Taxes or Profits: Name Your Poison
Robert Bahlieda M.A., Ed. D. is author of The Economic Gulag and The Democratic Gulag
As Canadians, we have been manipulated by big business through their media empires and the voices of the wealthy into thinking that taxes are the main problem in society and that if only we could get rid of taxes (and government) everything would be just fine. In the United States, this neoliberal and neoconservative mantra is now running rampant in the Presidency of Donald Trump. Nothing could be further from the truth.
In 1970, former President Ronald Reagan cut U.S. corporate taxes from 72% to 28% and set off a death spiral for governments around the world of tax cuts for corporations. Countries like Ireland (The Celtic Tiger) nearly bankrupted themselves in the race to the bottom. Prior to that the post-war economy was roaring along. Fifty yeas later corporate taxes are 15% in Canada and corporations in the U.S. have just received a massive tax decline. Interest rates have been between .5% and 3% since the 2008 financial crisis providing free money for corporate loans for businesses and zero returns for the average investor driving many into the much riskier stock market. Corporate profits have exploded along with CEO salaries while wages plummeted. Unemployment is at a forty-year low. Corporations have successfully argued that they can no longer pay high wages, pensions, healthcare or benefits for workers and jobs appear an disappear overnight in our globalized economy. The majority of work has become “precarious” in that it is short-term, poorly paid and could exist anywhere in the world causing massive social dislocation in local communities that open and close like a Mac’s Milk. Despite this our economy and the global economy is in much worse shape than in the 70s. The much-touted ear of Reaganomics and Thatcherism led to the dot.com crash of 1999 and the financial crisis of 2008. We have lived in a perpetual state of austerity for the past thirty years with no end in sight. The majority of the working poor around the world continue to struggle.
Taxes are the price we pay for a civilized society as Oliver Wendell Holmes once said. All of our collective infrastructure, social programs, our public security down to our municipal garbage and more are paid for with the taxes that are collected federally, provincially and municipally. Less and less of that tax burden is hoisted by the private sector. Without taxes we would be left in the shark infested waters of the private sector and inequality would be rampant. We would be living in a no-pay, no-service world. Taxes are a way to pay for projects larger than the individual and more importantly to support the individual who has no means. It has been said that the test of any society is how it looks after its most vulnerable.
The private sector wants no taxes so that they can impose monopoly control on public services and projects of all kinds and raise the cost of these to any price they choose. Once they have wiped out the competition they would have monopoly control.
Taxes are not evil. When administered judiciously they can be a godsend. Government taxes are open to public scrutiny and debate. Profits or private sector taxes are not. Private sector taxes are often horrendous as has been demonstrated in recent Big Pharma cases. They are unlimited and opaque. We believe that large government taxes are an abomination and that large private sector profits (taxes) are good business sense. Taking thousands of percent out of the economy each year is a drag on the economy not a benefit because those profits go to a small percentage of wealthy people who cannot stimulate a consumer economy with their spending. Cutting taxes is applying a tourniquet to the government economy that requires corporate tax money to fund its operation.
In our modern world the private sector functions like a parallel economy and society. They get all the wealth and profits and spend their money on the luxury market that responds to their needs while the rest of society runs in relative poverty and in parallel to them taking on all the social, healthcare, education costs and cleaning up the environmental messes that businesses inevitably leave behind. We need an integrated society not a parallel one.
After two hundred years of capitalism, poverty is still rampant, wages are subsistent, and profits continue to rise to the top one percent. Charitable causes have exploded from food banks to clothing recycling. Business has played the neoliberal plan perfectly. They have assimilated themselves into government and control the decision making and the money. Governments need to stop being businesses friends and start working with them at arm’s length. Billions in corporate welfare is given out each year to companies that are wealthy and profitable. The HST in Canada shifted a huge tax burden off corporations and on to ordinary Canadians. The TARP program in the U.S. paid back the bankers to the tune of $800 billion. Not a single person has ever been prosecuted for the 2008 crash. A small percentage of the world’s population owns the majority of the assets while half the population owns virtually nothing. Our governments are generally run by a group of patriarchal male dictators. Capitalism is a predatory, unrelenting economic theory that gives no quarter. After two centuries capitalism is a massive failure. It is nothing more than a dismally failed theory that is so good at what it does that business cannot give it up. It’s the future-age fentanyl. Adam Smith indicated the future of the rational free market system when he said that it would take five hundred people to be impoverished to make one person rich. Today that figure is five hundred thousand in our globalized world.
Business myths abound, and most people believe this fake news. The public sector is lazy and wastes money on huge bureaucracies while being inefficient about running the country, money is squandered on social programs, people make too much money. There is little evidence to support this and massive evidence of the horrendous damage of the free market. The public service gives excellent value for money in healthcare, education and most other ministries. yet the private sector will always claim that they can do the same job better. That usually means less qualified workers, lower paid workers and workers with none of the “perks” generally associated with full-time work. The only thing the private sector is in business for is making money which they do by cutting costs to the bone, cutting the taxes they pay to zero and cutting salaries and wages. What they should be in business for is making a fair society.
Another governing myth is that cutting taxes gives money back to the people. As we all know the tax cuts made by business-friendly governments consist of miniscule cuts to middle class tax rates while hiding massive tax cuts for the wealthy and the private sector. Their general approach to government is to strip back worker’s rights, environmental legislation and other sensible “red tape” that they say has hampered business opportunity. These are all legislative changes that were made because business was operating without a watchdog and destroying the country. The entire list of legislation is a testimony to society’s attempts to restrain business over the years. Governments have been convinced by the private sector to allow them to exercise ‘voluntary compliance’ over their affairs which has meant no compliance. This assumes that corporations have morality when in fact they have none. Why do we believe that the business community deserves and needs such huge tax breaks to operate? They also need to have workers employed at minimum wage, without benefits, healthcare, pensions or long-term full-time employment or they will go out of business. They also require a massive and complex social services system including a voluntary charitable giving system, roads and infrastructure that they never commit a dime towards to prop up society. They should also be allowed to pollute at will and leave behind toxic environmental damage and instant unemployment without financial penalty. These are just some of the extra perks that business always expects, and governments always comply. Business is never required to set aside funds to support the company if a downturn happens — they pay out all profits to faceless anonymous shareholders who are the top ten percent of society and then cry poor when the economy turns.
Still businesses say they are just getting by. The majority of the people who are employed are the working poor employed marginally in precarious work and it is their frustration that has led to a swing to radical ideas and parties. These private sector myths have decimated society. If these are the parameters of business viability — we need to rethink the entire economic system. Tinkering will not get it done.
