If you could deliver the same benefits with less than one quarter the overhead, wouldn’t you?
Senator Hugh Segal’s been stumping Canada for nearly thirty years now, making his case for a negative income tax form of guaranteed annual income to replace the current multitude of income assistance programmes in effect.
(What is that? You set the personal deduction for income tax at a high number, say $60,000. If you make zero to $30,000 you receive $30,000, a number slightly above today’s poverty line indicator. Between $30,000 and $60,000, you receive a declining share of that $30,000, so that by $60,000 you receive nothing. You radically simplify the tax code so that above $60,000 you do pay tax: practically no deductions or credits would be left. You get out of the welfare business, the case workers, the means testers, the whole nine yards of it. Finally, if that hasn’t saved enough, you raise consumption taxes instead.)
It’s not my point today to speak for or against this particular notion, although I like it — a lot.
Rather, something that I think does need a good airing is the cost and complexity of all sorts of programmes. These include on the government’s income side (taxation, worker’s compensation and the like) quite as much as on the expenditures side.
Human beings constantly complexify things.
Take, for instance, the many calls for a flat tax régime. That sounds reasonable, doesn’t it? — a tax return the size of a postcard. No real questions of interpretation, or so it might seem. Unfortunately, three different forces come into play.
First, taxpayers (quite rightly!) look to minimize the taxes they pay. However income is defined, grey areas will exist. There will therefore be a need to question even simple declarations of income and taxes to be paid.
Second, tax administration will, as each grey area is subjected to scrutiny, require more documentation (and therefore more people to file, organize, study, etc. that documentation), and as administrative rulings and Tax Court findings pile up more and more interpretation enters the system.
Third, the political will to stick to the basics is tested regularly: an education “push” leads to an education deduction, a demographic “push” leads to a family deduction, questions of fairness lead to complexity (e.g. joint returns, poverty-line protections, etc.) and the net effect is that soon the massive infrastructure of our tax code and the thousands of people employed in handling it, plus the loss of time and energy we are all put through building our tax bundles each year, has been recreated.
This leads us to an important point: politics should be as much if not more about stripping back this complexity as about giving us new “goodies” to swoon over (or, at the very least, extend a vote for).
Laws passed should have sunset provisions. Universally.
It may seem frivolous to, for instance, have sunset provisions on our laws concerning murder — “who in their right mind would want to overturn those?” — but think just for a moment about the intersection of foetal viability and the question “is it murder?”, the question of voluntarily deciding to end one’s own suffering but being in a state where someone else must assist and the question “is it murder?”, the nine-year-old who, in full premeditation, takes another’s life and the question “is it murder in the same sense as if a twenty-two-year-old had done it?”, or the question of Tasering as a routine first response, and the complexity of writing a viable code about the taking of another’s life becomes visible.
The need to redebate these periodically is foregone in today’s code — we simply pile yet more into it — rather than going through it, cleaning it up, making limits clear.
The science-fiction author Robert A. Heinlein, in his book The Moon is a Harsh Mistress, has his character, rational anarchist Professor Bernardo de la Paz, offer the following thought: perhaps laws should require a two-thirds majority to be passed, and a one-third “majority” to be repealed. The idea here is that if 33% of the population is at odds with a provision it needs to be rethought. The character also called for universal sunset provisions, forcing items to be redebated.
Alas, in the story, these provisions were not a part of their nation-building, but then few who take on the job of writing constitutions see themselves as trying to make it as difficult as possible to do something. Instead, they focus on what can be done — and the complexity piles up and up until finally the structure topples under its own weight.
We call that revolution, whether it comes piece-meal as in the British tradition (although the Blairite revisions to the Lords, to devolution and to the mechanisms of measurement in recent years ought to have been considered revolutionary rather than evolutionary) or with periodic sound and fury, as is most of the rest of the world’s experience.
When we lived in The Netherlands in the late 1990s, there was an interesting provision in its tax laws: a maximum percentage of income to be paid out in taxes. If the combination of VAT, municipal levies, specific imposts and income tax added up to more than the maximum, you lowered your income tax to the maximum. This still required all the record-keeping, documentation (and a small army of people in the Belastingdienst (equivalent to the Canada Revenue Agency)), but at least it set a limit — even if it was around 68%! — on what various governments could take. It recognized “one taxpayer”.
I tell this story because, in a federal system, the interactions between the parts do ultimately come down to “one taxpayer”, yet the various levels of government do not co-ordinate well between themselves.
Aside from TILMA in Alberta, British Columbia, and Saskatchewan, there isn’t even a single market and single regulatory régime shared between provinces, although we have such an agreement with multiple countries! That’s poor co-ordination for you!
What this suggests to me is — and wait for the screams of anguish from provincialists coast-to-coast — the single most important power in the Canadian Constitution just might be Section 47, the provision to allow the Federal Government to disallow provincial legislation (and, since the provinces in turn control municipalities, therefore to disallow elements of municipal charters and enabled municipal actions requiring provincial approval, e.g. with the Ontario Municipal Board).
Why does this matter? Suppose our Senate took sober second thought seriously, and worked primarily to repeal legislation passed by the Commons? Suppose our House of Commons tirelessly worked to prune provincial legislation? What kind of country might this be?
For those who believe that only government can make things happen, of course, this would be anathema. But for those of us who believe in individual initiative, such a process might be quite liberating. In any event, it is a thought experiment, but one worth spending time to think about.
This is why Senator Segal’s thoughts on negative income taxes are worth considering. It is simplifying. It might not be a good policy — as always, the devil is in the details — but it cuts through a thicket of vines that have grown up with many point solutions.
Just as with a more general pruning of the legal thickets, a severe reduction in form-filling and compliance regulations, tax reduction (those who are regular readers know I am a proponent of tax elimination: keep one type of tax per level of government and get rid of all the rest — and add the Dutch limit to keep the combination at a sensible total outlay) and other forms of repeal/sunset clearing away, Senator Segal proposes something that should have less overhead, less cost to deliver — and thus be more effective at using our money.
At every step, ask the question: does this simplify things, or make them more complex?
Even if you are emotionally committed to other alternatives, consider the simple carefully before rejecting it. If we can’t clean the Augean stables of public policy easily, we could at the very least not add to the mess.
Indeed, if our communities are going to be able to experiment, it is essential.