It comes as no surprise that among the goodies Santa Martin produced from his satchel yesterday were tax breaks for families with children. These had been hot items on many pre-budget wish lists. No politician could have resisted the clamour without appearing Scrooge-like.
However, the supporters of child-centred tax breaks seem to fall into two camps. One camp favours lower taxes as a matter of principle. To them, virtually any tax cut is a good tax cut. Every dollar that can be kept out of the hands of the government is a dollar that will not be used to distort market signals, misallocate resources and reduce prosperity.
I confess, I fall into this camp. Because I am childless, it won’t be my dollar that’s saved from this ignoble usage. However, I can still be glad that child-centred tax cuts will rescue someone else’s dollar for more productive uses.
Unfortunately, I see no signs that those in the second camp are likely to return the courtesy if the time ever comes when childless taxpayers might be under consideration for a tax cut. This camp favours child-centred tax cuts for a very different reason. They seem to think that the raising of children is some sort of community service. Parents should be remunerated by tax cuts for providing this service, and non-parents should pay higher taxes for receiving this service.
For instance, economist John Richards, a fellow of the C.D. Howe Institute, wrote recently in The Globe and Mail, "Children are not a luxury and families of any income with children should be taxed less than households with similar incomes but no children."
There’s Beverley Smith, the Calgary homemaker who in 1997 lodged a complaint about Canada’s "discriminatory" tax system with the United Nations, who refers on her web site to the "vital services…[to] society" that parents play by "raising the next generation of Canadians."
Then there’s Reform MP Monte Solberg, defending his party’s proposed flat tax in a letter to The National Post: "…we are introducing a $3,000-per-child deduction to recognize the cost of raising children."
Why should people who choose to spend their money in a particular way be "recognized" by the tax system? Why is it automatically assumed that anyone who is raising a child is conferring a benefit on everyone else?
Some of the children being raised today will grow up to be thieves or murderers. Some will end up on welfare, or as drug addicts, and will never repay society for the benefits lavished upon them. Some will choose other unsavoury and anti-social occupations such as bureaucrat or tax collector.
The childless nerd who locks himself away in his attic and creates a brilliant new invention or writes a seminal work of philosophy may ultimately benefit society far more than millions of parents combined. Why shouldn’t he be "recognized" by the tax system?
The fact is, everyone benefits from living in society rather than as hermits. We don’t have to reinvent the wheel person by person. We achieve economies of scale. Our combined knowledge grows through division of labour and specialization. But we all pay for these benefits in kind, merely by being part of society ourselves.
The notion that some of us should also subsidize others in cash in the mere anticipation of receiving future benefits from them is strangely lopsided. Today’s children, assuming they grow up to be the bakers, hairdressers, and car mechanics of the future, won’t provide their services to the childless for free. Childless people will still have to pay in the future for whatever they choose to buy. Why should they also pay now?
Underlying this issue are two drastically different theories used to justify taxation. The first holds that we pay taxes because the government provides us with goods and services—roads, public parks, schools, hospitals and so on. We can certainly debate whether it’s necessary or desirable for the state to provide each particular item, but once the decision has been made, we pay the government for these things just as we pay the grocer for our food and the hairdresser for our haircuts.
Under this theory of taxation, households with children should logically pay higher, not lower, taxes than those without, because their greater number of family members will ordinarily consume more of these services.
The opposing theory of taxation holds that we pay taxes for the purpose of maintaining a system of "social justice". Taxation is a method both of redistributing wealth and of persuading people to behave as the government deems best. In theory, we all cast our lot in together to be governed by wise leaders for the greater good of everyone. In practice, our individual choices are overridden by political cliques, and our extraordinary efforts are punished by progressive tax rates.
Those on the child tax-cut bandwagon, especially conservatives, should stop to think through the consequences of subscribing to this theory of taxation. A state that is powerful enough to subsidize the family at one time could just as easily decide to destroy it at another.
This system is easy to get into, but hard to get out of. Once you surrender to the notion that someone else knows how to spend your money more wisely than you do, you surrender not only your own autonomy but probably that of generations to come.
Frankly, I can’t understand
why any parent would want to bequeath such a legacy of subservience and
bondage to his or her child.
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