Unpublished Op-Ed submitted to the Toronto Star
While the banks, oil and pharma companies, arms manufacturers, investment dealers, stock traders, massive tech firms, food conglomerates and other big businesses all over the globe make astronomical profits for their elite shareholders and wealthy owners, the working public are told we are in a period of austerity, low growth and economic uncertainty. We are asked to survive on precarious subsistence wages and basic living standards while the rich live large and the gap between the rich and the poor widens dramatically. We are treated to reports of the lavish and grotesque over-indulgence of the wealthy daily in the media while people around the world starve while billions of tons of perfectly good food is thrown out rather than being given away. It is implied that this is normal and random rather than repulsive and coordinated. It is portrayed as something we should all aspire to. Within all this modernist Orwellian debauchery we are told by the corporate owned media that governments are a roadblock to individual freedom and taxes are a pox on society when the exact opposite is true.
The
reasons for this are multi-faceted. First, it is not just taxes that are the
problem it is the accumulative effect of both taxes and most significantly profits
on working people that is the unacknowledged dilemma. Increasing profits have dramatically
raised the cost of living to the working public while wages have remained
stagnant for decades. Shifting the taxes burden from the corporate to the
public sector has doubled down on this reality. Since the end of the Second
World War the Keynesian welfare state that gave us the things we cherish as
Canadians and an era of unprecedented growth and prosperity has been slowly but
surely dismantled. Taxes that have provided excellent value for money we
unfortunately have often take for granted. Our healthcare and Canada Pension Plan systems are only two
examples.
It
has been said that taxes are what we pay to live in a civilized society with
social programs, infrastructure, public transit, security and stability but
over the last several decades personal taxes have increased while corporate
taxes have plummeted with no discernable improvement in the Canadian economy. Corporate
taxes are the lifeblood of society and for the past fifty years we have been
applying a tourniquet to them. Taxes that were intended to spread the cost of
government across all of society making services affordable and shared have
been concentrated in the public sphere. Over the last half century the private
sector has succeeded in convincing governments and the public that corporations
pay too much tax leading to a precipitous reduction in corporate rates around
the world to stimulate the economy in a race to the bottom fuelled by
globalization and ultimately a shifting of the overall tax burden from the
private sector to the public. At the same time, the private sector has
progressively withdrawn from social responsibility in society. Curiously with a current federal corporate tax
rate of 15%, one of the lowest in the world – business is not flocking to the
Canadian economy as predicted and as Joseph Stiglitz, the former chair of the
World Bank unequivocally stated. There is no empirical evidence that reducing
corporate taxes either stimulates the economy or creates jobs despite the
opposite being repeated ad nauseum by right-wing acolytes. The sharp reduction
in corporate tax rates has left governments strapped for much needed revenues
to provide social services and repair infrastructure that are desperately
needed in today’s precarious work world. The majorit of our cities’ infrastructure was
built fifty years ago when tax money was plentiful. Not a penny has been spent
since. With the ddrop in interest rates the public is hurting. Charities have
become corrupt big business. This is the primary reason governments everywhere
are struggling to fund government and the services it provides. While the
private sector always supports infrastructure investments by governments, they
do little to fund them. That is why they don’t want money spent on social infrastructure
– it takes money away from their profits.
Secondly,
companies have driven down wages through contract and other part-time work
while shipping jobs to overseas sweatshops where people work for pennies an
hour to produce consumer goods for developed nations. Similarly, they have shed
legacy costs of pensions and benefits like healthcare for western workers,
while eliminating stable full-time work, leaving the majority in society with
little discretionary income with which to stimulate the economy after basic
subsistence living expenses like food, shelter, clothing and transportation are
paid for and while struggling under increasingly high personal debt loads. Add
into that the low Canadian dollar that is driving up the price on everything
for working people and it is a perfect storm of economic problems that only the
0.01% will fare. The working public are caught in a Catch-22. We are being told to stimulate the economy by
spending but being provided with no increased income with which to do it. Is it
little wonder that the economy is flagging while profits are soaring?
Generally,
the private sector chants the mantra that taxes are regressive and should be
reduced, eliminated, or controlled while unregulated, unexamined profits are a progressive
necessity to provide incentives to entrepreneurs. In reality, the unspoken
truth is that profits are simply another form of egregious private sector tax
levied on the consuming and working public – the only difference is that they
are generally outrageous and we have no control over how much that tax is or
why it is being levied. Nor do we have any control over where that money is
spent once it is earned like we do with public government taxes. It is not
governments that are gouging the public and ruining the economy, it is the relentless
private sector and its irresponsible greed that has been out of control since
deregulation under Reganomics in the 1990s. So, while modest increases in
government taxes are decried by economists, right-wing think tanks and the
business community, staggering profit margins that have little relation to
costs but reflect the unquenchable and often inhumane greed of the private
sector are blandly ignored or accepted by governments and the public.
Profits
and greed are the real problem in society and the real drag on the economy. Profits
and taxes are directly related to the wealth curve. Higher taxes means a higher
standard of living for all, lower taxes means a higher standard of living for
the rich. Massive amounts of cash are being parked on the sidelines around the
world that should be used to stimulate the economy. This is earned income that
is withdrawn from global commerce and piled up on balance sheets like those of
Apple and other conglomerates or shipped to off-shore tax havens that the CRA
and IRA generally ignore. Profits are private and well-guarded secrets. In
contrast, government taxes are public and open to scrutiny and are used for
socially supportive purposes. It is time for us to all shine a bright light on
the murky world of profit and loss and take a hard look at whether it is taxes
or profits that provide more value-added to the lives of Canadians and begin to
realize that it is profits, not government taxes that are the real problem. Most
profits are based on astronomical undisclosed mark-ups on the cost of the
material needed to produce them. While we regulate everything else in our
society we turn a blind eye to profits and their negative effects on us all. It
is time to shatter the old shibboleth of free enterprise that only the prospect
of unlimited return will motivate entrepreneurs to invest while workers are
expected to tolerate status quo returns for their labour while costs, profits
and wealth soars. This has been the mantra of capitalism for 200 years and it
has never delivered even a marginally better life for all. There is no reason
why society shouldn’t determine what a reasonable profit is and how it should
be monitored and taxed in the same way as we do for wages and everything else
in society. It is time to begin to demand to know how much profit is made on
each item sold so government, consumers and the public can decide how much profit
is being made on an item and if that is reasonable. All consumer goods being
sold in Canada should be required to have a sticker on them much like the
nutritional stickers on food that breaks down the amount of materials cost,
labour costs and profit built in to every item. In this way every consumer will
know how much they are being gouged. Our entire modern economy is based on
exacting as much money from consumers as possible for as little cost as
possible while accepting no social responsibility for the impacts of that
process on society. Unregulated profit is for more regressive than taxation.
That is the hidden secret of the modern economy. In our brave new neoliberal
world this equation has become so grotesquely distorted that the profits being
made are staggering while workers’ wages stagnate. Capitalism has become a
carney shell-game in which the working public are the marks. There should be
far louder grumbling about profits than taxes.
