Paying Your Fair Share

There’s a lot of talk these days about fairness. It seems that almost everyone, is demanding that everyone else pay their fair share. Because so many seem to confuse what is fair with what is convenient for their particular circumstance, I thought I’d go back to the source and look up the definition of the word fair.

Fair is defined as “a gathering held at a specified time and place for the buying and selling of goods such as an exhibition, as of farm products or manufactured goods, usually accompanied by various competitions and entertainments”.

Oops. Sorry, wrong definition of fair. Let’s try that again.

Fair is defined in the Oxford dictionaries as “treating people equally without favouritism or discrimination”. That’s more like it. Everyone is equal and everyone is treated equitably. Clearly when it comes to societies we’re quite a distance from achieving that goal and there is some work to be done if this is going to be accomplished.

Most people think that fairness can only be achieved through wealth redistribution, a sort of a Robin Hood attitude that sees one or more sectors of society taking from other sectors and redistributing it more fairly. That seems like it might make sense except it leaves off another part of the definition of the word fair which is “being in accordance with relative merit or significance”.

And that is a big part of the problem in all this discussion about paying your fair share.

It isn’t based on merit, it is based on want and envy. How inconvenient. The idea that society will somehow become fairer by treating others less fairly is also covered in the definition of the word fair; “superficially true or appealing; specious”. It may be appealing to many to demand the rich pay more but it is a superficial approach to things.

In fact, that is a big part of the problem with the entire discussion of wealth redistribution and fairness. It is very superficial and has nothing to do with the real issues facing society and merely trades one form of inequity for another. Most people who are demanding the wealthy pay more taxes have no clue how much money those with high incomes actually contribute to society through various taxes and donations.

The problem isn’t that the wealthy don’t pay their fair share. If you look only at income taxes, it is true that they pay attractively low rates but when you factor in property taxes, charitable donations, provincial taxes, capital gains and GST, they pay quite a bit more than for which many give them credit.

Both Barrack Obama and Mitt Romney had pretty much the same tax rate of just over 20% last year but when you factor in Romney’s other contributions and charitable donations, he actually coughed up almost 39% of his income. It seems a little unfair to accuse him of not paying his fair share under those circumstances.

I’m not defending Mitt Romney or the rich nor do I think they should pay less than the rest of us. Quite the contrary, I fully support everyone paying their fair share but for me, the operative word is fair and that means everyone is treated in exactly the same way.

Too many who are demanding that others pay more are also demanding more government entitlement for themselves. Students demand more taxation on the rich so that they can have reduced and even free tuition. That, my friends, has nothing to do with fairness and everything to do with “I want.” Trying to rationalize the demand for reduced or free tuition is one thing but accusing others of not paying their fair share in order to satisfy that demand is something else entirely.

It’s just another form of vested self-interest at best and greed at worst.

I’m not picking on students because the same attitude permeates our societies at all levels. Everyone wants everyone to pay their fair share but nobody wants to give up their share of entitlements and consequently, fairness is a relative term for most these days.

There is a big furor over Romney’s comment about 47% of Americans not paying any income tax. I think his comment was ill-advised and I definitely don’t believe that the majority of the 47% are either deadbeats or tax cheats. Quite the contrary, I believe they are simply following the tax act as it is written and are, therefore, doing nothing wrong. They aren’t the problem. The tax act is. It isn’t progressive and it isn’t fair. In every democratic nation on earth, it is an overly complex unfair mess.

There is something wrong in a society where 47% of people, other than those below the poverty line, pay no taxes at all but demand others pay their fair share. It doesn’t matter what the reasons are for the rich, middle class or other special interest not paying taxes, it is a systemic inequity that completely undermines any concept of fairness for all.

For decades, governments have alternately pandered to different sectors of the electorate by offering tax incentives and entitlements that weren’t necessary or that we could afford. The result has been an absurd level of debt and an incredible lack of fairness in tax policy and social programs. Governments have further compounded things by trying to use tax policy to socially engineer society, alternately raising taxes on corporations and then lowering them when they realized it was causing unemployment, raising then lowering taxes on sin products like cigarettes only to raise them again and tinkering with the tax act for the rest of us like a kid with ADD.

Now governments, which have pretty much dug themselves into a financial hole so deep that even taxing taxes as some do isn’t helping. The solution? Increase tax rates on the most successful and call that progressive taxation.

True fairness would require all including, corporations, citizens, charities, NGOs, foundations, churches, academic institutions and that strange guy who lives down the street in the spooky house, pay exactly the same percentage of their income to the government with no deductions.

Pick a number; 10% for example (and easy math). If everyone pays 10% of their income, then someone making $20,000 a year pays only $2000 in taxes while someone earning $2 million pays $200,000.  Unions, churches, charities and others that live off the taxpayer either directly or indirectly through generous tax exemptions for their supporters would suddenly be contributing just like the rest of us.

The current system even with higher tax rates for those earning higher incomes is inequitable. We call it progressive taxation but it is anything but. We have different tax rates for different income levels but how fair is it for someone who earns $100,000 per year, for example, being bumped to the next tax bracket while someone earning $99,999 stays at the lower level? It isn’t fair and that inequity can only be fixed by requiring that everyone pay the same percentage of their income in taxes.

Even that, however, won’t produce absolute fairness. That will only be achieved when we agree that there are too many entitlements for various groups and sectors of our society, many of which are not essential and most of which are anything but universal.

Clearly the poor and the working poor need our support although simply handing them a monthly pittance and a handful of food stamps hasn’t achieved much judging from the numbers we see begging on, and sleeping in, the streets of our cities these days. Handing out tax deductions to the middle class for day care and sports activities for their children isn’t fair either because it excludes those who do not have children but who are expected to contribute to those entitlements for others through their taxes nonetheless.

Some jurisdictions have an allowable deduction for mortgage payments but no deduction for those who pay rent. Other jurisdictions allow a deduction for a small portion of  rent but home owners cannot deduct any of their mortgage payment. That hardly treats all citizens equitably which not only defies logic but any sense of treating everyone fairly.

Government should go back to what it was intended to do; maintain infrastructure, healthcare, education, defense and common issues the nation requires of it including an unemployment insurance program to which we all contribute.

Government should provide, on behalf of us all, a safety net for those who need a hand up but if we are to achieve true fairness, the rest of us should go back to depending on ourselves for our livelihood instead of on government.

Anything less is merely the unfair, overly complex mess we have now and that hasn’t worked too well for us lately. That won’t prevent all those, at all income levels, who have a vested self-interest in protecting their entitlements and tax advantages from demanding others pay their ‘fair share’ though. The simple truth is that what constitutes fair share is in the eye of the beholder and doesn’t actually have anything to do with fairness whatsoever.

It never did. Fairness may well be what many are demanding but if the truth were told, it is the last thing most actually want.

RELATED POSTS

The Redistribution Of Wealth
http://bearsrant.blogspot.ca/2012/08/the-redistribution-of-wealth.html

Entitlement Addiction
http://bearsrant.blogspot.ca/2012/04/entitlement-addiction.html

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