CANADIAN POLITICS:

TAX FREEDOM DAY:

According to the Fraser Institute, a right wing Canadian public policy think tank, "Tax Freedom Day" fell on today, June 14, this year. The concept of "tax freedom day" originated in 1948 with Florida businessman Dallas Hostetler. Since then the idea of such a measure has spread worldwide. Within federal systems such as Canada and the USA this presumed day falls on different calendar dates in different provinces and states. The concept of such a measure may seem straightforward. Calculate total "income". Calculate the total payments in taxes. Subtract b from a . The result would be the proportion of national income that is not paid out in taxes. Divide a by b sand multiply by 365, and you would theoretically get the day of the year where "you begin to work for yourself rather than for government". The problem is that it is nowhere near so simple. In Canada the Fraser Institute calculates this day annually. The American equivalent is the Tax Foundation.

The calculation of both taxes and income, however, is subject to more than a few subjective choices. The problems with the Fraser Institute's method of calculation have been extensively discussed at 'Tax Freedom Day: A Flawed, Incoherent, and Pernicious Concept" by Neil Brooks. The previous link is a pdf file available at the Centre for Policy Alternatives. The Fraser calculations both understate income and overstate taxes. Even calculations by different groups such as the Fraser Institute and the Tax Foundation have widely different methods, and applying the American method to the Canadian data would show TFD as falling far earlier in the year.

The estimate of income is underrated because of a number of assumptions that the Fraser Institute makes. They first of all only include "cash income" in their calculations. This ignores such things as pension and health/dental insurance contributions made by employers and investment income accumulating in pension funds and life insurance policies. The amount of taxes paid is also overstated by including such items as the employers share of payroll taxes as "family income". The Fraser Institute itself provides different methods of estimating income, but they insist on avoiding "total income" in making their estimates of TFD. The way that the Fraser Institute uses the "average" family income and taxes rather than the "median" also tends to inflate the amount of taxes that are presumably paid by lower income groups. Anyone interested in the full story of the Fraser Institute's calculations is urged to consult the reference above.

All that is well and good, and Molly has little doubt that both sides of this debate have an interest in exaggeration. The Fraser Institute is influenced by people with higher incomes, ones who do indeed pay higher taxes, and they attempt to garner political allies by making it seem as if lower income groups have the same magnitude of a problem as their natural constituency does. Leftist think tanks, on the other hand, are not straightforward spokespeople for the poor either. Their natural constituency is the salaried government employee engaged in "helping" ie "managing" the poor and other disadvantaged groups. The class position and income of such people depends in a very obvious way on continued high levels of taxation, and such groups naturally minimize the effect that taxes have on poor and middle income groups, once more to appeal to potential political allies. They even have their own version of the right wing's "trickle down economics" in that they believe that money spent on the social control bureaucracies automatically helps the situation of the so-called "clients". If I were to sum up I would say that this sort of debate has all the hallmarks of being nothing but a squabble amongst different factions of the ruling class over the division of the spoils.

So where to go from here ? Molly is a "libertarian socialist". She believes in socialized enterprise which is democratically controlled by its workers, the community it is in or its customers- or a mixture of all three. By this definition the so-called "socialism" of both Marxism and social democracy where property and enterprise is controlled by the state is not socialism at all. State enterprise and property are the property of that part of the ruling class embedded in state bureaucracies, and their class rule is not the democratic alternative envisioned by socialists who are not apologists for class rule. It would be useful to recognize the obvious, something that the leftists are usually reluctant to do, that the burden of taxes- no matter the quibble over the exact amount- represent a withdrawal of income initiated by a faction of our ruling class. Left with its original owners this income would be available for many other purposes-including the building of socialist institutions. With the right wingers Molly is in agreement that taxes should indeed be reduced. The significant caveat is that they should be reduced in a careful way that promotes the development of cooperative solutions to the many problems that the state presently pretends to address. On this point Molly is in agreement with the leftists who recognize another obvious fact- that a large majority of the population benefits to at least some degree from many of the government programs presently financed by taxation and that some people are utterly dependent on them. Where Molly parts company with the leftists is in refusing to believe that such programs are an unalloyed good and that there are not other and better solutions to the same problems. Molly sees the task of an anarchist movement in a industrial country as very much nothing more than thinking about how such institutions could be developed and then trying to carry such plans into practice. In the end there would be working models that could simply be expanded and generalized to replace the "social welfare" functions of the state. Taxes could be reduced as such institutions grew.