Getting it Wrong with Michael Bliss

Eat the rich. Well, tax them to death (and then confiscate their estates). That’s the plan according to Michael Bliss, one of Canada’s leading historians (and, thankfully, not one of Canada’s leading public policy experts). The rich are just sitting on piles of money, which the State needs – currently for deficit reduction in particular and for the Entitlement Project in general. They are earning more than ever and are taxed less heavily than in the 1950s, fueling social resentment. Bliss’ solutions are a bit of a dog's breakfast (death duties, progressive taxation (90% on incomes over $2 million) and publishing the tax returns of everyone in the top brackets); but his heart is in the right redistributionist place and that’s what matters. Also, he is opposed to raising the GST back to its former levels. Sales tax is not progressive enough, since ordinary people have to chip in too.

This is all completely wrong. First and most blindingly obvious is that if the rich get squeezed they’ll just leave. They’re exactly the kind – probably the only kind – of immigrant that every country wants; and mobility not just of capital, but even of people, has never in history been greater. This is why the supertaxes of previous decades had to be abandoned.

A second and more serious point Bliss overlooks is that the expenditure problems of developed economies are not in an acute state of crisis but a chronic one. It’s not as if we need a one-time top-up in funding and then everything will be fine. Rather, we are going to have a squeeze this year, next year, 10 years from now, 75 years from now. Demand for public funds is limitless and always will be. Taxing the rich is exactly the wrong quick fix because it gives the non-wealthy majority relief without making them take responsibility for their own choices. If its ok to do this time, it will be next time too. Deficit? Surcharge. Health care overruns? Surcharge. Infrastructure collapsing ahead of schedule? Surcharge.

While it's ok to cut the poor some slack with regard to public finance, as they have enough problems already, it is totally wrong to do this with the broad middle class. People ought to look their choices in the face. Which is why the next tax hike – and the one after that – should be the GST. A little reminder for everybody, every day that stuff costs money.

Bliss fulminates against the wealthy leaving their children their estates. “Unearned wealth,” supposedly. Is it any less unearned if confiscated by the State on behalf of voters who don’t want to take responsibility for their spending choices?