The second in a seven-part series, “Taxes for the Common Good.”
Have you ever stopped to consider how much you would spend if you had to pay directly for the infrastructure and services you use every day?
Walk out your front door and look around. You’ll likely see sidewalks, roads, street lights, and city trees. Down the way, there is a park with a play structure and tennis courts. Time it right, and you might see school buses, garbage trucks, street sweepers, or snow plows.
And you haven’t even left your home.
This says nothing of the schools, hospitals, libraries, recreational spaces, institutions of government, and public safety services that you have access to in the wider community.
Valuable Public Services
I’ve said it before, and I’ll say it again: it is a terrible shame that public dialogue about taxation has been so completely separated from the vast array of services we receive in return. Have another look at the list above. Have you noticed how incomplete it is?
Taxes also pay for income supports for seniors, social assistance, newcomer integration services, environmental protection, international assistance, and more.
By pooling our resources, taxation allows us to acquire more and better services than we could on our own – and to do so in a cost-effective and efficient way. Remember the streetscape I mentioned earlier? Can you imagine if each household was responsible for procuring and installing their own sidewalks and streetlights?
The hassle would be one thing, and the expense quite another.
In 2006, median income households received $41,000 worth of public services, that’s about 63% of their total income. For low- and modest-income households, the benefits are even greater. Access to public education, health care, and transfer payments is only possible through taxation. The value of these services for those earning less than $20,000 per year is more than two times higher than their average incomes. Even those living in households in the $80,000 to $90,000 range received benefits from public services equivalent to about half of their total household income.
The Great Equalizer
It should come as no surprise that those who have more have greater capacity to get more. In other words, those on the higher end of the income spectrum have more money to spend not only on material goods, but also, sports, culture, and leisure activities.
The tax system therefore serves as a bit of equalizer, offering more opportunity to those with fewer financial resources. A recent study of OECD countries found that the value of public programs – such as education, health care, and early childhood education and care – represented 76% of the disposable incomes of low income households compared to 34% among middle income households, and 14% among high income households.
Of course, the rich benefit most from tax cuts. Research by Hugh Mackenzie and Richard Shillington demonstrates that at least three-quarters of Canadians would have been better off without broad-based income tax cuts, the reduction of the GST, or cuts to the capital gains tax. Instead, those on the margins of society pay with their well-being for the wealthy to have a few more dollars in their pockets.
Public Services Provide Good Value for Money
Most days, I don’t really notice the abundance of public services that I have access to. I take it for granted that I can borrow books from the library, take my kids for regular visits to the optometrist, or meet with my local Member of Parliament.
But when I stop and think about it, I’m really grateful.
We certainly do get a great deal in return for our tax dollars.
Not least of which is the opportunity that we, as citizens, have to fulfill our responsibility to promote justice and to respect the right of all people to live in dignity.
Karri Munn-Venn is a policy analyst at Citizens for Public Justice, a national organization of members inspired by faith to act for justice in Canadian public policy. Taxes for the Common Good: A Public Justice Primer on Taxation is available free at www.cpj.ca/taxes-and-common-good.