Saturday, June 14, 2008



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.


Larry Gambone said...

"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."

Agreed. But I suspect the purists and right-wing "anarchists" in our midst will shit a 5 sided brick over what you have written.

mollymew said...

Hi Larry,
I have only begun to yap. I have litle doubt that many will see such a middle way as unpalatable. let the chips fall where they may. Hopefully more on this subject later today.

Nicolas said...

Hum... On one hand, I am preatty sure that for the moment my household is getting more in terms of direct services then what we put in in terms of taxes (and we are preatty much of the so-called middle class variety). On the other hand, it's not clear at all that a cooperative system would not cost us more for the same services. Furthermore, I really like the idea of some things being universal and paid for by society as a whole.

I think that it's a strategic mistake to try to 'opt-out'. It play's into the neoliberal games. I think a better strategy would be to try to decentralise and democratise the programs while still have them state funded. In other words, as some french comrades put it, to fight for libertarian public services.

Let me just take one exemple: schools. The way I understand your proposal, we would fight to eigther get the money back or some sort of "school vouchers" so we can set up our onw alternative libertarian schools. I'm not sure about how clever this strategy is. I would rather fight inside the local school to make it better for everyone. I want it to democratise and become self-management by the staff and parents while still being public, that is state funded and open to all kid of the hood.

Werner said...

Gee I think I've been through this one already. A public service like medicare is a "civic good". The fact that it is presently funded by the state does not take anything away from the value of the thing. Finding ways to "hollow" out the welfare state should be THE preoccupation of anarchists. In the early days of (quasi)"socialized" medicine in Saskatchewan there were dozens of community clinics throughout the province. These got absorbed by compulsory state insurance. Year ago in England cooperative doctors and dentists were a common feature (back in the early fifties a gold filling was less than "one quid" ... the 'national health' paid the rest). In essence we have to put the "time machine" in reverse and rebuild mutualist models. Somehow.

Werner said...

Opps I meant "Years ago"