Nothing is certain, they say, but death and taxes. I’m not so sure. Death has been a target of scientists and dreamers for generations. So far, death is winning. Though lives have gotten longer – largely due to improvements in sanitation and nutrition and vaccines and antibiotics that prevent early death– the gains have so far been marginal. And while more people are living longer, the maximum age has not increased much at all. A few years or a few decades seem to be the best we can do. Some new studies that suggest that reducing people’s stress is one way to lengthen lives and make people healthier and more active once they do get old. Doctors and yoga teachers are doing what they can; newscasters and politicians seem to be working in the opposite direction.
And of course if the climate reaches the tipping point it all becomes fairly moot.
So while death continues to be certain, taxes are a whole other thing. Thanks to the endless tinkering of lawmakers, tax systems in the most countries in the world have become ridiculously complex and increasingly opaque. Rich people – and lot of middle class folks as well – have seen the amount of taxes they pay fall to zero through a combination of loopholes, deductions, tax credits, tax shelters, and, of course, outright fraud. Avoiding taxes seems to be a national sport in some quarters.
There is little that can be done about the 4% or so of chronic cheats – those who prefer to game the system even if they are already winning at it (other than hunt them down and put them in jail). Whether you are talking about welfare systems or Ponzi schemes, there are always a few who will take advantage of deceit to get ahead. Of course, when we are dealing with the welfare system we are talking about a few hundred dollars at a time; rich tax evaders skip out with millions or even tens of millions each.
A truly courageous government would make revising the tax system a number one priority. It is a daunting task. Most tax codes run to hundreds or even thousands of pages and even experts can be surprised at some of the provisions. A lot of the things included in tax law are put there for, let’s give them the benefit of the doubt, honourable reasons.
Take for example the tax deduction for your bus pass. The idea was that this would encourage people to take public transit. In fact, more than 90% of the people who claim it were already taking the bus. They were being paid to do something they were happy to do anyway. Studies have shown that if the same money had been spent on improving infrastructure, ridership would have increased by more than a few percent.
Both the Canadian and the American tax system are filled with similar boutique tax credits – giving money to people for things they would do anyway and almost always benefitting the middle class and the rich while providing nothing to those who actually need a hand up.
Will the new government in Canada or the next one in the United States do the right thing and simplify the code so everyone is one a level playing field? Not bloody likely. There are plenty of points to be gained by adding yet another little deduction and almost none to be made by requiring those who currently avoid the inevitability of taxes to pay their fair share.
And that’s ten minutes.