Consumption tax, not wealth tax needed
While I concur with MP Alistair MacGregor in his scorn for the endless platitudes (“We’ve got your back”) and empty promises of our Prime Minister, I find he falls into the same trap as Mr. Bernie Sanders in his call to soak the rich. I greatly admire and enjoy Mr. Sanders for his efforts to help the underprivileged, but his proposal to tax the likes of Mr. Bezos for all the money he has recently made on his stake in Amazon is ridiculous. Amazon has made it possible for millions to obtain needed supplies while avoiding human contact and the virus. This is a service to humanity; and so it is only “fair” that Mr. Bezos should be punished for providing this service, since he is profiting from it? Please explain why?
What Mr. Sanders and Mr. MacGregor mean is that is much easier not “fairer” to confiscate wealth from those who have it. To them it is only “fair” that those who “have” should share with those who don’t, whether they like it or not. No one is accusing – or are they? – Mr. Bezos of being a war profiteer who dishonestly is charging excess prices for needed goods. There is nothing unfair about people who found companies and make a fortune from doing so. Personally, I am greatly affronted by executives who receive outrageous salaries and bonuses ($50 million); I am equally outraged that hockey and basketball players should get $20 million and more in salaries for playing games. Yet I don’t believe taxation is the solution to this serious problem. Neither of these cases is the same as people becoming wealthy from making good investments.
If you examine the case of Mr. MacGregor and the NDP, it claims that those who work hard while young, sacrificing leisure to get educated, and as a result become doctors and lawyers and engineers who prosper later in life, should be punished by having their “ill-gotten gains” confiscated in income taxes or wealth taxes. The message is that we should all squander our youth drinking beer and screaming “woo hoo” at hockey games and generally have a good time. We should all spend every penny we earn and go into debt to buy toys and gadgets for ourselves and our children, teaching them that saving is wrong, wasting money on fashions and throwing everything into the garbage dump. Then since we have no savings and thus have not $200 to get to the next pay cheque (according to statistics), we should expect the government to bail us out when epidemics interfere with our jobs.
Mr. MacGregor wants to increase the tax on those who have higher incomes, much of which comes from investments due to saving, which perhaps he thinks should be discouraged. How high, since it is already 54 per cent on top incomes? Should we go to 75 per cent or perhaps to the 97.5 per cent in the U.K. before Mrs Thatcher reformed taxation and caused the U.K to become prosperous again instead of moribund? He also wants to tax wealth to confiscate the savings of those who do save. What does he expect to happen? The rational response for people is to remove investment capital from Canada, where it is used to promote expansion and development, and to put it to work in other countries where its growth cannot be monitored by tax authorities here.
Wealthy people do not enjoy their wealth until the moment they start spending it, perhaps on luxury cars, jewelry, and high fashion items. I agree with a large luxury tax, perhaps one hundred percent on those items. It makes the wealthy have to pay a lot to display their wealth, and they can afford it; it signifies that they really are wealthy, if they wish to prove it. While they are not spending though, they must be investing, and economists believe that investment is very valuable to society; that is to say it is to be encouraged.
In fact, the real tax that is needed is not an income tax where it already confiscates more than half of what is earned, but a consumption tax. Canada’s rate around ten percent is to be contrasted with the EU, where it is closer to 25 per cent on average, with similar rates of income tax as here. What do they do with the extra revenue? They have much better health systems and infrastructure. They also discourage with this tax the foolish purchases of the profligate spenders who have to think a little more when there is an extra twenty-five percent to be paid. That means less consumption, less use of the earth’s resources, and less waste to fill the garbage dumps. It means greater protection of the environment. Yet this does not seem to be a concern of Mr. MacGregor and the NDP, who ought to remember that it was Deng Xiaoping who said that socialism did not mean shared poverty — to be wealthy was glorious (which may be a mis-translation). In saying that, he unleashed the entrepreneurial spirit of the Chinese people, thereby creating great inequality in China as the almost universal poverty was changed to what they now claim is the eradication of poverty in China (with perhaps some exaggeration). The NDP should take note in its laudable concern for the plight of the underprivileged.