The Canadian Centre for Policy Alternatives has a new tag line, the “adult conversation.” Of course, what they mean by an “adult conversation” about say, taxes, is that they want to have a conversation about taxes and anyone who disagrees with them is childish and should be ignored.
For me, an adult conversation involves conceding that the adults you are conversing with have a valid point of view. You may disagree with their analysis and conclusions, you may consider their logic flawed or their position dogmatic, but this does not invalidate their point of view. Indeed an adult conversation also requires, from time to time, recognizing that the person you are conversing with may actually have a point.
Consider the common CCPA argument that “you get what you pay for.” Indeed, if you want lots of public services you will need to spend lots of money. Now, it does not necessarily follow that in order to get quality public services you have to spend lots of money. My Institute, for example, just completed a series of national and regional municipal performance reports that demonstrated many cities and towns are able to deliver very competitive services without breaking the bank.
It also does not follow that just because you can deliver very good services at low cost, you should never spend more money to improve or expand services. In fact, even those advocating for smaller government do not generally insist that government should be eliminated from the face of the earth but instead argue that government spends too much money on things we shouldn’t do at all and too little money on the things we should be doing well. Too many subsidies for business, not enough support for the physically and mentally challenged. Too much on gold-plated pensions for politicians, not enough on police and fire protection.
This brings us to the difference between “needs” and “wants.” I am sure if they were offered to us we would all want those gold-plated pensions and other public sector perks like a premium pay, generous sick time and weeks and weeks of annual vacation. But that does not translate into a need for such perks, just a desire to have them too. If we want to have an adult conversation about taxes, for example, we have to first have an adult conversation about our true needs, not our wants. Wants are a luxury and should be treated as such. Let’s identify our needs and pay for those in full, then see what is left over for extras.
And, while we are at it, let’s recognize that adults (at least in theory) should also be able to recognize that nothing happens in isolation. A discussion about what taxes you can charge, for instance, has to take into account the taxes being charged by your competitors, whether you like those taxes or not. If everyone else is lowering taxes, raising them where you live will have consequences. Adults should understand that. Pretending that things are other then they are has no place in an adult conversation.
An adult conversation therefore requires a firm connection to the facts. Consider the argument that lowering taxes to grow the economy is a “right wing fantasy.” Well, the OECD (that bastion of right-wing theory) has consistently said that high taxes, particularly high corporate and personal taxes, are an anti-growth strategy. A wider tax base, lower rates and a focus on consumption, not income, taxes has been their recipe in paper after paper.
Consider also the argument that tax cuts led to the current federal deficit – the idea being that from 1995 to 2009 taxes as a percent of GDP in Canada fell from 36 per cent to 33 per cent, resulting in some $50 billion in “lost revenues” annually and a federal deficit that appeared “overnight.” First, a 14-year span covering three governments hardly seems to qualify as “overnight.” Second, in that 14-year span government spending went up almost 3 per cent a year. The result was annual expenditures some $71 billion higher. One suspects that a $71 billion annual increase in spending might have helped create a $50 billion annual deficit.
Speaking of growth and taxes, by the way, as our taxes as a percent of GDP fell, our GDP almost doubled in real terms, from $800 billion to more than $1.5 trillion. So, from a tax take perspective, 36 per cent of $800 billion is some $288 billion and 33 per cent of $1.5 trillion is $495 billion. The government would appear to have done OK, as it was cutting rates and raising revenues.
Lower taxes, economic growth, an expanded tax base, and higher government revenues, all at the same time – now that sounds like something worth talking about.
Charles Cirtwill is President and CEO of the Atlantic Institute for Market Studies (www.AIMS.ca), a non-partisan, independent public policy think tank based in Halifax.