As springtime approaches, and everything thaws, as I walk through the streets of downtown and the bright tall sun chews away at the cold air emanating from the long frozen concrete, my thoughts echo those of every fellow pedestrian: What is that smell? And what the hell is that on the sidewalk? Are you all high? Why do I have to take every step as though in a minefield or pasture? And, of course and linearly, what’s the deal with those new taxes?
Good Lord, run, here comes the tax theorists
So happy to see recent news articles indicating that many Canadian economists think the steady rise in the carbon tax and the increased tax on capital gains are “the right thing to do”. As a tax-paying mortal, struggling with the cost of living, you might wonder how increased taxes on anyone are a good thing.
Well you would think that wouldn’t you, you dull-witted plebeians, you just don’t understand, you’re not looking at it through the right lens – think of the policy, the beloved policy. Relentlessly raising the carbon tax and going for the wallets of the rich are the best way of achieving the government’s stated policies. That’s what they mean! So an overly aggressive carbon tax will stifle not just your emissions but potential new businesses that actually make stuff, thereby reducing emissions. Success! Chase them all out of here! Going after the rich for a few more bucks (they won’t even notice it’s gone!) is a simple strategy to help governments fund excessive spending while minimizing squawks/lost votes from the electorate. The government brags, via the Department of CBC, that “only 0.13 per cent of Canadians…are expected to pay more in personal income taxes.” That is…only 50,000 votes at stake out of 27 million possible… political calculus 101!
Trevor Tombe, an economist that I quite like who does good work, nevertheless penned a piece about why raising capital gains taxes makes sense, on the grounds that “The government’s change makes the after-tax amount a person receives from capital gains very well aligned with other types of payments.”
So, what they’re missing, what they can guess at if interested but can’t quantify, is the damage that is caused by these policies that is completely hidden. What businesses won’t ever be started because of a rapidly growing/excessive carbon tax? How many wealthy individuals will choose not to invest in new Canadian businesses?
While the theorists may be right that these policies are the most efficient means possible to enact government policies, maybe what we really need is for someone to point out how stupid the policies are in the first place. That if you’ve decided to maim yourself, while it may be true that jumping in front of a bus is the most efficient, maybe it would be better to argue it is better not to maim yourself at all rather than suggest that technically it is much more efficient to just throw yourself down a flight of stairs.
Tombe acknowledges this in his article, in a haunting way: “Different people will reach different conclusions over whether federal taxes should or shouldn’t increase. Indeed, having the government take a majority of each additional dollar is a concern some have.” Well that’s putting it rather mildly. And while it may make sense in the world of academia to treat it as a totally subjective kind of thing – in essence saying well, it is up to a government to decide how much of your money they will allow you to keep – it’s actually a much bigger deal than simply where you stand on the socialist-capitalist spectrum.
If you think along the lines of ‘what is an appropriate amount for governments to take from you’, how about you throw that idea out of your head like a drunk out of a bar and and think of it like this, from Nassim Taleb: “In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using exactly the same logic… For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner) — likewise, there is no such thing as a failed entrepreneur or failed scientific researcher, any more than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take personal risks. (Sorry.)”
Entrepreneurs should be our economy’s heroes, for the risk they take; they should not be equalized with dividend income. To think doing so is wise is to show a profound misunderstanding of the way business actually works; they don’t understand the view from the pit, where one’s own skin is in the game and it will be hero or zero. Yes, these same theorists will argue that there are carrots in there to offset the hike, but why not just stay out of this area entirely? Why create any headwinds?
Recall that recently an article appeared on the Bank of Canada’s very own website stating that: “We need to ensure that the right incentives are in place to allow companies in these industries to grow and thrive… History shows that advances in productivity often come from the start-ups, the new companies led by entrepreneurs with groundbreaking ideas… When you compare Canada’s recent productivity record with that of other countries, what really sticks out is how much we lag on investment in machinery, equipment and, importantly, intellectual property… I hope I’ve been clear about the pressing need for Canada to increase productivity. I’m saying that it’s an emergency—it’s time to break the glass.” Those are central bankers talking! The greyest of the grey. They speak like a washing machine. For them to use the words “it’s an emergency” is so at odds with their standard flow of language they might as well have added porn to their website.
Buried in the middle of an article is an important statement: “Economists and policy-makers across the country have worked hard to understand the root causes of why Canadian businesses seem reluctant to invest.”
Well, I’d suggest you work a little harder, but here’s a clue from the trenches, and from the mouths of people I know who will be subject to both these hits, and who can/do build companies: STOP #$%&$^$ TAXING AND HARASSING THEM OUT OF EXISTENCE! Yeah I know, all caps is for losers, but at budget/tax time we’re all allowed a primal scream.
Middle East
Well, wasn’t that something. Just when you think you’ve seen it all. It looked like we were heading for World War III, then Iran announces they are sending a bunch of rockets and exploding stuff towards Israel, but gave them half a day’s notice, and plenty of time to prepare, and the barrage was essentially a pyrotechnic feather-fluffing from the Iranians. Israel, thank heavens, decided that that game was on, and launched a bunch of rockets into Iranian wasteland. A good time was had by all. Both sides got to high five their way around the underground war rooms, and no one was hurt. If this is progress, I’ll take it! I found my scrap of paper with what I would still argue is a superior idea, to inhabit the entire region with western bureaucrats, setting up one massive red-tape call center/office complex, because that wet blanket layer can stifle anything. Oh, you want to fire some rockets? Take this pile of forms, complete them all, complete the environmental assessment, complete the anti-child/forced labour supply chain analysis, document the estimated carbon impact of your project over the next 20 years, document the steps taken to ensure diversity on the project, designate for tax purposes the nature of the entity that will be doing the firing, demonstrate local content requirements for gun powder, shell-casings and other firing mechanisms, for a start… once your full application has been received we will respond to your query in up to 12 weeks and document what steps are required from there.
Just see what happens to the hot heads then. The cement shoes of bureaucracy would crush them all.
Like a fine wine, getting better with age… Energy meets humour in “The End of Fossil Fuel Insanity”, a timeless classic that should be on every book shelf alongside classics such as War and Peace, The Adventures of Huckleberry Finn, and The Idiot, none of which was selected lightly. Available at Amazon.ca, Indigo.ca, or Amazon.com. Thanks!
Read more insightful analysis from Terry Etam here, or email Terry here.