A tax fight has Canadians on democratic autopilot. That’s a problem. - Macleans.ca

A tax fight has Canadians on democratic autopilot. That’s a problem.

Opinion: The ongoing debate over tax reform is driven by partisan and special interests—and is a missed opportunity for democratic engagement

Finance Minister Bill Morneau makes an announcement on housing in Toronto Monday, October 3, 2016. The federal government has announced measures intended to stabilize the real estate sector amid concerns that pockets of risk have emerged in some housing markets, particularly those in Toronto and Vancouver. (Nathan Denette/CP)

Finance Minister Bill Morneau makes an announcement on housing in Toronto Monday, October 3, 2016. The federal government has announced measures intended to stabilize the real estate sector amid concerns that pockets of risk have emerged in some housing markets, particularly those in Toronto and Vancouver. (Nathan Denette/CP)

The Liberal government’s proposed changes to incorporated small business loopholes has triggered a national throwdown that has pitted small business owners, including engaged doctors and farmers, against Finance Minister Bill Morneau and a prominent set of scholarly economists. The debate is hovering over the media landscape like a thick layer of smoke, and Canadian citizens are debating the issue in their living rooms, on the bus, and in coffee shops. What we have here, friends, is a good, ol’ fashioned public debate. So, how’s that going? Not so great.

A well-functioning democracy relies on a public realm in which citizens mingle about, discussing, debating, forming preferences, and communicating those preferences to policy-makers whose job it is to ensure that the people get what they want, more or less. And if democracy is in particularly good shape, those outcomes will tend to be fair and equitable, with no group or small cadre of groups dominating outcomes. In Canada, we do fairly well at producing representative policy and we’re decent at fair and equitable outcomes. We can do better, though, and when prolonged national discussions about policy pop up, we ought to seize the chance to get people involved in a way that builds their capacity as citizens and respects their dignity and autonomy as humans.

READ MORE: Inside Ottawa’s crackdown on small business tax loopholes

The tax proposal issue is already a study in democratic debate, but it’s not an encouraging one so far, for a few reasons. Let’s start with you and me. Most of us have very little time to be citizens. We have jobs, families, and hobbies; we have to get up in the morning and make breakfast, go to work, get to the store in the afternoon, get caught up on bills in the evening, and get to sleep at night. Most of us have precious little time to learn about an issue, analyze each and every little bit of the evidence and arguments on each side, and generate a sophisticated, rational, and autonomous position. So we tend to use shortcuts, known sometimes as “heuristics,” to make up our mind. Sometimes these mental shortcuts take the form of a source we trust and whose judgment we consciously or unconsciously adopt as our own. That source can be a friend, a family member, our doctor or lawyer, a political party, or a professional association.

Heuristics can be awfully useful. Sometimes they permit less engaged or sophisticated citizens to approximate high-quality, educated political preferences and opinions. Often, however, folks will use these shortcuts “off the shelf,” without much consideration of why an organization or person might support or oppose this or that proposal. When that happens, democratic politics is reduced to a battle between partisan forces and interest groups, with ordinary people stuck in the middle as popular opinion fodder, as coveted “hearts and minds”—or tuned out altogether.

The tax changes debate has lined up two sides of heuristics, each on one side of the democratic battle, like an 18th-century European skirmish. On the one side, in favour of the changes, is the government, a few notable economists, and a handful of professional groups, including the Canadian Nurses Association. On the other side, opposed to the changes, are many incorporated professionals and their associations or interest groups, including the Canadian Medical Association and the Canadian Federation of Independent Business. This isn’t unusual. This is democratic pluralism: groups battle it out, as parties and experts and professional bodies form shifting coalitions depending on what’s at stake at the time.

RELATED: What do doctors really have to fear from the feds’ tax crackdown?

The tax issue is just accessible enough to be susceptible to competing frames—among them are fairness (such as “People should pay their fair share in taxes”), and economic and professional imperatives (such as “Business will suffer, and doctors will quit or never start if we make these changes!”). Never mind that there each of these competing frames tends to be oversimplified and each could overlap with its opposing side, frames are powerful tools in debate, and they are often used strategically in an effort to manipulate rather than deliberatively in an effort to persuade. That, too, is common practice.

The issue at hand is also just complicated enough to incentivize people to rely on heuristics and ready-made frames when they make up their minds about which side to take. Thus, many people are all too keen to switch on democratic autopilot, which means that interests and experts fully control the debate.

So what? What’s wrong with that? Shouldn’t the experts, the elected officials, and the professionals just Thunderdome it out amongst one another, and all the better for them if they can rally the population by bloody hook or crook to their side? Ideally, no.

READ MORE: Bill Morneau needs to start taking tax fairness seriously

Good democracy requires a constant balance among competing groups, including elected leaders, partisan interests, professional interests, and citizens at-large. If you get too much partisan or professional dominance, you risk corporatist or elite rule, which can marginalize and dominate citizens. If you get too much expert-led government, you end up with technocracy, which you might expect is a good thing—let the smartest folks in the room do their thing!—but we disagree constantly about who the experts are and whether their recommendations are good or competent or true or ethical. Even the experts often disagree with each other about these considerations. If you get too much popular control, you may end up with unhinged populism or tyranny of the majority. So, democratic debate requires a distribution of power and influence among these groups, filtered through the political exchanges in the public sphere where we all make up our minds, and back to the corridors of formal power where elected officials decide what to do.

My argument presupposes that citizens can in fact make good political decisions. Because they can. With time, resources, motivation, and a chance to participate, people come up with thoughtful, informed preferences, opinions, and solutions. That’s good for democracy. When one or more of these goods are missing, the quality of democratic debate suffers and so do outcomes. In the case of the proposed tax changes, professional associations and their members are disproportionately driving the discussion, winning the framing battle, and inserting themselves as the only good and true and reliable heuristics for citizens looking for a way to make up their mind. Regardless of whether or not these advocates are right or wrong, the debate itself is not great, and that’s bad for democracy.

Doctors and farmers, for instance—whom we tend to trust and cannot live without—enjoy a structural advantage here, and they’ve mobilized to exploit that upper hand. The Liberals, who genuinely seem to be pursuing these changes in earnest and for the right reasons, have not done themselves any favours, having done a poor job selling the proposed reforms to Canadians so far. For their part, Conservatives have disgraced themselves in their headlong rush into unmitigated partisan thoughtlessness, and NDP leadership contenders have weighed in with a mix of unhelpful side-swipes and slightly more constructive, if heavily qualified, support. None of this helps ordinary Canadians make up their mind about what we ought to do here.

Who’s going to win the battle of the mental shortcuts? My best is the government will entertain the idea of amending its proposal and reaching a compromise. That’s a perfectly fine and democratically palatable outcome—and an example of democratic pluralism at work. But the whole affair will leave Canadians a little more frustrated with and a little less trusting of politics and politicians, and perhaps professionals, too.

If every side in this matter pulled back the throttle on their own strategic interests and committed to engaging citizens in a more deliberative and thoughtful way, something might yet be saved. Indeed, the moment could even be leveraged to build trust and citizen capacity. I don’t expect that will happen, but don’t just take my word for it; take a moment and think it through for yourself.


A tax fight has Canadians on democratic autopilot. That’s a problem.

  1. As long as we live in an ‘Us verses Them’ society, it will always be a fight and rage, rather than democratic debate. ‘Taxation’ is a vile word in our society, but if we didn’t have it, we wouldn’t have the good standard of life we live in, people from all over the world, would kill to pay taxes to live in a society like the one we live in today..What we need to try and do, is, instead of demonizing taxation, show the positive side of why we pay taxes, examples, healthcare, roads and highways, infrastructure, law and order, healthy justice system(not corrupted), national parks, regulated fishery without corruption, even being able to help other countries when in need, this all comes with a price tag, and if we all avoided a fair tax, well it wouldn’t be fair to the people who have to pay the load, while others freeload.

    • However, based on my experience, the government could deliver the same programs and benefits it does with higher quality at 70% of the cost. I was with one of the largest companies in Canada and we thought we were always very efficient. Then we hired McKenzie Inc. (world class business consultants) to come in a check us out. When they departed three years later, our customer base had increased by 15%, our customer service, product quality ,safety and environmental performance was the best in our industry and our costs were 30% lower. Our governments either just increase spending and raise taxes (the Liberals and NDP).. or slash and burn and eliminate needed programs and benefits to get costs down. Both of these are equally very poor leadership and management.

  2. This is the fairest commentary on the issue I’ve seen. Most of the coverage has been stridently pro business/professional and anti Trudeau.
    Not getting much coverage of viewpoints from Union workers, service employees and all those who just get a tax hold back on the pay check, and fill out a unsophisticated tax form once a year and take what they got coming.
    A lot of journalists are now contract, freelance, self employed these days. Are they largely incorporated?
    Coverage certainly shows a decided bias in favour of all these tax loopholes which result in an unfair burden on salaried wage earners over phony incorporated businesses.

  3. It appears that it is okay to demonize small and medium business owners using the term loopholes (implying cheating) whereas if you ever used the term welfare bums for low income people you would be strung up.I have yet to see in the media a balanced analysis of the proposals. Where is the balanced approach? Where are the interviews with tax experts on the significant problems is the proposals? The finance minister and the prime minister can come out and say that they are closing loopholes – I say that something is place for 40 years is policy endorsed by successive governments both Liberal and PC. The Liberals created this us versus them problem. Oh well, where else is the government going to get the money to give to Bombardier and other multinationals…

  4. Trudeau and Morneau have just killed the family farm in favour multinational food companies. The global 0.01%’ers will own the land and production from it will be by multinational food companies.

    Here comes the Soviet food system owned and controlled by the global elites and plutocrats.

  5. Think about it?? No need, as it’s obvious. This article tells us that democracy would be better if everyone was honest and played by the ‘rules’. Oh and that people despite being busy should pay more attention. Really? We already know this and we know that it doesn’t happen. What is happening with the tax issue is what happens with almost every other issue. The government puts forward a policy that will negatively impact some group. That group cries fouls and brings out whatever resources it can to change the policy. The government also encourages its side. The government then says OK, we have listened and will make some changes and then implements what it had originally hoped to get. Would it be better if this wasn’t the way things happen? Sure. Is it going to change? No. Not until there are immediate consequences for lying or a believable nonpartisan group is established to tell people the truth in a way that they will actually see it and believe it. … Or a general belief that the government is doing what is best for its citizens. … The big problem though is that many people will not believe the goverment even if it is telling the truth (I’m not saying this government is… dropping electoral reform, non evidence-based decisions Kinder-Morgan, Site C, fighting the Human Rights Commission decisions in court , etc..) because their heuristic says it is a Left (or Right) government and they are only looking out for their Party faithful/backers. And unfortunately this is mostly true. They are rarely looking after the majority of Canadians i.e. those who didn’t vote for them. So if we want a better democracy, then we need a better system of electing government. They got it right in PEI but have been stymied by the existing government. Hopefully they will get it right in BC next year and then the rest of Canada can follow. A bad system will almost always win over a good policy(not saying this tax change is a good one), so you have to change the system. (Not hold another election ;-) )

  6. I would not in this context consider nurses as professionals. They are union members who have lavish pensions, few responsibilities towards personal financial management and jobs for life. Same for teachers.

  7. “In Canada, we do fairly well at producing representative policy and we’re decent at fair and equitable outcomes.”
    Our tax system may be representative but it sure isn’t fair. Today, the top 1% of earners in Canada pay 10% of all income taxes collected. The top 10% pay 54% of all taxes collected. And Trudeau still doesn’t think “the rich” pay enough. That’s not fair but it sure is easy for the 90% to embrace.

  8. I’m a doctor. I grew up lower class. Worked hard to be a doctor. Care for patients from all walks of life. No matter how rich, poor, sick or abused. My interest is their interest. I want to be able to keep filling forms for free, doing therapy on Medicare, running over 20 minutes if a patient needs it. If I earn enough I work more, offer more and help more. Saving some tax meant I could keep running my community practice earning less while my surgeon other half made more and could split it more fairly. I can’t do that anymore. Not with 10% less pay and no help from a corporate tax structure. So I will do hospital work. Emergencies, only short term. It pays more. And everyone including me suffers. I’m not a special interest group I’m a human interest group. Anyone who doesn’t understand why we chose to be doctors not lawyers, MBAs or engineers is missing the crux of the governments folly in putting us against our patients.