October 17 is International Day for the Eradication of Poverty. Around the world people are working to raise awareness of the plight of those struggling with low-income. Canadians for Tax Fairness salutes organizations like Canada Without Poverty and Citizens for Public Justice and many others who are working to eradicate poverty in this country. Many solutions are required to set things right. Here at C4TF we are working towards modernizing the tax system. Not only would that make the system more fair, it would also generate revenue to support the values we cherish.
Here is an excerpt from Dennis Howlett's introductory chapter of upcoming book that C4TF is publishing on the connection between tax issues and social justice:
Any attempt to restore responsible environmental policies, revive and expand our social programs, re-build our crumbling infrastructure or boost our flagging economy will be inadequate without also addressing the need to increase the fiscal capacity of the government. The tax system can also play a key role in closing the gap between rich and poor, which is not only undermining the health of our economy but threatening to damage our democracy.
Until recently many progressive groups, including progressive political parties, have shied away from advocating for tax fairness and tax reform fearing that the issue was political dynamite. Right-wingers have had little opposition to their call for deep tax cuts, especially for the rich and for corporations.
But the tide is turning. Faced with growing inequality and cutbacks to government programs, public opinion polls now show strong support for tax fairness, including raising taxes on the rich and on corporations. A public opinion poll conducted by Environics Research for the Broadbent Institute in April of 2012 found that 73% support increasing the corporate tax rate and 83% support higher taxes for the rich. The even found that 64 per cent would be willing to pay “slightly higher taxes, to fight income inequality. This compared with 33% who said they were not willing to pay higher taxes.
Canada is growing more unequal. Social and economic disparities threaten democracy itself as those with the most wealth are able to influence political decision-making, and do so to protect and strengthen their own interests. The wealthiest, who can afford to pay a fair share of our public service costs, enjoy a tax system skewed in their favour.
A more progressive tax system can help to narrow the growing gap between rich and poor and boost the economy by stimulating consumer spending by middle and lower income Canadians. Higher tax rates on higher income brackets should be restored.
But restoring higher income tax rates for higher incomes alone will not ensure the rich pay a fairer share. Most very rich people don't pay anything close to the highest marginal rate on their income because they find all kinds of ways – both legal and illegal- to avoid paying taxes.
One of the most unfair things about our tax system is that income from investments is taxed at a much lower rate. And the really rich get most of their income from investments. Over 2/3 of the capital gains exemptions goes to tax filers making over $100,000 a year. This cost the government over $11 billion in 2007.
Governments need to adopt the principle articulated by the Carter Commission on taxation 50 years ago that, “a buck is a buck,” regardless of how you earn it.