Maybe we have it all wrong - Macleans.ca

Maybe we have it all wrong

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Alex Himelfarb considers taxes and the decline of trust, transparency, honesty and equality.

Most Canadians do know that the teachers and firefighters, the police and health care workers, the roads and bridges and traffic lights, the help when we are down or temporarily out of work, the child and elderly benefits we receive are all paid for through taxes. But, we are still reluctant to pay those taxes. We will always say no to taxes if we believe government is inefficient and wasteful or incompetent or worse.

We are falling into what game theorists call a social trap. Even when we know that cooperating with others would serve our collective interests, absent trust, we go off on our own. The absence of trust limits our ability to act collectively and imagine new possibilities. It takes the future away from us and hands it to “the market”. No trust. No taxes. Trapped.

Stephen Gordon quibbles with Himelfarb’s prescription.

… the problem is that Himelfarb proposes the tax measures that are most likely to appease anti-tax sentiment: he suggests increasing taxes that almost everyone thinks they won’t have to pay. Increasing taxes on the top 1% doesn’t inconvenience the other 99% of the population. And if you’re part of the vast majority of voters unfamiliar with the economics of tax incidence, you might be tempted – wrongly – to think that you won’t have to pay corporate taxes, either.

Himelfarb does well to remind us that there is no free lunch, but his point is greatly blunted by offering instead lunches at a 99% discount. The real challenge is to persuade voters to accept the responsibility of paying full price for what goverments provide.