Green shoots sprouting through the rubble. No, not the economy, which is doing fine already; in fact, it's looking like the whole crisis thing was just a false alarm and we'll be back to a full-on boom by the summer. But to see somebody in politics, a conservative, no less, actually advancing conservative economic policies - that really is different. So props to Christine Elliott for promising a flat income tax for Ontario. There are three good reasons to support this. First, it simplifies the tax system, which is always a good thing. Second, it lowers the disincentive to be more productive. Third, and most importantly, it represents a commitment to honesty and accountability in public finances.The political problem with "progressive" taxation, aside from the sheer perversity of punishing the most productive members of society with an extra marginal tax burden, is that it allows government to expand services for lower income voters by slapping an extra tax on the high-income minority. "Lower income" in this case can mean the bottom 75 or 80 percent of the population if the tax increase is applied only at the top level. Most voters therefore face the trade-off of increased public spending on the one hand and on the other a cost to them of . . . nothing. Who wouldn't go for that?
A flat tax, by contrast restores accountability to public decision-making. Voters who want more swimming pools, buses, hospitals or whatever can have them - but they actually have to pay up. Yikes. Yes, the flat tax as proposed by Elliott adheres to the usual meaning of the term - that is, it is a flat rate after a basic exemption (in this case 8% on income over $18K), so not a pure flat tax; but it shifts the fulcrum. Instead of trying to crowbar more money out of the top earners (who are also the top producers) most taxpayers would be facing some level of tax increase if the flat rate went up. More spending would mean more tax - for almost everybody, which is the point.
Most Canadians like their public services. Unfortunately, not everyone is completely forthright about facing up to their fiscal responsibilities. We like to push the weight off onto somebody else - onto Ontario, Alberta, Toronto, the oil industry, the banks, other corporations, commercial property, the rich in general. While utterly inconsequential instances of venality like Adscam envelopes or MPs padded travel allowances never fail to raise the national gorge, the gross political corruption of our tax system, the bloated hippo in the room, parades about in the open without attracting any notice at all. The GST - an honest tax which everyone is expected to pay (even though there is almost no one who won't try to duck it if they think they can get away with it) - is, by the same token, reviled.
Of course, flat tax in Ontario is a political non-starter. But, still, it's nice to see somebody with the backbone to actually mention it out loud; and more so at a time when fiscal conservatives in Canada seem to be heading for the endangered species list.