Cutting Income Tax Is The Truly Moral Thing To Do

Ever since Quebec Finance Minister Carlos Leitão’s announcement of modest income tax reductions in the province’s fall economic update, the Quebec media landscape has been flooded with the lamentations of those who oppose such measures.

Some complain that the current fiscal breathing room has been purchased with draconian cuts to government services budgets. This is simply false. The budgets of the main governmental missions have kept increasing in recent years; they just haven’t grown quite as quickly as some anticipated or would have liked.

Others complain that they don’t know what to do with the money that will be returned to them. In La Presse, a woman bizarrely accuses the minister of preventing her from helping the poor: “Do you realize that you are forbidding me from transferring my income tax reduction, that I don’t know what to do with, to a person you are deliberately keeping in poverty?” And yet, there are hundreds of organizations that help the poor to which she can send her money, and which will undoubtedly spend it more efficiently than government bureaucrats would. She could even give it directly to a poor person!

Some also complain that is it the rich who will benefit the most, while taxpayers earning $17,300, for example, will get a meagre $1 reduction. Yet there is nothing surprising in this. In Canada, as Financial Post columnist William Watson calculated on the basis of Statistics Canada numbers, the richest 50 per cent of taxpayers earn 90 per cent of all income, and pay 95.5 per cent of all income taxes, while the other half earn the remaining 10 per cent of all income, and pay 4.5 per cent of all taxes.

Tax cuts can logically only affect those who pay taxes, and especially those who pay a lot, not those who pay practically nothing. My impression, though, is that these factual, rational replies will have no effect whatsoever on those who oppose Leitão’s income tax reductions. Indeed, such opposition is based on some implicit moral assumptions: that in a society in which inequalities exist, it is immoral not to want to redistribute more wealth; it is immoral not to give more resources to the government for it to redistribute; it is immoral and selfish to want to spend one’s money as one sees fit.

Those who support tax cuts commit a strategic error in focusing exclusively on economic arguments and only very rarely mentioning moral arguments.

After two decades of debating the case for tax cuts and other reforms to government policies as president of the MEI, a not-for-profit research and educational organization, I know it is very difficult to change the minds of those who hold this egalitarian, statist position. By definition, moral arguments are based on absolutes. The rest is just unimportant details.

I have actually come to the conclusion that those who support tax cuts, as my organization does, commit a strategic error in focusing exclusively on economic arguments and only very rarely mentioning moral arguments. We thereby cede all of this territory to our opponents, who are very good at exploiting the moral angle.

Yet there are also moral arguments in favour of leaving more money in taxpayers’ pockets. For example, our society is obsessed with the moral imperative of allowing each individual to live life the way they want to, whether we’re talking about spirituality, sexuality or physical appearance. But forcefully removing half of one’s legitimately earned income is the equivalent of taking six months of one’s time each year, a period during which one must work for others before seeing to one’s own needs. How can we consider it moral to impose such partial servitude, when we rightly value individual autonomy in other aspects of life?

Moreover, what’s so moral about being forced to do something? The woman who says she prefers giving her money to the government — and who wants to force everyone else to do the same — instead of directly helping someone is in fact denying her own autonomy and renouncing her moral responsibility. It is when we give while having the choice not to give that we are acting morally, not when we are forced to do so. A morally responsible society would be one in which we would pay less income tax, but would voluntarily give more to the poor. Why not fight for this instead?

The distributional equality that opponents of tax cuts often invoke is a fundamentally flawed concept, based on the idea that wealth is intrinsically collective.

Equality of results is sometimes just. For example, it is fair for a policewoman with five years of experience working for the City of Montreal to earn the same salary as a policeman with equivalent experience and identical duties.

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But equality of results is also often a source of injustice. Some employees are clearly more productive than others, based on objective and measurable performance criteria like sales generated. Creating or tending toward equality of results through income taxation is thus a serious injustice and is in no way moral or ethical.

Despite what the defenders of egalitarianism and statism think, I believe most people want more autonomy, both in how they live their lives and in what they do with their money. They don’t necessarily have time to dissect the many economic arguments for or against income tax cuts. But they are instinctively receptive to moral arguments. This is a niche that should get more attention from political parties and anyone who wants to defend the idea of a more prosperous society that is also just, free, and responsible.

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Author: Michel Kelly-Gagnon