THE "CON" IN PRO AND CON

The silly season is back. Americans are being bombarded with political advertising. This morning, watching my favourite “CBS Sunday Morning” – I stopped counting after about half a dozen of these commercials. The Republicans were accusing the Democrat candidates of the usual tax and spend. The Democrats were accusing the Republicans of catering to the interests of Big Business. The same old same old.

But setting aside actual political considerations: who will win and who will lose and why – I come to the main point: “The Con.” I don’t mean “con” as the opposite of “pro” – I mean “con” in the context of using devious means to persuade, e.g. “conning.”

The biggest political con in America, and to some extent here, is that taxes of any kind of fundamentally bad. Anyone who votes for tax increases is the devil incarnate. Heading the “con” list is the totally meaningless statement: “Job-killing tax increases.” There is utterly no logic to the belief that tax increases lead to job losses, but it reads well to people whose attention span is at bumper-sticker level. It makes a good slogan and it plays to the uninformed prejudices of the voter, or as our mayor would say: “The rights of the taxpayer,” whatever that means.

There is the fantasy, and then there are the facts. The fact is, in America at any rate, tax “increases” are leveled at the top one percent of the population who make more than $250,000 a year – and more likely into multi-millions a year. To “penalize” the rich by taking more money from them simply does not cause unemployment. All the extra money the rich save on taxes is not money that would be spent providing jobs. In fact, most of the excess i.e. the difference between what you earn and what it costs you to live is simply stashed away, sometimes in offshore accounts where it can escape the evil eye of the tax collector. There is absolutely no evidence to connect higher taxes for the super-rich to unemployment. We have the same issues here that American corporations have: corporate taxes. Mr. Harper plans to reduce those taxes to attract business. All the evidence so far, and the Globe published this story many months ago, is that corporate tax savings do not find their way into expenditure on either capital goods or hiring more employees. The money is stashed away in the company treasury.

Because it has taken me more than a paragraph to explain the simple realities of taxes and the relationship to jobs, that is far too much to ask some people to absorb. It exceeds bumper sticker length. It probably exceeds the verbiage allowed on Twitter.

The only case that can be made for job loss associated to tax increase is that companies will always, if they can, move their operations to lower tax jurisdictions and with that moving upset the job market in their original home. That’s quite true. But it is also true that those jurisdictions with lower taxes and actually borrowing from Peter to pay Paul, One part of the country suffers, another part seems to prosper. Except that with that lower tax haven, the governments will have less to spend on silly things like education, social services, and health care. If you look at the low tax places you will find that their levels of social services are substantially lower and that their own citizens suffer most from the love affair with lower taxes.

In fact, when the epithet “tax and spend” is used (as it was here during our recent federal election), there is a fatal flaw that few of us seem to notice. It is the “spend” part. If tax revenues are spent much of it goes to pay salaries for people in essential jobs. But America, and to some extent Canada, does not connect the dots. You object to paying taxes but you also object to your neighbour having his home foreclosed on after he loses his job. Sometimes, and I am being excessively cynical. only because it lowers the value of the neighbourhood and with it your own home

You can’t have it both ways. Taxation is part of democracy. Democracy believes that it is obliged to provide services to its citizens, not to protect the rights of the wealthy to bolster their portfolios.