Saturday, June 15, 2013

The Calgarian Advantage – Low Taxes or Zero Taxes?

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In Alberta, property taxes are everything. Since the province levies a flat income tax of 10% and has no sales tax, property taxes are a vital part of the government’s budget. Recently, the Alberta government raised the property taxes of booming towns. Previously, places like Chestermere were paying less in tax for property of the same value as those found in places like Calgary. Due to these changes, Calgary taxpayers are no longer subsidizing smaller Albertan communities and therefore have a “tax surplus” of $52 million dollars.

It was assumed that this money ($126 per person) would be returned to its rightful owner – the individual taxpayer. But the mayor and city council of Calgary have other plans. They’d like to keep everybody’s money and spend it on something else. Perhaps paying down a $3.2-billion debt or endless infrastructure construction? The ideas are endless and the Calgary Sun is outraged. They’ve launched a full scale attack on the city’s bureaucrats declaring 27 times in one editorial, “It’s not your money, give it back!”
If the Sun’ s editorials aren’t getting dangerously close to the notion that taxation is theft, then the letters they publish are certainly pushing the envelope. Consider, Ben Nielsen’s letter from June 8:
“It’s not about the $126. It’s about the principle of not letting Mayor Naheed Nenshi and his cohorts take our hard-earned dollars. I don’t care if I can only buy two cups of very expensive coffee, I don’t want Nenshi and others on council to appropriate this in the name of city need, when they can’t plan their way out of a Lego box…”
With the Sun adding, “it’s your money. Not the city’s.”
Taxation is obviously theft. How could it not be? Apologists insist that taxation is actually voluntarily because of the social contract. If the people of Calgary want to build a road, everyone – or at least the majority – assume to value it. If someone doesn’t contribute voluntarily, they are – according to the logic – neglecting their collective responsibility as inhabitants of the city. But value is subjective. It may argued that value is objective and ultimately the road is an extension of the city’s social contract. If the people of Calgary do indeed have a physical contract, or a charter or constitution that all residents have signed, then it is perfectly legal to punish or ostracise those refusing to pay into something they voluntarily agreed to. But as no resident of Calgary has this kind of relationship with the city council or provincial government, value is determined by the preferences of bureaucrats. The social contract confuses the definition of a city. A city is a marketplace of individuals – it would be a grave mistake to arrogate a city its very own beliefs and values. To say that Calgary wants the money back is to say that the individual residents of the city of Calgary want the city council to return them their money. It is completely absurd to forcibly seize people’s wealth and call it a “voluntary” arrangement.
Tax revenue, some argue, is a “social benefit.” But taxation implies a state and a state cannot calculate. Economic calculation requires sound pricing. Prices develop when people are free to act and exchange voluntarily. Prices act as an objective expression of the ever-changing values of all the market participants. Entrepreneurs compete for finite resources using this mechanism; prices steer them toward consumer satisfaction. Profit-motive is the true social benefit and the only rational way to allocate scarce resources. The state cannot use these methods because it taxes. Its decisions are ultimately arbitrary and in the long-run, destructive.
Evidently, the economic argument is invalid when democracy is in use. In a democracy, it is said, the act of voting makes government responsible to the people and thus taxation is truly voluntary vis-a-vis the voters. This is a major fallacy that needs little refute. Majority opinion cannot negate reality. There are social norms against theft which make civilization possible. It would frightening to live in a world where the social norm disregards theft. There would be no society to define the term “social norms.” The civilizing processes of exchange, specialization and the division of labour would never develop. It would be true anarchic chaos – certainly not a world where people are advanced enough to establish a centralized democratic state that finds a $52 million tax windfall.
But what about voting? Roderick T. Long brilliantly summed up the argument: “A government is an institution that says no one is allowed to produce law and order except me in this area and I will decide what kind of laws you will get, what kind of order you will get and how much you pay for it. If you don’t like it, well, you know, every four or six years you can petition for some change in the personnel of my company.”
Governments are essentially criminal organizations. Their legitimacy rests on an ideology that is preached in public schools and reinforced in the media. While the Calgary Sun has come incredibly close to labelling taxation as theft, they have yet to cross the line. Perhaps, as Rothbard pointed out, this is because the “intellectuals” that promote the state also benefit from its existence. SunMedia’s conglomerate is Quebecor, a communications corporation that receives government subsidies. It’s also rumoured that Peter Mansbridge, Ezra Levant and Tom Mulcair actually enjoy each others company and often go out together for lobster on Mike Duffy’s tab. But this is just speculation…
Although the “taxation as theft” argument may be a stretch from the $52 million tax windfall issue, this inquiry is merely the logical solution to the problem. The editorials in the Sun have been bordering on this realization; just shy of publicly announcing their support for the abolition of mandatory taxation. And it’s a shame, really. If the city of Calgary and the province of Alberta decided to abolish mandatory taxation and open its “public services” to private competition, then we’d really see a Calgarian Advantage.

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