded The Outstanding Achievement award, considered the most prestigious award in Canadian public service. And, he’s the former clerk of the Privy Council, not to mention a former ambassador too.

His view: We need more tax revenue, not less. Tax cutting is destroying our collective capacity to shape our future.

We all know that taxes are the price of civilization – they pay for what we care most about. But over the last three decades it has become a dirty word. Alex gives credit to Milton Friedman, economic advisor to former American President Ronald Reagan, for initiating the movement. It was Friedman who famously said, “I’ve never seen a tax cut I don’t like.” He promised that tax cuts were free; they would pay for themselves. It turned out to be an irresistible message, adopted by politicians of every stripe.

Nobody enjoys paying taxes. We are even more reluctant to pay them when politicians tell us that our tax money is being wasted. They talk of inefficiencies, bloated bureaucracies and gravy trains. As long as we think government is corrupt, we will always refuse to pay more tax.

Unfortunately, there really is no free lunch. Time and again, we see that there is never enough waste to be cut to deliver on promises. Let’s be clear – when taxes are cut, government services are eroded. Along with them, we lose our ability to address inequality, mitigate its effects, protect the environment, foster a more just and peaceful society, and develop the infrastructure needed to be productive.

But tax cuts create jobs, we’re told. Alex emphatically states that there is no evidence to support this. In fact, he references economists Paul Krugman, 2008 Nobel Laureate and New York Times journalist, and Yoshihiro Francis Fukuyama, once closely associated with neoliberalism (think privatization and free trade), in saying that tax cuts have led to increasing inequality and the unravelling of our economic systems.

As Alex puts it, “We are drifting toward a smaller and meaner Canada.”

We are desperate for vision from our politicians. But, all great change starts outside government. Let’s start by removing the taboo of increased taxes, particularly for top income earners. Even Adam Smith, the father of capitalism, endorsed taxing the rich at a higher proportion of their earnings. He understood that without redistribution of wealth, capitalism moves inexorably toward oligarchy. Turns out he was quite the prophet. Krugman and Fukuyama say that America has already achieved that state. Canada isn’t far behind.

Reversing budget cuts will turn the light back on at the end of the tunnel.

 

This article first ran in the June/July 2014 issue of the North Simcoe Community News.

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