Income Tax & Election Day

[August1991]

I'm tired of reading nonsense on this forum. Nonsense about electoral reform and about proportional representation (and about whacky conspiracy theories).

Perusing my income tax form, it occurred to me that we need real democratic reform in this country. Here are my two suggestions.

First, we have to get rid of income tax withholding (or payroll deductions). Governments should send us a bill and we should pay it. Because of payroll deductions (withholding), it is far too easy for governments to collect taxes. (Indeed, utilities have learned the advantage of automatic deductions. How many posters let their telephone company/ISP automatically deduct? How many posters allow how many institutions to make "automatic withdrawals"?)

Milton Friedman is partly responsible for the creation in the early 1940s of income tax withholding. Here's what he said later about it:

“We were paying almost no attention to the postwar consequences of anything we did,” Friedman admitted years later. “We were just asking ourselves: What can we do to win the war? I have no apologies for it, but I really wish we hadn’t found it necessary to do that and I wish there were some way of abolishing withholding now.”

It was at the Treasury Department that Friedman discovered a feature of bureaucracies that later became a central theme in his 1984 book The Tyranny of the Status Quo: They are loath to change. The Internal Revenue Service, Friedman later recalled, was the biggest opponent of the withholding idea, insisting there was no way it could work. Today, alas, it takes a different view.

Reason

Oh, the irony! I have no doubt that the IRS was at first against withholding (or automatic deduction of income taxes). The great weakness of government bureaucracy is that it seems to offer security - or protection against change.

Incidentally, many European governments do not collect income taxes as we do in North America. OTOH, they collect VAT (or our GST) hidden in the price. European VAT rates are around 30%. But then, European governments are also adopting the North American approach to withholding income taxes too.

Second, we should schedule elections on or around the date we pay income tax. If we are going to move to a fixed election date system, then the date should be 30 April.

If a government is going to face the voters for re-election, let it face them on the date the voters are all writing a cheque for their tax bill.

This has nothing to do with rich or poor. With progressive taxation, taxes "hurt" a rich person as much as they "hurt" a poor person - more or less.

The true measure of a civilized democracy is not the percentage of citizens who vote; it is the percentage of citizens who pay their taxes. In the West, we are quickly approaching a limit where more citizens vote than pay taxes.

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Because of the ease with which they can collect taxes, modern governments have become a behemoth:

be·he·moth [ bi heməth, be əməth ] (plural be·he·moths) noun Definition: 1. something huge: something that is enormously big or powerful, 2. huge animal: in the Bible, a huge beast usually thought to be a hippopotamus (Job 40:15), [14th century. < Hebrew bĕhēmōṯ < bĕhēmāh "beast"]

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The way we pay income tax is only about 60 years old so it's no wonder income taxes have gone up. I suspect other automatic deductions will rise too in the future since this is the easiest way to get someone else's money. In the next few years, I would expect to see a general revolt against such automatic deductions - including income tax withholding.

IOW, this cannot continue. At some point in the next few decades, someone somehow is going to face the basic problem of stopping this government growth. Maybe it'll be a Gorbachev type chosen because of the evident impossibility of government growth. Maybe it'll be a tax revolt. Dunno.

The Left now fears Global Warming and the general complexity of modern life. The Left believes that our material living standards cannot be maintained, certainly not if they are extended to the billions of others. There's a Calvinist edge to North American Leftism.

The Right now fears the Islamofascist Hordes and a general threat to our modern life. The Right believes that too many Westerners are not prepared to defend their civilization and freedoms. There's a Protestant edge to North American Rightism.

I'm worried about the Behemoth growing in our midst. Modern governments have pre-authorized monthly deductions - and they can set the amount.

I fear that this Behemoth will not be able to deal with Global Warming or with Islamofascists. It will just take more money from our accounts.

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Last point. Can anyone explain to me why Quebec residents get an automatic 16.5% reduction of their federal income tax? C'est l'abattement fédéral remboursable. I know Duplessis negotiated this but what's the logic?

The Quebec Abatement consists of a reduction of 16.5 percentage points of federal personal income tax for all tax filers in Quebec, representing approximately $3.7 billion in 2006-07.

[Riverwind]

First, we have to get rid of income tax withholding (or payroll deductions). Governments should send us a bill and we should pay it.

Income tax is due when you earn the money - not on April 30th of the following year. Self-employed people must make quarterly installments based on their estimated annual income or face stiff interest penalties. Corporations must submit their taxes every month. Financially asute people would have no problem making these regular payments, however, many people with less sense would miss these payments and end up paying a lot more in interest. A significant percentage of the population would end up with huge debts to the taxman and would end up having their wages garnished anyways.

Second, we should schedule elections on or around the date we pay income tax. If we are going to move to a fixed election date system, then the date should be 30 April.

I like this idea.

[M.Dancer]

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Last point. Can anyone explain to me why Quebec residents get an automatic 16.5% reduction of their federal income tax? C'est l'abattement fédéral remboursable. I know Duplessis negotiated this but what's the logic?

The Quebec Abatement consists of a reduction of 16.5 percentage points of federal personal income tax for all tax filers in Quebec, representing approximately $3.7 billion in 2006-07.

Been a while since ai filed a Quebec tax form, but if I remeber it's because Quebec will tax you seperately over and above any 16 or 17 percent reduction

[stignasty]

I'm tired of reading nonsense on this forum.

That coming from the person who linked Muslim schools in Ontario to 9/11.

Nonsense about electoral reform and about proportional representation (and about whacky conspiracy theories).

While I agree with you on the conspiracy theories, I don't see where a discussion of electoral reform does any harm. If anything it can make people more aware of the system we have.